Plaintiffs vs. William R. Kerr
UNITED STATES DISTRICT COURT
WILLIAM R. KERR
PLAINTIFFS' OPPOSITION TO DEFENDANT WILLIAM R. KERR'S MOTION TO DISMISS
1. The Requirements of Personal Jurisdiction, Subject Matter Jurisdiction, and Venue have all been met.
Plaintiffs assert claims under the Securities Exchange Act of 1934, specifically Section 10(b) and Rule 10b-5. 15 U.S.C. s 78j(b) [Count I]. Plaintiffs also assert claims under the Securities Act of 1933, specifically Section 12(a)(2), 15 U.S.C. s 77l(a)(2) [Count II]. For causes of action brought under the 1933 and 1934 acts, Congress enacted a special statute that establishes the legal standard for personal jurisdiction, subject matter jurisdiction and venue: Section 27 of the Securities Exchange Act of 1934, 15 U. S. C. s 78aa.
The Fifth Circuit Court of Appeals recently discussed the broad jurisdiction and venue provisions of 15 U. S.C. s 78aa in Busch v. Buckman, Buckman & O'Brien, Law Firm, 11 F.3d 1255 (5th Cir. 1994). In Busch, the Court of Appeals reversed a decision of the district court for the Southern District of Texas. The district court had held that it lacked subject matter jurisdiction over the defendants under s 78aa "because no act constituting a violation of the 1934 Securities Exchange Act occurred in Texas." Further, the Fifth Circuit Court of Appeals held that the district court had erroneously concluded that under the Due Process Clause of the Fifth Amendment, "it could not exercise personal jurisdiction over the defendants because they lacked minimum contacts with Texas."
In Busch, a promoter in New York had sent a prospectus to Plaintiff, a Texas resident, soliciting the purchase of an interest in a limited partnership as a tax-sheltered investment. Included with the prospectus was a tax opinion and a confidential offering memorandum prepared by defendants. Plaintiff made an investment. When the tax shelter did not pan out, Plaintiff filed a Rule 10b-5 claim against defendants in the Southern District of Texas. Defendants filed a Rule 12(b) motion, arguing that they were not subject to personal jurisdiction in Texas "because (1) no act constituting a violation under the 1934 Securities Exchange Act occurred in Texas and (2) they did not have minimum contacts with Texas." The district court agreed, and the Fifth Circuit Court of Appeals reversed that decision.
In reversing, the Fifth Circuit restated the established rule that "Section 27 of the 1934 Securities Exchange Act, as amended, grants subject matter jurisdiction to a district court where 'any act or transaction constituting the violation occurred.'" [ Busch at pp. 1256-1257.]
As to the issue of personal jurisdiction, the Fifth Circuit stated that "(o)nce a case is filed in an appropriate district court under s 78aa, the statute gives the district court the authority to serve defendants nationwide. Congress' grant of this power under s 78aa is limited only by the constraints of constitutional due process." [Citing Federal Trade Commission v. Jim Walter Corporation, 651 F. 2d 251 (5th Cir. 1981) The Fifth Circuit explained: "(i)n cases where a state is attempting to get extraterritorial jurisdiction over a defendant, the inquiry is whether the defendant has had minimum contacts with the state. International Shoe Co. V. Washington, 326 U. S. 310, 315, 66 S. Ct. 154, 158, 90 L.Ed. 95 (1945). And when a federal court is attempting to exercise personal jurisdiction over a defendant in a suit based upon a federal statute providing for nationwide service of process, the relevant inquiry is whether the defendant has had minimum contacts with the United States." [ Busch at 1258, Citations omitted] [emphasis added]
The Fifth Circuit Court of Appeals concluded, "(h)ere the due process concerns of the Fifth Amendment are satisfied. Given that the relevant sovereign is the United States, it does not offend traditional notions of fair play and substantial justice to exercise personal jurisdiction over a defendant residing within the United States." [Citations omitted] "The district court in the Southern District of Texas has subject matter jurisdiction under s 78aa...Further, the court has personal jurisdiction over Buchman because Buchman has minimum contacts with the United States and resides herein." Busch at 1258.1
In Hilgeman v. National Insurance Company of America, et al., 547 F. 2d 298 (5th Cir. 1977), the Fifth Circuit Court of Appeals discussed the broad scope of Section 27 of the Securities Exchange Act of 1934, 15 U.S.C. 78aa. In a securities action, the Court of Appeals reversed the district court and found that personal jurisdiction, subject matter jurisdiction and venue were all correct in the Northern District of Alabama.2
