District but communicated, via wire, mail, or publication, inside the District of Columbia. With respect to these torts, District of Columbia law defines the "act" of the statement as occurring where the statement was written or spoken, not where it was understood by the third party. See, e.g., Moncrief v. Lexington Herald-Leader Co., 257 U.S. App. D.C. 72, 807 F.2d 217 (D.C. Cir. 1986); Margoles v. Johns, 157 U.S. App. D.C. 209, 483 F.2d 1212, 1218 (D.C. Cir. 1973). Applying the logic that guided these decisions, the Court finds that defendant's act of allegedly misrepresenting Columbia Data's finances occurred in Maryland, where the report was written. See Complaint, Exhibit A. Thus, personal jurisdiction over defendant Mallery is available, if at all, only under § 13-423(a)(4).
Under this section of the long-arm statute, the Court must first find that acts committed by Mallery or his agents outside the District of Columbia caused the alleged tortious injury inside the District of Columbia. There is no question that defendant Mallery, like the putative class of which he has been named representative, must be deemed responsible for the alleged misrepresentation made by his partner. See D.C. Code § 41-112 - 114. Thus, if the tortious injury of which plaintiff complains occurred within the District of Columbia, and defendant, himself or through his partners, regularly conducts business in the District of Columbia, or derives substantial revenue from services performed in the District of Columbia, the Court has jurisdiction over defendant under § 13-423(a)(4). On the record now before the Court, it has jurisdiction over defendant's person.
First, the information before the Court puts the situs of plaintiff's injury in the District of Columbia. Plaintiff allegedly received the allegedly misleading financial statements in the District of Columbia. Plaintiff's Memorandum in Opposition to Motion to Dismiss at 12. Plaintiff allegedly relied on those statements when deciding to fund the loan in the District of Columbia, Complaint at para. 20, and allegedly suffered injury in the District of Columbia when Columbia Data Products could not repay the loan issued in reliance on defendant's statements. Id. at 25. Repayment was to occur in the District of Columbia. Master Promissory Note, attached to Complaint as Exhibit 2.
Defendant asserts that plaintiff's financial losses are merely a means of measuring plaintiff's injury, rather than an indicia of the injury itself. To support this proposition, defendant cites to Leaks v. Ex-Lax, Inc., 424 F. Supp. 413 (D.D.C. 1976) (product liability and negligence case) and Aiken v. Lustine Chevrolet, 392 F. Supp. 883 (D.D.C. 1975) (emotional distress and impaired credit rating case). Unlike those cases, in which the plaintiffs allegedly suffered some physical or emotional injury, in this case the only injury is the financial loss that allegedly resulted from plaintiff's reliance on the allegedly misleading statements prepared by Deloitte. Thus, far from a measure of injury, pecuniary loss is the injury as far as plaintiff is concerned.
Defendant tries to persuade the Court that the real situs of plaintiff's injury is Maryland, the location of the overvalued collateral for the loan to Columbia Data Products. This confuses the act causing plaintiff's injury with the injury itself. See, e.g., Reuber v. United States, 242 U.S. App. D.C. 370, 750 F.2d 1039, 1050 (D.C. Cir. 1984) (act separate from injury under D.C. long-arm statute). Plaintiff was not injured by the amount of the collateral, or the misrepresentation of that amount, but by Columbia Data Product's failure to repay the loan allegedly extended on the basis of the financial statements prepared by Deloitte. This injury occurred in the District of Columbia.
The other requirement for assertion of personal jurisdiction under § (a)(4) of the long-arm statute is, as mentioned above, that defendant or his agents have regular business contacts with the District of Columbia. There is no question that defendant meets this standard. Deloitte maintains an office in the District of Columbia, and in fact at least twenty-seven Deloitte partners are listed in the Washington, D.C. office in Deloitte's 1987 "Worldwide Directory." Memorandum in Opposition to Motion to Dismiss, Exhibit A. This constitutes "regular doing of business" under the long-arm statute. See, e.g., Security National Bank, N.A. v. Tauber, 347 F. Supp. 511 (D.D.C. 1972).
