was breached was an Illinois contract” (leave aside for the
moment the potential problematic issue on that score suggested in
n,2). That argument could have force if this lawsuit had instead
charged (say) fraud or other misconduct in connection with the
negotiation or execution of the Agreement. But the entry into
the Agreement is no more “a substantial part of the events or
omissions giving rise to the claim” than, for example, the fact
of a person's getting aboard a Metra train in Highland Park would
fit that description if a claim were to be based on an accident
sustained by that same commuter passenger who, after leaving the
train and beginning to walk to the office, were to be hit by a
speeding taxi that runs a red light on Wacker Drive. That is,
the hypothesized accident would certainly not have happened “but
for” the train ride that preceded it, in the same sense that the
asserted fraud and breach of contract in this case would not have
happened “but for” the contract signing that preceded them (in
this instance by years, not by minutes or hours), Just as in
other areas of law a mere “but for” relationship does not
automatically equate to proximate cause, here such a “but for”
relationship does not cause the years-earlier signing of the
Agreement to constitute “a substantial part of the events or
omissions giving rise to the claim[s]” that arose much later.

Financial Management seeks to avoid that obvious common

sense meaning of the Section 1391(a) (2) requirement by urging



-, Embassy Group Ltd. Page 1 of 2

EMBASSY EMBASSY |
MEMBERS. VENDORS: |

EMBASSY GROUP LTD.

Embassy Group Ltd. is a 100% member-owned, 2.8 billion :
dollar corporation consisting of the industry's leading *
independent plumbing, HVAC and PVF wholesalers. These
wholesalers are committed to remaining strong and :

i _ independent. i

Established In 1991, the group was founded on the principle
that equal participation by a limited group of Premier Plumbing,
HVAC and PVF Wholesalers partnering with the Top Industry
Plumbing, HVAC and PVF Vendors would result in a mutually
rewarding relationship for all. This union also insures the

United We Stand

esate

individual Members’ business remains viable in the face of changes, consolidations
and chain competitors entering the markets today.

The Embassy Group consists of 62 premier plumbing, PVF and HVAC wholesalers 4
operating over 500 branch locations nationwide generating a multi-billion dollar

volume in plumbing and related specialty and professionally installed products. The
Embassy Group is strategically aligned with the top 73 plumbing and specialty brand
manufacturers natlonwide. (Click on Members or Vendors above for a complete

listing.) Consolidating purchasing and promotional power to secure increased market

share for the Embassy partnership is the ultimate goal.

ee

The Group requires membership participation by committee in most management q
activities and functions. This system encourages group participation and member
involvement in the decision making process, Embassy is governed by a 7-member

Board of Directors, as well as a Vendor Committee, Long Range Planning

Committee, HVAC Committee and Decorative Hardware Cammittee.

In a world of cloned products, persuasive images and new technology, independent wholesa
in human resources. Member employees have a commitment to in-depth product knowledge
development and technical expertise, which provide the competitive edge.

Thank you for visiting our site. If you are a wholesaler or manufacturer Interested in becomin:
unique organization, please contact the Embassy Group office at info@embassygrqupltd.con

Embassy Staff

Walter P. Gumm
President
* wqumm@embassygroupltd.com

Maureen K. Cosyns, CMP
Executive Vice President

mcogyns@embassygroupltd.com
Erica M. Romero

Program Administrator
erica@em ite

httn-//waw.embassvorannltd.cam/ 1/28/2003

ee —


1391 (a) (2) that is far more succinctly set out in 17 Moore's
Federal Practice §110.04[1], at 110-42 (3d ed. 2002):

Generally, the court must focus on activities of the
defendant, not the plaintiff.

In somewhat more expanded form, what was said in Woodke v. Dahm,
70 F.3d 983, 985 (8 Cir. 1995) in rejecting a contention like
Financial Management's advanced by a plaintiff in a “passing off"
claim under the Lanham Act, where defendant's conduct took place
outside of the forum but plaintiff's economic harm was felt
inside the forum, could well have been written for this case:

While the present venue statute was certainly intended
to expand the number of venues available to a
plaintiff, we are reluctant to impute to Congresa an
intent to abandon altogether the protection of
defendants as a relevant consideration in venue
matters, We think it far more likely that by referring
to “events or omissions giving rise to the claim,”
Congress meant to require courts to focus on relevant
activities of the defendant, not of the plaintiff.

* * *

(W]hile damages or potential adverse economic effect
are a necessary part of a Lanham Act claim, if Congress
had wanted to lay venue where the plaintiff was
residing when it was injured, it could have said so
expressly.?