In Hilgeman, supra, service of process was made upon two out-of-state defendants pursuant to 15 U. S. C. 78aa. The district court had held that this "service was insufficient because neither Moody nor Sando is 'found or is an inhabitant or transacts business in Alabama nor is the suit based upon an offer or sale that took place in Alabama.'" In reversing the district court, the Fifth Circuit Court of Appeals stated that "(s)ervice of process under the 1933 and 1934 Acts is nationwide, and may be served 'in any...district of which the defendant is an inhabitant or wherever the defendant may be found. '" The Court of Appeals stated that 15 U.S.C. 78aa "is the language governing venue and in personam jurisdiction under the 1933 Act." The Court of Appeals stated that the district court held "that it lacked personal jurisdiction...and that venue was improper with respect to these three defendants. In doing so, the district court erred. Both the personal jurisdiction and venue issues are governed by s 27 of the Securities Exchange Act of 1934, 15 U.S.C. s 78aa. According to s 27, any suit to enforce liability under the 1934 Act may be brought in the district where 'any act or transaction constituting the violation occurred." [ Hilgeman at 301] [Emphasis added]
The Fifth Circuit Court of Appeals detailed how relatively significant the act or transaction had to be. The Court of Appeals stated that "suit...may be brought in the district where 'any act or transaction constituting the violation occurred.' The 'act' contemplated by the statute need not be crucial, nor must 'the fraudulent scheme be hatched in the forum district.'" The Court of Appeals cited Hooper v. Mountain State Securities Corporation, 282 F.2d 195, 204 (5th Cir. 1960) in which the Court pointed out that the "jurisdictional act cannot be trivial; it must be 'of material importance to the consummation of the scheme.'" The Court of Appeals found no significant difference between the formulation in Hooper, supra, and the formulation by the Seventh Circuit: '"(a)ll that is required is but one act within the forum district which represents more than an immaterial part of the allegedly illegal events."'[See, Bath Industries, Inc. v. Blot, 427 F.2d 97, 114 (7th Cir.1970)]
In Hilgeman, the Fifth Circuit held that defendant's act of sending a premium notice to Plaintiff in the Northern District of Alabama and the Plaintiff paying the premium by a check drawn upon an Alabama bank were sufficient to meet the requirements of Section 27 of the 1934 Act, 15 U.S.C. 78aa.3
In Schoemann v. Natural Energy Corporation, et al., 2000 WL 269892 (E. D. La., March 9, 2000), Plaintiff brought an action against defendants under the Securities Act of 1933 in the United States District Court for the Eastern District of Louisiana. Plaintiff alleged that Mr. Seigel contacted him by telephone at his office in Metairie, Louisiana, in regard to an investment opportunity. Plaintiff made a stock purchase and a loan to defendants. After the complaint was filed, defendants raised the objection of lack of personal jurisdiction, that they had no minimum contacts with the forum. In overruling defendants' objection, the District Court noted that the Plaintiff brought an action under the Securities Act which provides for nationwide service of process, thus, "the relevant inquiry is whether the defendant has had minimum contacts with the United States." [Citations omitted] The District Court stated that "as long as Mr. Siegel maintains minimum contacts with the United States, forum is proper in any United States District Court. A defendant has sufficient minimum contacts with the United States to support the fairness of the exercise of jurisdiction by a United States Court if he resides or conducts business on American soil." [Citations omitted]
The District Court also evaluated the issue of personal jurisdiction as if the legal requirement for personal jurisdiction was "minimum contacts with the forum." The District Court concluded that its decision would be the same since Mr. Seigel's telephone calls to Plaintiff in Louisiana and his receipt of funds from Plaintiff were sufficient to establish the defendants' minimum contacts with the forum. The District Court noted that this jurisdiction has been labeled "specific jurisdiction" by the courts. Specific jurisdiction is said to exist where "'defendants' contacts with the forum which are asserted as the basis for jurisdiction (are) related to the subject matter of the controversy...or must be the result of 'affirmative acts performed in connection with the subject matter of this litigation."' [Citations omitted] The