Securities and Exchange Commission v. Church-Koegel et al
Omnibus Order. ORDER granting 38 Motion to Dismiss; granting 39 Motion to Dismiss; granting 38 Motion to Change Venue; granting 39 Motion to Change Venue; granting 28 Motion to Dismiss; granting 28 Motion to Change Venue. This action shall be transferred to the United States District Court for the Central District of California pursuant to 28 U.S.C. § 1404(a). The Clerk shall take all necessary steps to effectuate the transfer of this action. Any pending motions are denied as moot. The Clerk is directed to close this case. Motions Terminated: 28 MOTION to Dismiss 1 Complaint, MOTION to Change Venue filed by David H Goldman, 39 MOTION to Dismiss 1 Complaint, MOTION to Change Venue filed by Nicole J Walker, 38 MOTION to Dismiss 1 Complaint, MOTION to Change Venue filed by Brook Church-Koegel. Signed by Judge Robert N. Scola, Jr on 9/15/2020. See attached document for full details. (amb)
United States District Court
Southern District of Florida
Securities and Exchange
Brook Church-Koegel and others,
Civil Action No. 20-21001-Civ-Scola
This matter is before the Court on Defendants David H. Goldman, Brook
Church-Koegel, and Nicole J. Walker’s respective motions to dismiss or, in the
alternative, transfer this action to the United States District Court for the Central
District of California for forum non conveniens. (Goldman Mot., ECF No. 28;
Church-Koegel Mot., ECF No. 38; Walker Mot., ECF No. 39.) Plaintiff Securities
and Exchange Commission (“SEC”) has responded to each motion, and the
Defendants have each replied. Having reviewed the record, the parties’ briefs,
and the relevant legal authorities, the Court grants the motions (ECF Nos. 28,
The SEC filed its complaint against the Defendants on March 5, 2020,
alleging that they were among the top revenue-producing salespersons for
Woodbridge, purportedly a Ponzi scheme. (ECF No. 1 at ¶1.) Woodbridge “is a
Sherman Oaks, California-based financial company” purportedly not registered
with the SEC and with no publicly traded stock. (Id. at ¶10.) The Defendants are
also all California-based, each residing in the Central District of California. (Id.
at ¶¶ 7-9.) From July 2012 through December 2017, Woodbridge raised at least
$1.22 billion from more than 8,400 investors nationwide through allegedly
fraudulent unregistered securities offerings. (Id.) The company claimed that it
was using investors’ funds to make high interest rate loans to third-party
borrowers. In reality, the SEC claims, investors’ funds were used to purchase
almost 200 residential commercial properties “primarily in Los Angeles,
California and Aspen, Colorado” for entities whose beneficiary was Woodbridge’s
owner. (Id. at ¶27.)
The Defendants allegedly personally solicited and sold Woodbridge
securities in unregistered transactions to many of these investors. (Id. at ¶2.)
The SEC claims that the Defendants, acting as unregistered brokers, were jointly
responsible for raising approximately $444 million between June 2014 and
December 2017 from thousands of investors in more than 40 states. (Id. at ¶4.)
Church-Koegel in particular is alleged to have sold or assisted in the sale of
unregistered securities to approximately 1,600 investors; Goldman to
approximately 2,800 investors; and Walker to approximately 1,000 investors.
(ECF No. 1 at ¶33.) The complaint alleges that Church-Koegel and Goldman each
received over $1 million in transaction-based compensation, and that Walker
received more than $750,000, in addition to their salaries from 2014 to 2017
while they were employed by Woodbridge in California. (Id. at ¶¶ 1, 39.)
The complaint also details how much of the Defendants’ overall
participation in the scheme took place in this District. Of the Defendants’ total
sales (approximately $444 million), Church-Koegel “directly” solicited and sold
at least $1.8 million in securities to eight investors in this District; Goldman
directly solicited and sold at least $960,000 to nine investors in this District; and
Walker directly solicited and sold at least $100,000 to two investors in this
District. Additionally, each Defendant is alleged to have “coordinated with and
assisted” three or four “external sales agents” located in this District in additional
sales. (ECF No. 1 at ¶14.) Church-Koegel was allegedly indirectly involved in an
additional $10.5 million in sales in this District; Goldman an additional $59
million in this District; and Walker an additional $2.5 million in this District (Id.)
