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Siddle v. Connectgov

November 30, 2009


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


This matter is before the Court on several motions, including a Joint Motion to Dismiss filed by Defendants Steven Logan (Logan), Satellite Tracking of People, LLC (TN) (STOP-TN), and Satellite Tracking of People, LLC (DE) (STOP-DE). There also is Plaintiffs' Motion to Strike the Affidavits of Joseph F. Johnson, Jr.; Steven W. Logan; and Doctor R. Crants, Jr. The Joint Motion to Dismiss for lack of personal jurisdiction will be granted, and the motion to strike the affidavits will be denied.


Plaintiffs are citizens of the state of Illinois who own PPCT Management Services, Inc. (PPCT, an Illinois corporate citizen). They also own Homeland Security Corporation (HSC) and Homeland Training Corporation and are trustees of the Bruce K. Siddle and Sandra K. Siddle Trusts (Illinois Trusts). They claim that Defendants conspired to defraud them of property held by HSC through alleged Racketeer Influenced and Corrupt Organizations Act (RICO)-based activities. Specifically, Plaintiffs claim that (1) Defendants STOP-TN and STOP-DE were "RICO enterprises that affected interstate commerce within the meaning of 18 U.S.C. § 1961(4)" (Doc. 2, ¶¶ 17, 24) and (2) Defendant Logan participated in the control and affairs of STOP*fn1 "through a pattern of racketeering activity" (Doc. 2, ¶¶ 31-32).

Plaintiffs want compensatory, punitive, and treble damages exceeding $81,925,260, plus costs, for damages caused by Defendants' alleged racketeering activity and illegal conspiracy. Logan and STOP jointly move to dismiss on three grounds: (1) lack of personal jurisdiction, (2) lack of standing, and (3) failure to state a claim upon which relief may be granted. The Court lacks personal jurisdiction over Defendants Logan and STOP, although the other arguments support dismissal.


An action against a party over whom the Court lacks personal jurisdiction must be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(2). "The plaintiff bears the burden of demonstrating personal jurisdiction." Central States, S.E. & S.W. Areas Pension Fund v. Reimer Express World Corp.,230 F.3d 934, 939 (7th Cir. 2000). Where, as here, a motion to dismiss is submitted on written materials without an evidentiary hearing, the plaintiffs need only establish a prima facie case for personal jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Further, any conflicts between well-pleaded jurisdictional allegations and affidavits will be resolved in the plaintiffs' favor. Id. at 782-83. A court, however, accepts as true any uncontroverted facts contained in any affidavits. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). In order to exercise personal jurisdiction over Defendants Logan and STOP, this Court must find that: (1) haling them into court in this district accords with due process principles and (2) they are amenable to process from the court. See United States v. De Ortiz, 910 F.2d 376, 381 (7th Cir. 1990).

The answer to the first proposition is resolved by determining whether these Defendants had sufficient "minimum contacts" with the forum so that the uber-familiar "traditional notions of fair play and substantial justice" are not offended. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). In a federal question case such as this one, "due process requires only that each party have sufficient contacts with the United States as a whole rather than any particular state or geographic area." De Ortiz, 910 F.2d 376 at 382. More specifically, "a federal court in a federal question case is not implementing any state's policy; it exercises the power of the United States." Lisak v. Mercantile Bancorp, Inc., 834 F.2d 668, 671-72 (7th Cir. 1987). The relevant inquiry, therefore, is whether Defendants Logan and STOP had sufficient contacts with the United States -- a question that here, and most always, must be answered in the affirmative because of the defendants' ongoing business activities within the United States.

In a federal question case, determining whether the defendants are amenable to service requires inquiry into the applicable federal statute. De Ortiz, 910 F.2d 376 at 382. Here, Plaintiffs bring their claims under RICO, 18 U.S.C. §§ 1962(a)-(d), and common law civil conspiracy. As such, this Court must first consider the implications of RICO § 1965(a) and (b), which authorize venue and service of process respectively.