District Court concluded that "under the doctrine of specific jurisdiction, a single substantial contact may satisfy due process requirements." [Citing Dalton v. R & W Marine, Inc., 897 F.2d 1359, 1361 (5th Cir 1990)] Although this finding of specific jurisdiction was not an application of the proper legal standard for personal jurisdiction under the 1933 and 1934 Acts, it demonstrates just how minimum the contacts with the forum have to be to satisfy the requirements of specific jurisdiction; to wit: where a state court, without the advantage of the jurisdiction and venue provisions of Section 27 of the 1934 Act, 15 U.S.C. 78aa, is attempting to get extraterritorial jurisdiction over a defendant. [See, Busch v. Buchman, Buchman & O'Brien, Law Firm, 11 F.3d at 1258.]4
In our case, Co-defendant and Co-conspirator Romona Holcombe traveled from California to Louisiana, Louisiana, on or about July 11, 1997, and, through untrue statements of material fact and through material omissions upon which Plaintiffs relied, offered to Plaintiffs, on behalf of Kerr, investment contracts being sold by Co-defendant and Co-conspirator William R. Kerr. [See, Exhibits A, B, and C, Declarations of Mitchell Bourgeois, Barbara Bourgeois and John Rogers. See, Exhibit D, Deposition of Romona Holcombe, February 8, 2000, page 5.] Holcombe falsely represented to Plaintiffs that Kerr was offering to sell to Plaintiffs investment contracts in "medium term bank debenture trading programs allegedly offered by the top European banks." [See, Exhibits A, B, and C.] These "investment programs" do not exist. Holcombe told Plaintiffs that there was a small group of people, such as the Rockefellers, the Kennedys, and others that understood how to make money compound. That this compounding of money is done off-shore with European banks using U. S. Dollars. She falsely represented to Plaintiffs that this compounding of money took place through "European bank debenture trading programs" and that the "Federal Reserve knows about these programs and approves of them.[Id.]
Holcombe testified that she told the Plaintiffs "about William Kerr and what he was offering people." [See, Exhibit D, Deposition of Romona Holcombe, page 6.] Holcombe even testified that she told the Plaintiffs that these were "European bank debenture trading programs" and that "the Federal Reserve knows about these programs and approves of them." [Id. At page 7] Holcombe told Plaintiffs that she was "working with a man from California named William R. Kerr...the heir to the Kerr McGee oil fortune...and the son of a former United States Senator from Oklahoma." [Id. At page 8] She falsely represented to Plaintiffs that Kerr had been generating these programs for six years. [See, Exhibits A, B, and C.] Holcombe testified that she "had documents with me from William Kerr that I gave to the group and...I...repeated to them what I had been told by William Kerr." [See, Exhibit D at page 9] Holcombe falsely represented to Plaintiffs that Kerr "was for real and all what he said was true." [Id. At page 10] She told Plaintiffs that she had talked to people who "said they were making money with Mr. Kerr." [Id. At page 11] She told Plaintiffs that Kerr had offices "in Helsinki, Hong Kong, London, Los Angeles, Sidney, Zurich and the British Virgin Islands." [Id at page 14] Holcombe testified that she told Plaintiffs that Kerr had told her "that he had $200 billion tied up in these ongoing bank debenture trading programs...." [Id. At page 15, 20] Holcombe told Plaintiffs that Kerr had told her that he was doing this to help the small people. [Id. At page 17] She told Plaintiffs that Kerr had made "enormous profits in these bank debenture trading programs..." [Id at page 20] Of course, all this was false or misleading. She falsely represented that Kerr had taken in several hundred million dollars to begin his latest bank debenture trading program, the one that Plaintiffs would participate in. [See, Exhibits A, B, and C.] She falsely represented that Kerr makes enormous profits because he is trading in the hundreds of millions. [Id.] Holcombe told Plaintiffs that it was "only because of what Kerr is doing in Europe that he can let us come in on an existing program." [Id.] She reported that Kerr gave 15% of his profits to charity, that he was "very much a man of integrity." [Exhibit D at page 21] Holcombe told Plaintiffs that Kerr "was going to add any of these investors to the programs that he currently had underway." [Id at page 22]