Finally, two of the three Defendants, Church-Koegel and Goldman, are alleged
to have visited Florida. Church-Koegel allegedly met with external sales agents
and investors on three occasions, and once met “potential investors” in Palm
City, Florida where he showed them properties “on Google Earth.” (Id.) Goldman
allegedly traveled once to Florida “to meet with some of the highest revenueproducing external sales agents.” (Id.) Walker is not alleged to have traveled to
Florida at any time.
“A district court may transfer a civil action to any other district or division
where it may have been brought ‘[f]or the convenience of the parties and
witnesses, and in the interest of justice.’” Perlman v. Delisfort-Theodule, 451 Fed.
App’x 846, 848 (11th Cir. 2012) (quoting Robinson v. Giamarco & Bill, P.C., 74
F.3d 253, 260 (11th Cir. 1996) (citing 28 U.S.C. § 1404(a)). However, “[t]he
plaintiff’s choice of forum should not be disturbed unless it is clearly outweighed
by other considerations.” Id. (quoting Robinson, 74 F.3d at 260). The movant
bears the burden to persuade the court to transfer an action. Id.; In re Ricoh
Corp., 870 F.2d 570, 573 (11th Cir. 1989); Mason v. Smithkline Beecham Clinical
Labs., 146 F.Supp.2d 1355, 1359 (S.D. Fla. 2001). “Unless the balance is
strongly in favor of the defendant, the plaintiff's choice of forum should rarely be
disturbed.” Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 67 S.Ct. 839, 843 (1947);
see also Acrotube, Inc. v. J.K. Financial Group, Inc., 653 F.Supp. 470, 477 (N.D.
Ga. 1987) (To justify a transfer, the moving party must “demonstrat[e] that the
balance of convenience and justice weighs heavily in favor of the transfer.
Accordingly, when assessing a motion under section 1404(a), a court must
consider whether a transfer would make it substantially more convenient for the
parties to produce evidence and witnesses.”) (citations omitted).
A transfer in the interest of justice is discretionary in the Eleventh Circuit.
See Pinson v. Rumsfeld, 192 Fed. App’x 811, 817 (11th Cir. 2006). The Eleventh
Circuit has identified nine factors to assist courts in exercising this discretion.
Manuel v. Convergys Corp., 430 F.3d 1132, 1135 n.1 (11th Cir. 2005). This
analysis includes examining the following factors, which the party seeking
transfer has the burden to demonstrate: (1) the convenience of the witnesses; (2)
the location of relevant documents and the relative ease of access to sources of
proof; (3) the convenience of the parties; (4) the locus of operative facts; (5) the
availability of process to compel the attendance of unwilling witnesses; (6) the
relative means of the parties; (7) a forum’s familiarity with the governing law; (8)
the weight accorded a plaintiff’s choice of forum; and (9) trial efficiency and the
interests of justice, based on the totality of the circumstances. Id. When the
analysis of a factor results in a “neutral” outcome, that factor does not favor
transfer. Watson v. Community Edu. Ctrs., 2011 WL 3516150, at *5 (M.D. Fla.
Aug. 11, 2011).
As an initial matter, the parties do not dispute that venue is proper in this
District and that it would be proper in the Central District of California. Rather,
the Defendants’ argument is that this particular venue, the Southern District of
Florida, is materially less convenient than the Central District of California.
Although the Defendants seek transfer under the doctrine of forum non
conveniens, the Court will construe their motions as motions to transfer under
28 U.S.C. § 1404(a). Section 1404 has codified the forum non conveniens doctrine
in the context of motions to transfer. The Court now proceeds to weigh each of
the nine transfer factors set forth in Manuel v. Convergys Corp., 430 F.3d 1132,
1135 n.1 (11th Cir. 2005).
1) The convenience of the witnesses.