3 [Footnote by this Court] It is worth observing (as this
Court earlier noted in its January 15 memorandum order) that if
Financial Management had wished to require any litigation
relating to or arising out of the Agreement to be brought here,
it could simply have included such a mandatory forum selection
clause in Agreement 412. As the Agreement reflects, it is not
only a pre-printed form document prepared by Financial Management
itself (with its name preprinted both on the first page and on
signature page 7), and with blanks on pages 1 and 7 where the
name and signature of a “Member” such as Coburn are to be filled

6



that it suffices for venue purposes that the economic harm from
Coburn's complained-of actions has been felt in Financial
Management's pocket here in Illineis. On that score it attempts

to point to this Court's opinion in Club Assistance Program, Inc.

v._Zukerman, 594 F.Supp. 341 (N.D. Ill. 1984) and to our Court of

Appeals' opinion (approving and relying upon Club Assistance) in

FMC Corp. v. Varonos, 892 F.2d 1308 (7 Cir. 1990). But those

cases speak not to the permissible application of the venue
statute, but rather to a quite different question: the
permissible outer reach of the Illinois long-arm statute, which
allows defendants to be haled into court here so long as the
Constitution's Due Process Clause allows that result.

Indeed, it takes only a moment's thought to realize that if
economic harm to a plaintiff were really enough to satisfy
Section 1391 (a) (2), neither of the other alternatives--Section
1391 (a) (1) and (a) (3)--would ever have to be looked at, fora
plaintiff could always bring suit at its home base on the premise
that it has suffered harm there. $0 Financial Management's
contention in that respect is simply wrong--it would prove
entirely too much, by essentially eviscerating and making
irrelevant part of what Congress has prescribed in the venue
statute.

What has just been said here is really a much extended

version of the proposition as to the proper reading of Section



status date is set for 8:45 a.m. February 7, 2003 (with Coburn's
Louisiana counsel permitted to participate by telephone) to

discuss what order should be entered to implement this opinion.

Milton I. Shadur
Senior United States District Judge

Date: February 3, 2003



1
Minute Urder Form (67)

United States District Court, Northern District of Illinois

Name of Assigned Judge Milton I. Shadur Sitting Judge if Otber
or Magistrate Judge than Assigned Judge
CASE NUMBER 02 C 8928 DATE 2/4/2003
CASE l‘inancial Management Services, Inc. vs. Coburn Supply Co., Lne.
TITLE
[la the following box (a) indicate the party filing the motion, ¢.g.. plaintiff, defendant, 3ed party plaintiff, and (b) state briefly the mature
MOTION: af the motion being presented.]

DOCKET ENTRY:

qd) Oo Filed motion of [ usc fisting in “Motion” box above.]

(2) a Brief in support of motion due

(3) fl Answer brief Lo motion duc_ Reply to answer brief due.

(4) Oo Ruling/Hearing on setfor_ at.

(5) Oo Status hearing[held/continued to] [set for/re-set for] on setfor at

(6) Oo Pretrial conferencefheld/continued to] [set for/re-set for] on set for at

7) o Trial[set for/re-set for]on at

(8) oO [Bench/Jury trial] [Hearing] held/continued to ___at

Q) Qg ‘This case is dismissed [with/without] prejudice and without costs|by/agreement/pursuant to]
CUFRCP4(m) OlLocal Rule 41.1 OFRCP4i(ay1) OO FRCP41(a)(2).

(0) oi [Other docket entry] Enler Memorandum Opinion and Order. A status hearing is sct for 8:45 a.m.

February 7, 2003 to discuss what order should be entered to implement this opinion.

ql) ff

No notices requized. advised in open court

[For further detail see order attached to the original minute order, ]

Document
Number

No notices required.
° satura uur ot natives

FEB.0,5,2003

2422001

of | Notices muiled by judge's staff,

Notified counsel by telephoae.

Docketing to muil notices

Mail AO 450 form. 1 sore teed men

Copy to judge/magistrate judge

ate mulled nowce
courtroom

SN deputy’s

SN
initials

Date/timie received int
cenual Clerk’s Office

mailing dept initials



“* Embassy Group Ltd. Page 2 of 2

Embassy Group Ltd,
P.O. Box 843
Elgin, Illinois 60121-0843
Phone: (847) 468-0180
Fax: (847) 468-0183
info@embassygroupitd.com

© 2003 Embassy Group Ltd.



In summary, Coburn has prevailed on the first branch of its
argument: This Northern District of Illinois is not a proper
situs for this action under the applicable venue statute. That
makes it unnecessary to consider the considerably closer question
of what the appropriate balancing test under Section 1404 (a)
would have produced if venue would have been properly lodged
here.‘ But considerations of transfer are still relevant, for
taking that step under Section 1406 would spare Financial
Management the trouble and expense of having to file a new
Complaint and to pay a new filing fee for bringing suit in

Louisiana if this action were to be dismissed. Accordingly, a

in, but in this instance not a word of the form document has been
changed in any respect--no negotiation of any of its terms has
taken place. Nothing then prevented Financial Management from
inserting as part of the Agreement a venue consent or waiver,
specifying on a take-it-or-~leave-it basis that all such
litigation mist take place here. Financial Management did not do
so, instead stating only that Illinois law is to apply to the
Agreement (interestingly enough, that would add nothing to the
balancing process under Section 1404(a) if that analysis had to
be undertaken: It is one of the considerations that the Section
1404(a) cases bring into play anyway, and under Van Dusen vy.
Barrack, 376 U.S. 612, 639 (1964) a transfer would carry this
forum's law with it in any event), So although this Court has
not relied on that omission of a mandatory venue clause in
reaching its conclusion, the omission would also tend to cut
against Financial Management's position here.

