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John T. Reed' response to court' order for Russ Whitney to show cause why the Miami case should not be transferred to San Francisco UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION WHITNEY INFORMATION NETWORK, INC., a Colorado Corporation, Plaintiff, v. JOHN T. REED, an individual, CASE NO.: 03-60597-SEITZ/ BANDSTRA Defendant. _____________________________________ DEFENDANT' RESPONSE TO THE COURT' ORDER TO SHOW CAUSE WHY THE CASE SHOULD NOT BE TRANSFERRED TO THE NORTHERN DISTRICT OF CALIFORNIA AND SUPPORTING MEMORANDUM OF LAW Now comes the defendant, John T. Reed, pro se, and responds to this Court' Order to Show Cause Why This Case Should Not be Transferred to the Northern District of California and to Plaintiff' response to that order as follows: AUTHORITY OF DISTRICT COURT TO RAISE ISSUE OF PERSONAL JURISDICTION AND VENUE SUA SPONTE 1. ""¦a district court has the authority to raise the issue of defective venue on its own motion if the defendants fail to raise the defense of improper venue when given an opportunity to do so"¦Costlow v. Weeks , 790 F 2D 1486 (9th Cir. 1986). "The U.S. District Court for the Western District of Washington, dismissed sua sponte, the complaint for improper venue, and plaintiffs appealed. The Court of Appeals"¦held that: (1) the District Court had authority to raise the issue of defective venue on its own motion (2) The District Court lacked venue over the action, in which all the defendants resided in Alaska and virtually all activity providing basis of the complaint took place in Alaska; and (3) dismissal of action, rather than transfer to Alaska, was not an abuse of discretion." Federal Procedure Lawyers Edition '§1:758 2. In contrast to Costlow v. Weeks, here, the Court only considers transfer, not dismissal. RELATED CASE 3. Plaintiff filed another case (#03-60195-CIV-MARRA) involving the same Defendant regarding the same Web site in the Fort Lauderdale Division of the Southern District. 4. Plaintiffs in that case have withdrawn a motion for remand to the Broward County state court and moved to consolidate this Miami case with the Fort Lauderdale case. 5. Although the Fort Lauderdale case is older, Defendant has neither moved nor answered that complaint because of lack of a decision on whether it would be in state or federal court. Accordingly, the Defendant can still move that court under any provision of F.R.C.P. 12(b) to dismiss, or to assert lack of personal jurisdiction and/or improper venue as an affirmative defense in his answer. If the Fort Lauderdale and Miami cases are consolidated, Defendant still has the right to assert those defenses in the consolidated case. 6. Although Plaintiffs assert in the Fort Lauderdale case that their motion to consolidate into the Fort

Lauderdale court is unopposed, in fact, although Defendant agreed to consolidation of the two cases, the parties were not able to agree on venue. THIRD RELATED CASE DISMISSED 7. A third case (#2:02-cv-288-FTM-29DNF) between this Defendant and Plaintiff was filed in the Middle District of Florida Fort Myers Division on June 25, 2002. However, the Plaintiffs voluntarily dismissed that case on May 5, 2003. 8. Prior to that dismissal, Defendant had moved the Fort Lauderdale court to change the venue of that case to Fort Myers. ""¦DIRECTED AT"¦" 9. The complained-of Web page is about a Colorado corporation that has its principal place of business in Florida, but it is directed at a nationwide audience of persons who might be interested in information about that corporation. More of that audience is in California than any other state. 10. The damage caused by defamation occurs in the minds of those members of the public and business community who think less of the defamee and do less business with him as a result. The one place that does not occur is in the mind of the defamee, himself. So, although Plaintiff makes much of the location of its chief executive officer and the corporation' principal place of business, this information per se is irrelevant to an inquiry into where a ""¦substantial part of the events or omissions occurred"¦." Neither Plaintiff nor its CEO are "events" nor are either going to be improperly persuaded by false statements about Plaintiff. ""¦SHOULD"¦" 11. On page 4, Plaintiff says, "While a Court may raise on its own motion an issue of defective venue or lack of personal jurisdiction, it should do so only in the absence of waiver." [Emphasis added] Note the use of the word "should." This is conclusory, Dutch Uncle advice to the Court. The operative phrase in the sentence"”""¦a court may raise on its own motion"¦""”reveals that the law does, indeed, authorize the Court to move sua sponte to make this inquiry and, if it so decides, transfer. 