Class Action Defense Cases-Pfeiffer v. Himax: California Federal Court Denies Defense Motion To Transfer Securities Fraud Class Action To New York

Apr 2, 2008 | By: Michael J. Hassen

Defendant in Securities Fraud Class Action Failed to Establish Grounds to Transfer Class Action to New York, Particularly in Light of Defendant’s Waiver in Deposit Agreement to Right to Challenge Venue California Federal Court Holds

Plaintiffs filed a class action in California federal court against Himax Technologies alleging securities fraud in connection with the initial public offering of Himax stock; a related class action, entitled Oh v. Chan, CV 07-4891 DDP (AJWx), also has been filed, and a motion seeking “to certify a securities class action for substantially similar claims” is pending in that action. Pfeiffer v. Himax Technologies, Inc., 530 F.Supp.2d 1121, 1122-23 (C.D. Cal. 2008). Defense attorneys filed a motion to transfer the class action to the Southern District of New York pursuant to 28 U.S.C. § 1404(a); plaintiffs in both class actions filed a competing motion, seeking to consolidate the putative class actions. Id., at 1123. Plaintiffs opposed the motion to transfer venue, and the Oh plaintiffs filed papers also opposing transfer, id. The district court denied the motion to transfer venue.

By seeking to transfer the class action to New York under § 1404(a), defense attorneys argued that “the convenience of parties and witnesses” warranted transfer, and that such transfer would “promote the interests of justice.” Pfeiffer, at 1123. The district court explained at page 1123, “The parties do not dispute that venue would be proper in this district or in the Southern District of New York, nor do they dispute the Southern District of New York’s jurisdiction. The parties contest whether transfer of venue will serve the convenience of the parties and witnesses, and promote the interests of justice.” Preliminarily, the district court agreed that plaintiffs’ “choice of forum” was entitled to “only minimal consideration” in this case, because “[t]his is a purported class action lawsuit where Plaintiffs do not reside in the district, the facts did not occur in the district, and the district does not have a local interest in the action.” Id., at 1124. It thus found that “[t]hese factors weigh in favor of transfer of venue.” Id. The federal court further concluded that “convenience to the witnesses and parties” did not “favor either forum.” Id. Nonetheless, based on the court’s analysis of the various factors implicated by venue transfer motions, see id., at 1123-26, it concluded at page 1126 that “the permissive forum selection clause is insufficient to warrant transfer where the IPO documents specifically contemplate Himax’s waiver of any challenges to venue in any state or federal court.” Accordingly, it denied the motion to transfer, id. at 1126.

NOTE: The district court quoted the following language from the deposit agreement: “The Company irrevocably and unconditionally waives to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue of any actions, suits or proceeding brought in any court provided in this Section 7.6, and hereby further irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any such action, suits or proceeding brought in any such court has been brought in an inconvenient forum.” Pfeiffer, at 1125. In conjunction with other language in the deposit agreement, the district court concluded that “the deposit agreement contains a waiver to Himax challenging venue in any such action in federal court by a shareholder.” Id.

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