* In that respect, some of the factors set out in the
statute itself and in the caselaw that fleshes out its “interest
of justice” criterion (in that respect importing the forum non
conveniens considerations enumerated in Gulf Oi] Corp. v.
Gilbert, 330 U.S. 501, 508 (1947)) point in Financial
Management's direction, while others point toward Coburn and
hence toward transfer.



limited to its being identified as “a member of Embassy Group,
Ltd., which is a 100% member-owned, $2.8 billion Illinois
corporation” (Mem. 3-4)--an obvious red herring in terms of any
claimed Illinois activity by Coburn itself (see the Embassy
Group, Ltd. website, Ex. B to Financial Management's Memorandum,
a copy of which is attached to this opinion). As for Coburn
itself, even though its activities in Louisiana (where it is
situated) do give rise to activity by Financial Management in
Illinois, the vital fact for venue purposes is that Coburn's
activity is limited to the states of Texas and Louisiana.

It must be remembered that the relevant consideration under
Section 1391(a) (2) is where “a substantial part of the events or
omissions giving rise to the claim occurred,” and Financial
Management's own Mem. 1 characterizes its contentions as “claims
of fraud, conspiracy and breach of contract.” And when the
matter is looked at objectively, as this Court is obliged to do,
there is not the slightest question that all of the “events or
omissions” that have “giv[en] rise to the claim[s]”--the alleged
fraud, conspiracy and contractual breaches--took place in
Louisiana and Texas, where Coburn and its alleged fellow culprit
Lamonte's Heating and Cooling Sales, LLC, took all of the steps
that have caused the claimed injuries of which Financial

Management complains.

It will not do to say, “Well, after all, the contract that



substantial part of the events or omissions giving rise to the
claim occurred.” But then Financial Management proceeds to lard
up its description with a detailed account that focuses on that
issue, not in terms of the assertedly wrongful conduct by Coburn
(the properly relevant consideration, but rather in terms of what
Financial Management does in Illinois to carry out its business,
Although Financial Management's narrative does begin with a trip
by a Coburn representative to Illinois to hear a talk by
Financial Management's then President-CEO (probably back in 1999)
that led to Coburn's execution of a Memorandum Agreement
(“Agreement”) with Financial Management on April 30, 1999,7 all
of Financial Management's other particularized recitals {at its
Mem. 3-6) are devoted exclusively and at great length to its own
Illinois-based activity.

But as to Coburn, its purported Illinois “connection” is

2 Two things are worth noting about that. To begin with,

the Declaration of Financial Management's current President -CEO
Carol Delgado (“Délgade”) is careful to specify that Financial
Management executed the Agreement in Illinois. It might have
been guessed from the acumen of Financial Management's lawyers
(who of course authored the affidavit) that the affidavit's
silence as to Coburn's place of execution signifies that it
signed the document at its home base in Louisiana, and indeed
Coburn's Amended Answer (“AA”) §110 says exactly that. Second,
and of greater significance, not a word is said in Delgado's
Declaration or in the exquisite factual detail set out in
Financial Management's Memorandum about any Coburn representative
ever having set foot in Illinois at any time thereafter--and
again Coburn's AA says that no such contact ever took place
during the nearly four years that have elapsed since the
Agreement was signed.



IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

FINANCIAL MANAGEMENT SERVICES,
INC.,

Plaintiff,
Vv. No. 02 C 8928

)
)
)
)
)
)
)
COBURN SUPPLY COMPANY, INC., )
)

et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Coburn Supply Company, Inc. (“Coburn”), one of two

defendanta in this diversity of citizenship case, has attacked
this action by Financial Management Services, Inc. (“Financial
Management”) as being improperly lodged in this judicial district
under 28 U.S.C. §1391(a)? and, if that argument were to prove
unsuccessful, as more appropriately transferable to the Eastern
District of Louisiana under Section 1404(a). Financial
Management has filed a responsive memorandum, so that the first
(and dispositive) issue is ripe for resolution.
Propriety of Venue

Financial Management acknowledges that it must look to the
second of the three alternatives under Section 1391(a) to support
bringing this action in the Northern District of Tllinois--its

contention that this is “a judicial district in which a

1 All further references to Title 28's provisions will
simply take the form “Section--.”