United States District Court, Southern District of Illinois
August 30, 2000
ROB GRAVES, ET AL., PLAINTIFFS,
LEN PIKULSKI, ET AL., DEFENDANTS.
The opinion of the court was delivered by: Foreman, District Judge.
MEMORANDUM AND ORDER
Before the Court is a motion to dismiss filed by Network
Solutions, Inc. on the ground that venue is improper (Doc. 24).
Plaintiffs have filed a response, (Doc. 33), and Network
Solutions, Inc. has filed a reply (Doc. 40).
Also before the Court are motions to dismiss for lack of
personal jurisdiction filed by defendants Stanley Gottlieb,
Lonnie Gottlieb, and Phillip Rock (Doc. 10), and by defendant Len
Pikulski (Doc. 42).
Plaintiff Rob Graves operates a business known as "Biengees
Internet Negril" (BIN), a limited partnership located in Negril,
Jamaica. BIN and co-plaintiff, Negril Chamber of Commerce, a
not-for-profit Jamaican association, are in the business of
promoting tourism in Jamaica. They do so through a website
associated with the Domain Name, "negril.com." Plaintiff Ray
Arthurs owns and operates a resort in Negril, Jamaica called
Plaintiffs have brought a twenty-seven page complaint, in five
counts, against six defendants. Defendant Len Pikulski owns and
operates a company called "Nothin But Net LLC" which provides and
maintains web sites. Defendant Mark Pinkstone is an employee of
Nothin But Net. Defendants Stanley and Lonnie Gottlieb operate a
resort in Negril, Jamaica. Defendant Phillip Rock is allegedly an
agent of defendant Len Pikulski and of Nothin But Net. Defendant
Network Solutions, Inc. (NSI) is the registrar of the domain name
Plaintiffs allege that they entered into a contract with Nothin
But Net to become the internet service provider for the world
wide web site registered domain name "negril.com." Plaintiffs
allege that defendants competed with plaintiffs' web sites and
actually converted plaintiffs' web sites for their own use,
profit, and promotion (Count I). Specifically, plaintiffs allege
that Len Pikulski attempted to gain illegal control of the
registration of the domain name and of the associated website,
claiming that he "covertly influenced an employee of NSI to enter
false computer data in the computer data base of NSI to change
the actual domain name." (Doc.4, p. 10). Plaintiffs accuse the
Gottliebs of infringing
on their copyrights by publishing a web site that advertises
their resort in Negril, Jamaica, on a web server located in New
Jersey. (Doc. 4, Counts II and IV). Plaintiffs further allege
that defendant Lonnie Gottlieb posted statements that were
derogatory to plaintiffs on the web server in New Jersey. (Doc.
4, Count III). Plaintiffs allege that Network Solutions, Inc.
(NSI) breached the registration agreement by modifying and
changing the registration and ownership of "negril.com" from
plaintiffs to the co-defendants (Count V). Plaintiffs claim that
they have suffered a loss of revenue and a loss of goodwill, all
Defendant Len Pikulski is a resident of, and does business in,
New Jersey (Doc. 4, p. 4). Defendant Mark Pinkstone has the same
business address as defendant Pikulski (Doc. 4, p. 5). Defendants
Stanley and Lonnie Gottlieb state that they operate a resort in
Negril, Jamaica, and have residences in Mayville, New York, and
Negril, Jamaica (Doc 11, p. 2). Defendant Phillip Rock states
that he is a resident of Dartmouth, Nova Scotia (Doc 11, p. 2).
Defendant NSI is a Delaware Corporation that has its business
offices in Herndon, Virginia (Doc. 25, p. 1).
Plaintiffs registered the domain name "negril.com" with NSI on
January 16, 1996 (Doc.33, Exh. B, Doc. 40, Exh. 3). Plaintiffs
continued to renew the registration of the domain name, and
specifically, on February 10, 1999, plaintiff Graves' mother made
a payment to renew the registration effective March, 1999. On
March 16, 1999, plaintiffs received from NSI, via email, a domain
modification form so that they could add a certain individual,
Roy Rodden, as a technical contact. The top portion of the form
contained the March, 1999 version of the registration agreement.
The email began by stating: "This is the domain name registration
agreement you recently created. In order to complete a
modification you must email this form to hostmaster @
internic.net." Plaintiffs then sent in an email requesting the
addition of Roy Rodden as the technical contact. (Doc. 33, Exh.
This case was filed in December, 1999. Thus, the March, 1999
version of the registration agreement was the most recent version
that was available when the case was filed. The first paragraph
reads as follows:
The domain name registration agreement ("Registration
Agreement") is submitted to Network Solutions, Inc.
