United States District Court, N.D. Illinois, Eastern Division
November 2, 2005.
EVENT NEWS NETWORK, INC. and RICHARD LYNAM, Plaintiffs,
ROBERT THILL, THILL MEDIA, LLC, ASCEND MEDIA, LLC, AND MARCIA BOWMAN, Defendants.
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.
A. Motion to Dismiss
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 made, these facts fall within
the exception to Rule 9(b) because they are inaccessible to
plaintiffs and arguably within defendants' knowledge. B.
Sanfield, Inc., 1993 WL 515859, at *3.
A substantial part of events can occur in more than one place;
venue may be proper in more than one district. TruServ Corp. v.
Neff, 6 F. Supp. 2d 790, 792 (N.D. Ill. 1998). The test is not
whether most activities pertaining to the case were performed in
a particular district, but whether a substantial portion of the
activities giving rise to the claim occurred in the particular
district. Id.; RM Petroleum, Inc. v. LA Oasis, Inc., No. 03 C
3358, 2004 WL 406984, at *5-6 (N.D. Ill. Feb. 5, 2004). In a
trademark infringement action, the events giving rise to the
claim occur where the passing off of the infringing product
occurs. Halsoprodukter Labs Karnerud AB. v. Gero Vita Int'l,
No. 93 C 2129, 1993 WL 384525, at *4 (N.D. Ill. Sept. 28, 1993).
Plaintiffs allege that a substantial portion of the events giving
rise to this claim occurred in Illinois, including improper
solicitation of three ENN clients located in the Northern
District of Illinois. They allege defendants committed acts in
this district that led to the claimed infringement of ENN's trademark.
Habital Wallpaper and Blinds, Inc. v. K.T. Scott Ltd.
Partnership, K.T., 807 F. Supp. 407, 474 (N.D. Ill. 1992).
Therefore, venue is proper in the Northern District of Illinois.
B. Transfer of Venue
Defendants' motion to dismiss for improper venue must be
denied. Therefore, their alternative motion to transfer this case
to the Western District of Missouri or the District of Kansas
pursuant to 28 U.S.C. § 1404(a) is appropriately considered. A
court may transfer venue to any district or division where the
case may have been brought for the convenience of parties and
witnesses. 28 U.S.C. § 1404(a). To prevail on a motion to
transfer under § 1404(a), the moving party must demonstrate: (1)
venue is proper in both the transferor and transferee court; (2)
transfer is for the convenience of the parties and witnesses; and
(3) transfer is in the interests of justice. Pasulka v. Sykes,
131 F. Supp. 2d 988, 994 (N.D. Ill. 2001) (citing TruServ Corp.
v. Neff, 6 F. Supp. 2d at 793). Venue is proper in the Northern
District of Illinois and the parties do not dispute that venue
would be proper in either the District of Kansas or the Western
District of Missouri. Therefore, the focal point of this analysis
is the convenience of the parties and witnesses and the interests
1. Convenience of the parties
In determining the convenience of the parties and witnesses,
the court considers: (1) plaintiffs' choice of forum; (2) the
situs of material events; (3) the availability of evidence in
each forum; and (4) the convenience to the witnesses and parties
of litigating in the respective forums. Confederation Des
Brasseries de Belgique v. Coors Brewing Co., No. 99 C 7526, 2000
WL 88847, at *3 (N.D. Ill. Jan. 20, 2000). Defendants, as the
moving parties, bear the burden of showing that either the
District of Kansas or the Western District of Missouri is clearly
more convenient than this district. TruServ Corp., 6 F. Supp. at 793; Source Services
Corp. v. Technisource, Inc., No. 95 C 1420, 1995 WL 493499, at
*2 (N.D. Ill. Aug. 9, 1995). Venue should be transferred only if
there is a clear balance of inconvenience in the transferor
district over the transferee district. Tsaparikos v. Ford Motor
Co., No. 02 C 6899, 2002 WL 31844949, at *1 (N.D. Ill. Dec. 18,
2002). "Venue may not be transferred simply to shift
inconvenience from the defendant to the plaintiff." Id.
a. Plaintiffs' choice of forum
Plaintiffs' choice of forum is generally given substantial
weight under § 1404(a), particularly when it is plaintiffs' home
forum. See Pepsico, Inc. v. Marion Pepsi-Cola Bottling Co., No.
99 C 3939, 2000 WL 263973, at *8 (N.D. Ill. Mar. 6, 2000). The
Northern District of Illinois is not Lynam's resident forum, but
it is ENN's. Plaintiff's choice of forum is given less weight
where another forum bears a stronger relationship to the dispute.
Spank! Music and Sound Design, Inc., 2005 WL 300390, at *5;
TruServ, 6 F. Supp. 2d at 794 (citing Dunn v. Soo Line R.R.
