ELAINE E. BUCKLO, District Judge.
On August 28, 2008, plaintiffs, who are shareholders in corporate defendant Krakow Business Park SP. Z O.O. ("KBP"), brought an action alleging a pattern of fraud and deceit; corporate looting and misappropriation of corporate funds; and money laundering by various individual and corporate defendants. Plaintiffs asserted direct and derivative claims under 18 U.S.C. § 1962 ("RICO"), as well as liability under several common law theories including fraud, breach of fiduciary duty, civil conspiracy, and others. After the original complaint was amended, various defendants moved to dismiss the case on a variety of grounds. On August 19, 2009, I issued a memorandum opinion and order addressing a number of issues raised in the then-pending motions. Domanus v. Lewicki, 645 F.Supp.2d 697 (N.D.Ill.2009). I declined to dismiss the case on the asserted theory of forum non conveniens, but because I concluded that the amended complaint did not properly assert any individual claims distinct from the corporation's claims, and that the derivative claims could not proceed for failure to comply with Rule 23.1, I dismissed the complaint in its entirety. Although not a basis for my decision, I also noted the likely merit of arguments raised in defendants' motions for dismissal under Fed.R.Civ.P. 12(b)(6), and I admonished plaintiffs to bear these arguments in mind in any further iteration of the complaint.
Plaintiffs then filed a second amended complaint, which I dismissed without a written opinion and with explicit leave to amend. This brings us to plaintiffs' third amended complaint, which is the target of the pending motions. This complaint (which, for ease of reference, I generally refer to simply as "the complaint") names several additional defendants, including direct defendants (i.e., parties whose interests are adverse to plaintiffs'), as well as nominal or derivative defendants, whose interests are allegedly aligned with plaintiffs'. The complaint also adds direct and derivative claims. The direct claims now asserted are for violations of RICO, 18 U.S.C. §§ 1962(a)-(d), fraud, conversion, breach of fiduciary duty, tortious interference with prospective business advantage, civil conspiracy, violation of the Uniform Fraudulent Transfer Act (740 ILCS §§ 160/1 et seq.), and for an accounting. The derivative claims, brought on behalf of
Nine motions to dismiss are currently pending.
In a collective 12(b)(6) motion, defendants insist that the complaint is "incomprehensible," "contradictory," and that it "jumbles" the defendants together such that it is "impossible for defendants to discern whether plaintiffs have stated a claim." I disagree. The complaint sets forth lucid, detailed allegations that identify with substantial precision the specific wrongdoing attributed to each defendant, and it further explains how the various defendants' malfeasance fits into their overall unlawful scheme. While plaintiffs' allegations are indeed copious, they are far from "incomprehensible." The basic story that emerges from the complaint is that the individual defendants, working with each other and with and through a host of foreign and domestic corporations that they control, engaged in a pattern of misconduct designed to rob KBP of its assets, which defendants then misappropriated for themselves, and used, among other things, to wrest control and ownership of KBP from plaintiffs.
The substantive portion of the complaint is broken down into three sections. The first is the factual background, which alleges four distinct types of misconduct under the rubric "Misappropriation of Assets from KBP and its Subsidiaries." The categories of misconduct alleged are: sham contracts and payments for inadequate consideration (¶¶ 36-49); self-dealing leases (¶¶ 50-51); land misappropriation (¶¶ 52-53); and construction kickbacks (¶¶ 54-57). The allegations in each category set forth details of specific transactions,
The second section of the complaint is captioned "RICO Predicate Acts" and alleges how the wrongdoing described in the factual section, and certain specific acts exemplifying or relating to that wrongdoing, amount to mail and wire fraud (18 U.S.C. §§ 1341, 1343), money-laundering (18 U.S.C. § 1956(a)), and Travel Act (18 U.S.C. § 1952) violations, which are the "predicate acts" alleged to support plaintiffs' RICO claims.
In its third and final section, the complaint asserts twenty-five separate counts that identify plaintiffs' direct and derivative claims.
In short, the complaint is as well-organized as it is detailed, and the story it presents is cogent and plausible. Accordingly, defendants are reduced to grasping at straws to try and win dismissal under Rule 12(b)(6), and their various motions on this ground read accordingly. These motions generally seek to create the appearance of confusion, contradiction, or omission in the complaint where none exists. Defendants make only a half-hearted attempt to show that the complaint, read as a whole, fails to allege any of the elements of plaintiffs' various claims, or to meet the applicable pleading standards.
