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EVENT NEWS NETWORK, INC. v. THILL

November 2, 2005.

EVENT NEWS NETWORK, INC. and RICHARD LYNAM, Plaintiffs,
v.
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.

BACKGROUND

  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.

  DISCUSSION

  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 ...


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