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MORRIS v. AMERICAN BIOSCIENCE

November 2, 2004.

WILLIAM MORRIS, Individually and on Behalf of All Others Similarly Situated, Plaintiff,
v.
AMERICAN BIOSCIENCE, INC., AMERICAN PHARMACEUTICAL PARTNERS, INC., PATRICK SOON-SHIONG, Defendants.



The opinion of the court was delivered by: RONALD GUZMAN, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Morris and all others similarly situated brought this action against defendants American Bioscience, Inc., ("ABI"), American Pharmaceutical Partners, Inc., ("APP"), and Patrick Soon-Shiong ("Soon-Shiong") for allegedly artificially inflating APP's stock. Before the Court is ABI, APP, and Soon-Shiong's Motion to Transfer Venue pursuant to 28 U.S.C. § 1404(a) to the Central District of California. For the reasons set forth below, the Court grants Defendants' motion.

FACTS

  Plaintiffs allege that Defendants made materially false and misleading statements regarding the drug Abraxane, a reformulated version of Taxol under development for the treatment of breast cancer, in order to artificially inflate the value of APP's stock between October 25, 2002 and September 24, 2003. (Compl. ¶ 1.) In order to develop and test the new drug, Abraxane, the defendants instituted clinical trials. (Id. ¶ 51.) The trials for Abraxane consisted of three phases. (Id.) In Phase I, researchers test the drug or treatment in a small number of people to evaluate safety, dosage, and side effects. (Id.) In Phase II, researchers enlarge the study group in order to determine the drug's effectiveness. (Id.) In Phase III, researchers give Abraxane to a larger study group in order to evaluate the drug's success and to collect information for safe drug treatment. (Id.) It is in Phase III that the plaintiffs allege Defendants made materially false and misleading statements with regard to Abraxane. (Id. ¶ 16.)

  On December 14, 2001, APP became a publicly traded company. (Id. ¶ 2.) Shares began trading that day at sixteen dollars a share. (Id.) During Phase III, APP issued press releases in order to describe Abraxane to potential stock purchasers. (Id. ¶ 11.) These releases, dated October 25, 2002 through September 19, 2003, attempted to differentiate Abraxane from its competitor Taxol by asserting that Abraxane did not require steroid treatment. (Id.) On September 24, 2003, APP changed the press release to state that "no routine steroid pretreatment" would be needed. (Id. ¶ 17.) Plaintiffs allege that this was a material change and that consequently stock prices fell dramatically within two days of the September 24 press release. (Id. ¶ 18.) Moreover, Plaintiffs allege that Defendants artificially inflated stock prices using language that misled potential investors in all of the press releases that pre-dated September 24, 2003. (Id. ¶¶ 20-21.)

  DISCUSSION

  Defendants move to transfer this action to the Central District of California pursuant to 28 U.S.C. § 1404(a). District courts may transfer a civil action "[f]or the convenience of parties and witnesses, in the interest of justice . . . to any other district or division where it might have been brought." 28 U.S.C. § 1404(a). Consequently, transfer is proper under 1404(a) when "(1) venue was proper in the transferor district, (2) venue and jurisdiction would be proper in the transferee district, and (3) the transfer will serve the convenience of the parties and the witnesses as well as the interests of justice." United Air Lines, Inc. v. Mesa Airlines, Inc., 8 F. Supp. 2d 796, 798 (N.D. Ill. 1998); see Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986); Plotkin v. IP Axess, Inc., 168 F. Supp. 2d 899, 901-02 (N.D. Ill. Oct. 11, 2001). Weighing the "factors for and against transfer necessarily involves a large degree of subtlety and latitude, and therefore, is committed to the sound discretion of the trial judge." Coffey, 796 F.2d at 219-20.

