In re Eastman Kodak Company Securities Litigation

*NOT FOR PUBLICATON*

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

_______________________________________

TIANDONG TANG, individually and on

behalf of all others similarly situated,

Plaintiff,

Civil Action No. 3:20-cv-10462-FLW-ZNQ

v.

OPINION

EASTMAN KODAK COMPANY, JAMES

V. CONTINENZA, and DAVID

BULLWINKLE,

Defendants.

WOLFSON, Chief Judge:

Plaintiff Tiandong Tang sues Eastman Kodak Company (“Kodak”), James Continenza, and

David Bullwinkle (collectively, “Defendants”), individually and on behalf of others similarly

situated, for securities violations arising from a $765 million government loan to Kodak to

manufacture COVID-19 drugs. Before the Court are three motions to be lead plaintiff1 and a

motion to transfer this matter to a different venue. For the following reasons, I find that the Western

District of New York is the most appropriate forum, and decline to decide the lead plaintiff

motions.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

A. Defendants’ Course of Conduct

1 The following parties withdrew their lead plaintiff motions: Doug Atkin, see ECF No. 26; Broward

Motorsports Holdings LLC, see ECF No. 16; Gary Eberhard, see ECF No. 20; Alexander Enciso, see ECF

No. 33; Scott Reynolds and SRR Fortress Capital LLC, see ECF No. 22; Fred and Elaine Khachi, Sasan

Payvar, Dina Yaghmai, and Domenic Pesce, see ECF No. 34; Kevin Harte and Alfred Fenelle, see ECF No.

35; Margaretha Welkhammer, see ECF No. 25; and Daniel, Paul, and Mary Ann Yannes, see ECF No. 32.

Kodak is a software and consumables company incorporated in New Jersey and

headquartered in Rochester, New York. See Compl., ¶ 1.2 On July 27, 2020, Kodak alerted media

in Rochester to a “new manufacturing initiative that could change the course of history for

Rochester and the American people.” See id. ¶¶ 2, 27. According to Kodak, it meant to send the

alert as “background only,” but inadvertently omitted that caveat, so local news reported it to the

public. Id. ¶ 27. A trading frenzy ensued: investors moved 1.65 million shares that day, up from

75,000 previously. Id. ¶ 28. At the very same time, and unbeknownst to the public, Kodak’s Board

of Directors allegedly gave CEO James Continenza and CFO David Bullwinkle together 1.8

million stock options, convertible at a price between $3 and $12. See id. ¶¶ 3, 5, 34. Kodak’s shares

closed at $2.62, making the options instantly profitable. Id. ¶ 3.

On July 28, 2020, before trading began, RochesterFirst.com broke news of a $765 million

loan from the United States International Development Finance Corporation (“DFC”), which

Kodak would use to manufacture ingredients for COVID-19 drugs, the first of its kind under the

Defense Production Act (“DPA”).3 See id. ¶ 4, 28. DFC signed a formal Letter of Interest (“LOI”)

that day, with financing subject to final due diligence, and held a press conference with Kodak

officially announcing the deal. Id. ¶ 30. Continenza apparently told the Wall Street Journal that,

despite never successfully manufacturing pharmaceuticals before, Kodak has “a long, long history

in chemical and advanced materials—well over 100 years,” and could “get up and running

quickly.” Id. ¶ 32.

2 I accept all facts in the Complaint as true for the purposes of this motion. I also consider “affidavits,

depositions, stipulations, or other documents containing facts that would tend to establish the necessary

elements for a transfer.” See Plum Tree, Inc. v. Stockment, 488 F.2d 754, 756-57 (3d Cir. 1973).

3 Kodak filed a loan application with DFC in mid-June 2020, pursuant to an executive order that

delegated authority to DFC to “make loans . . . to create . . . industrial capabilities . . . needed to respond to

the COVID-19 outbreak.” See Compl., ¶ 26.

On July 29, 2020, Continenza appeared remotely on a CNBC show called Squawk Box,

broadcast from New York City, to discuss the loan. Id. ¶ 33. When asked if it was a “done deal,”

he purportedly responded: “We feel very comfortable that we can bank on it.” Id. When asked

about the high trading volume on July 27, 2020, he continued: “I mean, obviously this has been a

pretty tight kept secret . . . even until the last day, basically.” Id. And when the interviewer observed

that the deal did not look that way, he admitted: “Well, we knew for over a week.” Id. Kodak’s

shares closed at $33.20, up 1,000% from two days earlier.

Questions began to surface almost as quickly as the stock rose. On August 1, 2020, Reuters

reported the “unusual” option grant. Quoting “a person familiar with the arrangement,” the grant

“occurred because of an understanding” between Continenza and the Board of Directors “that had

previously neither been listed in his employment contract nor made public.” See id. ¶¶ 5, 37. Kodak

shares fell by $6.91 on the news. Id. ¶ 6. Then, on August 4, 2020, the website CQ Roll Call

reported a letter from Senator Elizabeth Warren asking the SEC to investigate Kodak’s dealings

with the DFC. According to that letter, Continenza purchased 46,737 shares [at $2.22] on June 23,

2020, “while the company was involved in secret negotiations with the government over a lucrative

contract,” which “raises questions about whether [he] potentially made investment decisions based

on material, non-public information.” Id. ¶ 7. Senator Warren also questioned Kodak’s allegedly

inadvertent disclosure on July 27, 2020, which set off a chaotic trading day, and its decision to

“ask[ ] reporters to remove the information” rather than reveal the deal to investors. Id. ¶¶ 8, 39-

40.

