The opinion of the court was delivered by: GASCH
The Securities and Exchange Commission (SEC) brought this civil injunction action against Page Airways, Inc. (Page) and certain of its officers and directors for violations of the federal securities laws. The SEC alleges that the marketing practices and sales activities of Page with respect to the sale of Gulfstream II (G-II) aircraft violated the Securities Exchange Act of 1934, and the Foreign Corrupt Practices Act. Page is a worldwide dealer for G-II aircraft, manufactured by Grumman American Aviation Corporation (Grumman). The complaint names six directors and officers of Page as individual defendants. The complaint further alleges that all defendants, in order to consummate sales of aircraft and spare parts to foreign entities, made improper and illegal payments to foreign officials or to commission agents without adequate controls to insure that such disbursements were made for the purposes indicated in Page records and without adequate controls to document whether services provided were commensurate with the amounts paid. The SEC also charges that false and misleading entries to disguise these payments were made in Page's books and records, and that false and misleading statements were made in filings to the SEC.
The standards to be considered in determining whether to grant or deny a section 1404(a) motion to transfer are generally a matter left to the discretion of the trial court.
Although the statute itself mentions only three considerations,
a court is not limited to those rather broad generalities, but may consider other factors which are subsumed by the purpose of the statute. See Chicago, Rock Island & Pacific R.R. Co. v. Igoe, 220 F.2d 299 (7th Cir. 1955). Among the factors to be considered are convenience of the witnesses of plaintiff and defendant; ease of access to sources of proof; availability of compulsory process to compel the attendance of unwilling witnesses; the amount of expense for willing witnesses; the relative congestion of the calendars of the potential transferee and transferor courts; and other practical aspects of expeditiously and conveniently conducting a trial. Id. at 304.
The Court has considered each of the above factors in reaching its decision in this case.
Defendants urge that convenience of the parties would best be served by transfer because all but one of the defendants reside in Rochester. They point out that Page's business would be substantially disrupted by having litigation proceed in an inconvenient forum. See United States v. General Motors Corp., 183 F. Supp. 858 (S.D.N.Y.1960).
Moreover, the individual defendants in this action represent a large part of Page's senior management. Although substantial weight must of course be accorded plaintiff's choice of forum under section 1404(a),
See Shutte v. Armco Steel Corp., 431 F.2d 22 (3d Cir. 1970), Cert. denied, 401 U.S. 910, 91 S. Ct. 871, 27 L. Ed. 2d 808 (1971), it appears to the Court that the overall burden on defendants in having to defend a suit of this type in this forum is much greater than the burden on plaintiff SEC in having to prosecute this action in the Western District of New York. Therefore, the convenience of parties in this case would be served by permitting transfer. Furthermore, additional considerations outweigh the traditional deference shown plaintiff's choice of forum.
Transfer of this action would greatly enhance the convenience to potential witnesses. Out of 64 potential witnesses listed by defendants, 25 reside in the Western District of New York. Of the remainder, almost all are located at equal distances from the District of Columbia and the Western District of New York. On this basis alone it would appear that the Western District would be more convenient overall for witnesses. Most of the SEC witnesses, on the other hand, are government employees, and it may be expected that the government would be able to produce them at trial in either forum. Additionally, defendants have demonstrated that certain crucial witnesses reside in the transferee forum, where it is more convenient for them to appear, and where, for potentially unwilling witnesses over whom defendants have no control, compulsory process may be used to compel attendance. Although the testimony of such witnesses could be obtained through deposition, this Court has previously observed that "live testimony is markedly preferable to lifeless written pages in mounting a defense, particularly where, as here, the resolution of critical factual issues will likely turn on the credibility of witnesses." SEC v. Jos. Schlitz Brewing Co., No. 77-0612, slip op. at 2 (D.D.C. June 17, 1977).
This lawsuit concerns the marketing practices of a corporation whose marketing headquarters are located in the transferee forum. All of Page's marketing and sales activities initiate in Rochester, where all of the company's principal sales personnel are located. The argument of the SEC that sales personnel traveled all over the world in making sales is of no avail; the suit could not be brought in Liechtenstein or Uganda, and Page's sales headquarters Are in Rochester. Page's accounting books and records and its bank accounts are in Rochester, and its audits are performed there. In short, the vast bulk of the documentary evidence in this case is in Page's custody and control in Rochester. The burden on defendants of litigating in the District of Columbia given the sheer volume of documents is a factor that weighs heavily in favor of transfer.
In a case such as this, involving allegedly false statements and improper practices, it is desirable to go behind SEC filings and examine the underlying documentary evidence. That evidence is largely in the Western District of New York.
In sum, the balance of convenience in this lawsuit heavily outweighs the SEC's choice of forum. Transfer of the action to the Western District of New York serves the salutary purposes of section 1404(a) inasmuch as most defendants live there, and most witnesses would also find it convenient. Access to the proof needed to resolve the serious questions raised by this suit would be greatly facilitated by allowing the case to proceed in Rochester. After careful consideration of these factors and the others mentioned above, the Court concludes that transfer of the ...