Opinion
Case No. 3:20-cv-01164-AC
09-24-2020
JOHN S. BARTH, Plaintiff, v. MABRY CARLTON RANCH INC., et. al, Defendants.
FINDINGS AND RECOMMENDATION :
Plaintiff John S. Barth, a resident of Springvale, Maine, brings this action against Defendants Mabry Carlton Ranch, Inc., and numerous other Florida Defendants ("Defendants"), alleging they have caused him damages by operating "a criminal enterprise to steal conservation funds from the budgets of the state of Florida and Sarasota County." (Compl. at 5.) On August 12, 2020, the court issued an Order to Show Cause in writing why this action should not be dismissed for lack jurisdiction and lack of venue. On August 25, 2020, Plaintiff filed a response. (Pl.'s Resp., ECF No. 7.) Based on Plaintiff's response, the court concludes that venue is improper and that this action should be dismissed.
Factual Background
Plaintiff contends Defendant Mabry Carlton Ranch Inc., and numerous other Florida Defendants, have caused him damages by operating "a criminal enterprise to steal conservation funds from the budgets of the state of Florida and Sarasota County." (Compl. at 5.) Plaintiff alleges that Defendants have caused the state and county to purchase lands and conservation easements at inflated prices from political insiders and owners who donate large sums of money to their political campaigns. (Id.) According to Plaintiff, this case involves collusion between public officials, Republican political operatives, and the agricultural and ranching industries. (Id. at 1.)
Plaintiff alleges violations of the Fifth and Fourteenth Amendments and a conspiracy to violate his constitutional rights under 42 U.S.C. §§ 1983 - 1985. Plaintiff seeks to pursue a variety of violations of criminal statutes, including violations of Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968; deprivation of rights under color of law, 18 U.S.C. § 242; conspiracy to defraud the United States, 18 U.S.C. § 371; an intent to seek forfeiture under 18 U.S.C. § 981; and mail fraud under 18 U.S.C. § 1341. Plaintiff asserts that if discovery is granted, and he establishes a misuse of federal funding, he will bring this case as the "relator" in claims under the False Claims Act, 31 U.S.C. § 3729. Plaintiff also alleges a variety of violations of Florida state law, including FLA. STAT. §§ 817, 837, 838.016, 838.021, 838.022, 838.15-16, 895, and the Florida State Code of Ethics, chapter 112.
Plaintiff seeks compensatory and punitive damages and criminal penalties. (Id. at 5.) Plaintiff also indicates that he will move for seizure, a restraining order, and a preliminary injunction when United States agencies have identified the accounts and assets to be impounded. (Id. at 67.)
In his sixty-nine-page Complaint, Plaintiff asserts eight separate counts, or claims, for relief. Counts One through Seven involve allegations of conspiracy to defraud the State of Florida, Sarasota County, and the United States by facilitating the purchase of conservation easements at inflated prices, constituting racketeering, fraud, bribery, perjury, and other crimes under federal and state law. In Count Eight, Plaintiff alleges that Defendants have conspired to deny his constitutional rights by misappropriating public funds under 42 U.S.C. §§ 1983-1985.
Procedural Background
Plaintiff asserts that he is a resident of Maine and identifies Defendant Mabry Carlton Ranch as a Florida corporation, and the remaining defendants as Florida residents or companies operating in Florida. (Compl. at 14-16, 68.) Plaintiff asserts that this court has original jurisdiction based on diversity and federal question, pursuant to 28 U.S.C. §§ 1331, 1332, 1343, and 42 U.S.C. § 1985. Plaintiff asserts venue in the District of Oregon is proper under RICO, 18 U.S.C. § 1965, because the acts alleged in the action have had "significant effects in Oregon." (Compl. at 3.)
Plaintiff appears to have filed a similar complaint and motions to file under seal and request for discovery assistance in the Middle District of Florida, Barth v. Mabry Carlton Ranch, Inc. et al., Case No. 8:19-cv-3181-T-33AEP (M.D. Fla). In the Florida action, in a February 27, 2020 Order, the court dismissed all causes of action under state or federal criminal laws with prejudice, and dismissed his civil causes of action without prejudice and with leave to amend. (Docket Entry No. 10.) The Florida court provided Plaintiff twenty-one days to file a second amended complaint, denied his motion for discovery assistance, and granted his motion to seal in part, noting that any filings prospectively would appear on the public docket. On March 10, 2020, Plaintiff moved to withdraw all his filings and change venue, which the Florida court construed as a notice of voluntary dismissal pursuant to Federal Rule of Civil Procedure 41(a), and dismissed his case. (Docket Entry No. 12.)
On March 5, 2020, Plaintiff again appears to have filed a similar complaint and motions to file under seal and request for discovery assistance in the District of Hawaii, Barth v. Mabry Carlton Ranch, Inc., et al., Civ. No. 20-cv-00104 JAO-KJM (D. Haw.). On June 1, 2020, the Hawaii court issued an Order concluding that venue in the District of Hawaii was improper, and that dismissal in lieu of a transfer was appropriate because the proceedings were in the earliest stages and Plaintiff opposed transfer to the Middle District of Florida. Barth v. Mabry Carlton Ranch, Inc., Case No. 20-00104-JOA-KJM, 2020 WL 2840238, at *2-3 (D. Haw. June 1, 2020).