Holcombe testified that Kerr was offering to Plaintiffs an "18-month investment contract that would pay 138 times the investment." [Id at pages 22-23] This, of course, was false. She said that Kerr told her "that it was only because of what Kerr was doing in Europe that Kerr would let them come into the existing program." [Id at page 23] Holcombe testified that Kerr paid her "5 percent... of the total amount of the investor's money" that she brought in." [Id at page 25] Holcombe testified that "quite a number of the Louisiana group...put up their money to invest in this bank debenture trading program sponsored by Kerr..." [Id at page 32] Holcombe testified that everything that she had told Plaintiffs "was simply a repeat of what Kerr told (her)." [Id at page 37]
Holcombe told Plaintiffs that she soon would be making "one million dollars a month" from these bank debenture trading programs. [See, Exhibits A, B, and C, declarations of Mitchell Bourgeois, Barbara Bourgeois and John Rogers.] She told Plaintiffs that the "biggest pitfall in the program is to bring in too many investors who can't keep their mouths shut. Talking too much. The Rockefellers, Kennedys never talked about what they had." [Id.]
Among the documents Holcombe had brought with her and distributed to Plaintiffs was a document entitled "An Introduction to the International Chamber of Commerce (Publication 500) and Bank Debenture Trading Programs." [Id. See, Exhibit A to Amended Complaint.] Holcombe reviewed the contents of this document with Plaintiffs. [Id.] The document contained numerous false and misleading representations. It stated that a bank debenture trading program "is an investment vehicle commonly used by the very wealthy...to give a guaranteed high return to the investor (with)...no risk....;" That "(t)he Instruments are debt obligations of the Top One Hundred (100) World Banks....(T)he Investors funds are never put at risk...these programs have been available...for years. However, because of the extremely high minimum requirements to enter them, only a few could qualify...10 to 100 million dollars....the investor must be 'invited in' to participate in these very limited enrollment programs." The document falsely represented that the profits could be great, " ... leasing assets, usually in the form of United States government Treasury Bills, for a fraction of their face value...is the principal on which leveraged trading-programs revolve. The leased assets provide the collateral against which the instruments are purchased and resold...(t)he large profits produced by trading programs is created by the difference between the purchase cost and resale price of the instrument...(b)y leasing assets, the profit is generated on a much larger amount of instruments, greatly increasing the total dollar profit." The document falsely represented that the "(a)uthority to issue a given allotment of (these)...banking instruments...is issued quarterly for each issuing bank, according to the Federal Reserve's (sic) or Central Bank's review of each bank's portfolio." The document falsely represented how it was that no one had heard of bank debenture trading programs before: "(v)irtually every contract involving the use of these high-yield Bank Instruments contains explicit language forbidding the contracted parties from disclosing any aspect of the transactions for a period of five years." The document related that an investor "...when first presented with the opportunity to participate...may be very skeptical about the existence and authenticity of such programs...but (this) invariably means that the potential investor is...not familiar with the profit opportunities that qualified European investors have enjoyed for the past 50 years." The document falsely represented "that there are no smoke and mirrors involved. All of the programs are conducted under the specific guidelines set up by the International Chamber of Commerce (ICC)...The ICC is the regulatory body for the world's great Money Center Banks...and exerts strict control on world banking procedures...The U. S. Federal Reserve is a very important member...and as a result the vast majority of U. S. citizens have not been made aware of the money making opportunities...and the chances are very great that your local (bank) branch manager has absolutely no knowledge of them, and may even deny their existence...(t)he main reason for this lack of knowledge is that all United States banks deny the existence of these programs...(even) the Comptroller of the Currency has regularly testified that these instruments do not exist." [Id.; See, Exhibit A to Amended Complaint] The representations contained in this document were false, misleading and contained material omissions upon all of which Plaintiffs relied in making their decisions to purchase these investment contracts from Kerr.