The convenience of witnesses is one of the most important factors in the
Section 1404(a) analysis. See Electronic Transaction Network v. Katz, 734
F.Supp. 492, 501 (N.D. Ga. 1989). To satisfy this factor, courts have held that
the movant must specify the key witnesses to be called, their expected testimony,
and the inconvenience to them should the action remain in the plaintiff’s chosen
forum. Id.; see also Proven Winners, N.A., LLC v. Cascade Greenhouse, Case No.
2:06-cv-428, 2007 WL 1655387, at *3 (M.D. Fla. June 6, 2007).
The Defendants have identified over 50 witnesses by name and location,
the majority of whom reside in California. (See, e.g., ECF No. 31 at 3-4; ECF No.
38 at 4-5; ECF No. 39 at 4-5.) The Defendants also indicated the expected
testimony of several of these witnesses. Specifically, they argue that the primary
question in this case is whether the products that they marketed were technically
securities and whether they required a securities license to market them. (See
ECF No. 38 at 3; ECF No. 39 at 3.) To that end, Church-Koegel and Walker claim
that their supervisors in California, some of whom appear to be on their witness
list, told them numerous times that the products they sold were not securities
that needed to be registered. (See ECF No. 38 at 2.) Goldman adds that the
dozens of witnesses on his list “can each provide highly important testimony
about the nature of the Woodbridge business and the respective duties and roles
of the co-defendants.” (ECF No. 31 at 3.) The SEC points out that three of the 58
witnesses identified by Church-Koegel and Walker are in Connecticut that those
three witnesses are attorneys whose testimony would presumably be quite
important to the extent that the Defendants are foreshadowing an “advice of
counsel” defense. (ECF No. 40 at 2.) The Court agrees with the SEC’s argument
that the convenience factor does not favor transfer with respect to the three
Connecticut-based witnesses. Those witnesses would have to travel no matter
whether the case is transferred. However, that leaves 55 other witnesses, the
overwhelming majority of whom are in California. At this point, the Court
underscores that this factor is not always won by the party that can muster the
longest witness roster. Such a rule would create poor incentives. However, in
this case, the Defendants have identified over 50 witnesses by name, location,
and, generally, by expected testimony. The SEC has identified no witnesses with
such precision. The balance tips decidedly in the Defendants’ favor.
The Court acknowledges that Goldman, whose motion was filed over one
month before Church-Koegel and Walker’s motions, neglected to identify his
proposed witnesses by name in his opening brief. Instead, he only listed their
names in his reply brief. Although the general rule is that “arguments raised for
the first time in a reply brief are not properly before a reviewing court,” the Court
finds that some leniency is in order. Herring v. Secretary, Dep't of Corrs., 397
F.3d 1338, 1342 (11th Cir. 2005). First, the information raised by Goldman
concerning his witness list is encompassed almost entirely by the subsequently
filed witness lists that accompanied his co-defendants’ motions. Accordingly, the
SEC has had an opportunity to respond to the contents of that list and in fact
did respond to the witness lists in the subsequent motions. In the SEC’s
responses to Church-Koegel and Walker’s motions, it “adopt[ed] and
incorporate[d]” its response in opposition to Goldman’s motion. (See ECF No. 40
at 1.) Second, the Court is “mindful of the fact that [the Defendant] is pro se and
is therefore entitled to some leniency” as a general matter. McDowell v. Gonzalez,
Case No. 19-cv-23110, at *8 (S.D. Fla. Dec. 2, 2019) (Bloom, J.).
Finally, the Court finds that the SEC’s reliance on Reyes v. JA & M
Developing Corp., is misplaced. Case No. 12-61329-CIV, 2012 WL 3562024 (S.D.
Fla. Aug. 17, 2012). The SEC cited to Reyes for the proposition that a party must
specify how a particular forum unduly burdens a witness as compared to the
proposed alternative forum. The holding of Reyes was not so broad. That case
did indeed deny a motion to transfer venue where the movants failed to provide
“any specifics on undue inconvenience for any witnesses.” Id. at *5. However, the
remainder of the paragraph excerpted by the SEC in its response brief explains
that the movants failed to show that transfer between two courthouses “roughly
thirty miles apart” and within the Southern District of Florida was justified. Id.
at *5 (emphasis added). In this case, the relative inconvenience to over 50 nonparty witnesses between fora on two coasts – thousands of miles apart – speaks
2) The location of relevant documents and the relative ease of access to
sources of proof.
