IN RE: Equity Funding Corporation of America Securities Litigation

Case MDL No. 142 Document 2 Filed 05/04/15 Page 1 of 44
BEFORE THE JUDICIALUPANEL; r=
ON no |
MULTIDISTRICT LITIGATION |2 1874
nr tail
IN RE EQUITY FUNDING CORPORATION PATHE. Ls ey
OF AMERICA SECURITIES LITIGATION ChLEng a DOCKET NO. 142
WILLIAM H. BECKER, JUDGE OF THE PANEL, Concurring
CORRECTION ORDER
The Concurring Opinion of Judge William H. Becker,
filed April 25, 1974, is amended as follows:
Page 2, lines 1, 2, and 3 are stricken and the following is
substituted therefor:
the attribution to the majority of a "but for"
rule, never formulated, enunciated or applied
overtly or covertly, consciously or subcon-
® sciously in any decision of the Panel.	Except for
Page 2 is further amended by inserting the following footnote 2
after the words "been conducted to final judgments.2/"
2/ Panel member Chief Judge Joseph S. Lord III
presided with distinction at the trial of the
first pilot case which began on March 16, 1964,
and concluded with a jury verdict on June 2, 1964.
Page 7, lines 6 and 7 of indented material at bottom of page.
The words "section 1407 pretrial proceedings" are stricken
and "their transfer to Philadelphia" is inserted.
Corrected pages 2 and 7 are attached hereto.
FOR THE PANEL:
ld efre]
Q Alfred P. Murrah	- Chairman

Case MDL No. 142 Document 2 Filed 05/04/15 Page 2 of 44
CORRECTED
® Sao TEER
the attribution to the majority of a "but for" rule,
never formulated, enunciated or applied overtly or
covertly, consciously or subconsciously in any decision
of the Panel. Except for correcting the inacurrate
historical reference to the electrical equipment private
antitrust cases, the comment will be limited.
The History of the
Electrical Equipment Litigation
In fairness to the able advocates and judges who
processed this electrical equipment litigation in coopera-
tion with the Co-Ordinating Committee for Multiple Litigation,
® it is noted that the Co-Ordinating Committee did much more
| in the electrical equipment cases than that stated in the
minority opinion. The minority opinion states that "In a
relatively short time the Committee settled 25,000 claims
in 1,900 actions filed in 36 districts." The facts are
that the Co-Ordinating Committee did not settle any cases. |
The parties settled the cases after (1) most of them had
been prepared for trial through a national pretrial program
of discovery and pretrial, (2) many appellate decisions on
vital legal questions had been secured, and (3) full trials
in a substantial number of representative pilot cases had
Q been conducted to final Judgments 2 In the course of the
2/ Panel member Chief Judge Joseph S. Lord III presided
with distinction at the trial of the first pilot case which
began on March 16, 1964, and concluded with a jury verdict
on June 2, 1964.

Case MDL No. 142 Document2 Filed 05/04/15 Page	3 of 44
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( efforts between the Block action and the previously transferred
actions. In addition, the participation of the Block parties
in such proceedings will insure the just and efficient termination
of the Block action. A separate discovery schedule concerning
claims unique to the Block action may be appropriately established
by the transferee court and it may proceed concurrently with
the common discovery.
IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C. §1407,
the action entitled Edward M. Block, et al. v. Equity Funding
Life Insurance Company, et al., D. Massachusetts, Civil Action
No. 74-4227-T, be, and the same hereby is, transferred to the
Central District of California and, with the consent of that
court, assigned to the Honorable Malcolm M. Lucas for coordi-
® nated or consolidated pretrial proceedings with the actions
previously transferred to that district.
®

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Fr
ed Lo
DOCKET NO. 142 Co
C BEFORE THE JUDICIAL PANEL ON MULTIDISTRICT LITIGATION: ~ ”	4 Lp i072	HVE
IN RE EQUITY FUNDING CORPORATION Tata,
OF AMERICA SECURITIES LITIGATION Clon Co Co :
ORDER
The Panel having found, upon the basis of the papers
submitted and the hearing held, that the actions listed on the
attached Schedule A involve common questions of fact and that
transfer of these actions to the Central District of California
for coordinated or consolidated pretrial proceedings would serve
the convenience of the parties and witnesses and would further
the just and efficient conduct of the litigation,
IT IS ORDERED that all actions on the attached
Schedule A pending in districts other than the Central District
of California be, and the same hereby are, transferred to the
Central District of California and, with the consent of that
court, assigned to the Honorable Malcolm M. Lucas for coordinated
or consolidated pretrial proceedings, pursuant to 28 U.S.C.
§1407, with the actions pending in that district and listed on
® Schedule A.A full opinion and order embodying the above decision
will be filed upon final preparation.
FOR THE PANEL:
PETTY	NTI TA	yrs mo
} ene he 7 a. ’ ’ : g Bh
Alfred P. Murrah
Chairman

Case MDL No. 142 Document 2 Filed 05/04/15 Page 5 of 44
SCHEDULE A DOCKET NO. 142
® CENTRAL DISTRICT OF CALIFORNIA
Anne Oringer, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-705-MML
Anne Oringer, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-706-MML
May Miller, et al. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-707-MML
Michael Zucker, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-708-MML
Simon Singer, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C=73-717-MML
David M. Stern, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-735-MML
Shigeo Matsuhara, et al. v. Equity Funding Civil Action
® Corp. of Pmerica, et al. No. C-73-741-MML
Hy Hacker, etc. v. Equity Funding Corp. of Civil Action
America, et al. No. C-73-742-MML
Hy Hacker, etc. v. Equity Funding Corp. of Civil Action
America, et al. No. C-73-743-MML
Sylvia Consino, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-753-MML
Jerry Goldstein, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-754-MML
Stanley Ferber v. Stanley Goldblum, et al. Civil Action
No. C-73-756-MML
Isidore Miller, et al. v. Stanley Goldblum, Civil Action
et al. (*) No. C-73-784-MML
Franz Paul, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-797-MML
(*) Dismissed by Judge Lucas on July 2, 1973.

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SCHEDULE A -2 - DOCKET NO. 142
@® CENTRAL DISTRICT OF CALIFORNIA (CONTINUED)
Sue Cholondenko, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-808-MMIL,
Martin B. Nimkoff, et al. v. Stanley Civil Action
Goldblum, et al. No. C-73-832~MML
James N. Routh, etc. v. Equity Funding Civil Action
Corp. of America, et al. (**) No. C-73-710-MML
Robert M. Loeffler, etc. v. Stanley Civil Action
Goldblum, et al. No. C-73-1034
Securities & Exchange Commission v. Equity Civil Action
Funding Corp. of America No. C-73-714
Merrill Lynch, Pierce, Fenner & Smith, Inc. Civil Action
v. H. Lynden Taylor Corp. No. 73-1188-CC
SOUTHERN DISTRICT OF NEW YORK
May Miller, et al. v. Equity Funding Corp. Civil Action
of America, et al. No. 73 Civ. 1374
Benjamin Messinger, etc. v. Stanley Civil Action
Goldblum, et al. No. 73 Civ. 1390
A. Bruce Rosow, etc. v. Equity Funding Civil Action
Corp. of America No. 73 Civ. 1396
Michael W. Untermeyer, et al. v. Equity Civil Action
Funding Corp. of America No. 73 Civ. 1444
Isidore Miller, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. 73 Civ. 1466
Betty Levine, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. 73 Civ. 1475
® (**) Dismissed by Judge Lucas on April 16, 1973.

