Securities and Exchange Commission v. RMR Asset Management Company

• Court: District Court, S.D. California
• Decided: May 18, 2020
• Docket: 3:18-cv-01895
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 SECURITIES AND EXCHANGE Case No.: 18-CV-1895-AJB-LL COMMISSION, 12 ORDER DENYING DEFENDANT Plaintiff, 13 RICHARD GOUNAUD’S MOTION v. TO TRANSFER VENUE TO THE 14 DISTRICT OF NEW JERSEY RMR ASSET MANAGEMENT 15 COMPANY, et al., (Doc. No. 86) 16 Defendants. 17 18 19 20 21 22 23 Presently before the Court is Defendant Richard C. Gounaud’s motion to transfer 24 venue to the District of New Jersey. (Doc. No. 86.) Plaintiff opposes this motion. (Doc. 25 No. 96.) Defendants Jocelyn M. Murphy and Michael S. Murphy also oppose this motion. 26 (Doc. No. 97.) For the reasons set forth more clearly below, the Court DENIES 27 Defendant’s motion to transfer venue. 28 / / / 1 BACKGROUND 2 On August 15, 2018, Plaintiff Securities and Exchange Commission (“SEC” or 3 “Plaintiff”) filed a complaint alleging fourteen defendants with violations of securities laws 4 arising from the unregistered broker conduct of Defendant RMR Asset Management Co. 5 (“RMR”), its principal, Ralph M. Riccardi (“Riccardi”), and other defendants. Shortly after 6 the filing of this complaint, consent judgments were entered against 11 of the 14 7 defendants, concluding the case as to those 10 individuals and RMR. (Doc. Nos. 3–22.) 8 The three remaining defendants include Jocelyn M. Murphy, Michael S. Murphy 9 (hereinafter the “Murphys”), and Richard C. Gounaud (“Defendant”). 10 RMR, the company that Defendant worked for during the relevant time period, had 11 its principal place of business in Chula Vista, California. (Doc. No. 1 ¶¶ 12–13.) Over the 12 years, Defendant received requests from Riccardi to buy bonds on his and RMR’s behalf, 13 while Riccardi resided and worked in Chula Vista, California. (Id. ¶¶ 12–14.) Furthermore, 14 Defendant received his compensation and directions from RMR and Riccardi. (Id.) 15 However, because the municipal bond industry is nationwide, and the bond transactions 16 can be conducted by phone or through electronic communications, many of the defendants 17 worked remotely for RMR and resided outside of the Southern District of California. (Id. 18 ¶¶ 13–26.) For example, the Murphys and another defendant reside in Colorado; Defendant 19 and two other defendants reside in New Jersey; while others reside in California, New 20 York, Texas, Florida, and Washington. (Id.) 21 Defendant filed this instant motion to transfer venue on May 16, 2019. (Doc. No. 22 86.) Plaintiff opposed this motion. (Doc. No. 96). The Murphys also opposed this motion. 23 (Doc. No. 97.) This Order follows. 24 LEGAL STANDARD 25 “For the convenience of parties and witnesses, in the interest of justice, a district 26 court may transfer any civil matter to any other district or division where it might have 27 been brought.” 28 U.S.C. § 1404(a). The purpose of section 1404(a) is to “prevent the waste 28 of time, energy, and money and to protect litigants, witnesses and the public against 1 unnecessary inconvenience and expense.” Van Dusen v. Barrack, 376 U.S. 612, 616, 84 2 S.Ct. 805, 11 L.Ed.2d 945 (1964) (internal citation omitted). Whether to transfer a case 3 pursuant to § 1404 is in the broad discretion of the district court and is appropriately 4 determined on an individualized basis. See Jones v. GNC Franchising, Inc., 211 F.3d 495, 5 498 (9th Cir. 2000). 6 To support a motion to transfer venue, the moving party must establish that (1) venue 7 is proper in the original district; (2) the transferee district is one where the action could 8 have been brought; and (3) the transfer will serve the convenience of the parties and 9 witnesses and will promote the interests of justice. Vu v. Ortho–McNeil Pharm., Inc., 602 10 F. Supp. 2d 1151, 1155–56 (N.D. Cal. 2009). “Generally, a defendant ‘must make a strong 11 showing of inconvenience to warrant upsetting the plaintiff’s choice of forum.’” In re 12 Ferrero Litigation, 768 F. Supp. 2d 1074, 1078 (S.D. Cal. 2011) (quoting Decker Coal Co. 13 v. Commonw. Edison Co., 805 F.2d 834, 843 (9th Cir. 1986)), superseded by statute on 14 other grounds by 28 U.S.C. § 1391. 