In support of their argument that plaintiffs fail properly to plead the requisite "predicate acts" to support their RICO claims, defendants attack subsection 91(c) of the complaint. Paragraph 91 generally alleges the use, by defendants Lewicki, Adam, and Richard Swiech ("Richard"), of the wires in interstate or foreign commerce in violation of 18 U.S.C. § 1343, and it identifies specific transactions in subsections (a)-(n). Subsection (c) alleges "wire transfers related to the sale of the KBP-100 building to First Property Fund, including, but not limited to, First Property Fund's wire transfer of $18,500,000 for purchase of the building and KBP-1's wire transfer, on behalf of KBP, of $571,000 to Domanus's Illinois bank account as his partial dividend." Defendants insist that plaintiffs "fail to provide any information regarding how or why" this transaction advances the alleged RICO scheme, wryly arguing that it is "hard to see how paying money to the plaintiff advanced the scheme to defraud," Def.'s Mot. at 10 (DN 243-1). But paragraph 60 of the complaint provides precisely the information defendants assert is lacking and makes perfectly clear both why plaintiffs consider this transaction fraudulent and how it relates
The additional arguments defendants raise in their collective 12(b)(6) motion are generally variations on the foregoing, disingenuous approach.
The separate 12(b)(6) motions filed by individual defendants and small subsets of defendants fare no better. The corporate defendants argue in their motion that all of the claims against them must fail because "the exact role of Lake Ridge, Orchard, and ADR in the overall scheme is entirely unclear," and because plaintiffs "do not list a single fact demonstrating that any money was actually transferred to or received by the corporate defendants." (Original emphasis) Defendants Lewicki and Richard insist in their separate motions that plaintiffs allege "very little actual wrongdoing" by them, and fail to allege that either had "any fraudulent intent." And defendants Szubert-Lewicki and Sanecka-Swiech argue that the claims against them fail because a portion of the factual allegations relating to them are made on information and belief. None of these arguments has merit:
The role of the corporate entities is explicit and unambiguous in the complaint: Paragraph 63 alleges that the corporations used funds misappropriated from KBP to invest in businesses and properties in metropolitan Chicago. And because these companies were allegedly controlled by the individuals responsible for the misappropriation, it is reasonable to infer that the corporations knew (through their principals) that the funds were acquired unlawfully, and thus that their participation in the scheme was knowing. As to the corporations' second argument, plaintiffs need not plead evidence (i.e., proof that funds were actually transferred as alleged). Because the allegations that the corporate entities received and used misappropriated funds are plausible in the context of the complaint as a whole, they are sufficient to support plaintiffs' claims against them.
The arguments raised by defendants Lewicki and Richard are even more difficult to reconcile with the complaint as a whole. The gravamen of plaintiffs' action is that the individual defendants, including Lewicki and Richard, participated in an elaborate web of fraudulent transactions designed to enrich themselves at plaintiffs' expense. Contrary to Lewicki's and Richard's arguments, the complaint is replete with allegations of specific wrongdoing by them, and their fraudulent intent emerges as a compelling inference from these allegations.
It is true that certain allegations relating to the alleged roles of Szubert-Lewicki and Sanecka-Swiech are made on information and belief (for example, the allegation that a company of which Szubert-Lewicki was president had no qualifications to perform, and did not, in fact, perform, services for which it invoiced and was paid by KBP). Nevertheless, I agree with plaintiffs
To the extent any of these defendants raises additional arguments for dismissal under Rule 12(b)(6), none merits individual attention. All pending motions for dismissal under Rule 12(b)(6) are denied.
Adam moves for dismissal of all claims against him for want of personal jurisdiction. Although it is plaintiffs' burden to establish personal jurisdiction, where jurisdiction is contested in a motion to dismiss, plaintiffs need only make a prima facie showing of jurisdictional facts. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir.2010). Accordingly, I accept as true all well-pleaded facts and resolve any factual disputes in plaintiffs' favor. Id. Under this standard, I easily conclude that plaintiffs have satisfied their burden.
In a federal question case such as this, jurisdiction is proper where 1) the defendant is amenable to service of process, and 2) jurisdiction comports with due process. United States v. De Ortiz, 910 F.2d 376, 381 (7th Cir.1990). Where service of process is not specifically authorized by federal statute, as is the case for claims brought under RICO, service is governed by the law of the forum state. Tamburo, 601 F.3d at 700. Because the Illinois long-arm statute "permits the exercise of jurisdiction to the full extent permitted by the Fourteenth Amendment's Due Process clause," the "constitutional and statutory inquiries merge." Tamburo, 601 F.3d at 700. Accordingly, the "key question is whether the defendants have sufficient `minimum contacts' with Illinois such that the maintenance of the suit `does not offend traditional notions of fair play and substantial justice.'" Id. at 700-01 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)).
