Dismissal of RICO Suit Against Plaintiffs’ Firms Affirmed Upon a Finding of Lack of Jurisdiction U.S. Court of Appeals, Seventh Circuit, June 4, 2018
ILLINOIS — Plaintiff John Crane Inc. (JCI) brought Racketeer Influenced and Corrupt Organizations Act (RICO) suits against two plaintiffs’ firms in Illinois alleging the firms conspired to hide evidence related to exposure to other asbestos products throughout discovery in numerous cases. The defendants, the Shein Law Center and Simon Greenstone Pantier Bartlett (Simon), moved to dismiss the complaint for lack of personal jurisdiction. Shein also moved to dismiss for lack of subject matter jurisdiction. The District Court dismissed for after determining it lacked personal jurisdiction.
On appeal, the court noted the standard for Illinois’ long arm statute which mirrored the federal standard. The defendant must have “sufficient contacts with the with the forum state” in order for jurisdiction to exist according to the court. The parties were in agreement that the court lacked general jurisdiction. Under those circumstances, JCI was required to establish that Shein and Greenstone’s contacts with Illinois were “related to the challenged conduct.” Specifically, those contacts must be separate from the defendant’s relationship with the plaintiff. JCI took the position that the defendants’ alleged fraudulent litigation in Illinois arose to the level of establishing contacts in Illinois. On the other hand, the defendants argued that only the litigation itself was directed toward the states in which the litigation was pending. Here, there was no contact with Illinois other than the fact that the plaintiff was a resident of Illinois. The court quickly analyzed whether courts may exercise jurisdiction over lawyers. Relying on the Wallace decision, the court determined that filing pleadings alone does not target a citizen in that state even in “furtherance of a tortious scheme.” JCI argued the court should distinguish the Wallace matter because of the broad nature of the allegations. The court was not convinced and found that communications between local counsel was not enough to establish personal jurisdiction. JCI also argued that it was entitled to additional discovery related to bankruptcy trust submissions including one based in Illinois. The court stated that “even if JCI had discovered that the defendants had submitted claims to a trust in Illinois, it would not have been enough to establish personal jurisdiction” because the relationship must arise out of contacts that the defendant himself created with the forum state.” Consequently, the court concluded the district court lacked jurisdiction. The court declined to address Shein’s motion to dismiss based on subject matter jurisdiction. However, the court noted how serious the allegations were and stated that the opinion should not erode the merits of the complaint.