Zarecor et al v. Morgan Keegan & Company Inc
Filing
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ORDER denying 16 Motion to Reassign Case; ORDER denying 17 Motion to Reassign Case. Signed by Judge Samuel H. Mays, Jr on February 28, 2013.
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TENNESSEE
WESTERN DIVISION
In re REGIONS MORGAN KEEGAN
SECURITIES, DERIVATIVE and
ERISA LITIGATION
This Document Relates to:
Herschel Zarecor, III, et al.
v. Morgan Keegan & Co., Inc.
No. 2:12-cv-02341-SHM-dkv
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2:09-md-2009-SHM
Case No. 12-2341
ORDER DENYING MOTION TO TRANSFER
Before the Court is Plaintiffs’ May 19, 2012 Motion to
Transfer Case Back to Eastern District of Arkansas (“Motion”).
(See ECF Nos. 16 and 17.)
Pursuant to Local Rule 7.2(a)(2), a
response is due within 14 days of a motion.
7.2(a)(2).)
(W.D. Tenn. Civ. R.
Defendant Morgan Keegan & Co., Inc. (“Morgan
Keegan”) has not filed a response to the Motion, and the time
for responding has expired.
I.
BACKGROUND
Plaintiffs Herschel and Mona Zarecor, citizens of the state
of Arkansas, and Herschel Zarecor III, a citizen of the state of
New Jersey (collectively, “Plaintiffs”), filed suit alleging
that Morgan Keegan, a Tennessee corporation, violated the
Arkansas Securities Act and the New Jersey Securities Act.
(Complaint ¶ 1-3, 9.) Each Plaintiff invested in the following
funds: the RMK Advantage Income Fund (“RMA”), the RMK Strategic
Income Fund (“RSF”), and the RMK Multi-Sector High Income Fund
(“RHY”) (collectively, “the Funds”).
(Id. ¶ 2.)
Defendant
Morgan Keegan, an investment bank and full-service brokerage
firm, was Lead Underwriter for the Funds, provided accounting
and administrative services for the Funds, and marketed the
Funds to its customers.
(Id. ¶ 12-13.)
Plaintiffs allege that the Funds “were represented to hold
over 300 diversified funds,” but in fact consisted of “bottom
slices of structured financial products such as collateralized
debt obligations.” (Id. ¶ 4, 3)
Plaintiffs also allege that the
public filings misrepresented collateralized debt obligations as
“corporate bonds” and that Morgan Keegan, through its employees
on the Valuation Committee, and its representative and Fund
Manager, James Kelsoe, was involved with filing inadequate
disclosures.
(Id. ¶ 13.)
Plaintiffs’ claims were originally
filed in a FINRA arbitration, which was initiated in July 2009.
(Id. ¶ 7.)
Although a full evidentiary hearing was held and the
FINRA Panel awarded $541,000 to Plaintiffs, the award was
vacated by the Eastern of District of Arkansas because the
arbitration panel lacked jurisdiction to hear the matter.
(Complaint ¶ 7.)
Plaintiffs filed this case in the Eastern
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District of Arkansas on November 17, 2011.
(Complaint.)
On
April 30, 2012, the United States Judicial Panel on
Multidistrict Litigation (“JPML”) transferred the case to this
Court as part of MDL No. 2009 because this case involved common
questions of fact with actions previously transferred to MDL No.
2009, and the transfer would serve the convenience of the
parties and witnesses and promote the just and efficient conduct
of the litigation.
Plaintiffs request this Court to transfer
the case back to the Eastern District of Arkansas, contending
that no further discovery is needed and the case is ready for
trial.
II.
Removal under 28 USC §1407(a)
28 U.S.C. §1407 governs the transfer and remand of cases in
multidistrict litigation. Section 1407(a) provides:
When civil actions involving one or more common
questions of fact are pending in different districts,
such actions may be transferred to any district for
coordinated or consolidated pretrial proceedings. Such
transfers shall be made by the judicial panel on
multidistrict litigation authorized by this section
upon its determination that transfers for such
proceedings will be for the convenience of parties and
witnesses and will promote the just and efficient
conduct of such actions. Each action so transferred
shall be remanded by the panel at or before the
conclusion of such pretrial proceedings to the
district from which it was transferred unless it shall
have been previously terminated.
