Boehner v. Heise
| Decision Date | 20 January 2006 |
| Docket Number | No. 03 Civ. 5453(DAB).,03 Civ. 5453(DAB). |
| Citation | 410 F.Supp.2d 228 |
| Parties | Jeffrey BOEHNER, Tom Fok, and Springland Trading, Inc., Plaintiffs, v. Lyn HEISE, Joan Eckes, and Ginseng Board of Wisconsin, Defendants. |
| Court | U.S. District Court — Southern District of New York |
David John Hoffman, Po W. Yuen, New York City, for plaintiffs.
Plaintiffs Jeffrey Boehner ("Boehner"), Tom Fok ("Fok"), and Springland Trading, Inc., commenced this action against Defendants Lyn Heise ("Heise"), Joan Eckes ("Eckes"), and Ginseng Board of Wisconsin, alleging that Defendants Heise and Eckes, on behalf of Defendant Ginseng Board of Wisconsin ("the Ginseng Board"), issued a defamatory and libelous letter about Plaintiffs' business for the purpose of interfering with business relations and in breach of contract, license and warranties. Defendants move to dismiss the Complaint for lack of subject matter jurisdiction, lack of personal jurisdiction, lack of venue, and improper service of Defendants Heise and Eckes, pursuant to Rules 12(b)(1), (2), (3), and (5) of the Federal Rules of Civil Procedure, or in the alternative, to transfer this case to the Western District of Wisconsin pursuant to 28 U.S.C.A. § 1406(a) on principles of forum non conveniens. For the following reasons, Defendants' motion to dismiss the Complaint is DENIED on all grounds; and Defendants' motion to transfer venue is DENIED.
Plaintiff Boehner, a citizen and resident of New Jersey, and Plaintiff Fok, a citizen and resident of New York, are owners and employees of Plaintiff Springland Trading, Inc., a corporation organized and existing under the laws of the State of New York, with a principal place of business in New York. (Complaint ¶¶ 1-3.) Springland Trading, Inc. is a wholesaler and retailer of both Asian ginseng and Wisconsin ginseng, and other medicinal herbs and roots. (Complaint ¶¶ 4, 11; Boehner Aff. ¶ 2.) Plaintiffs are fee-paying members of the Wisconsin Ginseng Growers Association ("the Association"), an organization of ginseng growers, wholesalers, and retailers. (Complaint ¶¶ 12-13.) The Association elects members to serve on the Wisconsin Ginseng Board ("Ginseng Board"), which represents the interests of ginseng growers in Wisconsin, and markets and promotes Wisconsin ginseng in national and international markets. (Id. ¶¶ 14-16.)
The Board operates a showroom where Wisconsin ginseng growers display their root products. (Id. ¶ 17.) As part of its promotion of Wisconsin ginseng, the Ginseng Board operates the Wisconsin Seal Program ("Seal Program"), which is designed to assure consumers that the products they are buying contain 100% pure Wisconsin ginseng. (Id. ¶¶ 18-20.) Every barrel of ginseng in the Board's showroom has a seal affixed to it. (Id. ¶ 21.) All Wisconsin ginseng that Plaintiffs purchased at the Wisconsin Ginseng Board was delivered to Plaintiffs' warehouses in New York with seals attached. (Boehner Aff. ¶¶ 5-6.) As part of the Seal Program, which Plaintiffs participated in, the Ginseng Board also delivered seals to Plaintiffs in New York so they could affix them to individual packages of Wisconsin Ginseng they sold to the public. (Complaint ¶¶ 25-26; Boehner Aff. ¶¶ 4-6.) The Ginseng Board conducted regular inspections of Plaintiffs' warehouses and facilities. (Boehner Aff. ¶ 5.) Plaintiffs also sell Asian ginseng root, which is different than Wisconsin ginseng root; Plaintiffs do not place the Seal on the Asian ginseng they sell to the public. (Complaint ¶¶ 27-30; Boehner Aff. ¶ 3.)
Defendants Lyn Heise and Joan Eckes were elected members of the Ginseng Board. (Complaint ¶ 8.) Plaintiffs allege that on January 2, 2003, Defendants Heise and Eckes, on behalf of the Defendant Ginseng Board, wrote and sent a libelous and defamatory letter to United States Senator Russell Feingold of Wisconsin at his offices in Washington, D.C. (Id. ¶ 31.) The alleged letter indicates that because Plaintiff Boehner previously worked for the U.S. Customs Service, Plaintiffs have been able to import millions of pounds of Asian ginseng products that go untested by the U.S. Customs Service while the shipments are in port, and that inspections made at Springland's warehouse are conducted on switched samples. (Id.) The letter requests that Senator Feingold conduct an official inquiry and ensure that testing be done in port. (Id.) Plaintiffs allege that Defendants published the letter to disparage Plaintiffs' business reputation and punish them for selling imported ginseng root. (Id. ¶¶ 36-37.) According to Plaintiffs, the letter caused U.S. Customs agents in New York to repeatedly seize and hold Springland's ginseng inventory to determine whether the company was mislabeling Asian ginseng as Wisconsin ginseng, which resulted in delayed sales and loss of customers and profits. (Boehner Aff. ¶ 7.)