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SCHEDULE	A -3- DOCKET	NO. 142
[ 1 SOUTHERN DISTRICT OF NEW YORK (CONTINUED)
Guy Michaels v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 1485
A. Richard Parkoff, etc. v. Stanley Civil Action
Goldblum, et al. No. 73 Civ. 1528
Nat Berens, et al. v. Bache & Co., Civil Action
Inc., et al. No. 73 Civ. 1604
Pinetree Fund, Inc. v. Stanley Goldblum, Civil Action
et al. No. 73 Civ. 1605
Fidelity Corp. v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 1623
Fidelity Corp. v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 1624
Arnold Elkind v. Stanley Goldblum, et al. Civil Action
No. 73 Civ. 1645
J Independent Investor Protective League v. Civil Action
Seidman & Seidman, et al. No. 73 Civ. 1957
Independent Investor Protective League, Civil Action
etc. v. Raymond L. Dirks, et al. No. 73 Civ. 1519
Salomon Brothers v. John W. Bristol & Co., Civil Action
et al. No. 73 Civ. 1556
Nat Berens, et al. v. Fiduciary Trust Co.. Civil Action
of New York, et al. No. 73 Civ. 1684
Lawton General Corp., etc. v. The Boston Civil Action
Co., Inc.,et al. No. 73 Civ. 1691
Arthur Rogosin, etc. v. Chemical Bank, Civil Action
et al. No. 73 Civ. 1885
Independent Investor Protective League, Civil Action
etc. v. Seidman & Seidman, et al. No. 73 Civ. 1994

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SCHEDULE A - 4 - DOCKET NO. 142
® SOUTHERN DISTRICT OF NEW YORK (CONTINUED)
Lisadent, Inc. v. Delafield Childs Inc., Civil Action
et al. No. 73 Civ. 2032
Russell J. Priskwaldo, etc. v. Stanley Civil Action
Goldblum, et al. No. 73 Civ. 2146
Independent Investor Protective League, Civil Action
etc. v. Chemical Bank, et al. No. 73 Civ. 1551
Jefferies & Co., Inc. v. Yura Arkus Civil Action
Duntov, et al. No. 73 Civ. 1407
Guy Michaels v. The Boston Co., et al. Civil Action
No. 73 Civ. 1476
Independent Investor Protective League v. Civil Action
New York Securities Co. No. 73 Civ. 2824
J Robert R. Felton v. Equity Funding Corp. Civil Action
of America, et al. No. 73 Civ. 2201
Max Israelson, et al. v. John W. Bristol, Civil Action
& Co., Inc., et al. No. 73 Civ. 2269
Murray Gilbert, et al. v. Bankers Trust Civil Action
Co., et al. No. 73 Civ. 2453
Edwards & Hanly, etc. v. The Boston Co., Civil Action
et al. No. 73 Civ. 2307
Salomon Brothers v. The Savings and Profit Civil Action
Sharing Pension Fund of Sears, Roebuck No. 73 Civ. 2531
& Co.
Stanley Spielman, etc. v. Seidman and Civil Action
Seidman, et al. No. 73 Civ. 2603
Independent Investor Protective League Civil Action
v. First National City Bank of New York, No. 73 Civ. 2213
~~ et al.
————————	| er CT BS ES SSE —

Case MDL No. 142 Document 2 Filed 05/04/15 Page 9 of 44
SCHEDULE A -5 = DOCKET NO. 142
® SOUTHERN DISTRICT OF NEW YORK (CONTINUED)Lawrence M. Weiner v. Oppenheimer & Co. Civil Action
No. 73 Civ. 2420
Independent Investor Protective League, Civil Action
et al. v. Stanley Goldblum, et al. No. 73 Civ. 3115
Jonas M. L. Cohen, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. 73 Civ. 3255
Irvin Davison v. Boston Co. Institutional Civil Action
Investors, Inc. No.73 Civ. 3256
Kent M. Klineman, et al. v. Equity Funding Civil Action
Corp. of America No. 73 Civ. 3164
Lowell S. Fink, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. 73 Civ. 3275
Harold I. Cole v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 3314
® Alfred Grien, Trustee v. A. G. Becker Civil Action& Co., et al. No. 73 Civ. 2946
NORTHERN DISTRICT OF ILLINOIS
Millicent Jones, et al. v. Equity Funding Civil Action
Life Insurance Co., et al. No. 73 C 879
Marc Gould, et al. v. Equity Funding Corp. Civil Action
of America, et al. No. 73 C 905
F. J. Lunding, et al. v. Equity Funding Civil Action
Life Insurance Cc., et al. No. 73 C 2018

Case MDL No. 142 Document 2 Filed 05/04/15 Page 10 of 44
SCHEDULE A - 6 - DOCKET NO. 142
® DISTRICT OF MARYLAND
Irvin Davison, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. 73-333-H
Jonas M. L. Cohen, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. 73=357-H
EASTERN DISTRICT OF PENNSYLVANIA
Robert Selig, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. 73-845
Merion Associates, etc. v. Equity Funding Civil Actian
Corp. of America, et al. No. 73-813
SOUTHERN DISTRICT OF TEXAS
John W. Dalton v. Goldman, Sachs & Co. Civil Action
® No. 73-H-684

Case MDL No. 142 Document 2 Filed 05/04/15 Page 11 of 44
¢
« CL
BEFORE THE JUDICIAL PANEL :
ON
lL MULTIDISTRICT LITIGATION i.	boo -! oy	
bow { HNC
IN RE EQUITY FUNDING CORPORATION )
OF AMERICA SECURITIES LITIGATION ) DOCKET NO. 142
OPINION AND ORDER
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
ALFRED P. MURRAH, CHAIRMAN, delivered the opinion of the Panel,
in which Judges Robson, Becker and Lord joined. Judge Becker
filed a concurring opinion. Judge Wisdom filed a dissenting
opinion, in which Judges Weinfeld and Weigel joined.
I. Background of Litigation
This complex multidistrict litigation arises out of
® the collapse of Equity Funding Corporation of America, a diversi-fied financial services company based in California. In the
latter part of March 1973 trading in Equity Funding's securities
was halted by the New York Stock Exchange and the Securities
and Exchange Commission. Soon thereafter, in an action brought
by the SEC in the Central District of California, Equity Funding
consented to a decree enjoining the continuation of an alleged
scheme to defraud investors. And the company is now in Chapter
1/
X bankruptcy in that district. = Numerous civil actions,
involving in some respects the alleged fraud, have been filed
in different federal district courts throughout the country.
The majority of these actions are pending either in the Central
1/ The bankruptcy proceedings are assigned to the Honorable
® Harry Pregerson of the Central District of California.