Plaintiff filed the instant action on July 19, 2020. On August 12, 2020, the court issued an Order to Show Cause why this action should not be dismissed for lack of jurisdiction or failure to state claim, and why this action should not be dismissed for improper venue. (Order to Show Cause, ECF No. 6.) On August 12, 2020, the court also denied Plaintiff's motion to file the case under seal and his motion requesting discovery assistance. (Order, ECF No. 5.)
On August 25, 2020, Plaintiff filed a response to the court's Order to Show Cause, contending that his action should not be dismissed because he has stated viable civil RICO claims and civil rights claims. (Pl.'s Resp. at 2.) Plaintiff also contends that he has demonstrated venue is proper in the District of Oregon pursuant to 28 U.S.C. § 1391(b)(2) and 18 U.S.C. § 1965(a).
Discussion
A federal district court generally may not hear a case on the merits if the court lacks personal jurisdiction over the defendants or the court is not a proper venue. Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 431 (2007); Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583-84 (1999) ("It is hardly novel for a federal court to choose among threshold grounds for denying audience to a case on the merits."); 28 U.S.C. § 1406. "When venue has been laid in the wrong district, the district court must 'dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.'" Clarke v. Aljex Software, Inc., Case No. 2:15-cv-01271-SU, 2015 WL 9305487, at *1 (D. Or. Dec. 1, 2015), adopted 2015 WL 9305655 (Dec. 21, 2015) (quoting 28 U.S.C. § 1406(a)). The decision to dismiss or transfer to a district with proper venue rests wholly within the court's discretion. Cook v. Fox, 537 F.2d 370, 371 (9th Cir. 1976). I. Venue is Improper under 28 U.S.C. § 1391(b)
The plaintiff bears the burden of proving that venue is proper. Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491, 496 (9th Cir. 1979); Birdwell & Janke, LLP v. Farkas, Case No. 3:18-cv-00910-YY, 2018 WL 6072030, at *9 (D. Or. Oct. 19, 2018), adopted, 2018 WL 6070339 (Nov. 20, 2018). If the court finds that venue is improper, it "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." 28 U.S.C. § 1406(a); Costlow v. Weeks, 790 F.2d 1486, 1488 (9th Cir. 1986). Venue is controlled by 28 U.S.C. § 1391(b), which provides:
A civil action may be brought in -
See also Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. Of Tex., 571 U.S. 49, 55-56 (2013); Bryce v. Choice Hotels Int'l, Case No. 3:18-cv-01852-MO, 2019 WL 149550, at *1 (D. Or. Jan. 8, 2019), aff'd 781 F. App'x 649 (9th Cir. 2019) (stating that if action does not fall within one of the three categories of § 1391(b), it must be dismissed or transferred under § 1406(a)).(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.
Viewing the Complaint in the light most favorable to Plaintiff, it is clear that venue is not proper in Oregon. Plaintiff alleges that all Defendants are residents of Florida, not Oregon, eliminating the first basis for venue. In his response, Plaintiff appears to agree that venue is not proper under § 1391(b)(1). (Pl.'s Resp. at 6.)
The second basis also is eliminated because the corruption is alleged to have occurred within Florida's borders. According to Plaintiff, Oregon residents comprise 1.43 percent of the United States population not residing in Florida, and "21% of Florida property owners who are non-residents." (Compl. at 3.) Based on these calculations, Plaintiff contends that Oregon residents who own real property in Florida will pay approximately $360,036 in corrupt tax payments there. (Id.) Plaintiff argues that these excess Florida tax payments are a substantial part of the criminal enterprise. (Id. at 5.) Plaintiff made nearly identical arguments in the Hawaii action. The Hawaii district court concluded Plaintiff's allegations were misplaced, "as they tend to show that an insignificant part of the events, if any, occurred" within the District of Hawaii, and that venue was improper under § 1391(b)(2). Barth, 2020 WL 2840238, at *2.
Likewise, Plaintiff's calculations in the Complaint fail to show that a substantial part of the events occurred in Oregon or that a substantial part of the real property giving rise to the action is in Oregon. On the contrary, the real property on which the Oregon residents are alleged to have paid excessive taxes pursuant to the corrupt scheme is situated in Florida, not Oregon. And, Plaintiff's allegations that Oregon residents made tax payments in Florida pursuant to a corrupt scheme to steal conservation funds from Florida's coffers fails to show that a substantial part of the events or omissions occurred within Oregon. Barth, 2020 WL 2840238, at *2. Therefore, Plaintiff has failed to show that substantial part of the events giving rise to his claims occurred within Oregon, and venue is improper under § 1391(b)(2). Bryce, 2019 WL 149550, at *1.
