United States District Court, N.D. Alabama, Southern Division
MEMORANDUM OPINION AND ORDER
K. KALLON UNITED STATES DISTRICT JUDGE
Sherri, and John Halbert (“the Halberts”) bring
this action against Credit Suisse AG and Janus Index &
Calculation Services, LLC (“JICS”) alleging
federal and state securities violations and tortious conduct.
Docs. 1; 45. The Defendants have jointly moved to transfer
venue to the S.D.N.Y. under 28 U.S.C. § 1404(a) or,
alternatively, to stay the action pending the resolution of
similar cases in the S.D.N.Y. under the first-filed rule.
Doc. 23. The motion, which is fully briefed and ripe for
review, id.; docs. 24, 30, 31, is due to be denied.
SUMMARY OF FACTS AND PROCEDURAL HISTORY
Halberts allege that they suffered significant losses after
investing in Credit Suisse's VelocityShares Daily Inverse
VIX Short Term exchange traded notes (“XIV ETNs”)
due to a precipitous drop in the securities' value on
February 5, 2018. Doc. 45 at 1-2. According to the Halberts,
Credit Suisse and JICS caused them to suffer these losses by
manipulating and failing to disclose the published estimates
of the XIV's value on and before February 5, 2018.
Id. ¶¶ 41-42. Allegedly, Credit Suisse
intentionally issued false and misleading offering documents
in connection with the XIV ETNs, failed to disclose that it
was engaging in activities that inflated their value, failed
to update the estimated value of the XIV while its value was
dropping, and then ended trading on the XIV in order to
realize a profit at investors' expense. Id.
¶¶ 8-49. Based on these contentions, the Halberts
assert claims against Credit Suisse and JICS for alleged
violations of § 10(b) of the Exchange Act, 15 U.S.C.
§ 78j(b), and Rule 10b-5 promulgated thereunder, 17
C.F.R. § 240.10b-5, as well as common law claims of
negligence, wantonness, fraudulent misrepresentation,
negligent misrepresentation, and fraudulent suppression, and
assert claims for alleged breach of contract and violations
of § 11 of the Securities Act, 15 U.S.C. § 77k, and
the Alabama Blue Sky Law, Ala. Code § 8-6-19(a)(2),
solely against Credit Suisse. Docs. 1; 45.
to the pending motion, in addition to the Halberts'
lawsuit, other investors filed three putative class actions
against Credit Suisse AG, JICS, and six other defendants in
the S.D.N.Y. to recover for their losses from the collapse of
Credit Suisse's XIV on behalf of themselves and other
investors, including the Halberts. See Chahal v. Credit
Suisse Group AG et al., No. 1:18-cv-2268-AT-SN (S.D.N.Y.
Mar. 14, 2018), ECF Nos. 1, 74; Eisenberg v. Credit
Suisse Group AG et al., No. 1:18-cv-2319-AT-SN (S.D.N.Y.
Mar. 15, 2018); Qiu v. Credit Suisse Group AG et
al., No. 1:18-cv-4045-AT-SN (S.D.N.Y. May 4, 2018).
These actions were subsequently consolidated by Magistrate
Judge Sarah Netburn, and the plaintiffs have filed a
consolidated amended complaint alleging violations of the
Securities and Exchange Acts. See Set Capital LLC et al.
v. Credit Suisse Group AG, No. 1:18-cv-2268-AT-SN
(S.D.N.Y. Aug. 20, 2018), ECF No. 82 (hereinafter “the
New York action”). The defendants in the New York
action have moved to dismiss, id., ECF. Nos. 100,
101, 105, and, to date, the court has not certified a class.
Defendants raise two points in their pending motion. First,
they contend that the balance of factors under 28 U.S.C.
§ 1404(a) favor a transfer to the S.D.N.Y.
Alternatively, they contend that the court should stay this
case pending resolution of the New York action based on the
first-filed rule. The court addresses each of these
contentions in turn.
Transfer of Venue Under 28 U.S.C. §
1404(a) allows a district court, “[f]or the convenience
of parties and witnesses, in the interest of justice, ”
to “transfer any civil action to any other district . .
. where it might have been brought . . . .” 28 U.S.C.