On August 4, 2020, the Wall Street Journal revealed a nascent SEC investigation into “how

Kodak controlled disclosure of the [DFC] loan.” Id. ¶ 9. According to the Journal, “[t]he SEC is

also expected to examine the stock options granted to executives” that same day. Id. Likewise, the

Journal reported a $116.3 million gift from Kodak Board member George Karfunkel to

Congregation Chemdas Yisroel, “a small space attached to a three-story apartment building” in

Brooklyn, which he founded. Karfunkel made the donation on July 29, 2020, the day Kodak’s

share price peaked. Id. ¶ 42. It was “the single largest [gift] recorded to a religious group.” Id. A

subsequent article in Mother Jones found that Karfunkel likely would “pocket a deduction between

$52.5 and $180 million” because of the synagogue’s tax-exempt status. As a result, Kodak’s shares

closed at $14.40, down $29 since news of the option grant emerged three days earlier. Id. ¶ 11.

On August 5, 2020, “[s]everal Congressional committees” sent a joint letter to Continenza

regarding “DFC’s decision to award [the $765 million] loan to Kodak despite your company’s lack

of pharmaceutical experience and the windfall gained by you and other company executives.” Id.

¶ 12. The letter called Continenza’s option grant “concerning” because the Board made it “prior

to the DPA loan becoming public information, but while Kodak was in discussions regarding the

loan.” Id. ¶ 45. On August 7, 2020, DFC rescinded its LOI, citing “[r]ecent allegations of

wrongdoing.” Id. ¶ 13. Kodak responded with a press release announcing a special committee to

“oversee an internal review of recent activity by the Company . . . in connection with the . . . loan.”

Id. ¶ 46. Kodak’s shares traded at $10.73 following these developments. Id. ¶ 14. Finally, on

August 11, 2020, on a call to discuss second quarter finances, Continenza “repeatedly referred to

the loan as a ‘potential loan,’” in contrast to his more confident statements on Squawk Box,

allegedly causing Kodak stock to fall to $9.72.

B. The Present Litigation and Pending Motions

On August 13, 2020, Tang filed this putative class action on behalf of all persons who

acquired Kodak common stock between July 27, 2020, and August 7, 2020, the class period. Id. ¶

48. Tang alleges that Kodak’s shares traded at artificially high prices because Defendants

misleadingly disclosed facts about the DFC loan. Tang also alleges that Continenza and Bullwinkle

profited from material nonpublic information because the Board gave them stock options

(convertible up to a much higher share price) before announcing the deal, on the near-certain

knowledge that Kodak’s value would soar as soon as the public became aware of the loan. Id. ¶¶

54, 66. Tang brings suit pursuant to Sections 10(b) and 20(a) of the Securities Exchange Act of

1934, as amended by the Private Securities Litigation Reform Act of 1995 (“PSLRA”). See 15

U.S.C. §§ 78j(b), 78t(a). A substantially similar action is pending in United States District Court

for the Southern District of New York. See McAdams v. Eastman Kodak Company et al., No. 20-

06861.

Tang published notice of his Complaint in Globe Newswire one day after filing it. See15

U.S.C. § 78u-4(a)(3)(A)(i). Class members could move to be lead plaintiff by October 13, 2020.

Twelve did so, but after most withdrew, three remain: Charles Satterwhite, Terry Butler, and Yiqi

Woodling (collectively, “Satterwhite Group”); Les Investissements Kiz. Inc. and UAT Trading

Service, Inc. (collectively, “Kiz Group”); and John McMullan. See ECF Nos. 18, 29, 31; supra,

note 1. Kiz Group also filed a transfer motion arguing that the Southern District of New York

(“SDNY”) is a more convenient forum. See ECF Nos. 53, 59. Only Satterwhite Group opposes,

and it seeks to keep this matter in the District of New Jersey. See ECF No. 57. McMullan has not

indicated a preference. Neither has Tang, who is not a New Jersey resident although he filed here.

Defendants do not appear to object to transfer. See ECF No. 54. This Opinion decides Kiz Group’s

transfer motion only, leaving the resolution of the lead plaintiff motions to the sound discretion of

the transferee court.

C. The Transfer Motion

Kiz Group moves to transfer because “many of the operative facts occurred [in SDNY],”

in particular “numerous key statements and disclosures” relating to the option grant and DFC loan.

Pl. Br. I, at 1-2.4 Kiz Group also contends that “the public interest weighs in favor of transfer given

court congestion in [New Jersey].”5 Id. Satterwhite Group opposes. In their view, Kiz Group relies

on “the irrelevant fact that Kodak’s stock is traded on the [New York Stock Exchange]” to tie this

matter to SDNY. See Pl. Br. II, at 5. Satterwhite Group also argue that Kiz Group bootstraps venue

to the place where certain media outlets reported Defendants’ statements and omissions, when in

fact venue is most appropriate where Defendants actually made them. Id. at 6. Based on the parties’

4 Surprisingly, Kiz Group does not attach declarations, exhibits, or supporting documents to its

transfer motion. But they make a number of assertions in their briefings that are inconsistent with their

position to transfer to SDNY. The same is true of Satterwhite Group’s opposition, which at various times

represents WDNY as a more appropriate forum than New Jersey. In this narrow circumstance, I may rely

on uncontested concessions in the parties’ briefs even though they do not constitute pleadings. See, e.g., EF

Operating Corp. v. Am. Bldgs., 993 F.2d 1046, 1050 (3d Cir. 1993) (“Representations made in briefs inform

opposing parties and the court of concessions, the specific contentions being raised and the facts and laws

relied upon to make them. The smooth, efficient working of the judicial process depends heavily upon the

assumption that such representations will be made after careful, deliberate evaluation by skilled attorneys

who must ultimately accept responsibility for the consequences of their decisions. It goes without saying

that one cannot casually cast aside representations, oral or written, in the course of litigation simply because

it is convenient to do so, and under the circumstances here, a reviewing court may properly consider the

representations made in the [ ] brief to be binding.”); Tlapanco v. Elges, No. 15-2852, 2017 WL 4329789,

at *6 (S.D.N.Y. Sept. 14, 2017) (finding, on a transfer motion, that § 1404(a) neither “suggests nor requires

the conclusion that a district court may not satisfy the requirements of that clause—i.e. acquire the power

to transfer a case—by relying on the parties’ representations and concessions”).