("NSI") for the purpose of applying for and
registering a domain name on the Internet. If this
Registration Agreement is accepted by NSI, and a
domain name is registered in NSI's domain name
database and assigned to the Registrant, Registrant
("Registrant") agrees to be bound by the terms of
this Registration Agreement and the terms of NSI's
Domain Name Dispute Policy ("Dispute Policy") which
is incorporated herein by reference and made a part
of this Registration Agreement. This Registration
Agreement shall be accepted at the offices of NSI.
(Doc.33, Exh. 1, p. 1) (emphasis added).
The registration agreement also contains a forum selection
clause which states:
Governing Law. Registrant agrees that this
Registration Agreement shall be governed in all
respects by and construed in accordance with the laws
of the Commonwealth of Virginia, United States of
America. By submitting this Registration Agreement,
Registrant consents to the exclusive jurisdiction
and venue of the United States District Court for
the Eastern District of Virginia, Alexandria
Division. If there is no jurisdiction in the United
States District Court for the Eastern District of
Virginia, Alexandria Division, then jurisdiction
shall be in the Circuit Court of Fairfax County,
(Doc.33, Exh. B, pp. 1-2) (emphasis added).
As noted, defendant Network Solutions, Inc. has moved to
dismiss on the ground that venue is improper in this Court.
A. Motion to Dismiss Standard.
Plaintiff bears the burden of establishing that venue is
proper. Emjayco v. Morgan Stanley & Co., Inc., 901 F. Supp. 1397,
1400 (C.D.Ill. 1995); 5A Charles Alan Wright & Arthur R.
Miller, Federal Practice & Procedure §§ 1352 at 263-65 (2d ed.
1990). To determine whether venue is proper, a court may examine
facts outside the complaint. Karlberg European Tanspa, Inc. v.
JK-Josef Kratz Vertriebsgeselischaft MbH, 699 F. Supp. 669, 670
(N.D.Ill. 1988). In resolving a motion to dismiss for improper
venue, the court must resolve any factual conflicts in the
parties' submissions in favor of the plaintiff, and draw any
reasonable inferences from those facts in the plaintiff's favor.
See, e.g., Nagel v. ADM Investor Servs., Inc., 995 F. Supp. 837,
843 (N.D.Ill. 1998).
Section 1406(a) of Title 28 of the United States Code provides
§ 1406 Cure or Waiver of defects
(a) The district court of a district in which is
filed a case laying venue in the wrong division or
district shall dismiss, or if it be in the interest
of justice, transfer such case to any district or
division in which it could have been brought.
28 U.S.C. § 1406(a).
This case is brought under federal question jurisdiction.
Whether venue is proper in a federal question case is governed by
Title 28, Section 1391(b) which states:
§ 1391 Venue generally
(b) A civil action wherein jurisdiction is not
founded solely on diversity of citizenship may,
except as otherwise provided by law, be brought only
in (1) a judicial district where any defendant
resides, if all defendants reside in the same State,
(2) a judicial district in which a substantial part
of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is
the subject of the action is situated, or (3) a
judicial district in which any defendant may be
found, if there is no district in which the action
may otherwise be brought.
28 U.S.C. § 1391(a).
Venue is not proper in the Southern District of Illinois.
Plaintiffs cannot establish venue under § 1391(1) because none of
the defendants reside in Illinois, and even if they did, not all
of the defendants reside in the same state. Defendants Stanley
and Lonnie Gottlieb have residences in Mayville, New York, and
Negril, Jamaica, where they operate their resort. Defendant
Phillip Rock is a resident of Dartmouth, Nova Scotia. Len
Pikulski allegedly resides in New Jersey and Mark Pinkstone's
business address is in New Jersey. NSI is a Delaware Corporation
that has its business offices in Herndon, Virginia. Accordingly,
plaintiffs cannot establish venue in Illinois under § 1391(1).
Plaintiff cannot rely on § 1391(2) to establish venue because
none of the events or omissions appear to have occurred in
Illinois. In fact, the complaint is completely devoid of
allegations that anything occurred in Illinois. Instead, many of
the events giving rise to some of these claims occurred in
Virginia. The registration agreement was entered into and was
performed at NSI's business offices in Virginia. The alleged
breach and some of the alleged acts comprising some of the
alleged tort claims also occurred in Virginia. Thus, venue is not
proper in Illinois under § 1391(2).
Finally, plaintiffs cannot establish venue under § 1391(3).