Attached to Defendants' motion papers are affidavits by Heise and Eckes, wherein they both state that they were never served in this action by a process server, no sheriff ever handed them any legal papers bearing the words "Summons" and "Complaint," and they did not find any summons or complaint on their doors. (Defs' Mem. Exs. B, Heise Aff. and C, Eckes Aff.) Defendants Heise and Eckes also state in their affidavits that they were made aware of the lawsuit by a telephone call from the Ginseng Board of Wisconsin, who later furnished them with copies of the Summons and Complaint. (Id.) According to an affidavit of process server Jody Barnett, submitted by Plaintiffs, Barnett went to the headquarters of the Wisconsin Ginseng Board in Wausau, Wisconsin, and met a man named Kirk Bauman, who represented to her that he was the treasurer of the Ginseng Board and was "in charge" of the office. Barnett states that Bauman told her that Eckes and Heise "were no longer members of the Ginseng Board, but that he had been authorized by Ms. Eckes and Ms. Heise to accept service of [sic] their behalf." (Id.) Also attached to Plaintiff Boehner's affidavit in opposition to the motion to dismiss are notarized, executed receipts of service, dated August 13, 2003, which state that Barnett left a copy of the summons and complaint with "Treasurer, Kirk Baumann." Defendants respond in their Reply papers with an affidavit by Baumann, who states that he was not authorized nor appointed by Heise or Eckes, nor did he inform any process server that he could accept legal process on their behalf. Heise and Eckes also submit additional affidavits indicating that they never authorized nor appointed Baumann to accept service on their behalf. (Defs.' Reply Ex. B, Heise and Eckes Affs.)
Plaintiffs commenced the present diversity action alleging five causes of action against all Defendants: (1) defamation and libel of Tom Fok, (2) defamation and libel of Jeffrey Boehner, (3) defamation and libel of Springland Trading, (4) interference with business relations, and (5) breach of contract, license and warranties. In addition to actual damages, Plaintiffs request punitive damages, lost profits, and a permanent injunction against any further publication or dissemination of defamatory statements by Defendants. (Complaint at 6-12.)
Defendants filed a motion to dismiss all causes of action of Plaintiffs' Complaint based on lack of subject matter jurisdiction, lack of personal jurisdiction, lack of venue, and improper service of Defendants Heise and Eckes, pursuant to Federal Rules of Civil Procedure 12(b)(1),(2), (3), and (5), or in the alternative, to transfer this case to the Western District of Wisconsin pursuant to 28 U.S.C.A. § 1406(a). (Defs.' Mem. Law 1-9.)2
Defendants argue that they are immune to this Court's subject matter jurisdiction by virtue of the Eleventh Amendment to the U.S. Constitution because the Ginseng Board of Wisconsin is an arm of the state. (Defs.' Mem. at 3-4.)
"A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir.2000). Under the Eleventh Amendment to the U.S. Constitution, states generally enjoy immunity from suit in federal court. See, e.g., Board of Trustees v. Garrett, 531 U.S. 356, 363, 121 S.Ct. 955, 148 L.Ed.2d 866 (2001). It is "well established that even though a State is not named a party to the action, the suit may nonetheless be barred by the Eleventh Amendment." Edelman v. Jordan, 415 U.S. 651, 663, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974). This immunity from suit extends to state agencies and departments, as well state officials who act on its behalf. See Burnette v. Carothers, 192 F.3d 52, 57 (2d Cir.1999), cert. denied, 531 U.S. 1052, 121 S.Ct. 657, 148 L.Ed.2d 560 (2000). However, it generally does not extend to counties and similar municipal corporations. See Edelman, 415 U.S. 651, at 668 n. 12, 94 S.Ct. 1347, 39 L.Ed.2d 662; Lincoln County v. Luning, 133 U.S. 529, 530, 10 S.Ct. 363, 33 L.Ed. 766 (1890); Moor v. County of Alameda, 411 U.S. 693, 719, 93 S.Ct. 1785, 36 L.Ed.2d 596 (1973).
"(W)hen the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants." Ford Motor Co. v. Department of Treasury, 323 U.S. 459, 464, 65 S.Ct. 347, 89 L.Ed. 389 (1945). "Thus the rule has evolved that a suit by private parties seeking to impose a liability which must be paid from public funds in the state treasury is barred by the Eleventh Amendment." Edelman, 415 U.S. at 663, 94 S.Ct. 1347. See also Hodgson v. Mississippi Dep't of Corrections, 963 F.Supp. 776, 784 (W.D.Wis.1997); Romco, Ltd. v. Outdoor Aluminum, Inc., 725 F.Supp. 1033, 1035 ...
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