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b4
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. 2/ | 3/
¢ District of California or the Southern District of New York.
Defendant Seidman & Seidman, joined by numerous other
parties, has moved to transfer all actions to the Central Dis-
trict of California for coordinated or consolidated pretrial
4/
proceedings. Practically all of the parties to the litigation
favor coordinated or consolidated pretrial proceedings under
Section 1407 in some form or to some extent. Some of the parties,
however, insist on bifurcation of the litigation and transfer of
certain groups of cases to the Southern District of New York
where most of the actions comprising those groups are now pending.
The matter has been extensively briefed and twice orally
argued. The real issue confronting us is whether all the liti-
® gation should be transferred to a single district and assigned
h 2/ The civil actions filed in the Central District of Cali-
fornia have been assigned to the Honorable Malcolm M. Lucas.
3/ The civil actions filed in the Southern District of
New York have been assigned to the Honorable Lee P. Gagliardi.
4/ in litigation of this magnitude it is not unusual that the
moving party is not a "party" to all actions " in which
transfer for coordinated or consolidated pretrial proceed-
ings under this section may be appropriate," 28 U.S.C.
§1407	(c) (ii). A purely literal reading of Section 1407
(c) (ii) suggests that a party may only move for transfer
of an action in which it appears as a party. Such a narrow
reading, however, is not consistent with the purposes and
intent of the legislation. In any event, any argument
challenging movant's right to request transfer of an action
in which it does not appear as a party was disposed of
by the Panel, which, on its own initiative, simply ordered
all parties to actions arising out of the collapse of
Equity Funding to show cause why those actions should not be	transferred to a single district or districts for coordi-
nated or consolidated pretrial proceedings under Section
1407.
2

Case MDL No. 142 Document2 Filed 05/04/15 Page 13 of 44
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| to a single judge under Section 1407 or whether the litigation
should be bifurcated with two transferee forums. For reasons
which we shall articulate, we have decided that the convenience
of the parties and witnesses and the just and efficient conduct
of the litigation can best be served by transfer of all of the
litigation to the Central District of California and, with the
consent of that court, assigned to the Honorable Malcolm M. Lucas
for coordinated or consolidated pretrial proceedings pursuant to
Section 1407.
II. Litigation before the Panel
A classification of the claims asserted in the litiga-
tion is essential to an understanding of the considerations which
prompt us to transfer all actions to one district and assign them
@® to one judge for Section 1407 treatment.
A. Primary or Underlying Fraud Claims
The primary or underlying fraud claims relate to an
alleged scheme by Equity Funding and its subsidiaries to inflate
assets and earnings by, among other things, creating and selling
to reinsurers bogus life insurance policies in order to present
to the investing public an image of a successful, growing and
prosperous enterprise. The alleged fraud, facilitated by the use
of cemputers, enabled Equity Funding to overstate its assets and
record non-existent assets, which eventually appeared in its
financial statements. The defendants in the fraud actions
typically include Equity Funding, its officers, directors and
® subsidiaries, and its accountants and auditors who prepared the
= financial statements and reports which concealed the alleged fraud.

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. .
< — 4 —
@® B. Trading or So-Called "Tippee" Claims
These claims are asserted by purchasers of Equity
Funding's securities against parties who allegedly possessed
material, non-public information concerning Equity Funding and
traded in the securities of the corporation without making such
information generally available to the investing public. Plain-
tiffs typically allege that in March 1973 a former Equity Funding
employee informed a securities analyst for a research oriented
brokerage firm that a massive fraud was being perpetrated at
the company; that the analyst conducted his own investigation and
passed the information he gathered to certain investors and agents
for investors in Equity Funding's securities; and that those in
possession of this inside information used it to their advantage
| until trading in all securities of Equity Funding was suspended.
Plaintiffs also necessarily allege the facts of the primary or
underlying fraud.
Some of the complaints which contain trading or "tip-
pee" claims name as defendants not only parties which allegedly
traded securities when in possession of inside information but
also party-defendants to the primary fraud claims.
C. Combination Primary Fraud-Trading Claims
Some of the complaints contain a single claim for
relief based upon allegations of both primary fraud and trading
on inside information.
D. Underwriting Claims
] These claims are asserted by purchasers of debentures
h of Equity Funding and focus upon the financial statements

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. .
+
-5 =
) in the separate registration statements and prospectuses
disseminated with respect to the public offerings of the
debentures. The claims necessarily contain allegations
relating to the underlying fraud at Equity Funding.
E. Rescission Claims
Claims for rescission and damages are made arising
out of Equity Funding's acquisition of Bankers National Life
Insurance Company and Liberty Savings & Loan Association.
Plaintiffs were stockholders in the corporations at the time
of the acquisitions and received Equity Funding stock in exchange
for their shares. They allege that the financial statements
used by Equity Funding in connection with the acquisitions
® were false and misleading. But included in plaintiffs’ claimfor rescission are allegations concerning facts relevant to
the primary fraud.
F. Miscellaneous Claims
1. Contract Action
This action involves a contractual dispute between
duPont, Glore Forgan and Federated Income and Private Placement
Fund concerning the sale of Equity Funding debentures. =
DuPont, Glore Forgan alleges that Federated Income breached
its contract to purchase the debentures and misrepresented
its willingness to pay for them under all circumstances.
Clearly, this action has nothing in common with the other
actions and since no purpose would be served by transfer
® 5/ DuPont, Glore Forgan, Inc. V. Federated Income and Private~ Placement Fund, S.D.N.Y., Civil Action No. 73 Civ. 1683.

Case MDL No. 142 Document 2 Filed 05/04/15 Page 16 of 44
) - 6 -
under Section 1407, it should remain in the Southern District of
@® New York.
2. Indenture Trustee Actions
Independent Investor Protective League has filed two
actions in the Southern District of New York against the indenture
trustees of the Equity Funding debentures, alleging that the
trustee violated its fiduciary duties to protect the rights of
6/
the bondholders. =~ Plaintiff is opposed to transfer of either
of the actions. The complaints on their face, however, raise
questions of fact common to the other actions and we find that
these parties will to some extent benefit from participation in the
coordinated or consolidated pretrial program in California.
3. Broker-Dealer Actions
® Individuals who purchased Equity Funding securities
before trading was suspended have filed actions against their
brokers and representative agents alleging violations
of Section 10(b) of the Securities and Exchange Act of 1934 and
7/
Rule 10b-5 promulgated thereunder. These actions necessarily
involve the primary fraud at Equity Funding and, in order to
eliminate the possibility of duplicative discovery
6/ Independent Investor Protective League, etc. v. Chemical
Bank, et al., S.D.N.Y., Civil Action No. 73 Civ. 1551;
Independent Investor Protective League, etc. v. First
National City Bank, S.D.N.Y., Civil Action No. 73 Civ.
2213.
1/ John W. Dalton v. Goldman, Sachs & Co., S.D. Texas,
Civil Action No. 73-H-684; Alfred Grien, Trustee, V.
A.G. Becker & Co., et al., S.D.N.Y., Civil Action No.
73 Civ. 2946; and Lawrence M. Wiener, et ux v.
Oppenheimer & Co., et al., S.D.N.Y., Civil Action No.
( 73 Civ. 2420.

