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KUNKLER v. PALKO MGMT. CORP.

February 12, 1998

JOHN KUNKLER, Plaintiff,
v.
PALKO MANAGEMENT CORP., t/a PALKO CONTINENTAL AND RICHARD A. PALKO, individually, Defendants.



The opinion of the court was delivered by: JOYNER

 JOYNER, J.

 February 12, 1998

 Presently before the Court is Defendants, Palko Management Corporation ("Palko") and Richard A. Palko's ("Richard Palko"), Motion to Dismiss Plaintiff, John Kunkler's, Complaint based on, among other things, improper venue. For the following reasons, this Court finds that venue is improper in the Eastern District of Pennsylvania. However, we will not dismiss the case; rather, we will transfer this action to the proper venue in the United States District Court for the District of New Jersey.

 BACKGROUND

 Plaintiff's Complaint alleges three Counts. Count I is a claim for a civil violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C.A. § 1961, et. seq. ; Count II alleges a Breach of Contract Claim; and Count III is a claim for Fraud. Plaintiff was employed by defendants as a salesperson with a compensation plan that provided for salary plus commission and/or a bonus. Plaintiff alleges that defendants created a scheme whereby they adjusted the accounting reports from which payments of commissions were generated so that employees were not paid commissions that were owe and due them but were rather paid lower commissions based on the fraudulent accounting reports. Plaintiff maintains that defendants utilized both the United States mails and wires to succeed with this scheme.

 Plaintiff and defendants all reside in New Jersey. Corporate defendant, Palko, is a New Jersey corporation with its principal place of business in New Jersey, and plaintiff was hired in New Jersey.

 I. Venue

 Defendants argue that Plaintiff's Complaint should be dismissed because venue is improper under the specific venue provision created by RICO, 18 U.S.C.A. § 1965. In response, plaintiff does not maintain that his claim arose in the Eastern District of Pennsylvania so as to satisfy the general venue provision in 28 U.S.C. § 1391(b), *fn1" but rather maintains that venue is proper in this District under the RICO provision since defendants "transact their affairs" in this District. Specifically, plaintiff maintains that some of the commissions for which he was not paid were earned through work performed in Pennsylvania on behalf of defendants and that defendants directed some correspondence related to their fraudulent scheme into Pennsylvania.

 Our Court of Appeals has held that the burden of proof when improper venue is raised properly rests with the movant. Myers v. American Dental Ass'n, 695 F.2d 716, 724 (discussing distinction between proper burden when jurisdiction is challenged as opposed to venue). Where there is more than one defendant, proper venue must be shown for each defendant. Private Label, Ltd. v. Inoff, 1993 U.S. Dist. LEXIS 5041, 1993 WL 120323, *5 (E.D. Pa.); Bhatla v. Resort Development Corp., 1987 U.S. Dist. LEXIS 11835, 1987 WL 28367, *1 (E.D. Pa.). The specific venue provision in RICO provides, in pertinent part, that venue is proper in "any district in which [the defendant] resides, is found, has an agent, or transacts his affairs." 18 U.S.C.A. § 1965(a). Under the RICO provision, "a person transacts his affairs within a particular district when he regularly conducts business of a substantial and continuous nature within that district." Shuman v. Computer Associates International, Inc., 762 F. Supp. 114, 116 (E.D. Pa. 1991)(citations omitted); see also Eastman v. Initial Investments, Inc., 827 F. Supp. 336, 338 (E.D. Pa. 1993); Bhatla, 1987 WL 28367 at *2. Further, "the RICO venue provision requires a showing that the individual defendant transacted his affairs on his own behalf and not merely on behalf of a corporation." Shuman, 762 F. Supp. at 116; see also Bhatla, 1987 WL 28367 at *2.

 Defendants admit that the corporate defendant, Palko, does conduct business in the Eastern District of Pennsylvania. However, defendants maintain that the individual defendant, Robert Palko, does not transact affairs on his own behalf in the Eastern District of Pennsylvania. To support this contention, defendants have offered the undisputed affidavit of Richard Palko, which provides that he is a resident of New Jersey, is registered to vote in New Jersey, works in New Jersey, regularly conducts his personal affairs within New Jersey, and does not maintain a residence or have an agent in Pennsylvania. (D.'s Mot. to Dis. at Ex. A--Aff. of Richard Palko).

 Thus, this Court finds that defendants have met the burden of showing that the individual defendant, Robert Palko, does not conduct substantial and continuous business affairs on his own behalf in Pennsylvania as required by 18 U.S.C.A. § 1965(a). As the substantial and continuous business affairs test of § 1965(a) is not satisfied as to both ...


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