Co., 864 F. Supp. 64, 65 (N.D. Ill. 1994) (When "the conduct and
events giving rise to the cause of action did not take place in
the plaintiff's selected forum, the plaintiff's preference has
minimal value")). While this case does have some connection to
Illinois, as discussed below, Missouri is the situs of the
majority of material events. Accordingly, plaintiffs' choice of
forum is entitled to less deference.
b. Situs of material events
Courts assessing whether to transfer intellectual property
cases often focus on the activities of the alleged infringer, its
employees, and its documents; therefore, the location of the
infringer's place of business is often the critical and
controlling consideration. S.C. Johnson & Son. Inc. v. Buzz Off
Insect Shield, LLC, No. 05 C 1046, 2005 WL 1838512, at *2 (N.D.
Ill. July, 28, 2005); H.B. Sherman Mfg. Co. v. Rain Bird Nat'l
Sales Corp., 979 F. Supp. 627, 630 (N.D. Ill. 1997); Confederation des Brasseries de Belgique, 2000 WL 88847, at *3
("Lanham Act cases typically focus on the activities of the
alleged infringer . . .").
Plaintiffs contend the material events occurred in Illinois
because the injury to ENN's reputation occurred there. The
material events inquiry, however, focuses on the location of the
actions creating the injury, not the location of the injury
itself. Spank! Music and Sound Design, Inc., 2005 WL 300390, at
*5; ABN Amro Sage Corp., 2003 22057449, at *5. Plaintiffs cite
ISI International, Inc. v. Broden, Ladner, Gervais LLP for the
proposition that when a party's business reputation is at issue,
"a great deal of weight should be accorded to the location where
its reputation originates." Plaintiffs' Resp. at p. 5;
256 F.3d 548 (7th Cir. 2001). Plaintiffs mischaracterize the holding of
ISI International, Id. at 549. In ISI International,
plaintiff brought suit against a Canadian law firm alleging that
the firm sent false and misleading letters to plaintiff's
business partners. This court dismissed for lack of personal
jurisdiction. Id. at 552. The Seventh Circuit reversed holding
that the district court had jurisdiction but remanded for
consideration of forum non conveniens. Id. at 553. ISI
International does not hold, or even discuss, the degree of
weight to be afforded to the location a business's reputation in
a convenience determination.
Thill and Thill Media are located in Missouri. Bowman is
located in New Jersey but is a former resident of Missouri.
Bowman's alleged actions giving rise to the claims occurred in
Missouri. Ascend is located in Kansas, less than twenty miles
from ENN's and Thill Media's offices. The products in this case
were developed in Missouri. Any confusing or misleading
statements made by defendants originated in Missouri or Kansas.
The competing business that Thill established is located in
Missouri. Further, the property that Thill allegedly wrongfully
retained and misappropriated is located in Missouri. These
factors strongly favor transfer because documents and witnesses regarding defendants' activities are factual elements
central to plaintiff's trademark infringement claims. Matweld,
Inc. v. Portaco, Inc., No. 04 C 1273, 2004 WL 1403696, at *2
(N.D. Ill. June 23, 2004); S.C. Johnson & Son, Inc., 2005 WL
1838512, at *2. Based on this record, the situs of material
events favors transfer to the Western District of Missouri.
c. Access to Sources of Proof
The location of a party's documents and records is usually not
a very persuasive reason to transfer a case. Photogen, Inc. v.
Wolf, No. 00 C 5841, 2001 WL 477226, at *5 (N.D. Ill. May 7,
2001) (citation omitted). All documents necessary to present both
sides of the case can easily be transported to either venue.
Hanley v. Omarc, Inc., 6 F. Supp. 2d 770, 775 (N.D. Ill. 1998).
Accordingly, this factor carries little weight. Plaintiffs have
already subpoenaed documents in Missouri. Thill Mot. at Ex. C.
The majority of relevant documents will be in Thill's possession
and are located in Missouri. The relative ease of access to
sources of proof slightly favors transfer to the Western District
d. Convenience of Witnesses
Witness convenience is the most important factor in determining
whether transfer is appropriate. Confederation Des Brasseries de
Belgiquie, 2000 WL 88847, at *3. When determining whether a
particular venue is more convenient for the witnesses, a court
must consider the number of witnesses in each forum; the nature,
quality, and importance of the witnesses' testimony with respect
to the issues of the case; the expense of transportation and the
length of time the witnesses will be absent from their jobs; and
whether the witnesses can be compelled to testify. Id.; S.C.
Johnson, 2005 WL 1838512, at *3. Defendants submit evidence establishing that both Missouri and
Kansas are more convenient for their witnesses than Illinois.
Thill lists seven potential witnesses in its 26(a)(1)
disclosures. Thill Mot. at Ex. D. Four of the seven are located
in the Western District of Missouri, one is located in the
District of Kansas. According to Thill and Thill Media, the
witnesses will testify regarding production work performed by ENN
and Thill Media; the defendants' relationships with various ENN
clients; and the business relationship between Ascend and Thill
Media. Id. Ascend lists two employees located in Kansas as
potential witnesses to testify regarding its relationship with
Thill, Thill Media, and ENN. While the location of employee
witnesses is generally afforded little weight in the convenience
analysis, their location is important in an intellectual property
infringement case. Matweld, Inc., 2004 WL 1403696, at *2;
Habitat Wallpaper and Blinds, Inc., 807 F. Supp. at 474.