Under § 1391(3), venue is proper in any judicial district in
which any defendant may be found, but only if there is no other
district in which the action may be brought. As noted, under §
1391(2), venue is proper in "a judicial district in which a
substantial part of the events or omissions giving rise to the
claim occurred, or a substantial part of property that is the
subject of the action is situated." Here, many of the events
giving rise to plaintiffs' claims occurred in Virginia. In
addition, plaintiffs' registration agreement
with NSI has a forum selection clause which states that the
exclusive jurisdiction and venue over the agreement shall be in
the Eastern District of Virginia. Consequently, there is another
district in which this action may be brought, the Eastern
District of Virginia, and venue is therefore not proper in
Illinois under § 1391(3).
Plaintiffs argue that the forum selection clause is not
enforceable. Specifically, plaintiffs argue that they did not
read the Agreement before they renewed it in February 1999. It is
well-settled, however, that "a contract need not be read to be
effective; people who accept take the risk that the unread terms
may in retrospect prove unwelcome." Hill v. Gateway 2000,
105 F.3d 1147, 1148 (7th Cir. 1997) (citations omitted).
Plaintiffs, relying on Hammes v. AAMCO Transmissions,
33 F.3d 774 (7th Cir. 1994), argue that a forum selection clause limiting
venue should not be enforced if there is some "conspiracy" aimed
at the plaintiff. Plaintiffs' reading of Hammes is inaccurate.
Hammes is distinguishable in that the Hammes court concluded
that the clause at issue "did not purport to confine the
franchisee's suits to Pennsylvania and should not be interpreted
to do so." Hammes, 33 F.3d at 783 (citing Paper Express, Ltd.,
v. Pfankuch Maschinen, GmbH, 972 F.2d 753 (7th Cir. 1992)).
Here, however, the forum selection clause clearly does restrict
suits under the registration agreement to Virginia. Accordingly,
plaintiffs' reliance on Hammes is ineffective.
Plaintiffs also rely on McGee v. International Life Insurance
Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957), where the
United States Supreme Court upheld jurisdiction of a California
court over a Texas insurance company that received a premium from
California. It is somewhat unclear why plaintiffs have cited this
case, but in any event, McGee is clearly inapplicable. For over
forty years, (i.e., since 1959), this case has been limited to
the insurance industry. It is simply not applicable. Trippe Mfg.
Co. v. Spencer Gifts, Inc., 270 F.2d 821, 822 (7th Cir. 1959).
Plaintiffs also argue that the registration agreement that they
entered into in 1995 did not contain a forum selection clause,
and that when they completed modification forms for their renewal
in March of 1999, they were merely "negotiating" for their
"domain return." The Court need not pass on whether the March
1999 registration agreement had actually been renewed or was
still under negotiation. Even if the contract were still under
negotiation, it is clear that a substantial part of the events or
omissions giving rise to plaintiffs' claims occurred in Virginia.
Accordingly, under § 1391(b)(2) this action could have been
brought in Virginia.
Finally, plaintiffs argue that the forum selection clause does
not apply because defendants' alleged wrongful acts were outside
the contract. Plaintiffs' claims, however, arise from their
contractual relationship with NSI, and are therefore within the
scope of the forum selection clause. Consequently, the forum
selection clause applies. See Hugel v. Corporation of Lloyd's,
999 F.2d 206, 209 (7th Cir. 1993) (plaintiffs' claims arise from
a contractual relationship and are therefore within the scope of
the forum selection clause).
C. Dismiss or Transfer.
The Court is now faced with the decision of whether to dismiss
or transfer this case. Section 1406(a) provides that: "the
district court of a district in which is filed a case laying
venue in the wrong division or district shall dismiss, or if it
be in the interest of justice, transfer such case to any district
or division in which it could have been brought."
28 U.S.C. § 1406(a). Under this section, the district court has broad
discretion on whether to dismiss or transfer the case. Cote v.
Wadel, 796 F.2d 981, 985 (7th Cir. 1986) (citing Coffey v. Van
Dorn Iron Works, 796 F.2d 217, 219 — 221 (7th Cir. 1986)).
This Court finds that it is in the interest of justice to
transfer this case to a district
where it could have been brought. Accordingly, this matter is
transferred to the Eastern District of Virginia, Alexandria
For the foregoing reasons, Network Solutions, Inc.'s motion to
dismiss for improper venue (Doc. 24) is GRANTED IN PART and
DENIED IN PART. This action is TRANSFERRED to the United
States District Court for the Eastern District of Virginia,
Alexandria Division, for such further proceedings as that Court
may deem appropriate.
IT IS SO ORDERED.
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