5 Additionally, Kiz Group raises the first-filed rule, under which district courts may “enjoin

subsequent prosecution of proceedings involving the same parties and the same issues already before

another district court,” See Equal Emp’t Opportunity Comm'n v. Univ. of Pa., 850 F.2d 969, 971 (3d Cir.

1988); Crosley Corp. v. Hazeltine Corp., 122 F. 2d 925, 929 (3d Cir. 1941) (“In all cases of concurrent

jurisdiction, the court which first has possession of the subject must decide it.”) (quoting Smith v. McIver,

22 U.S. 532, 535 (1824)), and “consolidate similar cases by transferring later-filed cases.” See Emps.’ Ret.

Sys. of City of St. Petersburgh, Fla. v. Teva Pharm. Indus. Ltd., No. 19-2711, 2019 WL 5485549, at *3

(E.D. Pa. Oct. 8, 2019); Osborne v. Emp. Benefits Admin. Bd. of Kraft Heinz, No. 19-00307, 2020 WL

1808270, at *4 (W.D. Pa. Apr. 9, 2020) (same). The first-filed rule does not warrant transfer to SDNY

because this matter is the first-filed action. See Palagano v. NVIDIA Corp., No. 15-1248, 2015 WL

5025469, at *1 (E.D. Pa. Aug. 25, 2015) (“The first-filed rule counsels deference to the suit that was filed

first.”). And venue determinations are traditionally made by the court presiding over the case filed first, as

here. See One World Botanicals Ltd. v. Gulf Coast Nutritionals, Inc., 987 F. Supp. 317, 329 (D.N.J. 1997);

FMC Corp. v. AMVAC Chem. Corp., 379 F. Supp. 2d 733, 751 (E.D. Pa. 2005).

briefings, which raise the Western District of New York (“WDNY”) as extensively as SDNY and

New Jersey, I consider that forum as well, even though Kiz Group does not specifically request a

transfer there.6

II. LEGAL STANDARD

28 U.S.C. § 1404(a) permits a court to transfer a federal action from one district to another

“[f]or the convenience of parties and witnesses, in the interest of justice,” as long as the transferee

court is one in which the action could have been brought originally. This inquiry requires an

“individualized, case-by-case consideration of convenience and fairness.” See Stewart

Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Huang v. Sonus Networks, Inc., No.

15-2407, 2016 WL 1090436, at *2 (D.N.J. Mar. 21, 2016). As such, courts consider various private

and public interest factors. See Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).

The burden to justify transfer rests with the movant, id., who must “show the proposed alternative

forum is not only adequate, but also more appropriate than the present forum.” Hoffer v.

Infospace.com, Inc., 102 F. Supp. 2d 556, 572 (D.N.J. 2000). Because § 1404(a) is designed to

6 The Third Circuit has not expressly decided whether a court may sua sponte transfer a case under

§ 1404(a). Cf. Amica Mutual Insurance Co. v. Fogel, 656 F.3d 167, 180 (3d Cir. 2011) (implicitly affirming

district court’s decision to do so); Lafferty v. Gito St. Riel, 495 F.3d 72 (3d Cir. 2007) (“Section 1404(a)

transfers are discretionary determinations made for the convenience of the parties.”) (emphasis added).

Nevertheless, district courts have frequently exercised such authority. See, e.g., Meyers v. Heffernan, No.

10-212, 2012 WL 1133732, at *5 (D. Del. Mar. 29, 2012) (“A Court’s authority to transfer cases pursuant

to 28 U.S.C. § 1404(a) does not depend upon a motion, stipulation, or consent of parties to the litigation.”);

Ziemkiewicz v. R+L Carriers, Inc., No. 12-1923, 2013 WL 505798, at *1 (D.N.J. Feb. 8, 2013) (“Because

this Court has jurisdiction and venue is proper, this Court has the authority to sua sponte transfer this case

pursuant to 28 U.S.C. § 1404(a).”); Bank Express Int’l v. Kang, 265 F. Supp. 2d 497, 507 n.12 (E.D. Pa.

2003) (“Although no party has requested it, we may transfer venue under § 1404(a) sua sponte.”); Bent

Glass Design v. Scienstry, Inc., No. 13-4282, 2014 WL 550548, at *6 (E.D. Pa. Feb. 12, 2014) (“[W]hile

venue is initially reliant on a plaintiff's preference as reflected in the pleadings, a district court may upon

motion or sua sponte dismiss or transfer a civil action to any other district in the interest of justice and/or

for the convenience of parties and witnesses.”). Based on that authority, under the transfer statute, I may

transfer a case to a venue discussed in the parties’ briefings but not specifically requested by the movant in

its motion. See 28 U.S.C. § 1404(a) (providing the authority to “any” district where an action could have

been filed, if in the convenience of the parties and interests of justice) (emphasis added).