15 In assessing whether a transfer of venue will serve the convenience of the parties 16 and witnesses, courts consider the following factors: (1) the plaintiff’s choice of forum; (2) 17 convenience of the parties; (3) convenience of the witnesses; (4) ease of access to the 18 evidence; (5) familiarity of each forum with an applicable law; (6) feasibility of 19 consolidation with other claims; (7) any local interest in the controversy; and (8) the 20 relative court congestion and time of trial in each forum. Hawkins v. Gerber Products Co., 21 924 F. Supp. 2d 1208, 1213 (S.D. Cal. 2013). 22 DISCUSSION 23 Defendant requests a change of venue to the United States District Court in New 24 Jersey. (See generally Doc. No. 86.) Defendant argues that his reasons to change venue are 25 based primarily on Defendant’s chronic health problems, his responsibilities as a caregiver, 26 and the extreme hardship that would result to him if venue was not changed. 27 / / / 28 / / / 1 A. Venue in Transferor and Transferee Courts 2 The first step in the Court’s venue analysis is to determine whether the instant action 3 could have been brought in the transferee district, the District of New Jersey. Pursuant to 4 28 U.S.C. section 1391(b), a civil action may be brought in any of the following: 5 (1) a judicial district in which any defendant resides, if all 6 defendants are residents of the State in which the district is 7 located; (2) a judicial district in which a substantial part of the 8 events or omissions giving rise to the claim occurred, or a 9 substantial part of property that is the subject of the action is 10 situated; or (3) if there is no district in which an action may 11 otherwise be brought as provided in this section, any judicial 12 district in which any defendant is subject to the court’s personal 13 jurisdiction with respect to such action. 14 Defendant asserts that this action could have been brought in the District of New 15 Jersey because a substantial part of the events occurred in New Jersey and because he 16 resides in New Jersey. (Doc. No. 86-1 at 7.) However, Defendant Gounaud is not the only 17 defendant in this case. This action is against fourteen defendants. Defendant has not 18 established that this action could have been brought against all defendants in the District 19 of New Jersey. Accordingly, Defendant has failed to establish that this action could have 20 been brought in the District of New Jersey. Furthermore, venue is proper in this District, 21 and that appears undisputed by Defendant. The fact that Defendant has not proven that this 22 action could have been brought in the District of New Jersey alone allows for denial of 23 Defendant’s motion. However, the Court will briefly address the other factors. 24 B. Fairness Factors 25 Once a court has determined that venue is proper in both the transferee and transferor 26 courts, it then considers public factors relating to the interest of justice, as well as private 27 factors focused on the convenience of the parties and witnesses. Decker Coal Co., 805 F.2d 28 at 843. The Ninth Circuit recognizes that the “‘[w]eighing of factors for and against transfer 1 involves subtle considerations and is best left to the discretion of the trial judge.’” Sparling 2 v. Hoffman Constr. Co., 864 F.2d 635, 639 (9th Cir. 1988) (quoting Commodity Futures 3 Trading Comm’n v. Savage, 611 F.2d 270, 279 (9th Cir. 1979)). 4 i. Plaintiff’s Choice of Forum 5 Ordinarily, a strong presumption exists in favor of a plaintiff’s choice of forum. 6 Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). 7 However, in cases where a plaintiff’s choice of forum lacks a significant connection to the 8 transactions giving rise to the plaintiff’s claims, a plaintiff’s choice of forum is entitled to 9 less weight. Pac. Car & Foundry Co. v. Pence, 403 F.2d 949, 954 (9th Cir. 1968) 10 (“Plaintiff’s choice of forum, then, is not the final word.”). 11 Defendant argues that Plaintiff’s choice of forum is entitled to minimal or no 12 deference because the SEC has regional offices across the United States and is litigating 13 this matter from its office in Washington D.C. (Doc. No. 86-1 at 9–10.) In opposition, 14 Plaintiff argues that the operative facts in this case are connected to this District. (Doc. No. 15 96 at 13.) Defendant routinely received orders for bonds from Riccardi and RMR, located 16 in this District. Defendant received compensation from RMR, which is a Chula Vista-based 17 company. This case involves several defendants working for the same company based in 18 Southern California. Furthermore, in securities litigation “unless the balance of factors is 19 strongly in favor of the defendants, the plaintiff’s choice of forum should rarely be 20 disturbed.” Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309, 1317 (9th Cir. 21 1985). Accordingly, the Court finds that Plaintiff’s choice of forum is entitled to deference. 22 Thus, this factor weighs in favor of this District. 23 ii. Convenience of the Parties 24 Defendant argues that the District of New Jersey is a more convenient forum for 25 him. (See generally Doc. No. 86-1.) Defendant also contends that it will not be any less 26 convenient for the remaining defendants because they are content with traveling. (Id.) 27 However, the remaining defendants oppose Defendant’s motion to change venue and 28 would prefer to have this litigation remain in this District. (Doc. No. 97 at 2.) Furthermore, 1 given that the SEC nor the remaining defendants reside in the same area, there is no district 2 that would negate the need for travel. This factor again weighs slightly in favor of the 3 litigation remaining in this District. 4 iii. Convenience of the Witnesses 5 The convenience of a particular forum to witnesses is often recognized as the most 6 important factor considered in ruling on a motion under § 1404(a). Metz v. U.S. Life Ins. 7 Co., 674 F. Supp. 2d 1141, 1147 (C.D. Cal. 2009). “The party seeking transfer cannot rely 8 on vague generalizations as to the convenience factors. The moving party is obligated to 9 identify the key witnesses to be called and to present a generalized statement of what their 10 testimony would include.” Florens Container v. Cho Yang Shipping, 245 F. Supp. 2d 1086, 11 1093 (N.D. Cal. 2002). Here, Defendant failed to identify any particular witnesses and what 12 their content of their testimony would be in his motion. Defendant does identify a few 13 witnesses in his reply. (Doc. No. 99 at 11.) However, Defendant still failed to provide a 14 generalized statement as to the content of the key witnesses’ testimony. 15 Furthermore, key witnesses in this case will likely include RMR employees and 16 Riccardi. These witnesses reside in this District. They will able to testify about “(1) bond 17 and other securities orders asked by Gounaud and the Murphys to fill; (2) transaction-based 18 compensation that Gounaud and the Murphys received from RMR for flipping bonds and 19 other securities; (3) whether Gounaud and the Murphys used their own funds to flip bonds 20 and other securities or traded securities for the accounts of others; and (4) the frequency 21 and regularity with which Gounaud and the Murphys brought and sold bonds and other 22 securities.” (Doc. No. 96 at 18.) Accordingly, this factor again weighs in favor of this 23 litigation remaining in this District. 24 iv. Ease of Access to Evidence 25 Ease of access to evidence is generally not a predominate concern in evaluating 26 whether to transfer venue because “advances in technology have made it easy for 27 documents to be transferred to different locations.” Metz, 674 F. Supp. 2d at 1148. Given 28 that documentary evidence in this case is primarily transferred electronically, the ease of 1 || access to evidence factor is neutral. 2 Vv. Familiarity of Each Forum with Applicable Law 3 This case involves federal securities laws, accordingly both this District and the 4 || District of New Jersey have equal familiarity with the relevant statues and case law. Thus, 5 || this factor is neutral. 6 Vi. Court Congestion and Time to Trial 7 In analyzing a motion to transfer venue courts are also directed to consider the 8 ||relative court congestion in each proposed venue. Defendant did not address this argument 9 his motion. In his reply, he explains that the fact that he cannot fly and will have to drive 10 |} will affect the Court’s schedule. However, this is not relevant in analyzing this factor. 11 || Accordingly, this factor bears no weight on the Court’s decision. 12 Finding that Defendant has failed to establish that this case could have been brought 13 ||in the District of New Jersey and that the majority of factors do not support transfer to the 14 || District of New Jersey, Defendant’s motion to transfer venue is DENIED. 15 CONCLUSION 16 Based on the foregoing, the Court DENIES Defendant’s motion to transfer venue. 17 18 || IT IS SO ORDERED. 19 Dated: May 18, 2020 © Ser : 20 Hon. Anthony J.Battaglia 21 United States District Judge 22 23 24 25 26 27 28