Additionally, Plaintiff has not demonstrated that the action could not have been brought in the Middle District of Florida, eliminating the third basis for venue. As noted above, Plaintiff previously filed his action there, and voluntarily dismissed it. See Barth, 2020 WL 2840238, at *2 (holding that § 1391(b)(3) did not provide basis for venue because Plaintiff previously brought action in the Middle District of Florida).
Nevertheless, Plaintiff argues that venue is appropriate under § 1391(b)(3) because "[p]ublic corruption is endemic in Florida," and that he withdrew his action from the Middle District of Florida because the judges within the Middle District of Florida are directly involved in the theft of public funds. (Resp. at 1, 4.) Plaintiff's belief that corruption exists in the Middle District of Florida does not, however, establish that venue is proper within the District of Oregon. See Eliason v. U.S. Dep't of Justice, Case No. 20-00257-JAO-WRP, 2020 WL 3965970, at *3 (D. Haw. July 13, 2020) (holding allegations that Utah judge was biased did not establish venue was proper in District of Hawaii). Plaintiff contends that defendants have accepted the property tax payments of Oregon residents, thereby "purposefully availing" themselves of the District of Oregon, establishing venue under § 1391(b)(3). Plaintiff's arguments are unavailing.
Plaintiff fails to make a showing that venue cannot be proper in another district under § 1391(b)(3) because the Complaint suggests there is another district where this action may be brought. See Atl. Marine Constr., 371 U.S. at 56-57 (providing that § 1391(b)(3) is a fallback option only if no other venue is proper). Venue appears proper in the Middle District of Florida as all defendants are alleged to be Florida residents and Plaintiff has previously lodged a similar action there; therefore, the fallback venue provision in subsection three does not provide a basis for venue here. Accordingly, the court concludes that venue is improper under § 1391(b)(1)-(3). II. Venue is Improper under 18 U.S.C. § 1965
Plaintiff alleges that venue is proper under a special RICO venue provision, 18 U.S.C. § 1965. Plaintiff alleges that the Oregon District comprises 1.43 percent of the U.S. population not residing in Florida, and suggests that Oregon residents are twenty-one percent of Florida's non-resident property owners. Plaintiff calculates that Oregon residents have paid an estimated $360,036 to Defendants as part of the corrupt scheme. (Compl. at 3.)
As the Hawaii District court aptly determined, § 1965(a) "authorizes a civil enforcement action to be 'in the district court of the United States for any district in which [a defendant] resides, is found, has an agent, or transacts his affairs.'" Barth, 2020 WL 2840238, at *2 (quoting 18 U.S.C. § 1965(a)). "Transacts his affairs" requires "business of a substantial and continuous character." King v. Vesco, 342 F. Supp. 120, 124 (N.D. Cal. 1972); see also Taal v. St. Mary's Bank, No. 5:19-CV-25, 2019 WL 8349005, at *5 (D. Vt. Dec. 10, 2019) ("Section 1965(a) requires that the affairs transacted in the district be substantial." (internal quotation and citation omitted)); Pincione v. D'Alfonso, 506 F. App'x 22, 24 (2d Cir. 2012) (requiring business to "be substantial in character, so that there is some amount of business continuity and certainly more than a few isolated and peripheral contacts with the particular judicial district" (citations and quotations omitted)). Contrary to Plaintiff's suggestion, his calculations fail to show that Defendants' business affairs within Oregon have been substantial and his conclusory allegations are insufficient to establish venue under § 1965(a). Eliason, 2020 WL 3965970, at *3 (holding plaintiff failed to establish venue under § 1965(a) RICO provision because defendants did not reside in Hawaii).
Venue also is improper under § 1965(b). Section 1965(b) provides for service of process of RICO defendants where it is required to serve the ends of justice. See Butcher's Union Local No. 498, United Food & Commercial Workers v. SDC Inv., Inc., 788 F.2d 535, 539 (9th Cir. 1986). Simply identifying Defendants in a RICO complaint does not subject them to the provisions of § 1965(b). Barth, 2020 WL 2840238, at *3.
III. Dismissal is the Appropriate Remedy
Having determined that the District of Oregon is not a proper venue for this action, the court must decide whether to dismiss or transfer the action under § 1406(a). 28 U.S.C. § 1406(a) (providing that the court "shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought"); see also Atl. Marine Const., 571 U.S. at 56 (explaining that when venue is improper, "the case must be dismissed or transferred under § 1406(a)").
Based on the allegations in the Complaint, the appropriate jurisdiction appears to be the Middle District of Florida. However, Plaintiff has not agreed to a transfer to the Middle District of Florida and previously dismissed his action from that district. And, because the instant proceedings are in their earliest stages, the interests of justice to not warrant transferring this action there. Barth, 2020 WL 2840238, at *3. Accordingly, the court recommends dismissal. \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \
Conclusion
Based on the foregoing, the court recommends that this action be dismissed without prejudice.
Scheduling Order
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due within fourteen (14) days. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within fourteen (14) days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
DATED this 24th day of September, 2020.
/s/_________
JOHN V. ACOSTA
United States Magistrate Judge