12. The sentence' conclusion is self-cancelling. Plaintiff would have the Court believe that it "should" only exercise its right to sua sponte inquire into personal jurisdiction or improper venue when the Defendant has not waived that right. If the Court believes that, it will never so move because, by definition, the only time the Court would ever need to so move would be precisely when Plaintiff says it "should" not. ""¦THE BULK, IF NOT ALL, THE FINANCIAL DAMAGE"¦IN FLORIDA." 13. On page 5, Plaintiff says, "Simply, since Plaintiff' principal place of business is in Florida, the bulk , if not all, the financial damage has and will occur in Florida." Plaintiff is arguing that all defamation cases must be tried in the domicile of the Plaintiff. Such an conclusion might be warranted in the case of a local merchant whose trade area is a few-mile radius around his retail store. But Plaintiff corporation is an international organization which sells its products and services throughout the world. It has permanent physical presence in at least two states"”Florida and Utah"”and in Canada, the United Kingdom, and Costa Rica. It also has traveling speakers and staff almost constantly on the road hitting virtually every state in the union every few months. Through books stores and its Web site, it sells its products and services nationwide and in foreign countries. Yet Plaintiff, for the purpose of this Show Cause Order, would have the Court believe that it will claim no damages for lost sales or diminished stock price anywhere but in the State of Florida. In many legal papers filed against Defendant in several cases, Plaintiff has repeatedly wailed about the immense damage done to it by Defendant all over the World Wide Web. (e.g., Complaint '¶14) Now, when trying to keep the case in Florida, the World Wide Web has suddenly been demoted to the Florida Wide Web. 14. Upon information and belief, based on conversations with former employees of Plaintiff corporation, it has a policy of running its TV infomercials in every part of the United States and Canada except in the vicinity of its Cape Coral headquarters. This policy, reportedly adopted to prevent chief executive officer Russell A. Whitney from being recognized and bothered on local streets, has the effect of making Florida uniquely unaffected by the damage allegedly done by Defendant' publication. ""¦WHEREVER CIRCULATED"¦" 15. On page 6, Plaintiff approvingly quotes the 11th Circuit as saying in Madara v. Hall that, "The tort of libel is generally held to occur wherever the offending material is circulated." The word" circulated" does not apply to Web sites. Unlike print periodicals, they cannot and do not report circulation figures by geographic region. Web pages are not physically delivered to the places where they can be read. A Web page is roughly the equivalent of a recorded telephone message residing on an answering machine. No one can hear it until they dial the source telephone. 16. If the word "circulation" does apply to the readers of Web sites, the answer to the question, "Where does Defendant' Web page "circulate?"" is in, "All 50 states." So Madara v. Hall only returns us to the Court' original concern that Plaintiff is claiming universal personal jurisdiction. THE ISSUES AT HAND 17. Plaintiff' brief in response to the Show Cause order rambles and meanders all over the legal landscape making it easy to lose sight of the issues at hand: "¢ whether the Southern District of Florida has personal jurisdiction over Defendant "¢ whether the Southern District of Florida is the proper venue for this case PERSONAL JURISDICTION 18. Personal jurisdiction stems from the due-process clause of the Fourteenth Amendment to the U.S. Constitution. The U.S. Supreme Court has elaborated on the application of the due-process right with regard to personal jurisdiction, most notably in International Shoe Company v. State of Washington, [(1945) 66 S Ct 154]. In an opinion that has stood the test of time into the Internet era, the court said"¦due process principles require that a defendant have "minimum contacts with the state" of such character that maintenance of a suit there does not offend "traditional notions of fair play and substantial justice." [Emphasis added] (Ibid at 158) 19. More recently, a few courts have address the issue of personal jurisdiction arising out of Internet Web sites that can be accessed from all states. In Butler vs. Beer Across America, (DC Ala. 2000, 83 F Supp 2d 1261), the court said, "¦personal jurisdiction could not be asserted by a federal court sitting in diversity in Alabama over a nonresident Illinois defendant in an action arising from a sale made in Illinois solely in response to an order placed by an Alabama resident via the Internet. The Illinois defendant was not registered to do business in Alabama, owned no property in Alabama, maintained no offices in Alabama, had no agents in Alabama, and did not place advertisements with Alabama media outlets except for what nationally placed advertisements may reach the state, or engage in any other significant promotions targeting state that would rise to such level as would justify exercise of general jurisdiction by state courts. 