Gecker v. General Electric Capital Corporation
Filing
21
ORDER DENYING TRANSFER re: pldg. (11 in FLS/9:12-ap-01979, 13 in ILN/1:14-cv-08447, 19 in MDL No. 2603, 14 in NYS/1:14-cv-08623), ( 1< /a> in MDL No. 2603) The motion to transfer, pursuant to 28 U.S.C. 1407, is DENIEDSigned by Judge Sarah S. Vance, Chair, PANEL ON MULTIDISTRICT LITIGATION, on 2/4/2015. Associated Cases: MDL No. 2603, FLS/9:12-ap-01979, ILN/1:14-cv-08447, NYS/1:14-cv-08623 (DLS)
UNITED STATES JUDICIAL PANEL
on
MULTIDISTRICT LITIGATION
IN RE: GENERAL ELECTRIC CAPITAL CORPORATION
THOMAS PETTERS INVESTMENT LITIGATION
MDL No. 2603
ORDER DENYING TRANSFER
Before the Panel:* Common defendant General Electric Capital Corporation (GECC) moves
under 28 U.S.C. § 1407 to centralize this litigation in the District of Minnesota.1 The litigation
consists of actions pending in the Southern District of Florida, the Northern District of Illinois, and
the Southern District of New York, as listed on Schedule A.2
Plaintiffs in all three actions oppose centralization. If the Panel orders centralization over
their objections, then the Florida and New York plaintiffs argue for selection of the Southern District
of New York as transferee district, while plaintiff in the action in the Northern District of Illinois
favors selection of that district.
These three actions all involve similar allegations that in 2000, GECC became aware of a
massive Ponzi scheme perpetrated by Thomas Petters, a Minnesota businessman to whom GECC
had extended two revolving lines of credit totaling approximately $100 million between 1998 and
1999. Under the scheme, which resulted in total losses exceeding $1.8 billion, investors were told
that the money they lent Petters or Petters-controlled entities would be used to purchase electronic
goods that would then be sold for a profit to large retailers such as Costco and Sam’s Club. Contrary
to those representations, the lent funds were used to make payments to other investors, fund Petters’
other businesses, and finance Petters’ lifestyle. Plaintiffs, all of which assert that they suffered losses
resulting from Petters’ wrongdoing, allege that GECC learned of the scheme in October 2000, but
failed to disclose its existence, at least in part so that the money it had lent would be repaid.
On the basis of the papers filed and the hearing session held, we deny GECC’s motion.
Although the actions share factual issues concerning when and in what manner GECC became aware
*
Judge Lewis A. Kaplan and Judge Ellen Segal Huvelle took no part in the decision of this
matter.
1
In its reply, GECC states that centralization in the Southern District of Florida also would
be appropriate.
2
As filed, the Section 1407 motion included a fourth action, which was then pending in the
District of Minnesota. That action has since been remanded to state court.
-2of Petters’ Ponzi scheme, and whether GECC failed to disclose the existence of the scheme, we are
not convinced that centralization under Section 1407 is warranted in these circumstances.
First, the actions are in significantly different procedural postures. The Southern District of
Florida action is an adversary proceeding in bankruptcy court that has been pending since September
2012. The two other actions were commenced in September and October 2014, respectively.
Discovery in the Florida action is well underway, in contrast to the other actions. The parties already
have exchanged more than one million pages of documents, and several depositions have taken
place. The fact discovery cutoff is May 8, 2015.
Second, it appears that details regarding the GECC-Petters relationship appear already to be
fairly well developed – at least in part through Petters’ 2009 criminal trial. Much of the discovery
in each of these actions thus is likely to be plaintiff-specific – directed to each plaintiff’s unique
relationship with Petters and his companies. For example, while the key dealings involving Petters
and GECC apparently took place during the 1998-2000 time frame, the loans at issue in the Southern
District of New York and Northern District of Illinois actions were made several years later.
Accordingly, discovery is almost certain to encompass, among other things, the full extent of the due
diligence that each plaintiff conducted before extending those loans.
Third, with the remand of the Minnesota action, there now are only three actions at issue.
Given the small number of involved actions, and the correspondingly limited number of involved
counsel and courts, alternatives to formal centralization appear both practicable and preferable. See,
e.g., In re Eli Lilly & Co. (Cephalexin Monohydrate) Patent Litig., 446 F. Supp. 242, 244 (J.P.M.L.
1978); see also Manual for Complex Litigation, Fourth, § 20.14 (2004).
For all the above reasons, we conclude that Section 1407 centralization would not serve the
convenience of the parties and witnesses or promote the just and efficient conduct of this litigation.
IT IS THEREFORE ORDERED that the motion for centralization of these actions is denied.
PANEL ON MULTIDISTRICT LITIGATION
Sarah S. Vance
Chair
Marjorie O. Rendell
R. David Proctor
Charles R. Breyer
Catherine D. Perry
IN RE: GENERAL ELECTRIC CAPITAL CORPORATION
THOMAS PETTERS INVESTMENT LITIGATION
MDL No. 2603
SCHEDULE A
Southern District of Florida
MUKAMAL v. GENERAL ELECTRIC CAPITAL CORPORATION,
Bky. Adv. No. 9:12-01979
Northern District of Illinois
GECKER v. GENERAL ELECTRIC CAPITAL CORPORATION, C.A. No. 1:14-08447
Southern District of New York
RITCHIE CAPITAL MANAGEMENT, LLC, ET AL. v. GENERAL ELECTRIC
CAPITAL CORPORATION, C.A. No. 1:14-08623
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