The Court agrees with the SEC that the access to evidence factor is neutral
in this case and does not weigh in favor of transfer of venue. See Motorola
Mobility, Inc. v. Apple, Inc., 2012 WL 3113932, at *7 (S.D. Fla. July 31, 2012)
(Scola, J.) (“modern methods of transportation and communication have largely
ameliorated the burdens of moving discovery from place to place”); Microspherix
LLC v. Biocompatibles, Inc., 2012 WL 243764 at *3 (S.D. Fla. Jan. 25, 2012)
(Moore, J.) (“In a world with fax machines, copy machines, email, overnight
shipping, and mobile phones that can scan and send documents, the physical
location of documents is irrelevant.”).
3) The convenience of the parties.
The Defendants argue that it would be much more convenient for this case
to proceed in the Central District of California for several reasons. First, they
could appear in person for all hearings and trial. Second, this Court would not
be burdened with arranging for telephonic and video appearances. Third, they
would be in a better position to call upon their contacts in California for legal
assistance, which they state is impossible for them to do in the Southern District
of Florida. Finally, Goldman adds a fourth reason, which is that transfer would
save the significant expense of cross-country physical mailing. The Court also
notes that all of the Defendants reside in California.
The minor inconveniences of telephonic or video-conferencing do not
persuade the Court that this factor tips in favor of transfer. Over the course of
the COVID-19 pandemic, these technologies have generally been efficient and
reliable substitutes for many in-person proceedings. As the SEC points out, “[t]he
widespread availability of video-conference for court hearings and depositions
also minimizes the need for travel.” (ECF No. 30 at 10 n.6.) Thus, litigation today
for remote parties may require less travel than it did in very recent history.
Accordingly, the travel factor is neutral.
The Court is persuaded that the Defendants’ claims that they are unable
to obtain counsel in this District without difficulty and that they reside in the
Central District of California both slightly favor transfer. Walker, for example,
submitted a declaration stating that “it would be an extreme hardship to find a
lawyer [in the Southern District of Florida] to assist [her] with this case,” whereas
she could more easily obtain legal assistance in California where she has worked
and lived for close to two decades. (ECF No. 39-1 at ¶9.) The SEC argues that
Walker “does not currently reside in California” because she was served with
process in New York while caring for her elderly parents. (ECF No. 40 at 3.)
Walker’s sworn declaration states that she does reside in California, where she
has lived for decades, even though she is “currently caring for [her] elderly
parents” in New York. (ECF No. 39-1 at ¶4.) Thus, it appears that all of the
Defendants do reside permanently in California. The SEC also appears to suggest
that the Defendants can afford counsel because they earned compensation in
the hundreds of thousands of dollars starting over six years ago and ending
nearly three years ago. (See, e.g., ECF No. 30 at 2.) However, the Defendants’
wherewithal lands somewhere between neutral and in favor of transfer. For
example, Church-Koegel and Walker argue that “[a]s the SEC well knows, as part
of the resolution of the Woodbridge bankruptcy, [they] waived [their] substantial
claim for unpaid salary. [They] ha[ve] virtually nothing left . . . .” (ECF No. 42 at
4; ECF No. 43 at 3.) Finally, the SEC did not respond to Goldman’s concerns
about costly cross-country mailing. Although this does not appear to be a major
consideration, Goldman did raise the issue and it does tip ever so slightly in the
Defendants’ favor. Cf. GolTV, Inc. v. Fox Sports Latin Am. Ltd., 277 F. Supp. 3d
1301, 1311 (S.D. Fla. 2017) (Altonaga, J.) (treating argument ignored by
plaintiff’s brief in response to motion to dismiss as conceded) (citing Hartford
Steam Boiler Inspection & Ins. Co. v. Brickellhouse Condo. Ass'n, Inc., No. 16-CV22236, 2016 WL 5661636, at *3 (S.D. Fla. Sept. 30, 2016) (Gayles, J.) (“[A]
plaintiff who, in [its] responsive brief, fails to address [its] obligation to object to
a point raised by the defendant implicitly concedes that point.”) (citation
omitted)). The Court disagrees with the SEC that “transfer would merely shift the
inconvenience from [the Defendants] to the [SEC].” (ECF No. 30 at 11.) These
factors are unique to the Defendants. As explained further below, the SEC does
not “reside” solely in this District and the SEC’s counsel is equally capable of
representing it (and in fact does represent it in related cases) in the Central
District of California.
