statute] should not be read more broadly than necessary to close those gaps." Bates 980 F.2d at 867 (emphasis added).
The 1990 amendment to 28 U.S.C. § 1391 does not alter this analysis. In addition to broadening the "claim arose" language, the 1990 amendment added subsection three to 28 U.S.C. § 1391(b). The amended text makes this new subsection-- 28 U.S.C. § 1391(b)(3)-- subordinate to the first two subsections by furnishing a new ground for venue only "if there is no district in which the action may otherwise be brought." Pub. L. No. 101-650, Tit. III, § 311, 104 Stat. 5089, 5114 (1990). Contrary to plaintiffs' assertions, the fact that Congress made 28 U.S.C. § 1391(b)(3) subordinate to the first two statutory subsections did not, and does not, alter the preexisting relationship between 28 U.S.C. § 1391(b)(1) and 28 U.S.C. § 1391(b)(2).
Plaintiffs also read Bates as implying that 28 U.S.C. § 1391(b)(2) provides an alternative for venue without regard to 28 U.S.C. § 1391(b)(1) because the Court in Bates found venue proper in the Western District of New York pursuant to 28 U.S.C. § 1391(b)(2) despite the fact that the only defendant did not reside in New York. Since neither party in Bates raised the issue of venue based on defendant's residence, the Bates court had no occasion to consider the relationship between 28 U.S.C. § 1391(b)(1) and 28 U.S.C. § 1391(b)(2). Cf. Webster v. Fall, 266 U.S. 507, 511, 69 L. Ed. 411, 45 S. Ct. 148 (1925) ("questions which merely lurk in the record, neither brought to the attention of the court nor ruled upon, are not to be considered as having been so decided as to constitute precedents"). Moreover, Bates reaffirms, as noted above, that the "purpose of the 1966 statute was to close venue gaps and should not be read more broadly than necessary to close those gaps." Bates, 980 F.2d at 867.
Viewed in the proper historical context, 28 U.S.C. § 1391(b) provides that in a case in which all defendants reside in the same state, venue lies only in that state, and, specifically, only in a district within that state in which one of the defendants resides. If, and only if, defendants do not all reside in the same state, then, and only then, venue lies in a district in which a substantial part of the events or omissions giving rise to the claim occurred. See 28 U.S.C. § 1391(b)(1) and (2).
Finally, plaintiffs argue that venue lies in the Southern District of New York pursuant to 18 U.S.C. § 1965(a) (Pl. Mem. at 25-27). Plaintiffs argue that RICO defendants are "found" for venue purposes wherever they are subject to personal jurisdiction. See 18 U.S.C. § 1965(a) ("any civil action or proceeding under this chapter against any person may be instituted in the district court of the United States for any district in which such person resides, is found, has an agent, or transacts his affairs") (emphasis added). Plaintiffs cite no authority for this reading of the statute, and the authority in this Circuit does not support plaintiffs' position. See, e.g., Welch, 1994 WL 665399 at *2-*3 (finding venue improper under section 1965[a] although defendants were subject to personal jurisdiction in the district); NOW Plastics, 1990 WL 301521 at *3 ("a corporate defendant is 'found' in a district for the purposes of [ 18 U.S.C. § 1965(a)] if its officers or agents regularly carry on the business of the corporation there").
In any event, the center of gravity of this suit is Indiana. All of the records pertaining to the disputed business of the corporations are in Indiana, as are the witnesses with knowledge of that business. Accordingly, the balance of convenience weighs heavily in favor of an Indiana forum. Even if subsections one and two of 28 U.S.C. § 1391(b) were treated as separate and independent grounds for venue, I would transfer this action to the Northern District of Indiana in the interest of justice.
For the foregoing reasons, defendants' motion is granted. This action is transferred to the Northern District of Indiana.
Dated: New York, New York
January 16, 1998
MIRIAM GOLDMAN CEDARBAUM
United States District Judge