COMMONWEALTH OF PENNSYLVANIA v. THINK FINANCE, INC.
2:14-cv-07139
| E.D. Pa. | Apr 4, 2018Background
- Commonwealth of Pennsylvania (OAG) sued Think Finance and related entities alleging usury and other violations for loans to Pennsylvania consumers.
- Think Finance defendants filed Chapter 11 bankruptcy petitions in the Northern District of Texas and then moved to transfer this action to the Northern District of Texas (anticipating assignment to the bankruptcy court).
- Defendants argued transfer should be governed by 28 U.S.C. § 1412 (transfer of proceedings "under title 11" or "related to" bankruptcy) and that a presumption favors transfer to the bankruptcy forum.
- OAG contended the general transfer statute, 28 U.S.C. § 1404(a), applies and emphasized this is a police and regulatory action brought by a state attorney general.
- The court concluded the case "relates to" defendants’ bankruptcy and thus applied § 1412, but held that the presumption in favor of transfer does not apply to police and regulatory actions brought by governmental units.
- Applying § 1412 factors, the court found defendants did not meet their burden to show transfer was in the interest of justice or for convenience and denied the motion to transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which statute governs transfer? | OAG: § 1404(a) (general transfer statute) | Defs: § 1412 applies because case "relates to" bankruptcy | Court: § 1412 applies because outcome may affect bankruptcy estates |
| Does § 1412 carry a presumption favoring transfer? | OAG: No presumption; police/regulatory action should proceed in state | Defs: Yes, courts presume transfer for related cases to bankruptcy forum | Court: No presumption for police/regulatory actions (public policy exception) |
| Should this police/regulatory action be transferred despite relation to bankruptcy? | OAG: State has strong interest; witnesses and claims are Pennsylvania-centered | Defs: Efficient to centralize related matters in bankruptcy district | Court: OAG’s interests (forum, local witnesses, regulatory enforcement) outweigh transfer factors; transfer denied |
| Burden of proof for transfer under § 1412 | OAG: Defs must prove by preponderance; plaintiff’s forum choice entitled to deference | Defs: Met burden via relation to bankruptcy and indemnities/overlap | Court: Defs failed to meet burden; plaintiff’s forum choice retained |
Key Cases Cited
- Jumara v. State Farm Ins. Co., 55 F.3d 873 (3d Cir.) (transfer factors to weigh convenience and interest of justice)
- In re Emerson Radio Corp., 52 F.3d 50 (3d Cir.) (bankruptcy-transfer considerations informing § 1412 analysis)
- Krystal Cadillac-Oldsmobile-GMC Truck v. Gen. Motors Corp., 232 B.R. 622 (E.D. Pa.) (discusses presumption favoring transfer under § 1412)