The Court has considered the convenience to the Defendants if this case
were transferred, and the Court now balances that against the convenience to
the SEC of not transferring this case. At the outset, the Court notes that this
factor calls for a balancing of the convenience to the parties – not their attorneys.
In SEC v. Savoy Indus., Inc., the SEC successfully defeated a transfer motion
because it “alleged that transfer would be inconvenient for it (as opposed merely
to being inconvenient for its attorneys).” 587 F.2d 1149, 1155 (D.C. Cir. 1978)
(emphasis added) (parentheses in original). Here, however, the SEC emphasizes
the travel burden on its local litigation team. First, that is an inconvenience to
the SEC’s attorneys and not the parties. See id. Second, even if that
inconvenience factored into the total balance, it would be neutral at best because
it would be offset by the corresponding inconvenience to the Defendants. The
Court is not persuaded that the inconvenience to the SEC’s attorneys is sufficient
“to countervail the inconvenience of requiring a party to defend its actions in a
forum” where a minority of “those actions took place and requiring non-party
witnesses to travel far from their place of residence.” S.E.C. v. Ernst & Young,
775 F. Supp. 411, 415–16 (D.D.C. 1991) (“[T]he concerns raised seem to relate
far more to the convenience of SEC attorneys than to the SEC itself.”). On
balance, the Defendants would be more inconvenienced by denial of the motion
than the SEC would be inconvenienced by transfer. This factor weighs in favor
of the Defendants.
4) The locus of operative facts.
The Southern District of Florida is home to a minority of the conduct at
issue. Instead of arguing that this District is the locus of operative facts, the SEC
argues that the Court should not “reward” the Defendants with transfer. The
converse of this argument is that the Court should deny the motion to punish
the Defendants at this stage of the case. Specifically, the SEC argues that “[w]hat
[the Defendants] [are] really saying is that [they] should be rewarded because
[they] made more money, off more investors, . . . in the Central District of
California than [they] did in this District. That [the Defendants] found more
success violating the securities laws [there] than [they] did [here]” does not justify
transfer. (ECF No. 30 at 11.) This notion of transfer as a matter of reward and
punishment finds no basis in Eleventh Circuit law. Besides the fact that this
policy argument does not speak to the locus of the case, it would be inappropriate
for the Court to deny a motion as a way of dispensing punishment upon the
movants based on as-yet unproven allegations.
The Court now proceeds to the task at hand, which begins with
considering what it means to be the “locus” of a nationwide, billion-dollar Ponzi
scheme with thousands of investors. That question is more difficult to answer
here than in, say, a garden variety case arising from a car accident. Although
neither party offers a definition for the locus, several cases offer guidance. The
court in S.E.C. v. Telco Mktg. Servs., Inc., held that the locus was the forum that
was home to “the majority of investors.” Case No. CA 79-1827, 1980 WL 1397,
at *1 (D.D.C. Mar. 26, 1980). In Grail Semiconductor, this Court held that the
Southern District of Florida was not the locus where “less than one-tenth of one
percent of the shares at issue” in the case were transferred to a South Florida
resident. 2013 WL 2243961, at *1. In Swift v. BancorpSouth Bank, the Court held
that the locus was the district of the defendant’s headquarters because that is
where the complained-of “policy decision” was made that triggered “multitudes
of other transactions” in various districts. Case No. 1:10-cv-00090-MP-GRJ,
2014 WL 12856701, at *3 (N.D. Fla. June 04, 2014). Finally, in the patent
infringement context, courts search for “the center of gravity of the accused
activity.” Trace–Wilco, Inc., v. Symantec Corp., 2009 WL 455432, at *23 (S.D. Fla.