“protect litigants, witnesses and the public against unnecessary inconvenience and expense,”

courts will not grant transfer lightly. Infanti v. Mandalay Bay Resort & Casino, No. 13-6934, 2014

WL 1430368, at *3 (D.N.J. Apr. 14, 2014) (citing Van Dusen v. Barrack, 376 U.S. 612, 616

(1964)). This is especially so in securities cases, because “the intent of the venue and jurisdiction

provisions of the securities laws is to grant potential plaintiffs liberal choice in their selection of a

forum.” See Securities Investor Protection Corp. v. Vigman, 764 F.2d 1309, 1317 (9th Cir. 1985).

III. DISCUSSION

A. Where This Matter Could Have Been Brought Originally

A court reviewing a transfer motion must first determine whether the action could have

been brought in the transferee district. See Shutte v. Armco Steel Corp., 431 F.2d 22, 23-24 (3d

Cir. 1970); Cadapult Graphic Sys. v. Tektronix, Inc., 98 F. Supp. 2d 560, 564 (D.N.J. 2000); In re

USA Techs., Inc. Sec. Litig., No. 18-13759, 2019 WL 4785780, at *2 (D.N.J. Sept. 30, 2019)

(calling this a “threshold” issue). Three statutory provisions might establish venue in this case: 28

U.S.C. § 1391(a), 28 U.S.C. § 1391(b), and 15 U.S.C. § 78aa. Under § 1391(a), an action may be

brought in any district “in which any defendant resides, if all defendants are residents of the State

in which the district is located.” Id. According to the residency allegations in the pleadings, Kodak

is headquartered in Rochester, New York, and WDNY is a proper venue to that extent. Kiz Group

does not address this provision in any event.

Additionally, under § 1391(b), an action may be brought in any district “in which a

substantial part of the events or omissions giving rise to the claim occurred.” Id. Kiz Group

assumes, without ever demonstrating, that SDNY is a proper venue for this reason. Sutterwhite

Group does not appear to specifically challenge that presumption. However, it is well-settled that

acts or omissions must be more than tangentially related to a forum to qualify as “substantial.” See

Dollar Discount Stores of America, Inc. v. Petrusha, No. 01-384, 2001 WL 881725, at *1 (E.D.

Pa. Apr. 25, 2001); Cottman Transmission Systems, Inc. v. Martino, 36 F.3d 291, 294 (3d Cir.

1994) (“Events or omissions that might only have some tangential connection with the dispute in

litigation are not enough.”). Substantiality under § 1391(b) turns on the “the location” of the events

giving rise to the claim, not forum “contacts” in the context of personal jurisdiction. Cottman, 36

F.3d at 295. For the reasons discussed infra, this provision does not support venue in SDNY, but

does in WDNY.

Finally, pursuant to 15 U.S.C. § 78aa, securities actions “may be brought . . . in the district

wherein the defendant is found or is an inhabitant or transacts business,” or where any fraudulent

and material act occurred. Id. Venue is proper in WDNY under this provision because Defendants

performed numerous acts or omissions there, see infra, which form the basis of Tang’s Complaint.

See Bath Industries, Inc. v. Blot, 427 F.2d 97, 114 (7th Cir. 1970) (“[A]ll that is required is but one

act within the forum district which represents more than an immaterial part of the alleged illegal

events.”); CIBC World Markets, Inc. v. Deutsche Bank Sec., Inc., 309 F. Supp. 2d 637, 646 (D.N.J.

2004) (same). Pursuant to § 78aa, venue also appears to be proper in SDNY because Continenza

allegedly conveyed misleading information to media outlets there, such as the Wall Street Journal,

and Kodak (or its officials) released similar statements to the press, which made their way to

audiences in SDNY. See, e.g., Mitchell v. Texas Gulf Sulphur Company, 446 F.2d 90, 106 (10th

Cir. 1971) (venue proper in Utah under § 78aa because defendants, inter alia, released a “false and

fraudulent” press release to the media, which came to Salt Lake City on the Dow-Jones broad tape

and in the Wall Street Journal); In re AES Corporation Securities Litigation, 240 F. Supp. 2d 557,

559 (E.D. Va. 2003) (venue proper in Indiana under § 78aa because defendant disseminated press

releases containing misleading statements over the business wire, which reached a national

audience); In re Triton Limited Securities Litigation, 70 F. Supp. 2d 678, 686-87 (E.D. Tex. 1999)

(venue proper in the Eastern District of Texas under § 78aa because defendant sent misleading

press releases into the district); Eades v. Boston Technology, No. 95-7236, 1996 WL 668403, at

*3 (E.D. Pa. Nov. 13, 1996) (venue proper in the Eastern District of Pennsylvania under

§ 78aa because defendant transmitted press releases containing allegedly false information into the

district); S-G Securities, Inc. v. Fuqua Investment Company, 466 F. Supp. 1114, 1121 (D. Mass.

1979) (venue proper in Massachusetts under § 78aa because Wall Street Journal reported the

substance of defendant’s press releases, thereby transmitting them into the district); Oxford First

Corporation v. PNC Liquidating Corporation, 372 F. Supp. 191, 197 (E.D. Pa. 1974) (Becker, J.)

(“Venue will be sustained in a securities case where a defendant causes false or misleading

information to be transmitted into a judicial district . . . the nature and function of a press release

is to diffuse information.”); CIBC World Markets, 309 F. Supp. 2d at 649 (“The publication of a

letter in the Wall Street Journal urging shareholders to behave in a certain way . . . is similar to the

publication of misleading information [and establishes proper venue].”).7 Accordingly, I find that

Tang could have originally filed his Complaint in SDNY, WDNY, or New Jersey.