Section 1965(a) deals with venue in RICO cases; section § 1965(b) creates personal jurisdiction by authorizing service of process, which is how a court gains jurisdiction over the person. Lisak, 834 F.2d 668 at 671-72, citing Butcher's Union Local No. 498 v. SDC Inv., Inc., 788 F.2d 535, 538-39 (9th Cir. 1986). Section 1965(b) authorizes nationwide service of process in civil RICO cases where required by the ends of justice. While not specifically defining "the ends of justice," the Seventh Circuit Court of Appeals in Lisak examined § 1965(b) and cited to the Ninth Circuit's decision in Butcher's Local. In that case, the Ninth Circuit Court of Appeals held that "for nationwide service to be imposed under section 1965(b), the court must have personal jurisdiction over at least one of the participants in the alleged multi[-]district conspiracy and the plaintiff must show that there is no other district in which a court will have personal jurisdiction over all of the alleged co-conspirators." Butcher's Local, 788 F.2d at 539 (emphasis added). Section 1965(b) authorizes nationwide service "so that at least one court will have jurisdiction over everyone connected with any RICO enterprise." Lisak, 834 F.2d at 672. The Seventh Circuit Court of Appeals suggested an approach similar to that adopted by the Ninth Circuit by noting in Lisak that a district court in Indiana would have jurisdiction whether or not a non-resident defendant could be brought before the court in Illinois, "so perhaps the ends of justice do not 'require' his presence in [the] suit." Id.

Assuming, without deciding, that Plaintiffs have met their jurisdictional pleading burden as to at least one defendant, there is a district court that possesses personal jurisdiction over all the defendants. Specifically, this Court transferred to the United States District Court for the Middle District of Tennessee two related cases filed by Plaintiffs based upon an agreement containing a forum selection clause fixing exclusive jurisdiction and venue over "[a]ny action to enforce or interpret [the] Agreement" in "the appropriate courts for Nashville, Davidson County, Tennessee." See Siddle v. Crants, civil no. 08-684-GPM (transferred Feb. 17, 2009) (Siddle I); Siddle v. Homeland Security Corp., civil no. 08-878-GPM (transferred May 4, 2009) (Siddle II). As such, the Middle District of Tennessee currently is deciding many of the same issues involved in this action. The ends of justice do not require summoning Logan and STOP for proceedings in this district court.

Even if jurisdiction was proper under § 1965(b), venue in this Court would be improper under RICO § 1965(a). Generally, statutory venue provisions are meant "to protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place of trial." Leroy v. Great Western United Corp., 443 U.S. 173, 183-84 (1979). RICO § 1965(a) provides that a civil RICO action "may be instituted in the district court of the United States for any district in which such person resides, is found, has an agent, or transacts his affairs." 18 U.S.C. § 1965(a). Defendants Logan and STOP do not reside in this district nor do they have agents in this district.

Admittedly, there is a dearth of case law regarding what it means to be "found" or "transact affairs" for RICO venue purposes. However, other courts have held that in order to be "found" in a district, the defendant must be present by its officers and agents carrying on business of the corporation. See, e.g., Van Schaick v. Church of Scientology of California, Inc., 535 F. Supp. 1125 (D. Mass. 1982). A defendant "transacts affairs" in a district where he regularly conducts business of a substantial and continuous nature. See Miller Brewing Co. v. Landau, 616 F. Supp 1285, 1288 (E.D. Wis. 1985). Here, Defendants Logan and STOP were not present, either individually or by their officers or agents. Moreover, they are conducting very limitedbusiness activities in Illinois via five small contracts with various law enforcement agencies -- only one of which involves a county within this district (Perry) and which, according to affidavits, "accounts for less than one- tenth of one percent of STOP's total revenues in 2008 and 2009" (Doc. 70, pp. 10-11). Clearly, this de minimis business activity does not rise to the level of being substantial within RICO's venue provision as interpreted by various other courts. See, e.g., SoComm, Inc. v. Reynolds, 607 F. Supp. 663 (N.D. Ill. 1985); Dody v. Brown, 659 F. Supp. 541 (W.D. Mo. 1987). Venue, therefore, is not proper in this district.

Neither Plaintiffs' alleged residence and financial injuries in Illinois, nor Logan or STOP's de minimis business connections with this district suffice to establish that venue is proper in this district under RICO ยง 1965(a). Furthermore, the "ends of justice" do not require haling Logan and STOP into this Court because personal jurisdiction is proper for all of the alleged RICO defendant-enterprises in ...

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