The opinion of the court was delivered by: Bua, District Judge.
Before the Court is defendants' motion to dismiss for improper venue
or, in the alternative, to transfer the case to the United States
District Court for the Southern District of Ohio. For reasons stated
herein, defendants' motion to dismiss is denied and defendants' motion to
transfer is granted.
So-Comm's business is the construction, marketing and operation of
cable television systems. Reynolds is one of the three directors of
So-Comm. Hanson is the controller of Clermont Satellite Services, Inc.
("CSS"), an Ohio corporation that contracted with So-Comm in 1983 to
construct cable systems and to perform certain management services.
Reynolds is the controlling shareholder, director and officer of CSS.
The following facts are assumed true for purposes of this motion. In
1983, Reynolds obtained cable television franchises for a number of
municipalities and townships in Clermont County, Ohio. After acquiring
these franchises, Reynolds proved unable to develop them because he
lacked sufficient capital. He therefore decided to sell the franchises. A
broker of investment opportunities in the cable communications industry
residing in Illinois put Reynolds in contact with Terrell Isselhard of
Chicago. On several occasions, Reynolds visited Chicago to discuss the
cable system franchises with Isselhard and Isselhard's law partner,
Clement J. Carroll. Isselhard and Carroll are also directors of So-Comm.
At these meetings, Reynolds made various representations to Isselhard
and Carroll about the franchise and number of Ohio "house counts"
available. The organizations responsible for undertaking the "house
counts" were RCH Cable Marketing, and CSS, both Ohio Corporations.
Reliance on the "house count" information was important in securing a
loan agreement with the Huntington National Bank of Northeast Ohio and in
forming two related Illinois partnerships, the Clermont Cablevision
Investment Limited Partnership and the Clermont Cablevision Operating
Partnership. The partnerships were to acquire and invest in the Ohio
cable system franchises and So-Comm was to benefit from the loan
In mid July, Isselhard undertook an investigation of Reynolds' and
Hanson's representation of the franchise area "house counts," which were
allegedly overestimated. The results of that investigation, among other
things, eventually led to this lawsuit. Another suit is pending between
So-Comm and Reynolds and Hanson in an Ohio state court. That case is No.
84-CV-0764 in the Clermont County Court of Common Pleas involving
allegations of common law fraud.
Defendants move this Court to dismiss this action for improper venue
or, in the alternative, to transfer this case to the United States
District Court for the Southern District of Ohio pursuant to
28 U.S.C. § 1404 (a).
Under the "weight of contacts" test, applied to determine proper venue
under both 18 U.S.C. § 1965 (a) and 28 U.S.C. § 1391 (b), the
Court finds that the Northern District of Illinois has sufficient
contacts with the underlying cause of action and consequently venue in
this district is proper. See Follett College Stores Corp. v. Fernandez,
587 F. Supp. 1051 (N.D.Ill. 1984).
Section 1391(b), 28 U.S.C. provides, in part, that an action such as
the present one (where jurisdiction is not based solely upon diversity of
citizenship) may be brought "in the judicial district in which the claim
arose." Id. Venue for RICO claims may be grounded upon section 1391(b).
Farmers Bank of the State of Delaware v. Bell Mortgage Corp.,
452 F. Supp. 1278, 1280-81 (D.C.Del. 1978). Venue for RICO claims may
also be grounded upon 18 U.S.C. § 1965. Venue under
18 U.S.C. § 1965 states:
any civil action or proceeding under this chapter
against any person may be instituted in the district
court of the United States for any district in which
resides is ...