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Tsai v. Karlik

United States District Court, E.D. Missouri, Eastern Division

July 24, 2014

SANDY TSAI, Plaintiff,
JERRY KARLIK, et al., Defendants.


CAROL E. JACKSON, District Judge.

This matter is before the Court on defendants' motion to dismiss this matter for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2) or for improper venue pursuant to Fed.R.Civ.P. 12(b)(3). In the alternative, defendants move to transfer this matter to a state or federal court in Illinois pursuant to 28 U.S.C. § 1404 and the doctrine of forum non conveniens. Plaintiff has responded in opposition, and the issues are fully briefed.

I. Background

Plaintiff Sandy Tsai brings this action against defendants under the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962(c), alleging that defendants defrauded her by encouraging her to invest in a real estate development project in Chicago, Illinois and then using her investment for their own personal expenditures. Plaintiff claims that she invested in $1.5 million in 15th Street Blue Island, LLC., ("15 BI") a company formed to acquire and develop property located at 15th Street and Blue Island Avenue in Chicago. Plaintiff alleges that defendants Jerry Karlik, Jordan Karlik, Keith Giles, Spiros Picoulas, and the corporations owned or managed by these individuals, [1] looted the assets of 15 BI. Plaintiff alleges that defendants committed mail and wire fraud in furtherance of their scheme, and engaged in a pattern of racketeering in violation of 18 U.S.C. § 1962(c).

II. Personal Jurisdiction

The defendants reside in Illinois and in New York and were served with process in those states. They move to dismiss plaintiff's claims for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Plaintiff has the burden of establishing that personal jurisdiction exists over non-resident defendants. Burlington Indus., Inc. v. Maples Indus., Inc. , 97 F.3d 1100, 1102 (8th Cir. 1996). For plaintiff to survive defendants' motion to dismiss for lack of personal jurisdiction, plaintiff "need only make a prima facie showing of jurisdiction...." Epps v. Stewart Info. Servs. Corp. , 327 F.3d 642, 647 (8th Cir. 2003). Plaintiff may make this showing by affidavits, exhibits, or other evidence. The Court must view the facts in the light most favorable to the nonmoving party. Id.

Under 18 U.S.C. § 1965, nationwide service of process is authorized for RICO claims. See, e.g., Golub & Assocs., Inc. v. Long, No. 4:09-CV-92 (JCH), 2009 WL 690118, *1-2 (E.D. Mo. Mar. 11, 2009). Although the Eighth Circuit has not yet addressed the relationship between nationwide service of process under RICO and personal jurisdiction, this Court has found that "where, as here, a federal statute authorizes nationwide service of process, the exercise of personal jurisdiction is compatible with due process as long as the defendants have sufficient minimum contacts with the United States." Id . (internal citations and quotations omitted).

Defendants had the necessary contacts with the United States to satisfy due process. They reside and transact business in the United States. Because RICO's provision for nationwide service of process provides a statutory basis for exercising personal jurisdiction over defendants, the Court need not address the Missouri long-arm statute. See, e.g., Jennings v. Bonus Bldg. Care, Inc., No. 4:13-CV-663-W-DGK, 2014 WL 1806776, at *3 (W.D. Mo. May 7, 2014) (finding that, in action under RICO, "due process of law requires only that the defendant has sufficient contacts with the United States, not the state in which the district court sits."); Omni Video Games v. Wing , 754 F.Supp. 261, 263 (D.R.I. 1991) (same); Kingsepp v. Wesleyan Univ. , 763 F.Supp. 22, 25 (S.D.N.Y. 1991) (discussing Clayton Act's nationwide service of process provision, and stating that, "when a defendant resides in the United States and is subject to nationwide service of process under a federal statute, the defendant is subject to personal jurisdiction in federal court without regard to state long-arm statutes and due process requirements are satisfied by the defendant's contact with the United States."). Accordingly, this Court may exercise personal jurisdiction over the defendants.

II. Forum Non Conveniens

Defendant seeks to enforce the forum-selection clause contained in the Operating Agreement of 15 BI, by moving to transfer this case to the United States District Court for the Northern District of Illinois under 28 U.S.C. § 1404(a) or to the Circuit Court of Cook County, Illinois pursuant to the doctrine of forum non conveniens. [2] The forum-selection clause states, in relevant part:

Any suit involving any dispute or matter arising under this Agreement may only be brought in the United States District Court for the Northern District of Illinois or any Illinois State Court having jurisdiction over the subject matter of the dispute or matter.

Ex. D [Doc. #39-4], at 23. As the Supreme Court explained recently in Atlantic Marine Construction Co., Inc. v. United States District Court for the Western District of Texas , 134 S.Ct. 568, 581 (2013), a "valid forum-selection clause requires district courts to adjust their usual § 1404(a) [and forum non conveniens ] analysis...." Thus, if the Operating Agreement's forum-selection clause is valid and applicable to plaintiff's claims under RICO, the Court will adjust its analysis accordingly.

A. Validity of the Forum-Selection Clause

A forum-selection clause is prima facie valid and should be enforced unless enforcement would be unjust or unreasonable. M.B. Rests., Inc. v. CKE Rests., Inc. , 183 F.3d 750, 752 (8th Cir. 1999). When "the forum selection clause is the fruit of an arm's length negotiation, the party challenging the clause bears an especially heavy burden of proof' to avoid its bargain." Servewell Plumbing, LLC v. Fed. Ins. Co. , 439 F.3d 786, 789 (8th Cir. 2006) (citing M/S Bremen v. Zapata Off-Shore Co. , 407 U.S. 1, 17 (1972)). "While inconvenience to a party is an insufficient basis to defeat an otherwise enforceable forum selection clause, a party can avoid enforcement of the clause by showing that proceeding in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court." Union Elec. Co. v. Energy Ins. Mut. Ltd. , 689 F.3d 968, 974 (8th Cir. 2012) (internal citations and ...

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