B. Private Interest Factors

Having so found, I now determine whether SDNY or WDNY is a more convenient forum

than New Jersey. There is no “definite formula” for this inquiry, but courts in the Third Circuit

consider the following private interest factors:

(1) plaintiff’s forum preference as manifested in the original choice; (2) the

defendant's preference; (3) whether the claim arose elsewhere; (4) the convenience

of the parties as indicated by their relative physical and financial condition; (5) the

convenience of the witnesses-but only to the extent that the witnesses may actually

be unavailable for trial in one of the fora; and (6) the location of books and records

7 The venue analysis under 15 U.S.C. § 78aa differs significantly from the convenience/fairness

analysis under 28 U.S.C. § 1404(a). See infra.

(similarly limited to the extent that the files could not be produced in the alternative

forum).

Jumara, 55 F.3d at 879-80; Huang, 2016 WL 1090436, at *2 (quotations and citation omitted). I

analyze each in turn.

i. Factors One and Two

There is ordinarily a strong presumption in favor of a plaintiff’s chosen forum, in this case

New Jersey, where Tang filed his Complaint. See, e.g., Windt v. Qwest Comm. Intern., Inc., 529

F.3d 183, 190 (3d Cir. 2008). Still, forum choice is a preference not a right. See Liggett Grp., Inc.

v. R.J. Reynolds Tobacco Co., 102 F. Supp. 2d 518, 526 (D.N.J. 2000); Ricoh Co., Ltd. v.

Honeywell, Inc., 817 F. Supp. 473 (D.N.J. 1993); AT&T v. MCI, 736 F. Supp. 1294, 1306 (D.N.J.

1990). Where a plaintiff chooses to file in a non-home forum, for instance, his choice is afforded

less weight. See Delta Air Lines, Inc. v. Chimet, S.p.A., 619 F.3d 288, 295-96 (3d Cir. 2010). Same

result obtains when the central facts of a lawsuit occur outside the chosen forum. See NCR Credit

Corp. v. Ye Seekers Horizon, Inc., 17 F. Supp. 2d 317, 321 (D.N.J. 1998); In re Consolidated

Parlodel Litigation, 22 F. Supp. 2d 320, 323-24 (D.N.J. 1998). That appears to be the case here:

based on the Complaint, Tang does not reside in New Jersey, and no facts arise in this state. Accord

Kelly-Brown v. Winfrey, No. 11-4360, 2011 WL 5325596, at *3 (D.N.J. Nov. 3, 2011) (giving

plaintiffs’ choice of forum less deference because they did not reside in New Jersey and had “no

connection to [the state] other than their selection of a New Jersey attorney to represent them in

this matter”).

Moreover, a plaintiff’s choice of forum “becomes substantially less important [where] he

sues representatively on behalf of a class.” See Job Haines Home for the Aged v. Young, 936 F.

Supp. 223, 228 (D.N.J. 1996) (collecting cases) (quotations omitted). “[I]n such actions the

participation of the class representative is generally minimal” and “the potential members of the

class will likely be scattered across the United States.” Santomenno v. Transamerica Life Ins. Co.,

No. 11-736, 2012 WL 1113615, at *5 (D.N.J. Mar. 30, 2012) (quotations and citations omitted).

Tang’s Complaint is also a putative class action on behalf of anyone who acquired Kodak common

stock between July 27, 2020, and August 7, 2020. Tang’s decision to file in New Jersey is not

decisive for this reason.

Finally, although Defendants have not indicated a forum preference, they filed a non-

opposition notice to Kiz Group’s transfer motion. See ECF No. 54. Kodak’s only connection to

New Jersey is that it is incorporated here, which “cannot be a dispositive fact in the venue transfer

analysis.” See Express Mobile, Inc. v. Web.com Grp., Inc., No. 19-1936, 2020 WL 3971776, at *5

(D. Del. July 14, 2020); Minstar, Inc. v. Laborde, 626 F. Supp. 142, 146 (D. Del. 1985) (“[T]he

mere fact that Delaware is the plaintifffs’ choice of forum and . . . the defendants’ state of

incorporation will not, standing alone, prevent this Court from transferring this suit to another

forum.”); Kirschner Bros. Oil, Inc. v. Pannill, 697 F. Supp. 804, 807 (D. Del. 1988) (stating that

minimal asserted connections, such as “the incorporation of some of the Defendants in Delaware[,]

is of little consequence”); In re Link_A_Media Devices Corp., 662 F.3d 1221, 1223 (Fed. Cir.

2011) (“Neither § 1404 nor Jumara list a party’s state of incorporation as a factor for a venue

inquiry.”). Factor two therefore is neutral.

ii. Factor Three

Kiz Group’s transfer motion turns on factor three—where the claims arose. In general,

courts analyze this factor by looking to “locus of the alleged culpable conduct.” See Van

Cauwenberghe v. Biard, 486 U.S. 517, 529 (1988); Leroy v. Great W. United Corp., 443 U.S. 173,

185-86 (1979); Cottman, 36 F.3d at 294 (“The test for determining venue is not the defendant’s

‘contacts’ with a particular district, but rather the location of those ‘events or omissions giving rise

to the claim.’”); Stillwagon v. Innsbrook Golf & Marina, LLC, No. 11-1338, 2013 WL 1180312,

at *26 (W.D. Pa. Mar. 20, 2013) (observing that factor three “focuses on where the activities

relevant to the claims . . . took place”); Days Inn Worldwide, Inc. v. Inv. Prop. of Brooklyn Ctr.,

LLC, No.08-390, 2009 WL 3153277, at *4 (D.N.J. Sept. 25, 2009) (analyzing where “the operative

facts occurred”); NCR Credit Corp., 17 F. Supp. 2d at 321 (“As a general rule, the preferred forum

is that which is the center of gravity of the accused activity.”); Park Inn Int’l, L.L.C. v. Mody

Enterprises, 105 F. Supp. 2d 370, 377-78 (D.N.J. 2000) (defining center of gravity as the place of

“[the underlying] dispute, its events, and transactions”).