The scope of personal jurisdiction is determined by the relationship between the cause of action and the defendant's contacts with the forum. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). A defendant with "continuous and systematic" contacts with a particular forum is subject to general jurisdiction there, which means that any action may be brought against the defendant, regardless of whether the action is related to the defendant's contacts with the forum. Tamburo, 601 F.3d at 701 (citing Helicopteros Nacionales, 466 U.S. at 416, 104 S.Ct. 1868). A defendant whose activities in a particular forum are not so extensive as to warrant the exercise of general jurisdiction may nevertheless be subject to specific jurisdiction there, when: (1) the defendant has purposefully directed his activities at the forum state or purposefully availed himself of the privilege of conducting business in that state, and (2) the alleged injury arises out of the defendant's forum-related activities." Tamburo, 601 F.3d at 702 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)).
Some, but not all, of the facts plaintiffs assert as a basis for personal jurisdiction over Adam are:
The list of Adam's activities in, or purposefully directed to, Illinois goes on.
The essence of Adam's response is "yes, but. . . ." That is, Adam does not dispute the foregoing facts (though he addresses only a portion of them in his motion and reply), but he tries to explain them away, apparently in the hope that they won't "count" for jurisdictional purposes. For example, Adam states that his Illinois driver's license, his social security card, and his Illinois bank account "were obtained in preparation for a possible attempt at citizenship," which Adam ultimately declined to pursue. Even setting aside the questionable logic of this reasoning (Adam's argument is undeveloped, but on its face it would seem to undermine, rather than support, his position, since citizenship might reasonably be considered the zenith of enduring contacts with a forum), Adam cites no authority for excluding any of these facts from my jurisdictional analysis.
Adam's remaining arguments that he lacks "minimum contacts" are flimsier still. His bald assertion that "[t]here are simply no facts alleged which demonstrate that plaintiffs' claims arose from [Adam's] contacts with Illinois or the United States" simply ignores significant portions of the complaint. And his reliance on his purported scant physical presence in the forum (which plaintiffs dispute as a factual matter) finds no support in the law: "So long as a commercial actor's efforts are `purposefully directed' toward residents of another State, we have consistently rejected
Adam's next argument, that even assuming the "minimum contacts" test is met, jurisdiction would be fundamentally unfair, is similarly unpersuasive. The key factors in this portion of the jurisdiction analysis are "(1) the interests of the states involved and (2) the relative convenience of litigating in [this] forum." Kohler Co. v. Kohler Intern., Ltd., 196 F.Supp.2d 690, 700 (N.D.Ill.2002) (citing Asahi Metal Indus. Co., Ltd. v. Superior Court, 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). Adam addresses the first factor in only the most cursory manner, arguing that because "the central underpinning of this litigation is a Polish corporation transacting no business from inside the United States, this forum has little, if any, interest in resolving the parties' disputes." Not only does Adam's gloss ignore plaintiffs' significant allegations of wrongdoing by Adam in, and directed to, Illinois, it relies on the faulty legal premise that Illinois has an interest in the dispute only if the "alleged wrongs" occurred here. Indeed, "[a] State generally has a `manifest interest' in providing its residents with a convenient forum for redressing injuries inflicted by out-of-state actors." Burger King, 471 U.S. at 473, 105 S.Ct. 2174 (citations omitted). This is all the more true where, as here, a forum resident seeks to recover from a defendant who "purposefully direct[ed]" his activities toward the forum. Id.
Adam's argument as to "relative convenience" similarly merits little weight. Adam decries the "fundamental unfairness" of allowing plaintiffs to proceed here after having "instigated" criminal proceedings against him in Poland, which proceedings resulted in travel restrictions preventing Adam from travelling to the United States. But even assuming plaintiffs were somehow involved in the Polish prosecutor's decision to pursue criminal proceedings against Adam (plaintiffs deny that they initiated the proceedings, and the evidence to which Adam points is ambiguous, at best), it is far from clear in any event that Adam would be unable to attend a trial in this case.
Perhaps above all, Adam cannot be heard to complain about the purported
In these related motions, defendants seek a ruling that the nominal defendants have not been properly served and are not subject to personal jurisdiction in this forum, and dismissal of plaintiffs' derivative claims for failure to join the nominal defendants as necessary parties. These motions are without merit.
I resolve the issue of personal jurisdiction in plaintiffs' favor for substantially the reasons set forth in plaintiffs' opposition. To begin with, the KBP entities have at least "minimum contacts" in this forum, including contracts with various forum residents (which, moreover, relate to the scheme alleged in the complaint); the existence of a KBP office in Illinois (identified on the company's website); the fact that Richard and Sanecka-Swiech—both forum residents—are Management Board members and/or officers of the KBP entities, (with Richard allegedly having plenary power to bind the entities); evidence that KBP has solicited investors in the United States, including at least one Illinois-based investor; and evidence that Richard negotiated transactions and signed documents at issue in this litigation on behalf of the KBP entities from Illinois. While defendants dispute some of these facts, plaintiffs have made at least a prima facie showing that KBP and its wholly-owned subsidiaries have been "doing business" in Illinois. This is sufficient for personal jurisdiction. Kohler Co. v. Kohler Intern., Ltd., 196 F.Supp.2d 690, 693 (N.D.Ill.2002) (personal jurisdiction proper under "doing business" test if defendant "has some reasonable subset of, e.g., an office, mailing address, telephone number, agents, or employees in Illinois.")