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SP |
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® and inconvenience to the parties and witnesses, they
: should be transferred to the Central District of Calif-
ornia and placed under the general supervision of the
transferee judge. If separate treatment is warranted,
however, plaintiffs may address these arguments to the
transferee judge who may fashion a pretrial program
to suit the needs of these plaintiffs and, when appro-
priate, recommend to the Panel that the actions be re-
manded to their respective transferor courts for further
proceedings.
G. Unified and Consolidated Complaints | |
® Pursuant to pretrial orders entered in the
| Central District of California and the Southern District
of New York, a set of unified and consolidated complaints
© have been filed. Plaintiffs in California have filed :
a single unified and consolidated complaint containing
requests for definition of four separate classes encom-
passing the primary fraud, trading or tippee, underwriting
and rescission claims as described cartier. In the
8/ Cf. In re Four Seasons Securities Laws Litigation,
344 F.Supp. 1404 (J.P.M.L. 1972) and 352 F.Supp.
962 (J.P.M.L. 1972),
9/ The California consolidated complaint contains
Rule 23 class allegations with respect to the
- following described classes:
| S

Case MDL No. 142 Document2 Filed 05/04/15 Page 18 of 44
SU Ce
‘ Southern District of New York, four separate consolidated
(1) Open Market Purchascrs: All persons who purchascd
common stock, debentures, or warrants of Equity Funding Corpora-
tion of America, or its subsidiaries, on the open market begin-
ning at least in 1964 and ending March 28, 1973, the exact
period of time being unknown to plaintiffs because of the
+ fraudulent concealment of the defendants, and who sustained
damage as a result of the fraudulent practices and scheme
hereinafter alleged. _
(2) original Issue Purchasers: All persons who purchased
. debentures issued by Lquity Funding Corporation of America as
described below, and who continue to hold said debentures and
who sustained damages as a result of the fraudulent practices
and scheme hereinafter alleged.
(1) a 5 1/2% debenture due 1991 offered
by prospectus dated in 1971;
(ii) a9 1/2% debenture due 1990 offered
: ‘we... +. . by prospectus dated in 1970; and
(iii) a 5 1/4% debenture issue, unlisted,
| issued Ly Injuily rundiliy Capiiadl
@ Corporation and guaranteed by EFCA,due 1989.
(3) Exchange of Stock Purchasers: All persons who
purchased securities of Equity Funding Corporation of America
by exchanging stock owned in the two corporations noted below
. for said securities, and who were injured as a result of the
fraudulent practices and scheme hereinafter alleged.
: (i) Bankers National Life Insurance Company,
('Bankers'), said exchange taking place
on or about October 12, 1971.
(ii) Liberty Savings & Loan Association,
('Liberty'), said exchange taking place
: on or about September 14, .1970. .
(4) March 1973 Security Purchasers: All open market
i purchasers, or purchasers who relied on the open market price,
: of securities of Equity Funding Corporation of America with-
out knowledge of the fraudulent practices and scheme herein-
after alleged between March 6, 1973, and March 28, 1973, and
who sustained damage as a result of the fraudulent practices
: and scheme hereinafter alleged, and as a result of the acqui-
C sition, utilization, and dissemination of inside information	- by certain defendants regarding said fraudulent scheme as
hereinafter alleged.

Case MDL No. 142 Document2 Filed 05/04/15 Page 19 of 44
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10/
® class action complaints have been filed. The allegedclasses as defined in the New York complaints overlap and
: conflict with the class allegations in the California con-
11/
solidated complaint.”
III. The Question of Transfer
The parties favoring bifurcation suggest that the
primary fraud issue is only peripherally involved in the
‘ trading, underwriting and rescission claims and that most
of the legal issues and discovery with respect to those
claims have nothing in common with the primary fraud claims.
They therefore argue that the primary fraud claims be trans-
ferred to the Central District of California and that the
trading or "tippee,' underwriting and rescission claims be
® transferred to the Southern District of New York for sep-
arate coordinated or consolidated pretrial proceedings.
10/ (1) A unified consolidated class action complaint
on behalf of trading class.
(2) A unified consolidated complaint in class
actions brought on behalf of former stockholders of
Bankers National Life Insurance Company.
(3) A unified consolidated complaint in under-
writing class actions.
; (4) A unified consolidated complaint in fraudand miscellaneous class actions.
11/ For example, in the New York consolidated complaint
on behalf of the 'trading class" no fewer than 14
separate class allegations are made, which conflict
not only with the California plaintiffs' alleged class
on behalf of "March 1973 Security Purchasers,' but also
with other classes alleged in the California unified
and consolidated complaint.

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® We start with the proposition that the alleged primary
or underlying fraud actuates the entire litigation and, to some
extent at least, conditions the various plaintiffs' right to
recover in all of the actions. The nature and quantum of proof
of the alleged primary fraud necessarily depends on and varies
with the legal theories of the cases. Not all of the discover-
able proof is common to all actions. For example, the trading,
underwriting and rescission claims may very well turn on
operative facts not distinctly relevant to the primary fraud
claims. But even so it cannot be said that the alleged under-
lying fraud is entirely irrelevant or non-essential to the
establishment of each of the stated cases. The allegations
® as drafted speak loudly in that respect. Indeed, as we have
seen for example, the facts of the primary fraud are carefully
pleaded in each of the counts contained in the unified consoli-
dated complaints filed in the Southern District of New York.
Our decision is necessarily based on the pleadings and
oral argument of counsel, whose statements of fact are under-
standably colored by their manifest interest in the locale
of the pretrial processing. Defendants do not concede the
alleged fraud at Equity Funding and it must, of course, be
proven as pleaded. We are governed by the facts as pleaded
and we cannot assume that they will be admitted. The facts
of the primary fraud underlie and undergird each action.
@

Case MDL No. 142 Document2 Filed 05/04/15 Page 21 of 44
* - 11 ~-
[| This fact alone augurs for the transfer of all of the litiga-
tion to a single district under Section 1407.
We know that proof in litigation of this kind consists
primarily of documents and depositions. And it is not the
province of the Panel to determine the nature or quantum of
proof relevant and discoverable by depositions and production
of documents. These decisions must necessarily be left to
the transferee judge who has the power and the duty to organ-
ize the discovery program to prevent duplication and unneces-
sary inconvenience to the parties and witnesses.
Coordinated or Consolidated Pretrial Proceedings
: The statute speaks in terms of transfer to "any district
® for coordinated or consolidated pretrial proceedings." 28
U.S.C. § 1407(a). Used in the disjunctive, the critical words
denote different judicial functions. They are indicative of
the flexibility and resourcefulness implicit in the legisla-
tion. They were undoubtedly intended to confer on a transferee
judge the power to fashion the discovery program to accommo-
date the different facets and nuances of the litigation. It
is the province of the Panel to decide whether in the first
instance the litigation should be transferred for coordinated
or consolidated pretrial proceedings. It is the province of
the transferee judge to determine whether and to what extent
the pretrial proceedings should be coordinated or consolidated.
® We have repeatedly declined to attempt to determine in what

Case MDL No. 142 Document2 Filed 05/04/15 Page 22 of 44
'
Co - 12 - |
2 way and to what extent the litigation should be coordinated
| or consolidated. From the very beginning we have left that
3 determination to the discretion of the transferee judge.
| The concept of transferring actions, sharing one or more
} common questions of fact but resting upon different legal
theories, to a single district and assigning them to the same
: : judge is not new to the Panel. We have always been at pains
to leave the extent of coordination or consolidation to the
ingenuity and resourcefulness of the transferee judge. In
the very beginning we were confronted with the problem of
transfer of actions in the Plumbing Fixtures litigation, aris-
ing out of two alleged criminal conspiracies charged in two
® separate indictments. See In re Plumbing Fixtures Cases, 295
| F.Supp. 33 (J.P.M.L. 1968). The so-called "short-line'" de-
| fendants in that litigation objected to consolidated discovery
| : ' proceedings on the ground that the civil actions were based
Cl upon separate conspiracies and that discovery would not be
| common to all cases. And they argued that it would be preju-
dicial to coordinate their discovery with the other cases in
which they were not parties and had no interest. We recog-
nized the separability of the alleged conspiracies, but we
oo nevertheless transferred all the cases to one district ". . .
leaving to the transferee judge the sole power to determine
in his discretion the order and procedures for conducting
® separate pretrial proceedings in respect to the separate
) alleged conspiracies."