28 U.S.C. §1407(a) (proviso without application here omitted).
In Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, the
Supreme Court held that remand of any pending case to its
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original court was the obligation of the JPML.
“Section 1407(a)
unequivocally places the authority to remand a transferred case
within the Panel, not the transferee judge.”
Roberts, 178 F.3d 181, 185 (3d Cir. 1999.)
In re William Lee
Although the
statutory power to order a remand under §1407(a) from a
transferee district court lies in the Panel and not the
transferee district judge, most transferred actions are remanded
at the suggestion of the transferee district court judge.
See
In re Multi-Piece Rim Prods. Liab. Litig., 464 F. Supp. 969, 975
(J.P.M.L. 1979) (stating that the transferee judge is in the
best position to determine whether actions are susceptible to
remand); In re Asbestos Prods. Liab. Litig. (No. VI), 771 F.
Supp. 415, 422 n.8 (J.P.M.L. 1991) ("Those parties who may seek
early remand of their actions or claims are reminded of (i)
Panel Rule 14(d)'s expression of the Panel's reluctance to order
remand absent a suggestion of remand from the transferee judge,
and (ii) the special affidavit requirement of that Rule.”).
A
transferee judge typically recommends a remand of an action by
filing a suggestion of remand with the JPML.
R.P.J.P.M.L.)
(See Rule 10.1(b),
A motion to remand must include an affidavit
reciting whether the movant has requested a suggestion of remand
from the transferee judge.
(See Rule 10.3(a), R.P.J.P.M.L.)
Plaintiffs have not requested a suggestion of remand from this
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Court, but the Court will consider whether the facts of this
case merit a suggestion of remand to the JPML.
III. Notice of Suggestion of Remand
In determining whether to issue a suggestion of remand, a
transferee court is “guided by the standards for remand employed
by the Panel.”
In re Bridgestone/Firestone, Inc., 128 F. Supp.
2d 1196, 1197 (S.D. Ind. 2001).
A party seeking remand to the
transferor court has the heavy burden of establishing that the
remand is warranted. E.g., In re Integrated Res., Inc. Real
Estate Ltd. P’ships Sec. Litig., 851 F. Supp. 556, 562 (S.D.N.Y.
1994.); In re Data Gen. Corp. Antitrust Litig., 510 F. Supp.
1220, 1226 (J.P.M.L. 1979) ("Absent a notice of suggestion of
remand from the transferee judge to the Panel, any party
advocating remand before the Panel bears a strong burden of
persuasion.")
The Plaintiffs argue that this case is ripe for remand
because no further discovery is needed and the case is ready for
trial.
(Motion 1.) They contend that “[the] case has been
‘tried’ once already before a three person FINRA panel in 2010”
and that they are “elderly retirees who desperately need to have
their case go to trial to try to recover lost retirement savings
so that they have money on which to live.”
(Id.)
Although the
issues in the Plaintiffs’ case overlap with the issues in the
MDL cases that have already concluded or are currently pending,
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Plaintiffs assert that discovery is complete.
Morgan Keegan has
not filed a reply disputing Plaintiffs’ claims that discovery is
complete or that the case is ready for trial.
The JPML is
obligated to remand any pending case to its originating court
only when the “coordinated or consolidated pretrial proceedings”
have run their course.
28 U.S.C. 1407(a); Lexecon Inc. v.
Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 34-35 (1998).
Because no further discovery is needed and the case is ready for
trial, good cause exists to remand the Plaintiffs’ case to the
Eastern District of Arkansas.
Because the Court lacks statutory
authority to grant such a motion, it suggests to the JPML that
remand is appropriate.
Plaintiffs motion to transfer the case to the Eastern
District of Arkansas is DENIED.
So ordered this 28th day of February, 2013.
/s/Samuel H. Mays, Jr.
SAMUEL H. MAYS, JR.
UNITED STATES DISTRICT JUDGE
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