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