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CASTLE v. GROUSE

February 11, 2004.

JOSEPH L. CASTLE, II, et al.
v.
LINDA J. GROUSE, M.D.



The opinion of the court was delivered by: HARVEY BARTLE, III, District Judge

MEMORANDUM

Plaintiffs, Trustees of the AHP Settlement Trust (the "Trust"),*fn1 have sued defendant Linda J. Grouse, M.D. under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1964, et seq., as well as for various common law torts, including fraud. Defendant has moved to dismiss this action under Rule 12(b)(3) of the Federal Rules of Civil Procedure for improper venue and under Rule 12(b) (6) for failure to state a claim upon which relief can be granted.

I.

  This action is related to the nationwide Class Action Settlement involving Wyeth's diet drugs Pondimin and Redux, commonly known as fen-phen. The class action, as well as Mutli-District Litigation No. 1203 involving fen-phen, are both situated in this court. In accordance with the Class Action Settlement Agreement approved by this court in Pretrial Order ("PTO") No. 1415 in Brown, et al. v. American Home Products Page 2 Corporation, Civ.A. No. 99-20593 (E.D. Pa.), the Trust was established and funded by Wyeth to pay benefits to class members who suffered mitral or aortic heart valve regurgitation from ingesting fen-phen. To obtain those benefits a class member is required to submit an echocardiogram read by a board-certified cardiologist who certifies that the class member's condition meets the definitions set forth in the Settlement Agreement. Settlement Agreement, § VI.C. The cardiologist must supply various medical information about the class member, including the echocardiogram readings, on a court-approved form known as a Green Form, and must attest to the accuracy of the information presented under penalty of perjury. Settlement Agreement, § VI.C.4; Green Form, Part II. The Green Form also has a section to be completed and signed by the claimant and one to be completed and signed by the claimant's attorney.

  Dr. Crouse, a board-certified cardiologist, was engaged by various attorneys to read and certify the echocardiograms of some 2,500 class members. The complaint asserts that hundreds of Dr. Grouse's readings were not only medically unreasonable but that she and others were involved in a scheme to defraud the Trust. It further alleges that as a result of the Trust's reliance on her certifications given under oath, it paid out several million dollars to undeserving claimants. The Trust seeks compensatory and punitive damages. Page 3

  II.

  First, Dr. Grouse challenges venue in this district. As the defendant, she bears the burden of proving that venue is improper. Myers v. American Dental Ass'n, 695 F.2d 716, 724 (3d Cir. 1982); Simon v. Ward, 80 F. Supp.2d 464, 466-68 (E.D. Pa. 2000). The relevant facts, however, are not in dispute.

  Dr. Grouse resides and practices medicine with Kramer and Grouse Cardiology, P.C.*fn2 ("Kramer and Grouse") in Kansas City, Missouri, where she read all the echocardiograms in issue and attested to the completed Green Forms. Immediately above the line for her signature and the date are the following two sentences:
This form is an official court document sanctioned by the Court that presides over the Diet Drug Settlement and submitting it to the Claims Administrators is equivalent to filing it with a Court. I declare under penalty of perjury, that the information provided in this form is correct to the best of my knowledge, information and belief.
Dr. Grouse forwarded the completed Green Forms to the various attorneys by whom she was engaged, and the attorneys in turn transmitted the forms to the Trust.

  When completed, the forms were sent to the Diet Drug Settlement, P.O. Box 7939, Philadelphia, PA 19101. This address was on the first page of the Green Form. It is undisputed that the Green Forms certified by Dr. Grouse were received by the Trust in Philadelphia and that the benefits provided to class Page 4 members as a result of these certifications were paid by the Trust from this location.*fn3

  Since this action is not based solely on diversity of citizenship, the applicable venue statute is 28 U.S.C. § 1391(b). The Trust relies specifically on § 1391(b)(2), which reads:
A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in . . . (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred
  Under § 1391(b)(2), we must focus on whether "a substantial part of the events or omissions giving rise to the claim" occurred in this district, not on the extent of the defendant's particular contacts with the forum. See Cottman Transmission Svs., Inc. v. Martino, 36 F.3d 291, 294 (3d Cir. 1994). Under Cottman, "[s]ubstantiality is intended to preserve the element of fairness so that a defendant is not haled into a remote district having no real relationship to the dispute." Id. The substantiality factor has clearly been met. As noted above, Dr. Grouse signed and submitted some 2,500 Green Form certifications which were ultimately forwarded to the Trust in Philadelphia for review and processing. Hundreds of these are alleged to be fraudulent. It was from Philadelphia that the Trust disbursed several million dollars to allegedly undeserving Page 5 claimants based on the Trust's reliance on those certifications. This is not a remote district having no real relationship to the claims in issue. Id.

  In Cottman, our Court of Appeals cited with approval Bates v. C & S Adjusters, Inc., 980 F.2d 865 (2d Cir. 1992). Bates involved a claim under the Fair Debt Collection Practices Act. Although the plaintiff had incurred a debt while living in the Western District of Pennsylvania, he instituted his action in the Western District of New York. The creditor, which was also located in Pennsylvania, had referred the matter to defendant, a debt collection agency that did not do business in the state of New York. The agency sent plaintiff a letter at his Pennsylvania address, but the Postal Service forwarded it to him at his new address in New York state. The Court of Appeals for the Second Circuit explained that venue was not a matter of contacts but a matter of where events occurred. Since the harm under the Fair Debt Collection Act did not occur until plaintiff received the letter, the court held that its receipt was a substantial event and that venue was proper. If the receipt of the letter as a result of the forwarding procedures of the Postal Service was sufficient to establish venue in Bates, surely the receipt in the Eastern District of Pennsylvania of numerous allegedly false or fraudulent Green Forms signed by Dr. Grouse and the payment by the Trust of several million dollars in benefits from this district predicated on those Green Forms are sufficient events to establish proper venue here. Page 6

  Dr. Grouse has not met her burden of proof to establish that venue is improper. Her motion to dismiss the complaint under Rule 12(b)(3) of the Federal Rules of Civil Procedure will be denied.

  III.

  Dr. Grouse also challenges the sufficiency of the Trust's complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. A complaint should be dismissed under Rule 12(b)(6) only where "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002). All reasonable inferences are drawn in favor of ...


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