Feb. 23, 2009) (Marra, J.). Under any of the aforementioned rubrics, the locus is
in the Central District of California and not here.
Goldman argues that the locus of operative facts is in California because
“all of the events at issue in the Complaint (meaning Goldman’s performance of
his job at Woodbridge) occurred in California, almost all of the potential
witnesses are in California and virtually none are located in Florida.” (ECF No.
28 at 4.) Goldman’s co-defendants echo this argument and state that they
worked for Woodbridge in California for several years. (ECF No. 38 at 2; ECF No.
39 at 2.) While the SEC does not address that the “center of gravity” is in
California, it does emphasize that some activity did take place in Florida.
However, its emphasis on that relatively minor activity only proves the
The SEC is suing to hold the Defendants liable for all of their purportedly
fraudulent conduct—not just the relatively little conduct that took place here.
Taken as a percentage of the total amount of investors allegedly defrauded by
the Defendants (approximately 5,400), the Defendants’ direct sales to 19
investors in this District amounts to 0.35%. Taken as a percentage of the
Defendants’ total sales on behalf of Woodbridge (approximately $444 million),
the Defendants’ direct sales to investors in this District (totaling approximately
$2,860,000) amounts to 0.6% of their total allegedly wrongful conduct. Even
extending every possible benefit to the SEC by factoring in the Defendants’
indirect sales in this District shows that less than 17% of their total activity took
place here. More importantly, this District is home to 0.6% of sales directly
attributable to these Defendants and 0.35% of their total victims. See Telco Mktg.
Servs., Inc., 1980 WL 1397, at *1 (D.D.C. Mar. 26, 1980).
The SEC’s rebuttal is as follows: “Those numbers mean nothing.” (ECF No.
30 at 11.) The Court is not persuaded by that argument. Those numbers guide
the Court’s identification of the locus of operative facts and, as set forth by the
Eleventh Circuit, that is the issue to be determined. The SEC’s reliance on SEC
v. Lefkowitz is unavailing. Case No. 8:12–cv–1210, 2013 WL 12170295, at *6
(M.D. Fla. Sept. 17, 2013). While it is true that Lefkowitz held that “the key
operative facts occurred in a Sarasota Court,” the Court reached that factual
finding because those “Defendants appeared fifty-eight times in a Sarasota Court”
to perpetuate their fraud. Id. at 5-6 (emphasis added). By contrast, Defendant
Walker appeared zero times in this District; Goldman only once; and ChurchKoegel only three or four times. (ECF No. 1 at ¶14.) This factor weighs heavily in
favor of transfer.
5) The availability of process to compel the attendance of unwilling
All parties in this proceeding can compel the attendance at trial of
unwilling witnesses, regardless of whether this litigation is pending in this
District or the Central District of California. SEC v. Feng, Case No. 15-9420,
2016 WL 7443220, at *4 (C.D. Cal. Apr. 7, 2016) (noting nationwide subpoena
power in finding convenience of witnesses did not support transfer). Additionally,
the Dodd-Frank Wall Street Reform and Consumer Protection Act gave parties
in proceedings brought by the SEC nationwide service of process for trial
subpoenas. This expanded power was codified in Securities Act Section 22(a) and
Exchange Act Section 27. 15 U.S.C. §§ 77v(a), 78aa(a). Accordingly, the
availability of process to compel the attendance of unwilling witnesses is a
neutral factor in this case.
6) The relative means of the parties.
The Court agrees with the SEC that the relative means of the parties is a
neutral factor. (ECF No. 30 at 12.) First, the Court gave the Defendants’ claims
that they “ha[ve] virtually nothing left” or that they struggle to afford the cost of
cross country mailing some credence in the convenience of the parties factor.