The authorities on which the KBP entities rely are not to the contrary. In Riemer v. KSL Recreation Corp., 348 Ill.App.3d 26, 283 Ill.Dec. 163, 807 N.E.2d 1004 (2004), the issue was whether a foreign corporate parent (actually, a corporate grand parent) could be deemed to be "doing business" in Illinois based on "sales activities of a subsidiary to a subsidiary." Id., 283 Ill.Dec. 163, 807 N.E.2d at 1006-1007. The Riemer court noted that not only was the corporate sub-subsidiary alleged to have caused the plaintiff's injury
Jurisdiction over these entities also comports with fair play and substantial justice. As nominal defendants, they will not face either the expense or the inconvenience of active litigants, and, as plaintiffs underscore, any judgment in plaintiffs' favor stands only to put money into their coffers. Even assuming I consider the KBP entities' asserted "good reasons" to oppose jurisdiction,
Finally, I am persuaded that the KBP entities have been properly served. Plaintiffs have made a prima facie showing of facts to support their argument that Richard is a "managing or general agent" of KBP and its subsidiaries. For example, they point to the KBP entities' interrogatory responses, which name Richard as KBP's "Second Vice President," and to evidence of Richard's de facto control over the KBP subsidiaries. Although the KBP entities purport to dispute that Richard exercises any actual control over these entities, I must resolve this factual dispute in
As noted above, I previously denied a motion to dismiss this case based on forum non conveniens. Having subsequently allowed the parties to conduct discovery, however, I now revisit the issue. I again conclude that dismissal on this ground is unwarranted.
"The common law doctrine of forum non conveniens allows a federal district court to dismiss a suit over which it would normally have jurisdiction in order to best serve the convenience of the parties and the ends of justice." Stroitelstvo Bulgaria Ltd. v. Bulgarian-American Enterprise Fund, 589 F.3d 417, 421 (7th Cir.2009). To prevail on their motion, defendants must show that an available alternative forum exists for plaintiffs' claims, and that "trial in the chosen forum would establish oppressiveness and vexation to a defendant out of all proportion to plaintiff's convenience, or the chosen forum is inappropriate because of considerations affecting the court's own administrative and legal problems." Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 429, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (alterations omitted) (quotation omitted). Defendants' burden is particularly weighty where, as here, the plaintiffs' home forum has been chosen.
My inquiry proceeds in two steps. First, I must determine whether an "adequate alternative" forum exists. If I conclude that one does, I then proceed to weigh private and public interest factors to determine whether the action should be dismissed. Kamel v. Hill-Rom Co., Inc., 108 F.3d 799, 802-03 (7th Cir.1997).
An alternative forum is "available" if all parties are amenable to process and are within the forum's jurisdiction. Id. at 803. Defendants meet a critical stumbling block on this issue. Defendants concede that Richard, Sanecka-Swiech, and Szubert-Lewicki are United States citizens and residents over whom Polish courts lack jurisdiction. Although they attempt to solve this problem having these defendants "consent" to the jurisdiction of Polish courts through declarations filed in this case, these purported consents are insufficient to carry defendants' burden of proving that Polish courts are "available" to hear this dispute.
First, plaintiffs have filed uncontroverted evidence that Polish courts do not consider such voluntary consents effective unless they are filed with a Polish court. Pl. Opp., Exh. A, Decl. of Tomasz Kaplinski at ¶ 6.
Second, plaintiffs have also submitted uncontroverted evidence that Polish law precludes jurisdiction over the corporate defendants who are domiciled in the United States and are alleged to have committed wrongful acts here. Pl.'s Opp., Exh. A at ¶ 5. None of these defendants even purports to consent to the jurisdiction of Polish courts, and defendants are conspicuously silent on this issue.
Under these circumstances, I conclude that defendants have failed to demonstrate that Polish courts are an "available" alternative forum. See Kamel, 108 F.3d at 803 (forum is available if "all parties" are amenable to process and are within the forum's jurisdiction); Concesionaria DHM, S.A. v. International Finance, 307 F.Supp.2d 553, 563 (S.D.N.Y.2004) (forum non conveniens motion cannot be granted "unless all defendants are subject to the alternative jurisdiction") (original emphasis). Accordingly, I need not proceed to the remainder of the inquiry. See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 255 n. 22, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981).
For the foregoing reasons, defendants' various motions to dismiss the complaint
