IN RE: Tenneco Inc. Securities Litigation

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BEFORE THE JUDICIAL PANEL |“ilL
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IN RE TENNECO INC. SECURITIES LITIGATION )) DOCKET NO. 253
OPINION AND ORDER
BEFORE JOHN MINOR WISDOM*, CHAIRMAN, AND EDWARD WEINFELD, EDWIN
A. ROBSON, WILLIAM H. BECKER, JOSEPH S. LORD, III, STANLEY A.
WEIGEL, AND ANDREW A, CAFFREY, JUDGES OF THE PANEL
PER CURIAM
This litigation was generated by the filing of an amend-
ment to Tenneco Inc.'s current report with the Securities and
( Exchange Commission (SEC). The amendment, filed pursuant to an SEC
voluntary disclosure program, details certain matters related
to payments made or accrued by Tenneco during the period from
’ January 1, 1970 through September 30, 1975 tovarious domestic
and foreign attorneys, advisors, consultants and agents.
The six actions before the Panel are pending in three
: L/
federal districts: four in the Southern District	of Texas;
* Although Judge Wisdom was not present at the Panel hearing,
he has, with the consent of all parties, participated in
this decision. ee
.- l/ One of these actions (Tuohy) originally was filed in the
District of the District of Columbia. An order was
entered sua sponte by Judge George L. Hart, Jr. trans-
ferring Tuohy to the Southern District of Texas pursuant
C to 28 U.S.C. §1404(a).

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® one in the District of Delaware; and one in the Southern
District of New York. Each of these actions apparently
2/
was brought derivatively on behalf of Tenneco. In addition,
three of the four Southern District of Texas actions were commenced
as class actions on behalf of all other similarly situated
shareholders of Tenneco. Defendants include Tenneco, several
of its subsidiaries, and various present or former directors,
officers and employees of Tenneco or its subsidiaries. Arthur
Andersen & Co. is named as a defendant only in the Southern
District of New York action.
All the actions before the Panel are based on virtually
® identical factual allegations. Basically, all plaintiffs
allege that: (1) between 1970 and the present, more than
$12,000,000 of wrongful disbursements were made from Tenneco's
corporate funds by Tenneco or through its subsidiaries for
unlawful political contributions, bribes or related payments:
(2) false and misleading entries were made in the books and
records of Tenneco to conceal these disbursements; (3) Tenneco
2/ Two of the Southern District of Texas actions were
brought derivatively on behalf of "Tenneco Corp." -
The other four actions were brought derivatively on
behalf of "Tenneco Inc." Movants suggest that all
plaintiffs intended to sue on behalf of Tznneco Inc.
rather than Tenneco Corp., which is a wholly-owned
subsidiary of Tenneco Inc. No responding party
[ refutes this suggestion.

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9 failed to disclose the disbursements in regular reports filed
with the SEC; (4) Tenneco's proxy statements were false and
misleading; and (5) as a result of the false and misleading
| proxy statements, the shareholders of Tenneco acted on
incomplete and misleading information when they elected
some of the defendants to the Board of Directors. The
complaints allege that defendants' conduct was in violation	of
the federal securities laws, various state statutes and
common law duties owed to Tenneco by the defendants. |
Every plaintiff seeks damages, and some seek an accounting,
a declaration that certain corporate elections be declared
® null and void, and/or injunctive relief.
All defendants have moved the Panel for an order trans-
ferring all actions to the Southern District of Texas for
coordinated or consolidated pretrial proceedings pursuant
to 28 U.S.C. §1407. All responding parties agree or
express no position on the desirability of transfer. The
only real dispute is over the selection of an appropriate
transferee district. The plaintiff in Tuohy favors the
District of the District of Columbia. Plaintiffs in the
other Southern District of Texas actions, however, support
the Southern District of Texas. Plaintiff in the Delaware
action originally favored transfer to the District of
®