Case MDL No. 142 Document2 Filed 05/04/15 Page 23 of 44
[” - 13 —-
\ | In two other notable groups of litigation we rejected
suggested bifurcation, leaving the extent to which the trans-
ferred litigation should be coordinated or consolidated to the
ingenuity and resourcefulness of the transferee judge. See
In re Revenue Properties Company Securities Litigation,
309 F.Supp. 1002 (J.P.M.L. 1970), and In re Seeburg-Commonwealth
United Merger Litigation, 312 F.Supp. 909 (J.P.M.L. 1970).
In the latter case we noted that while the two groups of cases
might be appropriate for bifurcated treatment they did involve
sufficient commonality of fact to warrant transfer of all actions
to a single district "to be conducted by a judge familiar with
both groups of cases and sensitive to the needs and rights of
all parties.” And we observed that:
® "The transferee judge may then consolidate
and coordinate the pretrial proceedings
: in the two groups of cases to the extent
he may deem consolidation or coordination
desirable to serve the convenience of
parties and witnesses and to promote the
just and efficient conduct of such actions."
In re Seeburg-Commonweath United Merger
Litigation, 312 F.Supp. 909, 911 (J.P.M.L.
1970).
The parties favoring bifurcation suggest that the Penn
Central litigation provides an ideal model for bifurcating these
proceedings. In that litigation we transferred all of the secur-
ities fraud litigation growing out of the financial difficulties
of the Penn Central Transportation Company to the Eastern District
12/
of Pennsylvania ~ and later ordered all actions arising from
12/ In re Penn Central Securities Litigation, 322 F.Supp.
® 1021 (J.P.M.L. 1971).

Case MDL No. 142 Document 2 Filed 05/04/15 Page 24 of 44
- 14 -
® the sale of Penn Central commercial paper to the Southern Dis-13/
trict of New York.
We ordered separate coordinated or consolidated pretrial
proceedings for the commercial paper litigation because we found
that those cases rested upon a different set of primary facts
than those involved in the fraud actions in Philadelphia.
But we transferred the bondholder actions to the Eastern District
of Pennsylvania for coordinated or consolidated pretrial pro-
ceedings with the other fraud actions. The bondholder plaintiffs
opposed transfer on the ground that they were proceeding only
against the underwriters and accountants who participated in
the issuance of the bonds and that their discovery would not be
® common to the fraud actions. We were not persuaded:"Although the extent of the factual overlap
is not certain, it is sufficient to require
these bond cases to be assigned with the
other cases for pretrial purposes. The
bondholding plaintiffs may present their
arguments for separate treatment to the
transferee judge, who is given the discre-
tion to decide the extent of coordination
or consolidation desirable in cases assigned
to him under Section 1407." In re Penn
Central Securities Litigation, 322 F.Supp.
1021, 1022-23 (J.P.M.L. 1971).
13/ In re Penn Central Commercial Paper Litigation, 325
F.Supp. 309 (J.P.M.L. 1971). It was the unique nature
of commercial paper as well as the magnitude of the
fraud litigation in Philadelphia which prompted us
to order plaintiffs' claims for relief to a separate
district for separate Section 1407 treatment. Inasmuch
as commercial paper is the unsecured equivalent of cash,
it was clear to us that the claims for relief by holders
of unsecured commercial paper were distinguishable from
other conventional claims for relief by holders of
® conventional securities.

Case MDL No. 142 Document2 Filed 05/04/15 Page 25 of 44
” - 15 -
lL We think the reasons for transfer of the bond actions in
the Penn Central litigation equally persuasive to support the
transfer of all actions in this litigation to the Central District
of California for coordinated or consolidated pretrial proceedings.
Potential Conflict in Rule 23 Class Determinations
There is yet another highly persuasive if not compelling
reason for transfer of all actions to a single judge. We have
consistently held that transfer of actions under Section 1407 is
appropriate, if not necessary, where the possibility for conflict-
ing, inconsistent class determinations by courts of coordinate
jurisdiction exists. 2 The complaints vary from the most precise
and skillfully drafted documents depicting a high degree of legal
artistry to what may be described as legal boilerplate. But a
® majority of the actions contain Rule 23 class allegations based
upon the primary fraud. Facially at least the potentiality of
inconsistent class determinations is readily apparent.
Because of the potential if not likely conflict of class
action determinations, we think this litigation should be
assigned to a single judge with the sole responsibility for
making the class action determinations "as soon as practicable ..
..." See Fed. R. Civ. P. 23(c) (1). See also Manual for Complex
Litigation, Part I, Section 1.40 (rev. ed. 1973).
14/ See, e.g., In re Brown Com any Securities Litigation,
395 Fotos. 307 305 (FP MT TTT) 1 To ro Texas Gulf
Sulphur Securities Litigation, 344 F.Supp. 1398, 1400
(J.P.M.L. 1972); In re Career Academy Antitrust Liti ation,
342 F.Supp. 753, 754 (J.P.M.L. 1972); In re Plumbing
® Fixtures Cases, 298 F.Supp. 484, 493 (J.P.M.L. 1968).

Case MDL No. 142 Document2 Filed 05/04/15 Page 26 of 44
E . : - 16 =- co
The transferee judge, with all claims and all parties
before him, will have a clear picture of the scope and com-
plexity of the litigation, essential to making the class de-
terminations. Once the class decisions are made, he will
then be in a position to ascertain the scope of discovery
. common to all actions and formulate a pretrial schedule re-
sponsive to the various demands of the litigants. As Judge
Wisdom observed in In re Four Seasons Securities Laws Liti-
157
gation, 328 F.Supp. 221 (J.P.M.L. 1971):
. "Should conflicts concerning discovery
objectives develop . . ., they may be
: presented to the transferee judge to
decide the extent of the coordination
or conenlidatinn of »rcoitrinl Llllecu—
@ ings." Id. at 223,
The Meaning of Transfer of All Actions
to a Single District
Transfer of all actions to California does not mean that
oo © all discovery proceedings will take place there. There is
"no necessity for lawyers to travel across the continent to
participate in pretrial discovery which has no bearing on
} their litigation. Indeed, the Manual for Complex Litigation
contains recommendations to protect a party disinterested in
16/
a particular aspect of discovery. Transfer does mean,
15/ Like the instant litigation, Four Seasons was also involved
~ in a Chapter X reorganization under the bankruptcy laws
in the transferee court.
16/ See, e.g., Manual for Complex Litigation, Part I,
® Section 2.31 (rev. ed. 1973).