(ECF No. 42 at 4; ECF No. 43 at 3.) However, neither party has submitted
evidence as to their financial condition. Accordingly, it would not be appropriate
to double count the Defendants’ unverified claims as to their means under this
factor. The SEC has also not submitted any evidence as to its means or the
means of the Defendants, which it alludes to in its briefs. This factor is neutral.
7) The forum’s familiarity with the governing law.
The Court agrees with the SEC that this District and the Central District
of California are equally capable of applying the federal securities laws upon
which the SEC bases its claims. (ECF No. 30 at 13.) This factor is neutral.
8) The weight accorded a plaintiff’s choice of forum.
This factor does not weigh against transfer. As a general rule, Court’s
“must give considerable weight to plaintiff’s choice of forum.” Allied Specialty Ins.
Inc. v. Ohio Water Parks, Inc., 699 F.Supp. 878, 882 (M.D. Fla. 1988). That
general rule is subject to at least three exceptions. First, “where the operative
facts underlying the cause of action did not occur within the forum chosen by
the Plaintiff, the choice of forum is entitled to less consideration.” Grail
Semiconductor, Inc. v. Stern, No. 12-60976-CIV, 2013 WL 2243961, at *3 (S.D.
Fla. May 21, 2013) (Scola, J.) (citations omitted); see also GolTV, Inc. v. Fox Sports
Latin Am. Ltd., 277 F. Supp. 3d 1301, 1322 (S.D. Fla. 2017) (Altonaga, J.)
(“[D]eference usually afforded to the plaintiff's choice of forum is diminished
where the locus of operative facts lies elsewhere and other factors tip in favor of
another venue.”). As discussed in Part III.4., supra, this District is not the locus
of operative facts, which reduces the amount of deference owed to the SEC’s
choice of forum.
Second, a plaintiff’s choice of forum “is entitled to less deference . . . when
the plaintiff do[es] not reside” in its chosen forum. Nat'l Tr. Ins. Co. v.
Pennsylvania Nat'l Mut. Cas. Ins. Co., 223 F. Supp. 3d 1236, 1246 (M.D. Fla.
2016). The SEC has not addressed this issue. Instead, it cites to SEC v. Daly for
the general proposition that “the Court should give substantial deference to [the
SEC’s] chosen forum”. (ECF No. 30 at 13 (quoting SEC v. Daly, No. 05–55, 2006
WL 6190699, at *4 (D.D.C. Feb. 11, 2006)).) However, Daly does not stand for
the proposition that the SEC, as a litigant, is entitled to a special degree of
deference greater than any other litigant before the Court. Daly simply reiterated
the black letter, general rule that a plaintiff’s chosen forum is entitled to
substantial deference when the main facts underlying the case took place in that
chosen forum. See id. (explaining that “SEC filings based on Defendant’s alleged
misrepresentations were made in the District of Columbia”). Nevertheless, the
Court has considered what the SEC’s “residence” is for transfer purposes and
concludes that this consideration is either neutral or it further diminishes the
deference owed to the SEC’s choice of forum. On the one hand, the SEC could
be a resident of every district in which it has an office. If that were the case, then
this factor would be neutral because the SEC has offices in both the Southern
District of Florida as well as the Central District of California. In other words,
the SEC “resides” here as much as it does there. On the other hand, if the SEC
resides in Washington, D.C., the location of its headquarters, then it is not a
resident of this District and its choice of forum is entitled to less weight. See Nat'l
Tr. Ins. Co., 223 F. Supp. 3d at 1246 (M.D. Fla. 2016).
Finally, the third exception reduces the amount of deference when the
plaintiff’s choice of forum is motivated by forum shopping or bad faith. The Court
disagrees with the Defendants’ arguments that this exception applies here. The
Defendants suggest that the SEC chose to bring this case in Florida in order to
hamstring them as out-of-towners without means to defend themselves on the
other side of the country. (See ECF No. 28 at 4; ECF No. 38 at 1; ECF No. 39 at
1.) The Defendants also suggest that their arguments of bad faith are bolstered
by their identification of inaccuracies in sworn affidavits made in the returns of
service on the Defendants. (ECF No. 28 at 4; ECF No. 38 at 6; ECF No. 39 at 56.) The Court does not credit these arguments. The SEC’s choice to bring this
case in Florida was legitimate. For example, the SEC’s “Miami Regional Office,
which is handling the investigation and litigation of this action,” is located in the
Southern District of Florida as are some of the victims of the scheme. (ECF No.