More specifically, “in the context of claims based on misrepresentations or omissions,” as

in this securities action, “the misrepresentations and omissions are deemed to occur in the district

where they were transmitted or withheld, not where they are received.” See Kerik v. Tacopina, No.

14-488, 2014 WL 1340038, at *5 (D.N.J. Apr. 3, 2014); Metro. Life Ins. Co. v. Bank One, N.A., No.

03-1882, 2012 WL 4464026, at *6 (D.N.J. Sept. 25, 2012); Branthover v. Goldenson, No. 10-

7677, 2011 WL 6179552, at *3 (S.D.N.Y. Dec. 12, 2011); Frato v. Swing Staging, Inc., No. 10-

5198, 2011 WL 3625064, at *4 (D.N.J. Aug. 17, 2011); Palagano v. NVIDIA Corp., No. 15-1248,

2015 WL 5025469, at *5 (E.D. Pa. Aug. 25, 2015). And “[w]here plaintiff’s cause of action arises

from strategic policy decisions of a defendant corporation,” like here,” the defendant’s

headquarters can be considered the place where events giving rise to the claim occurred.” Panitch

v. Quaker Oats Co., No. 16-4586, 2017 WL 1333285, at *6 (E.D. Pa. Apr. 5, 2017) (quoting Ayling

v. Travelers Prop. Cas. Corp., No. 99-3243, 1999 WL 994403, at *5 (E.D. Pa. Oct. 28, 1999)).8

8 15 U.S.C. § 78aa provides that a securities action is proper—and thus could be filed—in any district

in which a single act occurs, which courts construe broadly. In fact, the “venue-sustaining act need not

constitute the core of the alleged violation, nor even be illegal, so long as it represents more than an

immaterial part of the alleged violations.” See S-G Securities, 466 F. Supp. at 1121 (citations omitted); In

re AES Corp., 240 F. Supp. 3d at 559 (collecting cases); Hilgeman v. National Ins. Co., 547 F.2d 298, 301

(5th Cir. 1977) (“The ‘act’ contemplated by the statute need not be crucial.”) (citations omitted); First

In opposing each other’s transfer arguments, the parties make a far stronger case for venue

in WDNY than in either of their preferred forums. First, Kodak is headquartered in Rochester, and

keeps no offices or employees in SDNY or New Jersey. See Pl. Br. I, at 11. The main facility it

sought to revamp with the DFC loan is also there. Id. Second, there is no dispute that company

executives in Rochester undertook the very actions giving rise to Tang’s claims: most importantly,

the decision to give stock options to Continenza and Bullwinkle before publicly announcing the

DFC loan, and every judgment about what to tell the public thereafter, including what to omit or

withhold from public view, which furthered the alleged insider trading. In other words, Defendants

hatched and sustained the very fraudulent scheme described in the Complaint in WDNY. There is

likewise no basis to find that Defendants did not prepare and file their Form 4s in Rochester, which

divulged the option grant (and religious gift) to the SEC after-the-fact, negotiate the DFC loan

over the course of several months, sign the LOI, participate in drafting/distributing press

statements, and decide what disclosures to make.

Also dispositive: Kiz Group admits that “all statements made other than [the statement on

Squawk Box] occurred in Rochester.” See Pl. Br. I, at 11. This presumably includes Kodak’s

inadvertent alert to local media on July 27, 2020, and subsequent request to reporters to take it

Federal Savings & Loan Assoc. of Pittsburgh v. Oppenheim, Appel, Dixon & Co., 634 F. Supp. 1341, 1350

(S.D.N.Y. 1986) (“[A]ny non-trivial act in the forum district which helps to accomplish a securities law

violation is sufficient to establish venue [for purposes of 78aa].”). The case law, in turn, uniformly supports

the proposition that the mere transmission of misleading materials into a district establishes venue under §

78aa, regardless of where the statements themselves were made. See supra. By contrast, under § 1404(a),

courts must select “the most appropriate venue,” which “is where a majority of events giving rise to the

claim arose” and where the “center of gravity” is. See Amkor Tech, 2006 WL 3857488, at *5 (emphasis

added); Hoffer, 102 F. Supp. 2d at 572 (stating that, in analyzing private interest factors such as where the

claims arose, a court must determine that “the proposed alternative forum is not only adequate, but also

more appropriate”) (emphasis added). In a securities action such as this one, the center of gravity and locus

of events is where the allegedly fraudulent representations or omissions were made, not where they were

received. See supra. Thus, contrary to Kiz Group’s position, the fact that an action could have proceeded

in a district originally pursuant to § 78aa, because media there covered a defendant’s conduct, does not ipso

facto establish that the district is most convenient under § 1404(a) or that the claims “arose” there for

purposes of factor three.

down; Continenza’s statement in the press conference with the DFC on July 28, 2020;

Continenza’s statement to the Wall Street Journal on July 28, 2020, that Kodak has “a long, long

history in chemical and advanced materials—well over 100 years,” and could “get up and running

quickly”; various corrective statements or partial disclosures reported by news outlets between

August 1, 2020, and August 5, 2020; the press release announcing the special committee on August

7, 2020; and Continenza’s conference call with investors on August 11, 2020, characterizing the

certainty of the loan differently than before.

Kiz Group’s arguments to the contrary are unavailing. Kiz Group first claims that

Defendants made a “key” false statement—about how investors could “bank on” the FDC loan—

in SDNY because CNBC’s Squawk Box broadcasts from that district. The problem is that

Continenza appeared on Squawk Box remotely, from a location neither party can seem to identify,

and hence could not have made representations or withheld information in SDNY. See Pl. Br. I, at

10 n.7; Pl. Br. II, at 6. Moreover, in Kiz Group’s own words, “all other material connections to the

alleged fraud [are] in Rochester,” which establishes WDNY as the center of gravity of this dispute.