Case MDL No. 142 Document2 Filed 05/04/15 Page 27 of 44
i - 17 -
® however, that the responsibility for determining what discovery
is common and what is independently irrelevant to the stated
theories and issues rests in a single judge who, with an over-
all perspective of the entire litigation and the cooperation
of counsel, can schedule the discovery to minimize the expense
. to the parties and maximize the just and expeditious termina-
tion of the litigation.
We are well aware of the burdens this litigation will
impose upon the transferee court. But we are equipped to
, provide assistance and it is precisely in this context that
| we can demonstrate the flexibility and resourcefulness of
: Section 1407, while at the same time providing for complete
@ control over ail aspects of this litigation. The Panel is
authorized under the statute to provide deposition judges to
assist the transferee court. 28 U.S.C. § 1407(b). Inasmuch
as the actions presently pending in New York are all assigned
to Judge Gagliardi, who will presumably be responsible for
them if remanded by the Panel at or before the conclusion
: of the pretrial proceedings, he may very well preside over the
depositional discovery which will necessarily take place in
New York. In this way, he will be familiarized with the issues
: and nature of the evidence involved in the event the actions
or certain claims are remanded to him for further proceedings.
" Furthermore, the flexibility of the statute empowers
the Panel to "separate any claim, cross-claim, counterclaim
® or third party claim and remand any of such claims before

Case MDL No. 142 Document2 Filed 05/04/15 Page 28 of 44
| ~ 1s - |
@
; the remainder of the action is remanded." 28 U.S.C. § 1407(a).
Once the parties have succeeded in obtaining the necessary
discovery of the alleged underlying fraud, the transferee
Judge may in his discretion conclude that certain claims are |
appropriate for remand by the Panel. Thus, claims outside the
mainstream of the over-all litigation may successfully be
brought to conclusion with a minimum of delay and expense
to the parties while at the same time reserving to a single
judge the efficient administration so important to an expedi=-
| tious termination of the complete litigation.
IV. Selection of the Transferee Forum
Virtually all parties concede that the Central District
[ of California is the most appropriate transferee forum for
the primary or underlying fraud claims. We agree and, further-
more, conclude that it is the most appropriate transferee dis-
trict for all the litigation. The documents and the majority
. of the witnesses relevant to the alleged underlying fraud at
Equity Funding, as well as the Chapter X bankruptcy proceed-
ings, are located within that district. On balance, we find
that transfer of all of these actions to the Central District
of California will best serve the convenience of the majority
of the parties and witnesses and promote the just and efficient
: conduct of the litigation,
IT IS THEREFORE ORDERED that all actions on the attached
® Schedule A pending in districts other than the Central District

Case MDL No. 142 Document2 Filed 05/04/15 Page 29 of 44
oo | - 19 =
® of California be, and the same hereby are, transferred to
that district and, with the consent of that court, assigned
to the Honorable Malcolm M. Lucas for coordinated or con-
solidated pretrial proceedings pursuant to 28 U.S.C. § 1407
with the actions pending in that district and listed on |
Schedule A.
®
®o | |

Case MDL No. 142 Document 2 Filed 05/04/15 Page 30 of 44
hd
® SCHEDULE A DOCKET NO. 142CENTRAL DISTRICT OF CALIFORNIA
Anne Oringer, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-705-MML
Anne Oringer, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-706-MML
May Miller, et al. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-707-MML
Michael Zucker, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-708-MML
Simon Singer, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-717-MML
David M. Stern, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. C=-73-735-MML
Shigeo Matsuhara, et al. v. Equity Funding Civil Action
® Corp. of Pmerica, et al. No. C-73~-741-MML
Hy Hacker, etc. v. Equity Funding Corp. of Civil Action
America, et al. No. C-73-742-MMIL
Hy Hacker, etc. v. Equity Funding Corp. of Civil Action
America, et al. No. C-73-743-MML
Sylvia Consino, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. C-73-753~-MML
Jerry Goldstein, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-754-MML
Stanley Ferber v. Stanley Goldblum, et al. Civil Action
No. C-73-~-756-MML
Isidore Miller, et al. v. Stanley Goldblum, Civil Action
et al. (*) No. C-73-784-MML
Franz Paul, etc. v. Equity Funding Corp. Civil Action
PN of America, et al. No. C-73-797-MML
(*) Dismissed by Judge Lucas on July 2, 1973.

Case MDL No. 142 Document 2 Filed 05/04/15 Page 31 of 44
> K
SCHEDULE A -2 - DOCKET NO. 142
® CENTRAL DISTRICT OF CALIFORNIA (CONTINUED)
Sue Cholondenko, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. C-73-808-MML
Martin B. Nimkoff, et al. v. Stanley Civil Action
Goldblum, et al. No. C-73-832-MML
James N. Routh, etc. v. Equity Funding Civil Action
Corp. of America, et al. (*¥) No. C-73-710-MML
Robert M. Loeffler, etc. v. Stanley Civil Action
Goldblum, et al. No. C-73-1034
Securities & Exchange Commission v. Equity Civil Action
Funding Corp. of America No. C-73-714
Merrill Lynch, Pierce, Fenner & Smith, Inc. Civil Action '
v. H. Lynden Taylor Corp. No. 73-1188-CC
SOUTHERN DISTRICT OF NEW YORK
May Miller, et al. v. Equity Funding Corp. Civil Action
of America, et al. No. 73 Civ. 1374
Benjamin Messinger, etc. v. Stanley Civil Action
Goldblum, et al. No. 73 Civ. 1390
A. Bruce Rosow, etc. v. Equity Funding Civil Action
Corp. of America No. 73 Civ. 1396
Michael W. Untermeyer, et al. v. Equity Civil Action
Funding Corp. of America No. 73 Civ. 1444
Isidore Miller, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. 73 Civ. 1466
Betty Levine, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. 73 Civ. 1475
(**) Dismissed by Judge Lucas on April 16, 1973.

Case MDL No. 142 Document 2 Filed 05/04/15 Page 32 of 44
.
® SCHEDULE A - 3 - DOCKET NO. 142
SOUTHERN DISTRICT OF NEW YORK (CONTINUED)
Guy Michaels v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 1485
A. Richard Parkoff, etc. v. Stanley Civil Action
Goldblum, et al. No. 73 Civ. 1528
Nat Berens, et al. v. Bache & Co., Civil Action
Inc., et al. No. 73 Civ. 1604
Pinetree Fund, Inc. v. Stanley Goldblum, Civil Action
et al. No. 73 Civ. 1605
Fidelity Corp. v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 1623
Fidelity Corp. v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 1624
Arnold Elkind v. Stanley Goldblum, et al. Civil Action
® No. 73 Civ. 1645
Independent Investor Protective League v. Civil Action
Seidman & Seidman, et al. No. 73 Civ. 1957
Independent Investor Protective League, Civil Action
etc. v. Raymond L. Dirks, et al. No. 73 Civ. 1519
Salomon Brothers v. John W. Bristol & Co., Civil Action
et al. No. 73 Civ. 1556
Nat Berens, et al. v. Fiduciary Trust Co. Civil Action
of New York, et al. No. 73 Civ. 1684
Lawton General Corp., etc. v. The Boston Civil Action
Co., Inc.,et al. No. 73 Civ. 1691
Arthur Rogosin, etc. v. Chemical Bank, Civil Action |
ec al. No. 73 Civ. 1885
Independent Investor Protective League, Civil Action
etc. v. Seidman & Seidman, et al. No. 73 Civ. 1994

