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Gilman Opco LLC v. Lanman Oil Co., Inc.

United States District Court, N.D. Illinois, Eastern Division

March 28, 2014

GILMAN OPCO LLC, individually and as assignee of PAY GAS, LLC, and GILMAN LANDCO LLC, Plaintiffs,
v.
LANMAN OIL CO., INC., LANMAN TRANSPORTATION INC., and MICHAEL LANMAN, Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

Plaintiffs Gilman Opco LLC and Gilman Landco LLC assert claims against Defendants

Lanman Oil Co., Inc., Lanman Transportation Inc., and Michael Lanman for violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, et seq., and violations of Illinois statutory and common law. ( See R. 1, Compl.) Defendants move to dismiss the Complaint for improper venue pursuant to Federal Rule of Civil Procedure 12(b)(3) and 28 U.S.C. § 1406(a). ( See R. 10, Defs. Mot.) Alternatively, Defendants move to transfer the case to the United States District Court for the Central District of Illinois pursuant to 28 U.S.C. §§ 1404(a) and 1406(a). ( See id. ) After the parties completed briefing on Defendants' motion to dismiss or transfer, Plaintiffs moved for leave to take discovery on the amount of business Defendants conduct in the Northern District of Illinois before the Court rules on Defendants' motion. (R. 19, Pls. Mot. for Discovery.)

For the following reasons, the Court concludes that Plaintiffs should have an opportunity to depose Michael Lanman regarding the scope of Defendants' business within the Northern District of Illinois to clarify the representations he made in his affidavits submitted in support of Defendants' motion to dismiss or transfer. Accordingly, the Court grants in part and denies in part Plaintiffs' motion for discovery.

BACKGROUND

Plaintiff Gilman Opco LLC ("Gilman") is a limited liability company headquartered in Chicago that runs a gas station and truck stop located in Iroquois County, Illinois. (Compl. ¶ 13 & Exs. 1-2.) Defendants Lanman Oil Co., Inc. ("Lanman Oil") and Lanman Transportation Inc. ("Lanman Transportation") provide petroleum products to gas stations and truck stops, including the ones operated by Gilman and its assignor Pay Gas, LLC.[1] ( Id. ¶ 14.) Gilman and its affiliate, Gilman Landco LLC, assert several claims arising from Defendants' alleged scheme to fraudulently bill Gilman for those products.

Specifically, Plaintiffs allege that Defendants regularly charged Gilman and Pay Gas more than the mark-up permitted in their contract and billed them for delivering more expensive Marathon-branded diesel fuel when Defendants, in fact, delivered unbranded biodiesel. ( Id. ¶¶ 19-31.) Additionally, Plaintiffs allege that Defendants billed them for full tank-load deliveries when they delivered only partial tank loads and overstated the gallons of fuel delivered to Plaintiffs. ( Id. ¶¶ 32-49.) Plaintiffs allege that Defendants manipulated the invoices they submitted to Plaintiffs and attached two liens against Plaintiffs' property in furtherance of the fraudulent scheme. ( Id. ¶¶ 16, 50-53.) Plaintiffs assert ten counts against Defendants in total: Counts I-III for violation of RICO; Counts IV-V violation of the Illinois Consumer Fraud Act; Counts VI-VII for violation of the Uniform Deceptive Trade Practices Act; Count VIII for common law fraud, Count IX for breach of fiduciary duty, and Count X for unjust enrichment.

On November 25, 2013, Defendants moved to dismiss the Complaint for improper venue or, in the alternative, to transfer the case to the Central District of Illinois. Defendants argue that venue is improper in this District because all Defendants reside in the Central District of Illinois, all events or omissions giving rise to Plaintiffs' claims occurred in the Central District, the property that is the subject of this litigation is located in the Central District, and litigating this case in the Central District would be more convenient for the parties and witnesses and more efficient for the courts. ( See R. 11, Defs. Mem. at 4.)

LEGAL STANDARD

Under Rule 12(b)(3), a party may move for dismissal of an action that is filed in an improper venue. See Fed.R.Civ.P. 12(b)(3). Once a defendant challenges the plaintiff's choice of venue, the plaintiff bears the burden of establishing that it filed its case in the proper district. See Marzano v. Proficio Mortg. Ventures, LLC, 942 F.Supp.2d 781, 787 (N.D. Ill. 2013); MB Fin. Bank, N.A. v. Walker, 741 F.Supp.2d 912, 915-16 (N.D. Ill. 2010). In assessing a defendant's motion to dismiss under Rule 12(b)(3) for improper venue, a court must view the allegations in the complaint in the light most favorable to the plaintiff and accept all well-pleaded facts, except those contradicted by an affidavit, as true. See Marzano, 942 F.Supp.2d at 787 (citation omitted). The court also may consider evidence outside the pleadings to the extent that it sheds light on whether venue is proper. See Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801, 809-10 (7th Cir. 2011); Coleman v. Supervalu, Inc. Short-Term Disability Program, 920 F.Supp.2d 901, 903-04 (N.D. Ill. 2013). In doing so, the court must resolve any factual disputes and draw all reasonable inferences in the plaintiff's favor. See Marzano, 942 F.Supp.2d at 787; AGA Shareholders, LLC v. CSK Auto., Inc., 467 F.Supp.2d 834, 842-43 (N.D. Ill. 2006).

ANALYSIS

Plaintiffs allege that venue is proper in the Northern District of Illinois under 28 U.S.C. § 1391(b).[2] (Compl. ¶ 5.) Section 1392(b) allows a plaintiff to bring a civil action in any of the following districts:

(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is ...

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