Although it is not necessary that the alleged injury result from defendant's business contacts with the District of Columbia, see, e.g., Gatewood v. Fiat, 199 U.S. App. D.C. 238, 617 F.2d 820 (D.C. Cir. 1980), such a connection strengthens the conclusion that jurisdiction is properly asserted over defendant. Here, plaintiff claims that its decision to fund the Columbia Data Products loan, a decision made and carried out in the District of Columbia, was in part based on meetings held with Deloitte in the District of Columbia. Plaintiff's Opposition, at 12; Complaint at paras. 13-14. Although the relation between those meetings and the loan on which Columbia defaulted is, on this record, speculative, the Court must find that the allegation of a relationship between these meetings and the loan approval offers additional support for the assertion of personal jurisdiction over defendant.
Even though the long-arm statute gives the Court jurisdiction over defendant Mallery, this Court can assert that jurisdiction only if exercise of jurisdiction is consonant with the demands of the Due Process Clause.
Defendant argues that due process forbids exercise of jurisdiction over defendant Mallery. The Court disagrees.
For one, Mallery was a partner in the Washington office of Deloitte, Haskins & Sells at the time that he or his agents allegedly committed the alleged tort. Mallery affidavit, para. 4. He is now managing partner of Deloitte's Baltimore office. Id. at para. 1. Thus, he cannot find it altogether unexpected to be the named defendant in a suit arising from Deloitte's actions in the District of Columbia and in Maryland.
There are other compelling reasons to reject Mallery's due process argument as well. As a partner, Mallery is, as a matter of law, jointly and severally liable for any wrongs committed by his partners or their agents and could be haled into a District of Columbia court to redress any such wrongs that occurred here. See D.C. Code § 41-114(a). Moreover, he or his agents participated in business meetings in the District of Columbia that allegedly led to plaintiff's decision to lend money to Columbia Data Products. These facts -- maintenance of an office in the District of Columbia, conduct of business in the District of Columbia, and conduct of business, personally or through an agent, with plaintiff in the District of Columbia -- establish that the Court may exercise jurisdiction over defendant Mallery consistent with traditional notions of substantial justice and fair play. See, e.g., Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 80 L. Ed. 2d 404, 104 S. Ct. 1868 (1984); Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 96 L. Ed. 485, 72 S. Ct. 413 (1952).
Defendant also argues that due process forbids choosing Mallery as the representative of the defendant class. This argument is untenable. As Mallery is a proper party defendant, he suffers no additional burden if he is the class representative. Whatever liability defendants may face, they face as a class, and the named representative need bear no more, and no less, of that liability than any other class member. See, e.g., Moore v. National Association of Securities Dealers, 246 U.S. App. D.C. 114, 762 F.2d 1093 (D.C. Cir. 1985); see also, Federal Practice and Procedure : Civil at § 1768, 1770.
Another aspect of defendant's due process argument centers on Mallery's alleged inability to represent his partners fairly and adequately in this suit. Whether Mallery is an adequate class representative is not now an issue before the Court; that is a matter for consideration in connection with the motion for class certification, a motion that the parties stipulated should not come before the Court until the jurisdictional motions were resolved. See Stipulation, June 4, 1987. The Court will not breach its Order approving the stipulation and decide that matter now.
Thus, the Court must conclude that defendant Mallery comes within the scope of the District of Columbia long-arm statute and there is no constitutional impediment to exercise of jurisdiction over him. Accordingly, the Court will deny defendant Mallery's motion to dismiss for lack of personal jurisdiction over the defendant.
DEFENDANT HAS NOT SHOWN FACTS THAT JUSTIFY DISTURBING PLAINTIFF'S CHOICE OF FORUM.