Case MDL No. 142 Document 2 Filed 05/04/15 Page 33 of 44
LJ *
SCHEDULE A - 4 - DOCKET NO. 142
LC] SOUTHERN DISTRICT OF NEW YORK (CONTINUED)
Lisadent, Inc. v. Delafield Childs Inc., Civil Action
et al. No. 73 Civ. 2032
Russell J. Priskwaldo, etc. v. Stanley Civil Action
Goldblum, et al. No. 73 Civ. 2146
Independent Investor Protective League, Civil Action
etc. v. Chemical Bank, et al. No. 73 Civ. 1551
Jefferies & Co., Inc. v. Yura Arkus Civil Action
Duntov, et al. No. 73 Civ. 1407
Guy Michaels v. The Boston Co., et al. Civil Action
No. 73 Civ. 1476
Independent Investor Protective League v. Civil Action
® New York Securities Co. No. 73 Civ. 2824
Robert R. Felton v. Equity Funding Corp. Civil Action
of America, et al. No. 73 Civ. 2201
Max Israelson, et al. v. John W. Bristol, Civil ‘Action
& Co., Inc., et al. No. 73 Civ. 2269
Murray Gilbert, et al. v. Bankers Trust Civil Action
Co., et al. No. 73 Civ. 2453
Edwards & Hanly, etc. v. The Boston Co., Civil Action
et al. No. 73 Civ. 2307
Salomon Brothers v. The Savings and Profit Civil Action
Sharing Pension Fund of Sears, Roebuck No. 73 Civ. 2531
& Co.
Stanley Spielman, etc. v. Seidman and Civil Action
Seidman, et al. No. 73 Civ. 2603
Independent Investor Protective League Civil Action
® v. First National Citv Bank of New York, No. 73 Civ. 2213	W et al. :

Case MDL No. 142 Document 2 Filed 05/04/15 Page 34 of 44
.
» SCHEDULE A - 5 = DOCKET NO. 142
( SOUTHERN DISTRICT OF NEW YORK (CONTINUED)
Lawrence M. Weiner v. Oppenheimer & Co. Civil Action
No. 73 Civ. 2420
Independent Investor Protective League, Civil Action
et al. v. Stanley Goldblum, et al. No. 73 Civ. 3115
Jonas M. L. Cohen, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. 73 Civ. 3255
Irvin Davison v. Boston Co. Institutional Civil Action
Investors, Inc. No.73 Civ. 3256
Kent M. Klineman, et al. v. Equity Funding Civil Action
Corp. of America No. 73 Civ. 3164
Lowell S. Fink, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. 73 Civ. 3275
Harold I. Cole v. Equity Funding Corp. of Civil Action
America, et al. No. 73 Civ. 3314
® Alfrc¢d Grien, Trustee v. A. G. Becker Civil Actian
& Co., et al. No. 73 Civ. 2946
NORTHERN DISTRICT OF ILLINOIS
Millicent Jones, et al. v. Equity Funding Civil Action
Life Insurance Co., et al. No. 73 C 879
Marc Gould, et al. v. Equity Funding Corp. Civil Action
of Arerica, et al. No. 73 C 905
F. J. Lunding, e% al. v. Equity Funding Civil Action
Life Insurance Cc., et al. No. 73 C 2018

Case MDL No. 142 Document 2 Filed 05/04/15 Page 35 of 44
. te v * N
Pons
SCHEDULE A - 6 = DOCKET NO. 142
® DISTRICT OF MARYLAND
Irvin Davison, etc. v. Equity Funding Corp. Civil Action
of America, et al. No. 73-333-H
Jonas M. L. Cohen, etc. v. Equity Funding Civil Action
Corp. of America, et al. No. 73=357-H
EASTERN DISTRICT OF PENNSYLVANIA
Robert Selig, et al. v. Equity Funding Civil Action
Corp. of America, et al. No. 73-845
Merion Associates, etc. v. Equity Funding Civil Actian
Corp. of America, et al. No. 73-813
SOUTHERN DISTRICT OF TEXAS
® John W. Dalton v. Goldman, Sachs & Co. Civil Action
No. 73-H-684

Case MDL No. 142 Document 2 Filed 05/04/15 Page 36 of 44
[ . CORRECTED
company. They may also be banked like
checks. See A. O. Greef, The Commercial
Paper House in the United States (1939).
The Columbia Encyclopedia, 3rd ed., p. 459,
Columbia University Press, 1963.
The exceptional nature of the paper, the exceptional
manner and purpose of its sale and purchase, and the alleged
concealment and misrepresentations of the seller made those
| cases, pending in other districts, separable and transfer-
able to the Southern District of New York. In a discrim-
inating decision (abjuring the mythical "but for" rule)
the Panel transferred the similar actions pending in other
® districts to the Southern District of New York for processing
by the able and experienced Honorable David N,. Edelstein,
now Chief Judge of that district. In refusing to transfer
the commercial paper claims for relief pending in the
Southern District of New York to the Eastern District of
Pennsylvania, to which all other related Penn Central
securities actions had been transferred, the Panel said:
We conclude that the commercial paper
cases are sufficiently different from
the earlier cases that neither the
convenience of the parties and witnesses
nor the just and efficient conduct of
the litigation would be served by their
transfer to Philadelphia. 325 F. Supp.
Q 309, 311 (J.P.M.L. 1971).

Case MDL No. 142 Document 2 Filed 05/04/15 Page 37 of 44
SE |
JUDICIAL PANEL OR
wu TES RCT LL IGA TIONBEFORE THE JUDICIAL PANEL pro mI
ON
® MULTIDISTRICT LITIGATION FER 20 1973
IN RE EQUITY FUNDING CORPORATION ) PATCH 3, HOE AOF AMERICA LITIGATION ) CLERR OF 3 fi Fates
)
Edward M. Block, et al. v. Equity )
Funding Life Insurance Company, ) DOCKET NO. 142
et al., D. Mass., Civil Action )
No. 74-4227-T )
OPINION AND ORDER
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
The Panel has previously transferred all actions in this
litigation to the Central District of California and, with the
consent of that court, assigned them to the Honorable Malcolm
® M. Lucas for coordinated or consolidated pretrial proceedings1/
pursuant to 28 U.S.C. §1407. Since the above-captioned action
appeared to involve factual issues common to the previously
transferred actions, the Panel issued an order conditionally
. 2/
transferring it to the Central District of California. Only
plaintiffs move to vacate the conditional transfer order.
We find that this tag-along action involves questions
of fact common to the actions previously transferred to the
Central District of California and that its transfer to that
district for coordinated or consolidated pretrial proceedings
pursuant to 28 U.S.C. §1407 will best serve the convenience of
* Although Judges Lord and Weigel were unable to attend the
Panel hearing, they have with the consent of all parties, partici-
pated in this decision.
@®: In re Equity Funding Corporation of America Litigation,
375 F. Supp. 1378 (J.P.M.L. 1974).
2/ Rule 12, R.P.J.P.M.L., 53 F.R.D. 119, 123 (1971).

Case MDL No. 142 Document 2 Filed 05/04/15 Page 38 of 44
L ) JUDICIALPANELON MULTIDISTRICTLITIGATION =ROBERT A. SEEFRIED 1030 15TH STREET, N.W. PATRICIA D. HOWARD
EXECUTIVE ATTORNEY 320 EXECUTIVE BUILDING CLERK OF THE PANEL
ROBERT A. CAHN WASHINGTON, D.C. 20003 TELEPHONE: 882.8601
J. VINCENT AUG, JR. AREA CODE-202
JUN 2 WH
DOCKET NO. 142
TO ALL RECIPIENTS OF THE OPINIONS	AND ORDERS IN THE
EQUITY FUNDING LITIGATION
The Concurring Opinion of Judge William H. Becker, filed
on April 25, 1974, has been amended. I am enclosing a
correction order filed today with corrected pages 2 and 7
attached thereto. Please make the appropriate page sub-
iv ® stitutions in your copy of the Opinion.
Ve trul
esi Yo N 4
Patricia D. Howard
Clerk of the Panel
Enclosure
|