As soon as Plaintiffs committed to purchasing these investment contracts offered by Kerr, Kerr followed up and faxed to Mitchell Bourgeois in Louisiana, Louisiana, a memorandum signed by Kerr containing instructions at to the specific bank account of William R. Kerr to which Plaintiffs were to wire their funds to purchase these investment contracts sold to Plaintiffs by Kerr and Holcombe. [See, Exhibits A, B, and C, and particularly Exhibit A-1.] Pursuant to Kerr's written instructions to Plaintiffs, on July 24, 1997, Plaintiffs, in Louisiana, wired $149,500.00 to William R. Kerr in California. [Id. See, Exhibit A-2] Additional funds were wired immediately thereafter. [See, Exhibits A, B, and C.]
On July 25, 1997, Kerr, in California, telephoned Mitchell Bourgeois in Louisiana, Louisiana and told him that he had received the funds wired to him, which totaled $160,000.00. [Id.] Kerr invited Mitchell Bourgeois, Barbara Bourgeois and John Rogers to meet with him at his offices in Beverly Hills, California, offering to pay their hotel accommodations. [Id]
Without question, these acts and occurrences in this forum were "more than an immaterial part of Kerr' scheme to defraud Plaintiffs. Subject matter jurisdiction and venue have been established pursuant to 15 U.S.C. s 78aa. Since Kerr is a citizen of the State of California and the United States, personal jurisdiction has been established.5 [See, Exhibit D, Deposition of Romona Holcombe, at page 8. See, also Kerr Memorandum at page 3, and Kerr's sworn declaration at page 15.]
Pursuant to Kerr's invitation, Mitchell Bourgeois, Barbara Bourgeois, and John Rogers traveled to California to met with Kerr. Upon arrival, Kerr's driver met them at the airport and took them to their hotel. The next morning Kerr's driver picked them up and took them to Kerr's officer. [See, Exhibits A, B and C.] Kerr paid for their hotel rooms.6 [See Exhibit C-1.]
Holcombe attended this meeting. During the meeting, Kerr reaffirmed the representations that Holcombe had made in his behalf to Plaintiffs when she was in Louisiana. [See, Exhibits A, B and C, affirming the misrepresentations made by Kerr as set out in Paragraph 15 of the Amended Complaint.] Kerr represented to Plaintiffs how bank debenture trading programs worked, despite the fact that they don't exist. [Id.] He told them that "the principal, interest, and the full return on the investment was personally guaranteed by me." [Id.] He told them he "does not get into any investment programs where they say it is on a best efforts basis, but only entertains the programs that have bank guarantees." [Id.] Kerr falsely represented that he "had already received profits on this program way above what I am guaranteeing (to Plaintiffs)." [Id.] Kerr falsely represented that he had been very successful doing these programs, that he didn't need to do this, but he was doing it to help people." [Id.]
