United States District Court, Northern District of Illinois, E.D
March 15, 1983
MEDICAL EMERGENCY SERVICE ASSOCIATES (MESA), S.C., PLAINTIFF,
ROBERT M. DUPLIS, M.D., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Grady, District Judge.
This is an action under 18 U.S.C. § 1961 et seq., the Racketeer
Influenced and Corrupt Organizations Act ("RICO"), and for fraud,
misappropriation, tortious inducement of termination and
malicious interference with advantageous relations, unfair
competition under Ill.Rev.Stat. ch. 121 1/2, § 262, tortious
breach of employment duties, and tortious retention of
compensation. Defendants have moved to dismiss the complaint for
improper venue, lack of personal jurisdiction and insufficiency
of service of process, or, in the alternative, to transfer. We
grant the motion to dismiss.
On a motion to dismiss, we assume the facts as stated by
plaintiff. We summarize the facts relevant to this motion here.
Plaintiff, Medical Emergency Services Associates ("MESA"), is
an Illinois medical corporation which has its principal place of
business in Buffalo Grove, Illinois. MESA contracts with
hospitals to provide physicians to staff emergency rooms and
subcontracts with physicians to service its primary contracts. On
July 31, 1978, MESA contracted with defendant Orlando Regional
Medical Center, of Orlando, Florida, to provide emergency medical
services and staff there for a period of one year, with automatic
one-year renewals until either party terminated the contract in
accordance with its provisions. The contract continued in force
until it was terminated on March 31, 1982. MESA entered into
individual contracts of employment with each of
defendant-physicians Duplis, Wolfson, Bautista, Baguio, Wilson
and Castellaneta to provide emergency medical services, and each
was assigned to Orlando Medical. Each of these contracts of
employment provided that it would remain in force until it was
terminated by either party upon 90 days' notice.
MESA's complaint alleges that prior to December 23, 1981, and
while employed by MESA, one or more of defendants Duplis,
Wolfson, Bautista, Baguio, Wilson and Castellaneta conceived and
embarked upon a plan, scheme and course of conduct to form a
group, organization or enterprise to replace MESA as the provider
of emergency medical services for Orlando General. The complaint
alleges that in furtherance of this plan, one or more of these
defendants attempted to and did solicit the remainder of the
defendants and others to join this plan and scheme. The scheme,
as outlined in plaintiff's complaint, basically was that each of
the physicians would simultaneously quit their employment with
MESA and form another group to provide the same services to
Orlando General. The complaint alleges further that the
defendants conspired to conceal this scheme from MESA.
Defendants have moved to dismiss the complaint for improper
venue, lack of personal jurisdiction and insufficiency of service
of process, or, in the alternative, to transfer to the Middle
District of Florida.
Because this action is founded on both RICO*fn2 and diversity of
citizenship, we look to 28 U.S.C. § 1391(b) to determine whether
venue is proper.*fn3 That section provides:
A civil action wherein jurisdiction is not founded
solely on diversity of citizenship may be brought
only in the judicial district where all defendants
reside, or in which the claim arose, except as
otherwise provided by law.
28 U.S.C. § 1391(b). Plaintiff argues that venue is proper in the
Northern District of Illinois because, according to plaintiff,
the claim arose here.
Plaintiff argues that the claim arose in the Northern District
of Illinois where,
. . each defendant engaged in overt acts in
furtherance of the conspiracy by mailing into
Illinois simultaneous notices of contract
termination, where the injurious effect of all of the
defendants [sic] conduct was felt, where the "target"
of the tortious conduct is located and where the
contracts tortiously interfered with were legally
Plaintiff's Response Memorandum at 19.
Defendants argue that plaintiff's claim arose in Florida
because the alleged conspiracy was to deprive plaintiff of the
value of its employment agreements for services to be performed
in Florida; because Florida would be a more convenient venue for
the production of witnesses and records; and because Florida has
the most significant contacts with the inception of the claim.
Defendants argue that their contacts with Illinois were marginal
According to defendants, five of the six doctor-defendants had
only minimal contacts with Illinois. Those contacts, according to
defendants, involved signing an employment agreement with MESA,
an Illinois corporation, for services to be performed exclusively
in Florida; the agreements, although signed by the defendants in
Florida, stated that they were executed in Illinois; and some of
the physicians infrequently made phone calls or wrote letters to
Illinois during the course of their employment. With respect to
the hospital-defendant, the contacts involved tours by hospital
representatives of MESA-run hospitals in Illinois. Finally, with
respect to Dr. Duplis, the sixth physician, defendants argue that
his annual visits to MESA headquarters in Illinois were generally
social and unrelated to the alleged acts which form the core of
The venue question must be decided in accordance with the
principles laid down by the Supreme Court in Leroy, Attorney
General of Idaho v. Great Western United Corp., 443 U.S. 173, 99
S.Ct. 2710, 61 L.Ed.2d 464
(1979). The Court there discussed the principles underlying
28 U.S.C. § 1391 and the standards to be used in determining
where a claim "arose" for purposes of that statute. The Court
stated that "Congress did not intend to provide for venue at the
residence of the plaintiff or to give that party an unfettered
choice among a host of different districts." Id. at 185, 99 S.Ct.
at 2717. The Court concluded that
the broadest interpretation of the language of §
1391(b) is that in the unusual case in which it is
not clear that the claim arose in only one specific
district, a plaintiff may choose between those two
(or conceivably even more) districts that with
approximately equal plausibility — in terms of
the availability of witnesses, the accessibility of
other relevant evidence, and the convenience of the
defendant (but not of the plaintiff) — may be
assigned as the locus of the claim."