Finally, defendant has asked the Court to transfer this action to the United States District Court for the District of Maryland. He has made this motion pursuant to 28 U.S.C. § 1404(a), which provides
For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.
Defendant, who must demonstrate the wisdom of a change of venue, bears a heavy burden, as "the plaintiff's choice of forum is due substantial deference and, unless the balance of convenience is strongly in favor of the defendants, should rarely be disturbed." International Brotherhood of Painters and Allied Trades Union v. Best Painting and Sandblasting Co., Inc., 621 F. Supp. 906, 907 (D.D.C. 1985). On the basis of the record before the Court, defendant has not met that burden.
Defendant argues for transfer first on the ground that this case is fundamentally related to Guthertz v. Diaz, Civil Action Nos. R-84-4175 and R-84-4515, a suit that is pending in the United States District Court for the District of Maryland. Although pendency of a related case in the other forum is one factor that a Court should consider, existence of a related case elsewhere does not weigh in favor of transfer "if there is no realistic possibility of consolidating the present case with the related case." Federal Practice and Procedure : Jurisdiction § 3854. On the record before the Court, the Court cannot conclude that consolidation is a "realistic possibility."
The Court bases this judgment on several reasons. First, neither plaintiff nor defendant is a party to the Maryland action. Guthertz v. Diaz, Civil Action Nos. R-84-4175 and R-84-4515 (D. Md.), attached to Defendant's Motion to Transfer as Exhibit B. In addition, the Maryland action only raises claims stemming from alleged violations of federal securities laws in connection with a public offering of Columbia Data Products Stock, id.; the case before this Court only raises common law claims that are, for the most part, factually unrelated to the alleged securities law violations. Finally, the Maryland case was filed in February, 1985, defendant maintains that "substantial" discovery has been had in that case, and the Court must assume that it will soon be ready for trial. Thus, the Court cannot assume that there is a realistic possibility this relatively recent action, if transferred, would be consolidated with the mature Guthertz case. See, e.g., Combs v. Adkins & Adkins Coal Co., Inc., 597 F. Supp. 122, 125 (D.D.C. 1984); Federal Practice and Procedure : Jurisdiction § 3854.
As a second ground to support his motion to transfer, defendant alleges that Maryland law would apply to this action and thus the suit would best proceed in a Maryland court. While the Court recognizes that transfer to a "forum that is at home with the state law that must govern the case" is often appropriate, Van Dusen v. Barrack, 376 U.S. 612, 645, 11 L. Ed. 2d 945, 84 S. Ct. 805 (1964), the Court does not believe that Maryland law would apply to this action.
Whether District of Columbia or Maryland law would apply to this suit is determined by applying the choice of law rules of the District of Columbia, the forum jurisdiction of this suit. See, e.g., Klaxon v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496-97, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941); Nepera Chemical, Inc. v. Sea-Land Service, 253 U.S. App. D.C. 394, 794 F.2d 688, 695 (D.C. Cir. 1986).
District of Columbia law employs an "interests analysis" to choose the law applicable to a tort case. See, e.g., Semler v. Psychiatric Institute of Washington, D.C., Inc., 188 U.S. App. D.C. 41, 575 F.2d 922, 924 (D.C. Cir. 1978). Simply put, a Court must evaluate and balance the interests of jurisdictions that have some stake in the litigation and select the law of the jurisdiction that bears "the most significant relationship to the tortious occurrence and the litigants." Nepera Chemical, Inc. v. Sea-Land Service, 794 F.2d at 695; see also, Estrada v. Potomac Electric Power Company, 488 A.2d 1359, 1361 & n.2 (D.C. 1985).
As a benchmark for this inquiry, District of Columbia law looks to the criteria set forth in Section 145(2) of the Restatement (Second) of Conflicts of Laws. See, e.g., id; see also, Keene Corp. v. Insurance Co. of North America, 597 F. Supp. 934, 938 (D.D.C. 1984). These factors are:
(a) the place where the injury occurred,