Case MDL No. 142 Document2 Filed 05/04/15 Page 39 of 44
I
-2 =
| the parties and witnesses and promote the just and efficient
. conduct of this litigation.
Plaintiffs instituted their action in a Massachusetts state
court alleging violations of the Massachusetts Uniform Securities
Act and Section 17 (a) of the Securities Act of 1933.- Each plain-
tiff purportedly received a gift of 100 shares of Equity Funding
Corporation of America (EFCA) common stock and purchased $5,000
Fidelity Corporation bonds. Plaintiffs were allegedly defrauded
by defendant EFCA's inducement to retain the stock they received
as a gift and injured by their sale of the Fidelity bonds with
a resulting monetary loss caused by EFCA's embezzlement of Fidel-
ity's assets. Defendants subsequently removed this action to
® federal court. A motion by plaintiffs to remand this action
to state court was recently denied.
In support of their motion to vacate the conditional trans-
fer order, plaintiffs argue that no common factual questions
exist between this action and the previously transferred actions
because none of the transferred actions involves claimants who
are either gift recipients of EFCA securities or Fidelity bond-
holders. We disagree. A comparison of the Block complaint
with the unified and consolidated amended complaint filed in
the transferee district indicates that both contain similar
allegations focusing upon analogous violations of securities laws.
Thus, transfer of this action to the Central District of Cali-
fornia for coordinated or consolidated pretrial proceedings
@® pursuant to Section 1407 will eliminate duplication of discovery

Case MDL No. 142 Document 2 Filed 05/04/15 Page 40 of 44
. JUDICIAL 5daveBEFORE THE JUDICIAL PANES Tj ruol	ON
ON CpeLOTION
MULTIDISTRICT LITIGATION 7
JUL 16 1975
IN RE EQUITY FUNDING CORPORATION PATRICIAb viei as
OF AMERICA SECURITIES LITIGATION JCLERR	GF H=fa) + hid, . DOCKET NO. 142
Milton Littell v. Bache & Co., Inc., ) T No
S.D. Tex., Civil Action No. )
75-H-266 )
OPINION AND ORDER
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
The Panel previously transferred all actions in this
[ litigation to the Central District of California and, with the
consent of that court, assigned them to the Honorable Malcolm
M. Lucas for coordinated or consolidated pretrial proceedings
1/
pursuant to 28 U.S.C. §1407. Since the above-captioned
action appeared to involve factual issues common to the prev-
iously transferred actions, the Panel issued an order condi-
tionally transferring it to the Central District of Califor-
2/
nia. Plaintiff Littell moves the Panel for an order vacating
1/ tn re Equity Funding Corporation of America Securities
Litigation, 375 F. Supp. 1378 (J.P.M.L. 1974); 385 F. Supp.
1262 (J.P.M.L. 1974); F. Supp. (J.P.M.L., filed
February 20, 1975); F. Supp. (JeP.M.L., filed
May 22,, 1975).
2/ Rule 9, R.P.J.P.M.L., 65 F.R.D. 253, 259-60 (1975). |

Case MDL No. 142 Document 2 Filed 05/04/15 Page 41 of 44
° 2
+ the conditional transfer order. Defendant Bache & Co. opposes
| the motion.
Upon consideration of the papers filed with the Panel,
| we find that this tag-along action involves questions of fact
common to the actions previously transferred to the Central
District of California and that its transfer to that district
for coordinated or consolidated pretrial proceedings pursuant
to 28 U.S.C. §1407 will best serve the convenience of the parties
and witnesses and promote the just and efficient conduct of
3/
this litigation.
® This action was instituted recently by Dr. Littell
in the Southern District of Texas against Bache, a securities
brokerage firm. Plaintiff Littell claims that in February 1973,
a month before the Equity Funding debacle was disclosed to
the public, he purchased certain Equity Funding Corpora-
tion of America (EFCA) 9-1/2% debentures from defendant Bache,
the principal underwriter involved in the sale and distribu-
: tion of these debentures. The complaint contains allegations
that defendant violated the federal securities laws as both
an underwriter and a broker by failing to examine the financial
EY The parties waived their right to oral argument and,
at their request, the question of transfer of
this action under Section 1407 was submitted on
é the briefs.

Case MDL No. 142 Document 2 Filed 05/04/15 Page 42 of 44
o Ss	x
stability of EFCA with due care at the time defendant promoted
the sale of EFCA debentures to the public, which, in turn,
caused material facts about EFCA to be misrepresented in and
omitted from information disseminated by defendant.
In support of his motion to vacate the conditional
transfer order, movant propounds arguments similarly asserted
by other parties in opposition to previously transferred investor-
broker actions. See, e.9., In re Equity Funding Corporation of
) America Securities Litigation, __ _F. Supp. ____, _.- (J.P.M.L.,
filed May 22, 1975). Principally, movant contends that his
® action is only peripherally related to the mainstream of the
litigation in the transferee district and that its transfer
would compel him to become unnecessarily involved in the massive
pretrial proceedings being conducted there. Movant also argues
that any information required in this action about the alleged
fraud at EFCA has already been discovered by EFCA's bankruptcy
trustee and revealed by him in explicit detail through published
reports, which obviates any need for transfer. In additioh,
it is asserted that discovery regarding the allegedly anlawsul. ;
activities of defendant Bache can easily be obtained via pre-
trial proceedings in the Southern District of Texas.
¢ |}

Case MDL No. 142 Document 2 Filed 05/04/15 Page 43 of 44
Movant's arguments in opposition to transfer are
unconvincing. A comparison of the complaint in Littell with
the consolidated and unconsolidated complaints filed in the
| transferee court indicates that all of the pleadings contain
like allegations pertaining to the underlying fraud at EFCA.
And we have held before regarding investor-broker actions in |
this litigation that the commonality of factual issues arising
from the need to determine whether fraud existed at EFCA
dictates that these actions be included in the coordinated or
consolidated pretrial proceedings. See, e.dg., In re Equity
® Funding Corporation of America Securities Litigation, 375 F.
Supp. 1378, 1382 (J.P.M.L. 1974) and —— F. Supp. ____, __
(J.P.M.L., filed May 22, 1975). Nor are we persuaded that
the bankruptcy trustee's reports will provide the sole
source of discovery concerning the underlying fraud issues
in Littell and also in all the actions Presently before Judge
Lucas. Furthermore, and very importantly, in Littell Bache
is faced with charges that are substantially similar to those 3
it confronts in several of the actions in the transferee
| district. Thus, transfer of this action under Section 1407
[ oo

Case MDL No. 142 Document 2 Filed 05/04/15 Page 44 of 44
9 Cs
for inclusion in the ongoing proceedings is clearly necessary
in order to prevent duplicative pretrial efforts by the parties,
A the witnesses and the judiciary.
| Of course, the transferee judge is empowered to
| establish a separate discovery schedule for any issues unique
to Littell and discovery on such issues can proceed concur-
| rently with the other discovery in this litigation. In re
Republic National-Realty Equities Securities Litigation, 382
F. Supp. 1403, 1405-06 (J.P.M.L. 1974).
IT IS THEREFORE ORDERED that, pursuant to 28 U.S.C.
® §1407, the action entitled Milton Littell v. Bache & Co., Inc.,
S.D. Texas, Civil Action No. 75-H-266, be, and the same hereby
is, transferred to the Central District of California and, with
the consent of that court, assigned to the Honorable Malcolm
M. Lucas for coordinated or consolidated pretrial proceedings
with the actions previously transferred to that district. |
éo