The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
Event News Network ("ENN") and Richard Lynam (collectively
"plaintiffs") seek injunctive relief and damages against Robert
Thill, Thill Media, LLC ("Thill Media"), Ascend Media, LLC,
("Ascend"), and Marcia Bowman (collectively "defendants").
Plaintiffs sue defendants under the Lanham Act, 15 U.S.C. 1125(a)
et seq. and Illinois state law for trademark infringement,
trademark dilution, unfair competition, trade disparagement,
conversion, deceptive practices, breach of fiduciary duties,
tortious interference with contract, misappropriation, and
violation of duties of loyalty and good faith. Defendants move to
dismiss the action for improper venue. Alternatively, Thill,
Thill Media, and Bowman move to transfer venue to the Western
District of Missouri. Ascend moves to transfer venue to the
District of Kansas.
ENN is an Illinois corporation with its principal place of
business in Barrington, Illinois. Amended Compl. at ¶ 3. ENN
develops and produces video presentations and programs for its
clients, mainly medical associations, for viewing at conventions
and trade shows. Id. Lynam, a Wisconsin resident, is ENN's president and majority shareholder.
Id. at ¶ 4. Thill resides in Missouri and is the minority
stockholder in ENN. Id. at ¶ 10. Marcia Bowman, a New Jersey
resident, was employed by ENN as an independent producer on a
project by project basis. Id. at ¶¶ 7, 12. Ascend is a Delaware
limited liability company with its office in Overland Park,
Kansas. Id. at ¶ 6. Ascend produces print materials for
professional conferences and sells sponsorships for print and
video materials distributed at such conferences. Id. Thill
Media is a Missouri limited liability company with its office in
Kansas City, Missouri. Id.
Lynam and Thill organized ENN as an Illinois corporation in
August 1998. Id. at ¶ 11. Upon forming ENN, Lynam and Thill
executed a cross-purchase agreement with a lifetime right of
first refusal, which provides for the purchase of either
shareholder's shares in the event of termination of employment.
Id. at ¶ 11. The agreement states it shall be governed and
construed in accordance with Illinois law. Id. at Ex. A, ¶ 16.
Thill resigned from ENN on December 22, 2004. Id. at ¶ 15.
Following Thill's resignation, Lynam sought to purchase Thill's
shares in ENN pursuant to the cross-purchase agreement. Id. at
¶ 17. Thill disputes whether the cross-purchase agreement applies
in the event of resignation and refuses to sell his shares
pursuant to its terms. Id.
From 1998 to 2004, Thill was ENN's corporate secretary, vice
president and a director, managing and maintaining ENN's offices
in Kansas City, Missouri. Id. at ¶ 10. ENN's production
facilities, master recordings, and event video source recordings
were located at its Kansas City offices. Id. Plaintiffs contend
that while Thill was an employee and officer of ENN, he began to
compete with ENN and to divert business for his own benefit.
Id. at ¶ 13. Specifically, Thill and Bowman excluded other ENN
employees from participating in projects by setting up secluded
rooms and producing shows for their own benefit. Id. After
Thill resigned, ENN closed its offices in Kansas City, Missouri and demanded return of its property located
in the offices. Id. Thill allegedly failed to return the
property or allow ENN access to the offices until May 2005. Id.
In February 2005, Thill organized and registered Thill Media
under Missouri law. Id. at ¶ 14. Plaintiffs allege that
defendants have misrepresented ENN's relationship with Thill
Media to clients. Id. at ¶ 18. Specifically, defendants have
stated Thill Media was the creator of ENN's products and
services, ENN's reputation and trade identity was Thill and Thill
Media's reputation, and ENN approves of Thill and Thill Media's
activities. Id. Plaintiffs contend that Thill continues to hold
himself out as an agent of ENN. Id. at ¶ 20. Plaintiffs assert
that Ascend Media, LLC has acted in concert with Thill to contact
ENN's sponsors and inform them that Thill Media was the source of
ENN's products and services and that Thill Media is the successor
to ENN. Id. at ¶ 20.
Plaintiffs further allege that defendants have solicited and
misled ENN's clients, including clients in Illinois. Id. at ¶¶
21-25. Specifically, defendants inform plaintiffs' clients that
ENN is having difficulties and can no longer provide services.
Id. at ¶ 21. During 2005, the American Heart Association
("AHA") and the American Academy of Family Physicians ("AAFP")
stopped using ENN's services and hired Thill Media, allegedly as
result of these misrepresentations. Id. at ¶ 16. Plaintiffs
also allege defendants have copied or otherwise misappropriated
ENN video source and master recordings in order to compete with
ENN. Id. at ¶¶ 26-28.
In resolving a motion to dismiss for improper venue, plaintiffs
bear the burden of establishing that venue is proper. Spank!
Music and Sound Design, Inc. v. Hanke, No. 04 C 6760, 2005 WL
300390, at *4 (N.D. Ill. Feb. 7, 2005). Factual conflicts must be
resolved in plaintiffs' favor. ABN Amro Sage Corp. v. Cohen, No. 03 C 3556, 2003 U.S. Dist. LEXIS
15390, at *13 (N.D. Ill. Sept. 2, 2003).
Plaintiffs allege venue is appropriate under
28 U.S.C. § 1391(b)(2). When, as here, jurisdiction is not founded solely on
diversity of citizenship, an action may be brought 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."
28 U.S.C. § 1391(b)(2).*fn1 Plaintiffs contend that venue is
proper under § 1391(b)(2) because some of the events or omissions
on which they base claims occurred in Illinois. Plaintiffs assert
that defendants improperly solicited plaintiffs' clients in
Illinois. ENN is an Illinois corporation with its principal place
of business in Barrington, Illinois. Thus, plaintiffs allege,
ENN's reputation is affected in Illinois. The cross-purchase
agreement, that Thill allegedly violates, provides that Illinois
law governs any dispute over the agreement. Amended Compl. at Ex.
A, ¶ 16.
Defendants move to dismiss this case for improper venue
pursuant to Federal Rule of Civil Procedure 12(b)(3). Defendants
contend that the claims against them are centered on alleged acts
and omissions that took place in Kansas and Missouri, not
Illinois. Because the substantial portion of activities occurred
elsewhere, defendants conclude venue in Illinois is improper.
Defendants argue that any alleged improper communications with
ENN's clients originated from Kansas or Missouri. The property
that defendants allegedly misappropriate and wrongfully retain is
located in Missouri. Defendants also argue that plaintiffs'
statements that defendants contacted and misled ENN's clients in Illinois are insufficient to meet their burden because they
fail to satisfy the heightened requirement that fraud claims be
plead with particularity. Fed.R.Civ.P. 9(b).
Plaintiffs' allegations comport with Rule 9(b). The allegations
provide defendants with fair notice of the fraud claimed and
evidence a reasonable belief that their claims have merit. Decor
Grates, Inc. v. Fararo, et al., No. 92 C 6395, 1995 WL 548571,
at *7 (N.D. Ill. Sept. 12, 1995); B. Sanfield, Inc. v. Finlay
Fine Jewelry Corp., No. 93 C 20149, 1993 WL 515859, at *3 (N.D.
Ill. Dec. 13, 1993). With respect to clients located in Illinois,
plaintiffs satisfy the heightened requirements of Rule 9(b).
Plaintiffs allege who made the misrepresentations, what the
misrepresentations were, and to whom they were made. Amended
Compl. at ¶¶ 21-25. Although plaintiffs do not allege when and
where the misrepresentations were ...