Holcombe testified that she attended this meeting with Kerr in California. She testified that the representations that Kerr made to the Plaintiffs present were "very similar to the statements contained in Exhibit A" to the Amended Complaint. [See, Exhibit D, deposition of Romona Holcombe, pages 38-40.] Holcombe testified that Kerr encouraged the Plaintiffs that were present to talk to their friends and get them to make additional investments. [Id at page 48]
Soon after their return to Louisiana, Holcombe, in California, telephoned Plaintiffs and told them that Kerr said he would be willing to keep the medium term bank debenture trading program open for another week to give Plaintiffs the opportunity to purchase additional investment contracts from Kerr and to give Plaintiffs time to tell their friends about this investment opportunity offered by Kerr. The Plaintiffs who had met with Kerr in California repeated Kerr's representations to other Plaintiffs in Louisiana as Kerr had directed. Relying upon the representations of Kerr and Holcombe, Plaintiffs purchased additional investment contracts from Kerr totaling $96,500.00. [See, Exhibits A, B and C.] Each investor issued a cashier's check made payable to William R. Kerr, and these checks were mailed to Kerr in California. [Id. And see copies of cashier's checks made payable to William R. Kerr, Exhibit A-3.]7
On February 12, 1999, Kerr and Holcombe, in California, had a conference call with Plaintiffs in Louisiana, Louisiana. [See, Exhibit D, page 89.] During that conference call, Kerr offered to return to Plaintiffs' the full price paid for their investment contracts along with 18% annual interest. [Id.] Kerr falsely represented to Plaintiffs that their investment contracts were not securities, and that he had not violated the securities laws. [Id. At page 90] Kerr falsely represented to Plaintiffs that he had earned from his trading in bank debenture trading programs 82% of the total amount that was due to Plaintiffs on their investment contracts. [Id. At pages 91-92] Kerr stated that his problem was that he did not have 100% of the amount due to Plaintiffs. [Id. At page 92.] Kerr thanked Plaintiffs for "being patient." Kerr told Plaintiffs that "for being patient they would be rewarded because he wanted to honor the contract(s)." Kerr told Plaintiffs that he "could honor the contract." [Id at page 93.] Of course, Kerr has not "honored" his investment contracts he sold to Plaintiffs.
It is clear that the requirements for subject matter jurisdiction, venue, and personal jurisdiction have been met pursuant to 15 U.S. C. 78aa.
2. Further, the Requirements of Personal Jurisdiction, Subject Matter Jurisdiction, and Venue have all been met under the Co-conspirator Theory.
Under the co-conspirator theory, the acts of co-conspirator and co-defendant Romona Holcombe in traveling to Louisiana and persuading Plaintiffs to purchase these investment contracts from co-conspirator Kerr and to send their money to co-conspirator Kerr are sufficient to establish subject matter jurisdiction, personal jurisdiction and venue over Defendant Kerr. The Fifth Circuit Court of Appeals applied this co-conspirator theory in Higleman: "(t)hus, jurisdiction and venue are proper as to National Insurance Company of America and under the 'co-conspirator theory' proper as to its co-defendants." [See, Hilgeman v. National Insurance Company of America, supra, 547 F.2d at 302]
The Court of Appeals stated that "(t)he 'co-conspirator theory' was described by one court in the following terms: 'Plainly stated, this doctrine provides that in a multi-defendant securities proceeding, where a common scheme of acts or transactions to violate the securities act is alleged, if venue is established for any of the defendants in the forum district there is sufficient justification to establish venue as to the other defendants, even in the absence of any contact or substantial contact by any one defendant within that district."'[Citations omitted]
Co-conspirator and co-defendant Holcombe's extensive acts in this forum are more than sufficient to establish jurisdiction and venue as to co-conspirator and co-defendant Kerr under the co-conspirator doctrine.
3. Defendant Kerr has not carried his burden of proving that the balance of factors is strongly in favor of transferring this action to California.
28 U.S.C s 1404(a) 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." "The moving party must make a clear-cut showing that transfer is in the best interests of the litigation." [See, Icon Industrial Controls Corporation v. Cimetrix, 921 F. Supp. 375 (W.D. La. 1996), Citations omitted.] In determining whether or not the moving party has carried his burden of proof, a court must look to factors pertaining to the "private interest of the litigants" and to "factors of public interest" as set out by the Supreme Court of the United States in Gulf Oil Corporation v. Gilbert, 330 U.S. 501, 67 S.Ct. 839, 91 L.Ed. 1055 (1947). [ Cimetrix, at page 383.] The balance of these factors must be "strongly in favor" of transfer. [ Cimetrix, at page 383.] We will examine these factors set out in Gilbert to demonstrate that Kerr has not carried his burden of proof.