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® Delaware, but subsequently withdrew its opposition to
transfer of this litigation to the Southern District of
Texas. The plaintiff in the Southern District of New
York action has not responded to the motion for transfer.
We find that these actions involve common questions
of fact and that their transfer under Section 1407 to the
Southern District of Texas will best serve the convenience
of the parties and witnesses and promote the just and
efficient conduct of this litigation.
Plaintiff in Tuohy argues that these actions should
be transferred to the District of the District of Columbia
because interchange and coordination with numerous federal
® agencies and the Department of State, which plaintiff contends
will be vital to the conduct of this litigation at every
stage, can best be accomplished in the District of Columbia.
In addition, this plaintiff asserts that the civil action
docket in the District of the District of Columbia is
significantly more current than the one in the Southern
District of Texas and, therefore, transfer to the District
of the District of Columbia would permit the parties to
conduct pretrial proceedings more quickly and efficiently.
Finally, this plaintiff maintains that *the District
of Columbia federal court is best qualified
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@® to supervise these actions because it already has processed
many SEC actions involving allegations similar to those
raised in this litigation, and has more expertise in handling
actions with significant national and international zamifi-
cations than any other district court.
We are not persuaded by these arguments. The plaintiff
in Tuchy has failed to convince us that agencies or depart-
ments of the federal government will be significantly involved
in this litigation. Moreover, there has been no showing that
any cooperation with government officials which may be
necessary can be accomplished better if these actions were
transferred to the District of the District of Columbia
® than if they were transferred anywhere else. The argument
that the District of the District of Columbia because of
1ts general experience is somehow better qualified than any
other district to supervise pretrial in this litigation |
is wholly without merit. And while a comparison of the :
civil action dockets in the districts under consideration
as possible Section 1407 transferee districts is a relevant
factor for the Panel to take into account, this factor is out-
weighed by other considerations in the circumstances of this
particular litigation that make the Southern District of Texas
the most appropriate transferee forum. Four of the six actions
are already pending there. See In re Celotex Corp. "Technifoam"
Products Liabilitv Litigation, 68 F.R.D. 502, 505 (J.P.M.L.
®

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® 1975). In addition, Tenneco's headguarters are in Houston,
Texas, and, as a result, most of the relevant documents
and witnesses are located in the Southern District of
Texas. See In re U.S. Financial Securities Litigation,
375 F. Supp. 1403, 1404 (J.P.M.L. 1974). The Southern District
of Texas, furthermore, is the preference of all responding
parties in this litigation except the plaintiff in Tuohy.
See In re Westinghouse Electric Corp. Uranium Contracts
Litigation, 405 F. Supp. 316, 319 (J.P.M.L. 1973).
IT IS THEREFORE ORDERED that the actions listed on
the following Schedule A and pending in the District of
Delaware and the Southern District of New York be, and the
C same hereby are, transferred to the Southern District of
Texas and, with the consent of that court, assigned to the
Honorable John V. Singleton, Jr. for coordinated or con-
solidated pretrial proceedings pursuant to 28 U.S.C. §1407 ;
with the actions already pending there and listed on
Schedule A.
®

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® MDL-253 --~ IN RE TENNECO, INC. SECURITIES LITIGATION
SCHEDULE A
SOUTHERN DISTRICT OF TEXAS (HOUSTON DIVISION)
Lowell G. Raun, etc. v. Wilton E. Civil Action
Scott, et al. No. 76-H-363
Thomas J. Anderson, etc. v. N. W. Freeman, Civil Action
et al. No. 76-H-358
Mildred Milberg, etc. v. N. W. Freeman, et al. Civil Action
: No. 76-H-354
Alice Tweed Tuohy Foundation, etc. v. Herbert Civil Action
Allen, et al. No. 76-H-717
DISTRICT OF DELAWARE
Ralph Limmer, et al. v. N.W. Freeman, Civil Action
et al. | ~ No. 76-82
SQUTHERN DISTRICT OF NEW YORK
Harry Lewis v. N. W. Freeman, et al. Civil Action
No. 76 Civ.801