IN RE: Evergreen Valley Project Litigation

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SEITIN PANT oN
® DOCKET NO. 122 HULL ST
BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT LITrcatdchel [£73
CLoians insiomnIN RE EVERGREEN VALLEY PROJECT LITIGATION ”
ORDER REASSIGNING LITIGATICN
It is hereby ordered that this litigation be, and the
same hereby is, reassigned to the Honorable Hugh H. Bownes
sitting by designation in the District of Massachusetts
pursuant to 28 U.S.C. §292(b).
"FOR" THE PANEL:
Sh Bio
| John Minor Wisdom -
Chairman

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BEFORE THE JUDICIAL PANEL "i nc - Ze |	| ON ERTIES	WN FE NE
[ MULTIDISTRICT LITIGATION EERE
IN RE EVERGREEN VALLEY ) pocker	Rol 322
PROJECT LITIGATION ) MEI
OPINION AND ORDER CE
BEFORE ALFRED P. MURRAH, CHAIRMAN, AND JOHN MINOR WISDOM,
EDWARD WEINFELD*, EDWIN A. ROBSON, WILLIAM H. BECKER,
JOSEPH S. LORD, III, AND STANLEY A. WEIGEL, JUDGES OF THE PANEL
PER CURIAM
This litigation involves the financing for the construction
of a resort complex in the State of Maine and consists of three
actions in the District of Massachusetts and one action in the
Southern District of New York. The corporation developing the
complex issued through its underwriter two classes of municipai
® bonds, designated Series A and Series B, which were secured by
similar collateral. When the resort project faltered and construc-
tion stopped, the bonds became in default as a result of failure
to pay interest. Purchasers of the bonds have sued the issuing
development corporation, the bond rating company and the bond
underwriter and its alleged successors for securities laws viola-
tions and fraudulent misrepresentations in the bond offering
prospectus.
The underwriter of the bonds, a common defendant in all four
actions, moves the Panel, pursuant to 28 U.S.C. §1407, for trans-
fer of the action filed in New York on behalf of all Series B
bondholders to the District of Massachusetts for pretrial proceed-
(| * Although Judge Weinfeld was not present at the hearing,he has, with the consent of all parties, participated
in this decision.

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¢ ings with the three actions brought by the Series A bondholders.
We find that these actioneg involve common questions of fact and
that transfer of the New York action to Massachusetts for coordi-
nated or consolidated pretrial proceedings will best serve the
convenience of the parties and witnesses and promote the just and
efficient conduct of the litigation.
The bond rating corporation, a defendant in only one of the
Massachusetts actions, and plaintiffs in the New York action oppose
transfer on the ground that the Series A and Series B bonds are
substantially different in nature and legal effect and that,
therefore, the actions involve only limited common questions of
fact. They also argue that since the class allegations in the
New York and Massachusetts actions are different, there is no
® possibility of inconsistent class determinations absent transfer.
Although we agree that there is little likelihood for conflic-
ting class determinations absent transfer, we find that there are
sufficient common questions of fact between the lawsuits brought
by Series A and Series B bondholders to warrant transfer of these
actions under Section 1407 to a single district for coordinated
or consolidated pretrial proceedings. Common to both types of
actions are questions concerning alleged misrepresentations in
the same offering prospectus which will clearly involve discovery
of many of the same documents and witnesses. In addition, the
New York and Massachusetts actions raise a common issue as to
whether certain of the named defendants are successors to the bond
underwriter and therefore legally responsible for any liabilities
@ which may result. Transfer will eliminate the possibility of
l/ Three additional actions filed in the District of Maine
were originally part of this litigation, but were dismissed
Prior to hearing before the Panel.

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CY duplicative discovery and inconsistent determinations with respect
to this issue.
The District of Massachusetts is the most appropriate trans-
feree forum for this litigation. The vast majority of the parties
are already present in that district. In addition, the three
Massachusetts actions have been assigned to Judge Frank J. Murray,
: who is already familiar with the parties and the underlying
transactions.
~ Finally, one of the plaintiffs in Massachusetts argues that
his individual action arising out of purchases of Series A bonds
is ready for trial and that inclusion of his action in the coordi-
nated or consolidated pretrial proceedings would delay the expe-
ditious handling of his case. The transferee judge, however, is
® in the best position to make that determination. If the action
is indeed ready for trial, the transferee judge may proceed to set
it for trial without hindering the just and efficient conduct
of any of the other actions.
IT IS THEREFORE ORDERED that the actions listed on the
attached Schedule A be, and the same hereby are, transferred to
the District of Massachusetts and, with the consent of that court,
are assigned to the Honorable Frank J. Murray for coordinated or
consolidated pretrial proceedings pursuant to 28 U.S.C. §1407.
®