  Here the parties do not dispute that venue is proper in both the Central District of California and the Northern District of Illinois. Therefore, the Court focuses on whether the convenience of the witnesses and parties and the interests of justice weigh in favor of transfer. The party seeking to transfer venue bears "the burden of establishing, by reference to particular circumstances, that the transfer forum is clearly more convenient." Id. When making a transfer determination, the court must consider both the private interests of the parties as well as the public interests of the court. Medi USA v. Jobst Inst., Inc., 791 F. Supp. 208, 210 (N.D. Ill. 1992). Factors that the court considers in balancing the private interests include: "(1) the plaintiff's choice of forum, (2) the situs of material events, (3) the relative ease of access to sources of proof, (4) the convenience of the parties and (5) the convenience of the witnesses." Technical Concepts L.P., v. Zurn Indus., Inc., No. 02 C 5150, 2002 WL 31433408, at *2 (N.D. Ill. Oct. 31, 2002). The public interests include "the court's familiarity with the applicable law, the speed at which the case will proceed to trial, and the desirability of resolving controversies in their locale." Von Holdt v. Husky Injecting Molding Sys. Ltd., 887 F. Supp. 185, 188 (N.D. Ill. 1995). I. Private Factors

  A. Plaintiff's Choice of Forum

  In general, a plaintiff's choice of forum is given substantial weight. Macedo v. Boeing Co., 693 F.2d 683, 688 (7th Cir. 1982). However, the plaintiff's choice of forum is not absolute. Source Servs. Corp. v. Technisource, No. 95 C 1420, 1995 WL 493499, at *1 (N.D. Ill. Aug. 9, 1995). For example, in class action suits the weight given to the plaintiff's choice of forum is not substantial. Roots P'ship v. Lands' End, Inc., No. 90 C 1310, 1990 WL 186776, at *3 (N.D. Ill. Nov. 14, 1990). When a nationwide class is alleged, less deference should be given to the plaintiff's choice of forum because any member of the "`class who subsequently chooses to appear might be faced with similar inconveniences, depending on where the action proceeds.'" Id. (quoting Blake Constr. Co. v. Int'l Harvester Co., 521 F. Supp. 1268, 1271-72 (N.D. Ill. 1981)).

  In this case, Plaintiff resides in Illinois. However, Plaintiff alleges there are "hundreds or thousands of members in the Proposed class" throughout the country. (Compl. ¶ 31.) Many of these class members could be inconvenienced by litigation in the Northern District of Illinois. Further, as discussed below, from the evidence that the parties have submitted, it appears that the majority of the material events took place in California and not Illinois. Therefore, Plaintiff's choice of forum factor neither favors nor disfavors the transfer of venue to the Central District of California.

  B. Situs of Material Events

  Courts must determine whether a "lawsuit has any material relationship to the district in which it is brought." QSN Indus. Inc. v. Sanderson, No. 95 C 3356, 1995 WL 743751, at *5 (N.D. Ill. Dec. 13, 1995); see also Technical Concepts, 2002 WL 31433408, at *3. Plaintiff's complaint alleges that Defendants' press releases contained false statements concerning the use of steroids in the clinical trials of Abraxane. (Compl. ¶ 1.) Therefore, the Court must determine whether the false statements themselves have a material relationship to the Northern District of Illinois. Although the complaint alleges that Defendants made misleading statements, Plaintiff asserts that the material events underlying this cause of action were the clinical trials themselves, which were scattered across the country and the world. (Id.) The Court disagrees.

  Clearly, the press releases were received and purchases of stock occurred in Illinois as well as across the country. However, the material events at issue in this "case are not the actual purchases of stock or the receipt of the press releases." See Plotkin, 168 F. Supp. 2d at 903. Nor are the material events the actual trials in which steroids were used. Rather, the material events are the "creation and dissemination" of the press releases, all of which occurred in the Central District of California. See id. Defendant APP in Los Angeles, California, together with the non-party Los Angeles-based investor relations firm, Pondel-Wilkinson, prepared and issued the press releases. Any decisions regarding the creation or ...


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