30 at 1.) There is also no dispute that venue is proper here. Additionally, after
the Defendants claimed that the SEC filed perjured sworn affidavits made by the
process server, the SEC “further inquir[ed] into the specific details” raised by the
Defendants. (ECF No. 25 at 2.) When the SEC determined that it did “not have
sufficient information confirming that the Defendants were properly served with
process,” the SEC proceeded to serve the Defendants properly and file new
returns of service. (Id.) There is no evidence of forum shopping or bad faith by
9) Trial efficiency and the interests of justice, based on the totality of
The ninth factor favors transfer to the Central District of California. A
“relevant consideration when considering a § 1404(a) transfer” under the totality
of the circumstances is “[t]he presence of related cases” in the proposed
transferee forum. S.E.C. v. Daly, Case No. CIV.A. 05-55CKK, 2006 WL 6190699,
at *5 (D.D.C. Feb. 11, 2006) (citations omitted). As the Defendants point out,
there are at least two closely related cases pending in the Central District of
California. The first is SEC v. Pittsenbargar, Case No. 2:19-cv-10059 (C.D. Cal.
Nov. 25, 2019). The individual defendant in that case was a Texas resident who
allegedly sold unregistered securities in multiple states on behalf of Woodbridge,
but the SEC argued that venue was proper in the Central District of California
because Woodbridge was headquarted in and ran its operations from that
District. (Id. at ¶¶ 4, 12.) The same is true in this case. Moreover, the two lead
attorneys in Pittsenbargar, who filed that case and chose to litigate it in the
Central District of California, are also the two attorneys representing the SEC in
this case. (See id., ECF No. 1.) Counsel in this case also made similar arguments
in favor of venue in the Central District of California in yet another related case
against other Woodbridge salespeople, SEC v. Davis, Case No. 2:18-cv-10481,
(C.D. Cal. Dec. 18, 2018). By not responding to this point raised by the
Defendants, the SEC concedes it. See GolTV, Inc. v. Fox Sports Latin Am. Ltd.,
277 F. Supp. 3d 1301, 1311 (S.D. Fla. 2017) (Altonaga, J.) (treating argument
ignored by plaintiff’s brief in response to motion to dismiss as conceded).
“It is, moreover, vastly preferable to have all parties represented by counsel
in order to promote efficient and just case management,” which appears more
likely to occur if the case proceeds in the Central District of California. Brunson
v. Montgomery Cnty., Case No. 3:16-cv-00368, 3 (S.D. Ohio Aug. 3, 2017); see
also Sec'y of U.S. Dep't of Labor v. Kavalec, Case No. 1:19-CV-00968, 8 (N.D. Ohio
Nov. 1, 2019) (“[E]fficient adjudication of the issues will be improved if all of the
parties are represented by counsel.”); Grigsby v. Haverhals, Case No. 3:13-cv579-NJR-DGW, 2 (S.D. Ill. Feb. 2, 2016) (“[T]he appointment of counsel will likely
ensure that the final pretrial conference and trial run more efficiently.”). As this
ninth factor specifically calls for considerations of trial efficiency and the
interests of justice, the Court finds that it weighs heavily in favor of transfer.
As discussed above, all of the relevant factors either support transfer of
this case to the Central District of California or are neutral. Accordingly, the
Court grants the Defendants’ motions to transfer (ECF Nos. 28, 38-39). This
action shall be transferred to the United States District Court for the Central
District of California pursuant to 28 U.S.C. § 1404(a). The Clerk shall take all
necessary steps to effectuate the transfer of this action. Any pending motions are
denied as moot. The Clerk is directed to close this case.
Done and ordered in chambers, at Miami, Florida, on September 15,
Robert N. Scola, Jr.
United States District Judge
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