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SCHEDULE A ' DOCKET NO. 122
® SOUTHERN DISTRICT OF NEW YORK
Louis Lenzer, et al. v. Glore Forgan, Wm. Civil Action |
R. Staats, Inc., et al. No. 72 Civ. 2911
DISTRICT OF MASSACHUSETTS
Edward M. Sharzer, et al. v. The Civil Action
Development Corp. for Evergreen Valley, ~ No. 72-752
et al.
~ Edward N. Block, et al. v. Glore Staats Civil Action
Corp., et al. No. 71-3930
Edward M. Block, et al. v. F. I. duPont, Civil Action
Glore Forgan & Co., et al. No. 72-301
ol . . . , | B v

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: JUDICIAL PANE go EE SR
BEFORE THE JUDICIAL PANEL MULTIDISTRICT ie on EE
ON : SILED ; ~
MULTIDISTRICT LITIGATION : Sing oR Lh	RUG	IS 1977 1 lL
IN RE EVERGREEN VALLEY PROJECT LITIGATION ) D NO. 122 y A EE
Louis Lenzer, et al. v. Glore Forgan, ) - THEPANEL
et al., D. Massachusetts, Civil Action ).
No. 74-2641-M )
OPINION AND ORDER : = E
. BEFORE JOHN MINOR WISDOM, CHAIRMAN, AND EDWARD WEINFELD, SER
EDWIN A. ROBSON, JOSEPH S. LORD, III*, STANLEY A. WEIGEL, : Cl
ANDREW A. CAFFREY, AND ROY W. HARPER*, JUDGES OF THE PANEL. REST
PER CURIAM
On November 6, 1973, pursuant to 28 U.S.C. §1407, :
the Panel transferred an action (Lenzer) from the Southern .
District of New York to the District of Massachusetts for oo
coordinated or consolidated pretrial proceedings with three :
actions pending there. In re Evergreen Valley Project
Litigation, 366 F. Supp. 510 (J.P.M.L. 1973). These actions
are currently assigned to the Honorable Hugh H. Bownes of
the District of New Hampshire, sitting in the District of
Massachusetts by designation pursuant to 28 U.S.C. §292 (Db).
This litigation involves the financing for the
construction of a resort complex	in the State of Maine. The
corporation developing the complex issued two classes of
municipal bonds, Series A and Series B, which were secured
by similar collateral. The resort projected faltered,
*Judges Lord and Harper took nc part in the consideration co RE© or decision of this matter. Co

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® construction stopped, ‘and the bonds went into default.
Lenzer was brought as a class action on behalf of purchasers
of Series B bonds, whereas the other three actions were
brought by or on behalf of purchasers of Series A bonds.
Defendants in the four actions are the issuing development
corporation, the bond rating company, the bond underwriter,
its successors and certain individuals. Plaintiffs allege
that these defendants violated the federal securities laws,
inter alia, in connection with the offering of the two
classes of bonds.
Upon the suggestion of the transferee court, the
Panel conditionally remanded Lenzer to the Southern District
® of New York for further proceedings. See Rule 1l1l(f),
R.P.J.P.M.L., 65 F.R.D. 253, 262 (1975). Only a defendant
in that action, Charles Ww. Barnes, opposes remand. We find
that remand of Lenzer 1s appropriate at this time and,
accordingly, we order that action remanded to the Southern
District of New York for further proceedings.
Judge Bownes has found that because of the pendency
of related actions in the state courts of Maine and New York,
further pretrial discovery in federal court concerning the
Series A bondholders is unnecessary. Therefore,	he concluded,
Lenzer, which concerns only Series B bondholders, will no
longer benefit from multidistrict treatment with the three
actions concerning only Series A bondholders. } |
® . .

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Defendant Barnes requests that Lenzer not be
® remanded until Judge Bownes rules on defendant Barnes'
motion	to dismiss which is pending in Lenzer. We see
no reason to delay remand pending the disposition of that
motion. It can easily be presented to and determined by the
transferor court.
The governing statute states that each action trans-
ferred by the Panel "shall be remanded by the [Planel at or before
the conclusion of such [coordinated or consolidated] pretrial
proceedings to the district from which it was transferred
unless it shall have been previously terminated." 28 U.S.C.
§l407(a). It is not contemplated that a Section 1407
transferee judge will necessarily complete all pretrial pro-
9 ceedings in all actions transferred and assigned to him by
the Panel, but rather that the transferee judge in his dis-
cretion will conduct the common pretrial proceedings	with
respect to the actions and any additional pretrial proceedings
as he deems otherwise appropriate. Thus, in considering re-
mand of this action, the Panel is greatly influenced by the
transferee judge's suggestion that remand of the action is
appropriate. In re Air Crash Disaster Near Dayton, Ohio,
386 F. Supp. 908, 909 (J.P.M.L. 1975). Judge Bownes'
suggestion that remand of Lenzer is appropriate is obviously
| an expression that he perceives his role under Section 1407
to be completed.. We adopt his recommendation and order
® remand of Lenzer. :

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® IT IS THEREFORE ORDERED that the action entitled
Louis Lenzer, et al. v. Glore Forgan, et al., D. Massachusetts,
Civil Action No. 74-2641-M be, and the same hereby is,
REMANDED to the Southern District of New York.