See Pl. Br. I, at 2.

According to Kiz Group, it is also relevant that the Wall Street Journal is located in SDNY,

because it broke news about the stock grant and religious gift, reported Kodak’s various corrective

statements/partial disclosures, and quoted from company sources. See Pl. Br. I, at 11. While this

may matter for the purposes of determine where Tang’s action could have been brought under 15

U.S.C. § 78aa, see supra, it is not dispositive for the purposes of § 1404(a), where the inquiry is

the most appropriate forum based (in part) on the locus of operative events. In this regard, Kiz

Group erroneously conflates where a representation or omission is made with where one is

disseminated, and attempts to bootstrap transfer to the location of whatever media company

broadcasts, publishes, reports, or covers such information. Cf. In re Collins & Aikman Corp. Sec.

Litig., 438 F. Supp. 2d 392,397 (S.D.N.Y. 2006) (“[M]isrepresentations are deemed to occur in

the district where the misrepresentations are issued or the truth is withheld, not where the

statements at issue are received.”); City of Pontiac Gen. Employees' Ret. Sys. v. Stryker Corp., No.

10-376, 2010 WL 2035130, at *4 (S.D.N.Y. May 21, 2010) (“[T]he locus of operative events in a

securities action is where the alleged misrepresentations were made.”); In re Amkor Tech, Inc. Sec.

Litig., No. 06-298, 2006 WL 3857488, at *5 (E.D. Pa. Dec. 28, 2006) (transferring securities case

involving a company with Pennsylvania offices because “the vast majority of events and public

statements alleged in the Complaint occurred or were made in Arizona from the Company’s

Arizona Headquarters”); Purcell Graham, Inc. v. National Bank of Detroit, No. 93-8786, 1994

WL 584550, at *4 (S.D.N.Y. Oct. 24, 1994) (transferring to district where defendant “allegedly

made representations or failed to disclose information”).

Finally, Kiz Group emphasizes that Kodak is on the New York Stock Exchange (“NYSE”),

where Continenza and Bullwinkle improperly traded in company stock. See Pl. Rep. Br., at 3.

These facts are not dispositive either, or else every securities action would wind up in SDNY. See,

e.g., Laborers Local 100 & 397 Pension Fund v. Bausch & Lomb Inc., No. 06-01942, 2006 WL

1524590, at *4 (S.D.N.Y. June 5, 2006) (“[T]he SDNY would have even more business and every

plaintiff that sued a NYSE firm could nestle in right here at 500 Pearl Street.”). Factor three

therefore strongly favors transfer to WDNY, where the actionable and operative facts arose.

iii. Factors Four, Five, and Six

Courts consider party convenience under factor four, focusing on “relative physical and

financial condition.” See Liggett, 102 F. Supp. 3d at 533; Jumara, 55 F.3d at 879. Based on the

pleadings, neither Tang nor any potential lead plaintiff resides in New Jersey or SDNY, see Pl. Br.

I, at 8-9 & n.6, Defendants do not keep offices or personnel in either district, and no party indicates

an inability to afford litigation in one place versus another. Factor four is therefore in equipoise.

Courts consider witness convenience under factor five, but “only to the extent that the

witnesses may actually be unavailable for trial in one of the fora.” Jumara, 55 F.3d at 879. This is

often the most important private interest factor. See Headon v. Colo. Boys Ranch, No. 204-04847,

2005 WL 1126962, at *7 (E.D. Pa. May 5, 2005); Blankenship v. Graco Children’s Prod., Inc.,

No. 11-04153, 2011 WL 4712419, at *3 (E.D. Pa. Oct. 6, 2011). No present party alleges that any

witness could not attend trial in any forum. To the contrary, because “the lion’s share of potential

witnesses presumably reside in Rochester,” where “Defendants are located,” see Pl. Br. I, at 11-

12, WDNY plainly seems most convenient. See, e.g., In re Global Cash Access Holdings, Inc. Sec.

Litig., No. 08-3516, 2008 WL 4344531, at *4 (S.D.N.Y. Sept. 18, 2008) (“[I]n cases where, as

here, the plaintiff alleges that certain documents contained false or misleading statements, the key

witnesses are frequently ‘officers and employees of [the issuer] who participated in drafting or

distributing [those] statements.’”) (quoting In re Stillwater Mining Co. Sec. Litig., No. 02-2806,

2003 WL 21087953, at *4 (S.D.N.Y. May 12, 2003)). Factor five therefore favors transfer to

WDNY.

Finally, under factor six, courts consider “the location of books and records,” but again

“only to the extent that the files could not be produced in the alternative forum.” Jumara, 55 F.3d

at 879. While the relevant documents in this matter are almost certainly located at Kodak

headquarters in Rochester, “technological advances of recent years have significantly reduced the

weight of [this factor] in the balance of convenience analysis.” See Lomanno v. Black, 285 F. Supp.

2d 637, 647 (E.D. Pa. 2003); Copley v. Wyeth, Inc., No. 09-722, 2009 WL 2160640, at *6 (E.D.

Pa. July 16, 2009)); Huang, 2016 WL 1090436, at *3. Both parties recognize this, so I do not

attach weight to this factor. Accordingly, in sum, the private interest factors favor transfer to

WDNY.