ENN claims that of its 22 individuals likely to have
discoverable information, ten reside in Illinois, six reside in
Missouri and four reside in Kansas. Plaintiffs Mot. at p. 2.
Three of the witnesses are ENN's clients, whom defendants
allegedly solicited. Id. at p. 6. Although plaintiffs list
their 26(a)(1) disclosures as an exhibit, they fail to attach the
disclosures to their response. Therefore, the court is unable to
ascertain the nature and quality of ENN's remaining witnesses or
where the additional witnesses are located.
Based on this record, witnesses must travel regardless of the
district. It appears that a greater number of witnesses with
testimony important to the events are located in Missouri.
Moreover, the witnesses located in Kansas are within the Western
District of Missouri's subpoena power. Witness convenience weighs
in favor of transfer to the Western District of Missouri.
e. Convenience of the parties The court also considers the convenience of the parties in its
§ 1404(a) determination. Specifically, the parties' respective
residences and their ability to bear the costs of litigating in a
particular forum are considered. Avesta Sheffield v. Olympic
Continental Resources, L.L.C., No. 99 C 7647, 2000 WL 198462, at
*7 (N.D. Ill. Feb. 14, 2000). Transfer is inappropriate if it
merely shifts the balance of inconvenience between the parties.
S.C. Johnson, 2005 WL 1838512, at *4. The parties fail to offer
evidence regarding their inability to litigate in each forum.
Although ENN is an Illinois corporation with its principal place
of business in Barrington, it maintained an office and operations
in Kansas City, Missouri. Lynam resides in Wisconsin. Defendants
reside in Kansas, Missouri, and New Jersey. Party convenience is
2. Interests of Justice
The court must consider whether transfer is in the interests of
justice. This analysis focuses on the efficient functioning of
the courts, rather than the private interests of the litigants.
TIG Ins. Co. v. Brightly Galvanized Products, Inc.,
911 F. Supp. 344, 346 (N.D. Ill. 1996). In determining the interests of
justice, the court considers traditional notions of judicial
economy, such as (1) relations of the community to the issues;
(2) ensuring a speedy trial; and (3) the respective court's
familiarity with the applicable law. Matweld, Inc., 2004 WL
1403696, at *3.
a. Relation of the community to the issues
Plaintiffs request injunctive relief. Specifically, plaintiffs
ask the court to: enjoin defendants from using the ENN mark;
order that all materials bearing the ENN mark in defendants'
possession be returned or destroyed; enjoin defendants from using
any mark similar to ENN; enjoin defendants from informing clients
that plaintiffs are having any business difficulties; and order
defendants to return all plaintiffs' program materials and other
property. Plaintiffs also seek a declaratory judgment that the cross-purchase agreement requires Thill to sell his
shares at the price he originally paid. If injunctive relief is
granted, enforcement would primarily be required in Missouri.
Thus, this factor favors transfer to the Western District of
Missouri. Matweld, Inc., 2004 WL 1403696, at *3 (venue
transferred to District of Minnesota where injunctive and
monetary relief against defendant required enforcement in
Minnesota); Law Bulletin Publishing Co. v. LRP Publications,
Inc., et al., 992 F. Supp. 1014 (N.D. Ill. 1998) (Florida better
forum to enforce and monitor any injunctive relief because
Florida would be "closer to the action") (citations omitted).
b. Likelihood of a speedy trial
The court also considers the speed cases proceed to trial. See
Celozzi v. Boot, No. 00 C 3285, 2000 WL 1141568, at *8 (N.D.
Ill. Aug. 11, 2000). Ascend submits evidence showing the median
time to trial in civil actions in the Northern District of
Illinois is 28.4 months, six months longer than the District of
Kansas (22.7 months). The Western District of Missouri has an
even shorter median time to trial, 21.5 months. Therefore, the
likelihood of a speedy trial favors transfer to the Western
District of Missouri.
c. Familiarity with applicable law
Plaintiffs' amended complaint contains numerous counts under
the Lanham Act, the Illinois Deceptive Trade Practices Act,
Illinois Trademark Dilution Act, and common law. The three
districts are equally capable of resolving the federal claims.
The Northern District of Illinois is more familiar with Illinois
law, which governs the Illinois statutory and common law claims
as well as the cross-purchase agreement. Courts, however, are
often called upon to decide substantive legal questions based
upon another state's laws. TruServ Corp., 6 F. Supp. 2d at 794;
Plotkin v. IP Axess, Inc., 168 F. Supp. 2d at 905. Although this factor disfavors transfer,
based on the overall record, transfer to the Western District of
Missouri is in the interests of justice.
For the foregoing reasons, defendants' motions to dismiss are
denied. Ascend's motion to transfer venue to the District of
Kansas is denied. Thill, Thill Media, and Bowman's motion to
transfer venue to the Western District of Missouri is granted.
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