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Yourtravelbiz.com, Inc. v. Executive Systems of United Success

May 2, 2007

YOURTRAVELBIZ.COM, INC., PLAINTIFF,
v.
EXECUTIVE SYSTEMS OF UNITED SUCCESS, LLC., AND CHARLES KING, DEFENDANTS.



The opinion of the court was delivered by: Stiehl, District Judge

MEMORANDUM & ORDER

Before the Court is defendant Executive Systems of United Success, LLC's (ESUS) motion to dismiss or to transfer venue (Doc. 16) in which defendant Charles King has joined (See, Doc. 10 filed in 07-295). The plaintiff has filed a response to the motion (Doc. 25) and the defendants a reply (Doc. 26). This case was originally two separate actions, now consolidated, which were filed by plaintiff, Yourtravelbiz.com (YTB). The initial action, Yourtravelbiz.com v. Executive Systems of United Success, LLC., 07-30-WDS, seeks declaratory judgment that YTB has not breached an agreement with ESUS; that YTB acted in conformity with the ESUS Agreement; and that neither YTB nor its agents slandered ESUS; and that ESUS is not entitled to damages from YTB.

In the consolidated action, Yourtravelbiz.com v. King, 07-295-WDS, YTB has sued Charles King, an officer of ESUS, seeking to enjoin him from allegedly continuing to breach his non-compete and non-solicitation obligations under two agreements with YTB and further alleges that King is using a website, www.ytbscandal.com, to encourage other individuals and businesses to end their business relationships with YTB.

BACKGROUND

The plaintiff, YTB is a publically traded, Delaware corporation with its principle place of business in Wood River, Illinois. YTB sells on-line travel agency businesses nationwide. The defendants, King and ESUS, are both Georgia residents. King is domiciled in Jasper, Georgia, and ESUS is a Georgia limited liability company with its principal place of business in Woodstock, Georgia. ESUS has three owners or members, all of whom reside in the Northern District of Georgia.*fn1

YTB sells, inter alia, on-line travel agencies to individuals or entities, known as Referring Travel Agents (RTAs). YTB charges RTAs a one-time set up fee and monthly payments. YTB sets up the websites for the RTAs to use, and those websites are connected with TYB's web support network. RTAs then direct customers to the websites where customers can book travel. Commissions are earned by the RTAs based on the customer bookings. In addition, YTB contracts with individuals, known as Independent Marketing Representatives (IMRs), who market and sell the on-line agencies and are considered the sales force of YTB. IMRs enter into a contract with YTB, an "Independent Marketing Representative Terms and Conditions Agreement," which allow them to market and sell the YTB on-line travel agencies to others.

King became an IMR in October of 2004 for YTB.*fn2 The transaction that led to his taking this position took place both over the telephone and via the internet. (King Aff., ¶ 7) King subsequently became an RTA and entered into the RTA agreement via the Internet (See, Doc. 25). Both the RTA and the IMR agreements provide that Illinois law shall govern, that the parties must arbitrate disputes in Edwardsville, Illinois, and that the agreements were to become binding upon their acceptance at YTB at its home office in Edwardsville (See, Doc. 25, Exs.1A, 1B)

In December of 2005, King and his two partners started defendant ESUS to market and sell YTB opportunities, both IMR and RTA. King and ESUS proposed a direct mail marketing strategy to YTB, which YTB apparently did not finally approve. ESUS contends that the essential element of its success was a direct mail marketing program which was designed to offer a placement program to IMRs who joined YTB through ESUS. ESUS would place new IMRs under the sponsorship of existing IMRs, thereby increasing the existing IMRs commissions. The existing IMRs were to pay ESUS for the right to be included in the marketing program. King indicates in his affidavit that "a flood" of new IMR recruits were created, multiplying the commissions of the existing IMRs. (King Aff. ¶ ¶ 10-11). King contends that in May of 2006, Thayer C. Lindauer, vice president and general counsel of YTB approved the ESUS pamphlets and ESUS began printing these pamphlets. Lindauer does not agree that he finally approved the distribution of the mass marketing pamphlets, and therein lies the heart of the disagreements that led to this litigation (Lindauer Aff., Doc. 25, Ex. 1). In January of 2007, YTB terminated King as an IMR and cut its ties with ESUS.

The defendants seek to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(3) for improper venue, or, in the alternative, to transfer venue to the Northern District of Georgia. Neither party challenges the jurisdiction of this Court over this action or over the defendants.

ANALYSIS

1. Motion to Dismiss

The defendants seek dismissal under Rule 12(b)(3). In this circuit a "challenge to venue based upon a forum selection clause can appropriately be brought as a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(3)." Muzumar v. Wellness Int'l Network, Ltd., 483 F.3d 759, 760 (7th Cir. 2007). It is also well settled in this circuit that "under either federal or Illinois law, forum selection clauses are valid and enforceable." Id. at 761 (citing IFC Credit Corp. v. Aliano Bros. Gen Contractors, Inc., 437 F.3d 606 (7th Cir. 2006)). The record is clear in this case that the parties, YTB, King and ESUS entered into contracts that included a forum selection clause of Illinois. Therefore, the defendant's motion to dismiss based on Rule 12(b)(3) for improper venue is DENIED.

2. Motion to Transfer Standards

In the alternative, the defendant seeks transfer of venue pursuant to 28 U.S.C. § 1404(a), which provides: "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The Seventh Circuit has held that the trial court should consider "the relative ease of access to sources of proofs; availability of compulsory process for attendance of unwilling, and the cost of obtaining attendance of willing witnesses; the possibility of a view of the premises; the state of the court calendar both in the District where the case is pending and in the District to which it is sought have the case transferred." Chicago R.I. & R.P. Co. v. Igoe, 220 F.2d 299, 303 (7th Cir. 1955). "In passing on a motion for transfer, the district judge must consider the statutory factors in light of all the circumstances of the case. The weighing of factors for and against transfer necessarily involves a large degree of subtlety and latitude, and, therefore, is committed to the sound discretion of the trial judge." Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219 (7th Cir. 1986). Furthermore, ...


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