Securities and Exchange Commission v. Gallagher

Background

Defendant Steven M. Gallagher, also known as “Alexander Delarge 655321,” moved under 28 U.S.C. § 1404(a) to transfer the Securities and Exchange Commission’s action from the Southern District of New York to the Northern District of Ohio. The motion was filed more than three years after the SEC began the case. Discovery had ended, the parties were preparing pretrial submissions, and a final pretrial conference was scheduled for March 12. The court had also entered and modified a temporary restraining order, denied Gallagher’s motion to dismiss, ruled on several motions to compel, and held three conferences.

Legal standard

Section 1404(a) permits a federal court to transfer a civil action for the convenience of the parties and witnesses and in the interest of justice, if the action could have been brought in the proposed transferee district. The court stated that the parties did not dispute that the action could have been brought in the Northern District of Ohio. The only issue was therefore whether the convenience and justice factors supported transfer. Gallagher, as the moving party, had to show by clear and convincing evidence that transfer was warranted.

The court considered factors including the SEC’s choice of forum, witness convenience, the location of documents and other evidence, the parties’ convenience, the location of the events underlying the case, the ability to compel unwilling witnesses, the parties’ relative resources, the court’s familiarity with the governing law, trial efficiency, and the interests of justice.

Court’s analysis

The court found that the timing of Gallagher’s motion weighed very strongly against transfer. All discovery had ended, the parties were well into preparing for trial, and the court had developed a close familiarity with the case. Transferring the action at that point would needlessly delay resolution and require a new judge to spend substantial time becoming familiar with the matter. The court concluded that this would not serve the interests of justice.

The court also found that the SEC’s choice of forum was entitled to some deference, weighing against transfer. It stated that Gallagher could have raised an argument about the location of the operative facts earlier. Inconvenience and expense to Gallagher and potential witnesses weighed only mildly in favor of transfer. The location of documents and other evidence, the availability of compulsory process for witnesses, and the forum’s familiarity with the governing law were neutral.

Disposition

Judge Castel concluded that Gallagher had not met his burden to show that transfer to the Northern District of Ohio was warranted. Gallagher’s motion to transfer under 28 U.S.C. § 1404(a) was DENIED. The clerk was directed to terminate the motion at ECF 140.