C. Public Interest Factors

Courts in the Third Circuit also consider various public interest factors on a § 1404(a)

transfer motion:

(1) the enforceability of the judgment; (2) practical considerations that could make

the trial easy, expeditious, or inexpensive; (3) the relative administrative difficulty

in the two fora resulting from court congestion; (4) the local interest in deciding

local controversies at home; (5) the public policies of the fora; and (6) the

familiarity of the trial judge with the applicable state law in diversity cases.

Jumara, 55 F.3d at 879-80.

Kiz Group stresses court congestion. See Pl. Br. I, at 13. As a rule, that factor is not “of

great importance” on a transfer motion. See Kisko v. Penn. Cent. Transp., Co., 408 F. Supp. 984,

987 (M.D. Pa. 1976); Gallagher v. Ocular Therapeutix, Inc., No. 17-05011, 2017 WL 4882487,

at *5 (D.N.J. Oct. 27, 2017) (“[D]ocket congestion is not a particularly important factor compared

with the local interests of each forum.”); Burstein v. Applied Extrusion Technologies, Inc., 829 F.

Supp. 106, 114 (D. Del. 1992) (finding congestion “insufficient to prevent a §

1404(a) transfer which is otherwise mandated by the convenience of the parties and witnesses”).

This is especially so when “the reality is that [both venues] are [] busy.” See Eastman v. First Data

Corp., No. 10-5860, 2011 WL 1327707, at *5 (D.N.J. April 5, 2011). New Jersey faces the most

significant backlog of cases in the country. As of December 31, 2020, we had the most civil filings,

the second most pending cases, and the third most pending cases at least three years old.9 WDNY

has a comparatively lower caseload, which favors transfer there.

9 See Federal Court Management Statistics—National Judicial Caseload Profile (Dec. 31, 2020),

https://www.uscourts.gov/sites/default/files/data_tables/fcms_na_distprofile1231.2020.pdf.

Although Kiz Group does not discuss the other public interest factors, they all are either

neutral or in favor of transfer. Factor one is neutral because Tang’s claims arise under federal

securities law and there is no distinction between a judgment in WDNY, SDNY, or New Jersey.

See, e.g., In re USA Tech., 2019 WL 4785780, at *4; Zazzali v. Swenson, 852 F. Supp. 2d 438, 451

(D. Del. 2012) (concluding same). Factor six is also neutral because federal courts are presumed

to be equally “familiar with the applicable” federal law, here a longstanding securities statute. See,

e.g., Schlenker v. Immucor, Inc., No. 09-04297, 2009 WL 5033972, at *5 (E.D. Pa. Dec. 22, 2009

(“Both courts are intimately familiar with federal securities laws.”); Liggett Grp., 102 F. Supp. 2d

at 537 (same, but antitrust); Honeywell, 817 F. Supp. at 486 (same, but patent).

Factor two favors transfer to WDNY for the same reason as the private interest factors: it

would make trial substantially easier on Defendants and witnesses, and no harder on anyone else.

Compare Fink on behalf of Nation Safe Drivers Emp. Stock Ownership Plan v. Wilmington Tr.,

N.A., 473 F. Supp. 3d 366, 376 (D. Del. 2020) (“Plaintiff and all the Individual Defendants reside

in the Southern District of Florida. The parties have represented that there are witnesses and

documentary evidence in the Southern District of Florida. Thus, this factor weighs in favor of

transfer.”), with Allegheny Cty. Employees’ Ret. Sys. v. Energy Transfer LP, No. 20-200, 2020 WL

1888950, at *7 (E.D. Pa. Apr. 16, 2020) (“The practical considerations discussed above weigh

against transfer given the presence of potentially key witnesses here in Pennsylvania.”). Likewise,

under factor four, WDNY has a strong interest in deciding a local controversy involving one of its

biggest corporate citizens, and bearing virtually no relationship to any other place, at home. See,

e.g., Metro. Life Ins., 2012 WL 4464026, at *8 (finding that New York has a “compelling interest

in adjudicating the controversy and regulating the conduct of its corporations and the activities of

corporate officers working for corporations which conduct business in that state”); HAB Carriers,

Inc. v. Arrow Truck Sales, Inc., No. 0704390, 2009 WL 2589108, at *4 (D.N.J. Aug. 21, 2009)

(same); Tradimpex Egypt Co. v. Biomune Co., 777 F. Supp. 2d 802, 810 (D. Del. 2011)

(“Delaware, too, has a local interest, in that one of its citizens—Biomune, a Delaware

corporation—is alleged to have breached a contract.”).

Finally, factor five favors transfer because New Jersey has a public policy to preserve its

limited judicial resources, or at least not waste them on litigation with no meaningful connection

to the state. See, e.g., In re Exxon Mobil Corp. Derivative Litig., No. 19-16380, 2020 WL 5525537,

at *4 (D.N.J. Sept. 15, 2020) (“New Jersey jurors should not be burdened with adjudicating a

matter concerning decisions and/or conduct which occurred [] exclusively outside the State of New

Jersey.”); Govan v. United States, No. 09-00491, 2009 WL 10664440, at *4 (D.N.J. Dec. 22, 2009)

(“New Jersey jurors should not be burdened with adjudicating a matter concerning conduct which

occurred in Georgia.”); Honeywell, 817 F. Supp. at 486 (“[T]he burden of jury duty ought not to

be imposed upon the people of a community which have no relation to the litigation.”).

Accordingly, in sum, the public interest factors favor transfer to WDNY.

IV. CONCLUSION

For the foregoing reasons, I TRANSFER this matter to the Western District of New York,

and decline to decide the three lead plaintiff motions, which the transferee court may consider in

the normal course.

DATED: May 27, 2021 /s/ Freda L. Wolfson

Hon. Freda L. Wolfson

U.S. Chief District Judge