Id., emphasis in original (footnote omitted).
We read the Court's language in Leroy as requiring that venue
in this case lie in Florida. The Leroy Court made plain that only
in the unusual case will a claim be found to have arisen in more
than one judicial district. Our case does not appear unusual at
all. Although plaintiff has alleged some minimal contacts between
its cause of action and the Northern District of Illinois, it
seems clear that all or substantially all of the relevant acts
complained of occurred in Florida. Where a claim arises must "be
ascertained by advertence to events having operative significance
in the case. . . ." Sharp Electronics Corporation v. Hayman Cash
Register Company, 655 F.2d 1228, 1229 (D.C.Cir. 1981). The
various visits by some of the defendants to Illinois do not
appear to have been related in any meaningful way to the conduct
which forms the basis of plaintiff's complaint.
We also do not agree with plaintiff's second theory: that
because the economic effect of its alleged injury was felt in
Illinois, its claim arose here. That argument was advanced and
rejected in Leroy, supra, where the plaintiffs had argued that a
claim arose in Dallas because that is where the challenged
statute would have had its impact on the plaintiffs. The Court
. . such a reading of § 1391(b) is inconsistent
with the underlying purpose of the provision, for it
would leave the venue decision entirely in the hands
of plaintiffs, rather than making it "primarily a
matter of convenience of litigants and witnesses."
443 U.S. at 186-87, 99 S.Ct. at 2718, quoting from Denver &
R.G.W.R. Co. v. Railroad Trainmen, 387 U.S. 556
, 560, 87 S.Ct.
1746, 1748, 18 L.Ed.2d 954 (1967). The "economic effect" argument
has also been rejected in this district. See Robbins v. First
American Bank of Virginia, 514 F. Supp. 1183
, 1192-93 (N.D.Ill.
1981). In Robbins, Judge Moran found that the alleged diversion
of funds which provided the basis for the action resulted from
activities by Virginia residents in Virginia. Further, all
parties other than employees of the plaintiffs were located in
Virginia, and, with the exception of the execution of one
document, all of the relevant documents were substantially
negotiated, drafted, and executed in Virginia, which was also the
place of performance. The court, applying Leroy, held that "[t]he
action here is not unusual and the locus of the claim is clearly
Virginia." 514 F. Supp. at 1193. The court specifically rejected
the plaintiffs' argument that venue was proper in the Northern
District of Illinois because the impact of the defendants'
wrongful acts would be felt here. Our case seems practically on
all fours with Robbins,*fn4
and we similarly hold that venue is
improper in the Northern District of Illinois.
In reaching this conclusion, we have considered the Seventh
Circuit's opinion in People
of State of Illinois v. City of Milwaukee, 599 F.2d 151 (7th Cir.
1979), vacated on other grounds but upheld as to venue,
451 U.S. 304, 101 S.Ct. 1784, 68 L.Ed.2d 114 (1981).*fn5
There, the State of Illinois sued to enjoin the City of Milwaukee
from discharging raw sewage and inadequately treated sewage into
Lake Michigan. The court held that venue was proper in the
Northern District of Illinois under § 1391(b) because that
was "where the injury was suffered." 599 F.2d at 157. We do not
believe that the holding stands for the proposition that in
every case the claim arises any place where the injury is
ultimately suffered. In Illinois v. Milwaukee, the people of
Illinois had not engaged in any business relationships which would
have brought them into contact with sewage discharged in
Milwaukee. The Illinois residents were passive recipients of
the sewage, and their injury did not arise until the sewage made
its way to Illinois from Wisconsin. Therefore, in that case, the
place of injury and the place where the effects of the injury
were felt were one and the same. In our case, however, plaintiff
was doing business in Florida, and the alleged injury occurred
to its business interests in Florida. Any effects of the alleged
injury which plaintiff felt in Illinois were merely secondary.
As defendants point out in their brief, the plaintiff's theory
that a claim arises anywhere its economic effect is felt would
mean that the situs of a cause of action would always be the
residence of the plaintiff. That theory would render meaningless
the distinction which § 1391 makes between the place where the
claim arises and the place where the plaintiff resides, and would
remove the benefit which Congress intended to confer upon
defendants in enacting § 1391(b), see Leroy, supra, 443 U.S. at
183-87, 99 S.Ct. at 2716-18.
We, therefore, do not agree with plaintiff that "place of
injury" means the same thing as "place where the economic effects
of the injury are felt" (although in some cases those places may
be the same). We discount cases cited by plaintiff to support
plaintiff's "effects" test but which merely support a "place of
injury" test. See Ragold, Inc. v. Ferrero, U.S.A., Inc.,
506 F. Supp. 117 (N.D.Ill. 1980), and Bodine's Inc. v. Sunny-O-Inc.,
494 F. Supp. 1279 (N.D.Ill. 1980). We similarly discount, and
indeed find greatly disturbing, plaintiff's counsel's citation of
Great Western United Corp. v. Kidwell, 577 F.2d 1256 (5th Cir.
1978), without citing us to the subsequent history in that case.
It is the very case which the Supreme Court reversed in Leroy.*fn6
For the foregoing reasons, we find that venue does not lie in
this district. Accordingly, we dismiss the complaint without