Gilman Opco LLC v. Lanman Oil Co.

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

No. 13-cv-7846

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

DATE: March 28, 2014

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Court 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 the subject of the action is situated; or

(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.

28 U.S.C. § 1391(b). The dispute in this case concerns whether any Defendant "resides" in the Northern District of Illinois to make venue in this District proper under § 1391(b)(1). (See R. 10, Pls. Resp. Br. at 10-11.)

I. Defendant Michael Lanman

For venue purposes, a natural person "shall be deemed to reside in the judicial district in which that person is domiciled." 28 U.S.C. § 1391(c)(1). Defendant Michael Lanman states in his affidavit that he resides and is domiciled in Charleston, Illinois, which is located in the Central District of Illinois (see R. 11-2, Lanman Aff. ¶ 2), and Plaintiffs have put forward noevidence contradicting Mr. Lanman's representation. Accordingly, the Court finds that Mr. Lanman is a resident of the Central District of Illinois for venue purposes.

II. Defendants Lanman Oil and Lanman Transportation

A corporate defendant is deemed to reside for venue purposes "in any judicial district in which such defendant is subject to the court's personal jurisdiction with respect to the civil action in question . . . ." 28 U.S.C. § 1391(c)(2). In a State like Illinois with more than one judicial district, a corporate defendant subject to personal jurisdiction in the state "shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts." 28 U.S.C. § 1391(d). It is undisputed that courts in the Central District of Illinois would have personal jurisdiction over Defendants Lanman Oil and Lanman Transportation; both corporations maintain their principal place of business in Charleston, Illinois, which is in the Central District of Illinois, and do business with numerous gas stations and truck stops throughout the Central District. (See Lanman Aff. ¶¶ 3; R. 18-1, Lanman Supp. Aff. ¶ 6.) Accordingly, the question before the Court is whether Lanman Oil's or Lanman Transportation's contacts with the Northern District of Illinois are sufficient to subject at least one of them to personal jurisdiction in this District if it was a separate state. See 28 U.S.C. § 1391(d).

In a federal question case, "where federal statutes do not authorize nationwide service of process, a federal court in Illinois may exercise personal jurisdiction over a defendant if it would be permitted to do so under the Illinois long-arm statute."³ uBID, Inc. v. GoDaddy Grp., Inc.,623 F.3d 421, 425 (7th Cir. 2010) (citing Fed. R. Civ. P. 4(k)(1)(A)). "A state's exercise of personal jurisdiction is also subject to the demands of the Fourteenth Amendment's due process clause." Id. "Because Illinois permits personal jurisdiction if it would be authorized by either the Illinois Constitution or the United States Constitution, the state statutory and federal constitutional requirements merge." Id.; see also Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). With respect to the federal constitutional requirements, it is well-established that the due process test for personal jurisdiction requires that a defendant have minimum contacts with the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945) (citations omitted). "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958).

Two types of personal jurisdiction exist—specific and general. See Helicopteros...