As to the "private interests of the litigants," the Supreme Court, in Gilbert, set out these factors. Relative ease of access to sources of proof--in our case there are sixteen plaintiffs, fifteen of whom live in Louisiana, fourteen of whom live in Louisiana. Almost all of the evidence in this action will be derived from litigants who live in Louisiana. Availability of compulsory process for attendance of unwilling, and the cost of obtaining of willing, witnesses--Holcombe made her pitch to sell the investment contracts offered by Kerr, to approximately forty persons at Mitchell Bourgeois' home in Louisiana. Only sixteen of those persons are Plaintiffs. A group of the remaining non-plaintiffs will be called as fact witnesses to prove that Holcombe made these misrepresentations on behalf of Kerr as alleged in the Amended Complaint. If this action was transferred to California, none of these witnesses could be compelled to appear. Plaintiffs are working men and women, some of whom invested their life savings with Kerr. They cannot afford the costs to depose these witnesses. Even worse, some of the Plaintiffs cannot afford to travel to California and pay the costs associated with such a trip so they can appear and testify for themselves. Almost every person with an interest in this action resides in Louisiana. As the Supreme Court said in Gilbert, "(c)ertainly to fix the place of trial at a point where litigants cannot compel personal attendance and may be forced to try their cases on deposition, is to create a condition not satisfactory to court, jury or most litigants." Gilbert at page 844. Possibility of view of the premises--this factor is unimportant to this litigation. All other practical problems that make trial of the case easy, expeditious and inexpensive--this trial would be substantially less expensive for all the litigants if one litigant, Kerr, was required to come to Louisiana, rather than sixteen litigants being required to travel and stay in California during the trial.8 Many Plaintiffs could not be away from their places of employment for that length of time. For those Plaintiffs who could travel to California, the economic costs of that travel would make the trial more expensive for the litigants. Kerr, who is self-employed, and financially well-off would suffer no such hardships. "Merely shifting the inconvenience from one side to the other...obviously is not a permissible justification for a change of venue." [Cimetrix at page 384. Citations omitted.] Enforceability of a judgment--this would not be a factor.
As to the "public interest factors," the Supreme Court enumerated the following factors. Administrative difficulties follow for courts when litigation is piled up in congested centers instead of being handled at its origin--the origin of this action is the Middle District of Louisiana. Twenty years ago, this District had one judge. Now, the District has three district judges and one senior district judge who is active. This district also has three Magistrate Judges. Legal matters is this District are handled most expeditiously. Jury duty is a burden that ought not to be imposed upon the people of a community which has no relation to the litigation--the people of Louisiana have a significant relation to this litigation. Sixteen of its citizens were defrauded by Kerr and Holcombe. Citizens of Louisiana were defrauded by persons who came to Louisiana for the specific purpose of defrauding them. Jurors chosen from this area would not consider it a burden to determine the outcome of a extremely local matter. In cases which touch the affairs of many persons, there is reason for holding the trial in their view and reach rather than in remote parts of the country where they can learn of it by report only--this case touches the affairs of citizens of Louisiana, their families and their friends, who were defrauded by Kerr and Holcombe. The people of Louisiana are entitled to know that the culprits are forced to face the bar of justice here in Louisiana where the victims live and the offense occurred. There is a local interest in having localized controversies decided at home--because the victims of this fraud are from Louisiana, this action has already generated media coverage. A controversy centered in Louisiana ought to be decided in Louisiana. There is an appropriateness, too, in having the trial of a diversity case in a forum that is at home with the state law that must govern this case, rather than having a court in some other forum untangle problems in conflicts of laws, and in law foreign to itself--this action was brought under both a federal question and diversity basis. All plaintiffs are diverse from all defendants. The Amended Complaint is comprised of two claims under federal law and five claims under the laws of the State of Louisiana. In connection with the claims under Louisiana law, if this action was transferred, the California court would be required to follow the law of the Louisiana as to these claims. [See, Van Dusen v. Barrack, 376 U.S. 612, 84 S.Ct. 805, 11 L. Ed. 2d 945 (1964) A court in California would have a much more difficult task in dealing with the claims under Louisiana law than would this Court.