20. In J.B. Oxford Holdings, Inc. v. Net Trade, Inc., (DC Fla 1999, 76 F Supp 2d 1363), the court said, A brokerage company that had three interactive Web sites that were accessible by Florida residents with connections to the Internet, a national toll-free number listed on its Web sites, and a pending application to do business in Florida did not have sufficient contacts with Florida to permit exercise of personal jurisdiction over the company by a Florida forum under due process principles"¦ 21. Defendant: "¢ has never been a resident of Florida "¢ has never been registered to do business in Florida "¢ has never owned any property in Florida "¢ has never maintained an office in Florida "¢ has never had an agent in Florida "¢ has never placed an advertisement in a Florida media outlet "¢ has not utilized a toll-free number since the advent of the Internet "¢ has never applied for the right to do business in Florida 22. In Polymers, Inc. v. Ultra Flo Filtration Systems, Inc. (DC Fla 1998, 33 F Supp 2d 108), the court said, "¦merely placing products into the stream of commerce is not sufficient [to be considered a] purposeful act directed toward the forum state"¦ THE POWER TO DESTROY 23. In tax law, it has been memorably said by Justice John Marshall that the power to tax is the power to destroy. Similarly, the power to hale into distant forums is the power to destroy, if the defendant has limited financial resources. 24. The leading legal treatise on defamation is Robert D. Sack' Sack on Defamation, Libel, Slander, and Related Problems 3rd edition. It says at page xxvi of its preface, What is most disturbing is that the law [of defamation] falls most harshly on the less affluent publisher"¦Its effect is spelled out by author and reporter Jonathan Kwitny in a postscript to his book about the Mafia entitled Vicious Circles (Norton 1979) ""¦A terrible chill has been thrown over the free flow of information in this country by libel laws, by the lack of any consistent standards of what is permissible to print"¦and by the power of anyone to threaten a well-intentioned journalist and his publisher with financial ruin. "The losers are the American people. The crooked or acquiescent public officials, businessmen, mobsters, and others who plunder our wealth have found a way through the courts to hobble those who would help the public find out what' going on." [Sack continues], "¦the loss is as real as though presses had been smashed and books had been burned. 25. It is well settled that multi-state defamation cases involving media should be adjudicated in the sate with the most interest in regulating such conduct, namely, the location of the publisher. (See Defendant' multi-state defamation, conflict-of-laws analysis in his memorandum of points and authorities attached to his May 16, 2003 Special Motion to Strike the Complaint under California' Anti-SLAPP statute.) This principle is even more important when the publisher in question is less affluent, like the vast majority of Internet publishers. IMPROPER VENUE 26. Proper venue is spelled out in 28 USC 1391(a) which allows venue in: (1) a judicial district where any defendant resides"¦ (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 the property that is he subject of the action is situated; or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought. 27. 28 USC 1391(a)(1) supports transfer to the Northern District of California. 28. 28 USC 1391(a)(2) permits venue in Florida, but the Amended Complaint makes conflicting allegations with regard to where a substantial part of the events occurred. [e.g., "¦over the World Wide Web"¦ (Amended Complaint '¶5), ""¦via the Internet"¦" (Amended Complaint '¶5), ""¦via his Internet Web site"¦" (Amended Complaint '¶6)] 29. ""¦the plaintiff' bare statements of opinions, conclusory allegations, [e.g., "Defendant"¦ clearly directed"¦at a corporation in Florida"¦" (Amended Complaint '¶6)] and unwarranted inferences of fact [e.g., "Defendant"¦published same"¦within the Southern District of Florida." (Amended Complaint '¶5)] ["The bulk, if not all of the financial harm has occurred and will continue to occur in Florida." (Amended Complaint '¶6)] are not accepted as true." Defendant published everything in California. Any financial harm has occurred wherever the Web visitor in question resided, which is unknown at this time. [Bryan v. Stillwater Board of Realtors, 578 F2d 1319 (CA 10 Okla 1977)] [Western Mining Council v. Watt, 643 F2d 618 (CA 9 Cal 1981)] [Federal Procedure Lawyers Edition '§62:509] 30. 28 USC 1391(a)(3) does not apply to this case. Wherefore the Defendant supports the Court' inclination to transfer the case to the Northern District of California. Respectfully submitted, _______ _____________________ date John T. Reed Defendant 342 Bryan Drive Alamo, CA 94507 Telephone: 925-820-6292 Fax: 925-820-1259 www.johntreed.com John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, www.johntreed.com

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