Beveridge v. Mid-West Management, Inc., 98 C 4689.

• Decision Date: 24 August 1999
• Docket Number: No. 98 C 4689.,98 C 4689.
• Court: U.S. District Court — Northern District of Illinois
• Parties: Don BEVERIDGE, Dirk Beveridge, D.W. Beveridge Jr., and Associates, Inc., et al., Plaintiffs, v. MID-WEST MANAGEMENT, INC., d/b/a Midwest Family Broadcast Group, Charles Mefford and Mefford Achievement Systems, Defendants.

78 F.Supp.2d 739

Don BEVERIDGE, Dirk Beveridge, D.W. Beveridge Jr., and Associates, Inc., et al., Plaintiffs, v. MID-WEST MANAGEMENT, INC., d/b/a Midwest Family Broadcast Group, Charles Mefford and Mefford Achievement Systems, Defendants.

No. 98 C 4689.

United States District Court, N.D. Illinois, Eastern Division.

August 24, 1999.

Michael Brent Lulay, Michael B. Lulay & Associates, Ltd., Wheaton, IL, for Plaintiffs.

John Edward Rosenquist, Leydig, Voit & Mayer, Ltd., Chicago, IL, Jeffrey Stephen Ward, Lathrop & Cark, Madison, WI, for Defendants.

MEMORANDUM AND ORDER

MORAN, Senior District Judge.

This action is brought by Don Beveridge, Dirk Beveridge, and the corporations through which they conduct their motivational speaking business, D.W. Beveridge Jr. and Associates, Inc., Beveridge Business Systems Inc., Beveridge Performance, Inc., The Beveridge Institute, Inc., The Beveridge Consulting Group, Inc., and Dirk Beveridge and Associates, Inc. (collectively the Beveridge companies). Dirk Beveridge is a resident of Illinois, Don Beveridge a resident of Florida, and all of the Beveridge companies are Illinois corporations with their principal place of business in Illinois. Plaintiffs allege that defendant Charles Mefford, a Texas resident, his company Mefford Achievement Systems, Inc., a sole proprietorship operating primarily in Texas and Wisconsin, and a company with whom Mefford has done business, Mid-West Management, Inc., are liable for violating the Lanham Act (Count I); violating the Illinois Deceptive Trade Practices Act (Count III); unfair competition (Count V); breach of contract (Counts VII and IX); and misappropriation of a competitor's name (Count XI).¹

Since filing this action, plaintiffs have moved for the voluntary dismissal of Midwest Management, Inc., which we grant and this opinion is consequently directed solely to the defendant Charles Mefford in his individual capacity. See Plaintiffs' Rule 41(b) Mot. to Voluntarily Dismiss Mid-West Management, December 29, 1998. In addition, both parties have filed multiple motions, including defendant's motion to dismiss for lack of personal jurisdiction, defendant's motion to dismiss for improper venue or in the alternative to transfer venue, plaintiffs' motion to dismiss counterclaim, plaintiffs' motion to dismiss affirmative defenses and defendant's substantive motions for summary judgment and dismissal. For the reasons stated below, we deny defendant's motion to dismiss on the grounds of lack of personal jurisdiction and improper venue, but stay a decision on the motion to transfer until the parties submit additional filings.

FACTS

Despite the volume of the pleadings and motions filed by the parties, the facts of this case are relatively straightforward. Plaintiffs Don and Dirk Beveridge are in the business of giving motivational seminars and programs in the areas of sales and sales management. They have developed and marketed a certain system of self-improvement and motivation ("plaintiffs' system"), and they give lectures about the system in several states, including Illinois. To conduct these lectures, they hire speakers who have participated in their programs. Defendant Charles Mefford was one of plaintiffs' lecturers, working for them on more than twenty-five occasions between May 1987 and February 1992. See Complaint, Appendix, Mefford/Beveridge Lecture Agreements. At least half of Mefford's lecture contracts were performed in Illinois. Through the performance of these contracts, Mefford had access to the documents and details of plaintiffs' motivational system. Among other provisions, the contracts contained a confidentiality clause prohibiting Mefford from disclosing any "confidential information" he obtained while in the employ of the Beveridge Institute, a clause requiring him to return all documents, books, etc., upon terminating his relationship with the company, and a three year non-compete agreement. See Complaint, Appendix.

