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FOLLETT COLLEGE STORES CORP. v. FERNANDEZ

July 24, 1984

FOLLETT COLLEGE STORES CORPORATION, PLAINTIFF,
v.
ANTHONY FERNANDEZ, STEVEN FERNANDEZ, AND BRIAN FERNANDEZ, DEFENDANTS.



The opinion of the court was delivered by: Bua, District Judge.

ORDER

Before the Court is the defendants' Motion to Dismiss or Transfer the instant lawsuit based on improper venue. For the reasons stated herein, the Motion to Dismiss is denied and the Motion to Transfer is granted.

Plaintiff Follett is a corporation with its headquarters in Chicago, Illinois. The defendants were employees of the plaintiff. Anthony "Tony" Fernandez was plaintiff's midwest regional manager and maintained an office in Champaign, Illinois. Steven Fernandez was manager of plaintiff's three bookstores in West Lafayette, Indiana, while Brian Fernandez was plaintiff's general merchandise coordinator for the midwest region with his office in Champaign, Illinois.

I.

Follett brought Count I of the instant suit in this district under Title IX of the Organized Crime Control Act of 1970, 18 U.S.C. § 1961-68 (The Racketeer Influenced and Corrupt Organizations Act (the "RICO Act")). In Counts II through V, respectively, Follett sues for conversion, seeks an accounting, alleges a breach of fiduciary duty, and seeks a decree of formation of a constructive trust. Follett contends that the Fernandezes used their combined control over Follett's midwest region bookstores to falsify accounting procedures and reports for store operations, manipulate and misrepresent store inventory, use Follett's assets for the defendants' personal expenses and benefit, and conceal the above conduct from Follett.

Follett argues that the RICO Act claim arose within this district as this was where false and misleading documents were received through the mail and where telephone calls were received from the defendants as part of an alleged conspiracy and scheme to defraud Follett. Venue under the RICO Act is controlled by 18 U.S.C. § 1965(a), which states:

  Any civil action or proceeding under this chapter
  [18 U.S.C. § 1961-68] against any person may be
  instituted in the district court of the United States
  for any district in which such person resides, is
  found, has an agent, or transacts his affairs.

The defendants state that venue for Follett's RICO Act claim is improper in this district under 18 U.S.C. § 1965(a) and therefore that plaintiff's action should be dismissed. Alternatively, the defendants state that venue should be transferred to the Central District of Illinois for the convenience of the parties and witnesses and in the interest of justice pursuant to 28 U.S.C. § 1404(a).

II.

  Generally, in a RICO Act claim a "weight of the contacts" test
is applied to determine proper venue under 18 U.S.C. § 1965(a).
Farmers Bank of State of Del. v. Bell Mortg. Corp., 452 F. Supp. 1278
 (D.C.Del. 1978). To meet this test for venue, the plaintiff
must show that there is venue over the defendant due to the
latter's contacts with the forum district. Id. at 1281.

The defendants argue that their only contacts with this district which relate to the subject matter of Follett's suit were the mailing of documents and the making of telephone calls to persons within this district. Based on a review of the complaint and related memoranda from the parties, this Court agrees.

As shown by the complaint, it is clear that virtually all of the alleged activities concerning Follett's cause of action took place in either Champaign or West Lafayette. The defendants' only contacts with this district were minimal and involved document mailings and telephone calls originating from outside of this district.

Follett argues that the "weight of the contracts" rule recognizes that venue lies, and a claim arises, in any district where contacts are "more than miniscule."*fn1 Follett contends that the defendants came into this district to transact their affairs. Follett states ...


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