Jerrold M. Shapiro v. Santa Fe Gaming Corporation
No. 97 C 6117, 1998 U.S. Dist. Lexis 2488 (N.D. Ill. February 26, 1998)
An Illinois lawyer sought to recover attorneys' fees from defendant, a Nevada-based corporation. Commencing suit in Illinois, plaintiff argued that his role in aiding the defendant in recovering short-swing profits from one of defendants' directors entitled plaintiff to attorneys' fees under the Securities and Exchange Act of 1934. Defendant moved to dismiss on the ground that the Illinois federal court was an improper venue for this action to proceed. The court agreed, and dismissed the action.
Plaintiff argued that venue was proper under 15 U.S.C. §78aa on the ground that defendant "transacted business" in Illinois as a result of defendant's maintenance of a toll-free telephone number and an Internet website. In rejecting this argument, the court stated:
Although Internet law is still rapidly developing, it is well-settled that the operation of a toll-free telephone number and passive, non-advertising website, without more, is insufficient to satisfy jurisdiction or venue. ... Based on these facts, the court finds that defendant does not "transact business" in Illinois, because to hold otherwise would impermissibly subject millions of people to personal jurisdiction merely because they had a website, e-mail address or toll-free telephone number. Therefore, venue is improper in the Northern District of Illinois under §78aa.