Defendant Mefford's company, Mefford Achievement Systems (MAS) is a sole proprietorship in the business of giving seminars on sales and sales management. Mefford has never conducted any of his seminars in Illinois, nor does he specifically seek to attract clients from that state. During the last two years Mefford has advertised his services in a national publication, Radio Ink, which may be circulated in Illinois. In addition, Mefford provides personal management and sales consulting services to radio stations throughout the country. See Mefford Motion to Dismiss (Pers. Jur.), at 2. Specifically, Mefford has provided such services to an Illinois company, Radio Works, Inc. which operates three radio stations in that state. Prior to 1993 these radio stations were owned by former defendant Mid-West Management. Mefford has a contract with Radio Works under which he is paid $20,000 to work for them for approximately 6 days each year.

In July 1998, Don and Dirk Beveridge and their various companies filed this suit claiming that Mefford's lecturing system incorporated materials that he had misappropriated while working for the Beveridge companies. They claim that his lecturing activities violate their trademarks on such material and the non-compete and confidentiality provisions of the lecturing contracts. They generally aver that his work with the radio broadcast industry is similarly in violation of their rights. See Complaint, ¶ 13.

DISCUSSION

Defendant Mefford has moved to dismiss on the ground that this court lacks personal jurisdiction over him and that venue is improper in this district. As a preliminary matter, plaintiffs argue that Mefford waived these defenses because he filed a counterclaim and thereby submitted himself to the jurisdiction of this court.

The Seventh Circuit has not decided whether the filing of a pleading that contains both a challenge to personal jurisdiction and a defense will preserve the defense or render it waived, and the district courts of this jurisdiction have taken both approaches. One court in this jurisdiction has ruled that filing of a permissive counterclaim waives any objection to personal jurisdiction, even when the objection is contained in the same document. Outboard Marine Corporation v. Stumbras, 1991 WL 22511 (N.D.Ill.1991) (Leinenweber, J.). Another has concluded that a personal jurisdiction defense is preserved when asserted in a pleading, even if the pleading contains a counterclaim and regardless of whether the counterclaim is compulsory or permissive. Israel Travel Advisory Service, Inc. v. Israel Identity Tours, Inc., 1992 WL 330023 (N.D.Ill.1992) (Conlon, J.) (citing cases). We think that this is the more sound approach. As Judge Conlon noted in Israel Travel, to hold otherwise defeats the purpose of Rule 12, which was to eliminate the need for special appearances to challenge jurisdiction. 1992 WL 330023 at *1. Because defendant's answer raised the defenses of both the personal jurisdiction and venue, we will consider the merits of these arguments.

Personal Jurisdiction

In his motion to dismiss Mefford argues that he has had only two sources of contact with Illinois. First, pursuant to his contract with Radio Works, he comes to Illinois six days each year to provides sales and consulting services (the exact nature of which is unclear), and has done so since at least 1993. See Defendant's Mot. to Dismiss (Pers.Jur.), at 2. In return, Radio Works pays him $20,000 per year, which represents 10% or less of Mefford's total gross receipts. Second, Mefford advertises his services in a national journal, which he concedes may be circulated in Illinois. He maintains that because these activities are unrelated to the contract, tort and Lanham Act claims alleged in this action, the case must be dismissed. In response, plaintiffs argue that defendant's contacts with Illinois through the lecturing services he performed for the Beveridge Institute between 1987 and 1992 are sufficient to render him subject to the jurisdiction of Illinois.² Having considered these arguments, we conclude that defendant is subject to specific personal jurisdiction in Illinois and consequently before this court.

A federal district court sitting in diversity has personal jurisdiction only if a court of the state in which it sits would have such jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997) (citations omitted). As a result, three distinct sources must usually be examined to determine whether jurisdiction exists: state statutory law, state constitutional law, and federal constitutional law. Id. at 1276. Under Illinois law, personal jurisdiction is permitted to the extent allowed by the federal constitution, see 735 ILCS 5/2-209(c), and thus we need only pursue the last inquiry in this case.

To determine whether the requirements for personal jurisdiction are satisfied under the due process clause of the Fourteenth Amendment, we look to see whether the defendant has "certain minimum contacts with [the state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (internal quotation marks omitted). Depending on their nature and frequency, a defendant's contacts with the state can give rise to two different types of personal jurisdiction: specific and general. General jurisdiction refers to suits that neither arise from nor are related to the defendant's contacts within the forum, and it is permitted only where the defendant has "continuous and systematic general business contacts" with the forum. RAR, 107 F.3d at 1277 quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 8, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). Defendant Mefford's contractual relationship with the plaintiffs is not the sort of general and continuous business relationship sufficient to subject himself to...