§ 1404(a). It is undisputed that venue would be proper
in the S.D.N.Y.: the alleged violations of federal securities
laws occurred in this district, Credit Suisse AG resides in
this district, and a substantial part of the events or
omissions giving rise to the claims occurred in this
district. See docs. 45, 24-2; 15 U.S.C. § 77v
(any civil action under the Securities Act “may be
brought in the district wherein the defendant is found or is
an inhabitant or transacts business, or in the district where
the offer or sale took place, if the defendant participated
therein”); 15 U.S.C.A. § 78aa (any civil action
under the Exchange Act “may be brought in the district
wherein any act or transaction constituting the violation
occurred . . . or in the district wherein the defendant is
found or is an inhabitant or transacts business”); 28
U.S.C. § 1391(b)(2) (venue is proper in any
“judicial district in which a substantial part of the
events or omissions giving rise to the claim
occurred”). Therefore, the only issue is whether the
Defendants have met their burden of showing that the balance
of § 1404(a) factors justifies a transfer in this
case. As explained below, the Defendants have
failed to meet this burden.
Factors Supporting Transfer
three of the relevant factors affirmatively favor transfer:
the convenience of the witnesses, the availability of process
to compel the attendance of unwilling witnesses, and the
location of relevant documents and relative ease of access to
sources of proof. More specifically, most of the potential
witnesses concerning the allegedly illegal conduct appear to
be located either in New York or Darien, Connecticut,
see docs. 24-1 ¶¶ 4-6; 24-2 ¶¶
5-10, and it seems the only potential witnesses in Alabama
are the Halberts, see docs. 45; 24-1 ¶¶
7-9; 24-2 ¶ 5. Likewise, as the Defendants note, the
location of potential witnesses, which also includes
Colorado, likely places them beyond the reach of this
court's subpoena power. See docs. 24 at 8; 24-1
¶¶ 9-10; 24-2; Fed.R.Civ.P. 45(c). Furthermore,
because the offering documents at issue were prepared in New
York, Credit Suisse's only U.S. branch is in New York,
and JICS's principal place of business is Darien,
Connecticut, the location of relevant documents and access to
sources of proof also appears to favor transfer. See
docs. 24-1 ¶¶ 4, 6; 24-2 ¶¶ 5-10.
the circumstances of this case mitigate the weight of these
factors. For instance, the significance of the convenience of
witnesses factor is diminished where, as here, most of the
potential witnesses, “although in another district, are
employees of a party and their presence at trial can be
obtained by that party.” See Trinity Christian Ctr.
of Santa Ana, Inc. v. New Frontier Media, Inc., 761
F.Supp.2d 1322, 1328-29 (M.D. Fla. 2010) (citation omitted).
Furthermore, because the Halberts are willing to travel to
New York, Connecticut, and Colorado to depose the
Defendants' employees, see doc. 30 at 11, the
convenience of the witnesses does not weigh heavily in favor
of transfer. Similarly, the availability of process is of
less significance here, where there is no indication the
potential witnesses would be unwilling to appear. See
F.D.I.C. ex rel. Citizens State Bank v. Fedorov, No.
10-20912-Civ., 2011 WL 2110830 (S.D. Fla. May 26, 2011)
(finding this factor did not support transfer where
“[n]either of the parties has identified any specific
witness who would be unwilling to appear and may require the
court's subpoena power.”). Finally, although many
of the relevant documents and other evidence are located in
or around New York, this factor is less significant in the
absence of any contention by the Defendants that they face
substantial difficulty in producing relevant documents and
given “the predominance of electronic discovery in the
modern era.” Weintraub v. Advanced Correctional
Healthcare, Inc., 161 F.Supp.3d 1272, 1283 (N.D.Ga.
2015); see Steifel Labs., Inc. v. Galderma Labs.,
Inc., 588 F.Supp.2d 1336, 1340 (S.D. Fla. 2008)
(“Defendant has not demonstrated that there is any
particular difficulty in producing the materials or relevant
documents . . .”).
Neutral Factors and Factors Militating Against
contrast, the remaining factors are either neutral or
militate against transfer. To begin, “[t]he
plaintiff's choice of forum should not be disturbed
unless it is clearly outweighed by other considerations,
” Robinson v. Giarmarco & Bill, P.C., 74
F.3d 253, 261 (11th Cir. 1996) (quoting Howell v.
Tanner, 650 F.3d 610, 616 (5th Cir. 1981)), and this
choice receives “greater deference when the plaintiff
has chosen the home forum, ” as the plaintiffs have
done in this case, see Piper Aircraft Co. v. Reyno,
454 U.S. 235, 266 (1981) (citation omitted). Next, the
presence of six state common law claims and a claim for
violations of Alabama's Blue Sky Law, doc. 45
¶¶ 67-90, also supports greater deference to the
Halberts' choice of forum and disfavors transfer. See
Trafalgar Capital Specialized Inv. Fund (in Liquidation) ...