A balancing of the factors discussed above strongly favor denying Kerr's motion to transfer. However, as stated above, Plaintiffs do not have to carry any burden. For Kerr to prevail, the balance of factors must be strongly in his favor--a burden he has not come close to carrying. In Gilbert, the Supreme Court of the United States stated: "...unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed. Gilbert at page 843. [ A plaintiff's choice of forum is generally entitled to considerable deference. Cimetrix, at page 384. Citations omitted.] Under Gilbert and its progeny, Kerr's motion to transfer must be denied.
Under 15 U. S. C. s 78aa, subject matter jurisdiction, personal jurisdiction and venue are proper in the Middle District of Louisiana. Under the co-conspiracy theory, subject matter jurisdiction, personal jurisdiction, and venue are proper in the Middle District of Louisiana. Defendant Kerr has failed to carry his burden of proving that the balancing of factors is strongly in favor of transferring this action to California.
I certify that a copy of the foregoing PLAINTIFFS' OPPOSITION TO DEFENDANT WILLIAM R. KERR'S MOTION TO DISMISS has been by U. S. mail, postage prepaid, to James S. Holliday, Jr., Esq. 3538 Cole Drive, Louisiana, Louisiana 70806, local counsel for William R. Kerr.
1 In a dissent, Judge Emilio M. Garza agreed that under s 78aa the district court had subject matter jurisdiction and that venue was proper under the "act or occurrence" language of s 78aa. Judge Garza disagreed with the prevailing rule in the various circuit courts of appeal that for purposes of s 78aa the relevant inquiry is whether the defendant has minimum contacts with the United States. In our case, even Judge Garza's objections would be satisfied since Kerr had minimum contacts with this forum. [See, discussion infra.]
2 The Court of Appeal stated that "'a complaint that alleges the existence of a federal question establishes jurisdiction, even though the court ultimately decides that the plaintiff's federal rights were not violated.' Dismissal for lack of jurisdiction is appropriate only where the court decides that the federal claim is insubstantial, i.e., frivolous, or where the claim is foreclosed by prior decisions of the Supreme Court." [Quoting Wright and Miller in FN1, "'(t)he test for dismissal is a rigorous one and if there is any foundation of plausibility to the claim federal jurisdiction exists."'][Citations omitted] [Hilgeman at 300]
3 The Court of Appeals noted that the jurisdiction and venue provisions of Section 27 of the 1934 Act are to be applied in cases where a Plaintiff states claims under both the 1933 and the 1934 Acts. [Citations omitted] [At FN 7] Of course, in our case Plaintiffs state claims against Kerr under both the 1933 and the 1934 Acts.
4 Thus, if Judge Emilio M. Garza's dissent in Busch was the law in the Fifth Circuit, in our case this Court would still have personal jurisdiction over Kerr since Kerr had minimum contacts with the forum under the doctrine of specific jurisdiction.
5 [See Busch v. Buckman, Buckman & O'Brien, Law Firm, supra, Hilgeman v. National Insurance Company of America, et al., supra, Hooper v. Mountain State Securities Corporation, supra, and Bath Industries, Inc. v. Blot, supra.
6 In Kerr's memorandum, Kerr denies that he invited Plaintiffs to come to California and meet with him. [See, Kerr's memorandum at page 7.]
7 In Kerr's sworn declaration, he denies that he received any of these cashier's checks made payable to him and mailed to him: "I did not receive any cashier's checks from Plaintiffs through mail or otherwise." [See, Kerr's sworn declaration at page 17.] Likewise, in Kerr's memorandum to this Court, Kerr denies that these cashier's checks were paid to him: "...in actuality, these sums were never paid to Defendant Kerr nor to anyone else with Defendant Kerr's knowledge." [See, Kerr's memorandum at page 11.]
8 It is unlikely that Defendant Holcombe will be able to participate in this action from California, or even that she will be attending the trial of this matter. Holcombe is awaiting sentencing in the United States District Court for the Southern District of West Virginia on convictions arising from a very similar offense committed in West Virginia. Any discovery sought by Kerr as to his Co-defendant, Holcombe, will, of necessity, have to take place where Holcombe is incarcerated and under the auspices of the Federal Bureau of Prisons.