Empire Indus., Inc. v. Winslyn Indus., LLC
| Decision Date | 11 June 2020 |
| Docket Number | Case No. 18 C 698 |
| Parties | EMPIRE INDUSTRIES, INC., Plaintiff, v. WINSLYN INDUSTRIES, LLC, THE FIRECLAY FACTORY LLC, NIKO (INT) LTD., and IMPERIAL PACIFIC TRADING, LLC, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Empire Industries, Inc. has sued Winslyn Industries, LLC, The Fireclay Factory LLC, Niko (INT) Ltd., and Imperial Pacific Trading, LLC. Fireclay has moved to dismiss the claims against it under Federal Rule of Civil Procedure 12(b)(5) for improper process, Rule 12(b)(2) for lack of personal jurisdiction, and the doctrine of forum non conveniens.
The Court assumes familiarity with this case's factual and procedural background, which the Court has described in its prior written opinions. See Empire Indus. Inc. v. Winslyn Indus., LLC, No. 18 C 698, 2019 WL 2743470 (), at *1 (N.D. Ill. June 30, 2019); Empire Indus. Inc. v. Winslyn Indus., LLC (Ruling on Niko and Imperial's Motions to Dismiss), No. 18 C 698, 2019 WL 339544 (N.D. Ill. Jan. 28, 2019); Empire Indus. Inc. v. Winslyn Indus., LLC (Preliminary Injunction Ruling), 327 F. Supp. 3d 1101, 1106 (N.D. Ill. 2018). The following is brief synopsis of the factual and procedural background, as relevant for the purposes of the present order.
In considering Fireclay's motion to dismiss, the Court accepts the facts in the complaint as true and considers "matters outside of the pleadings to resolve factual questions pertaining to jurisdiction [and] process."1 Deb v. SIRVA, Inc., 832 F.3d 800, 808-809 (7th Cir. 2016). Empire is a New Jersey company that manufactures and distributes bathroom and kitchen products. Fireclay is a company based in the United Arab Emirates (UAE) that manufactures "fireclay-style" sinks, which are formed from clay fired at very high temperatures. Fireclay's principal place of business, offices, factories, and employees are not located in Illinois.
In July 2016, Empire and Fireclay began to discuss the prospect of Fireclay manufacturing products for Empire, and Empire began sending sink designs to Fireclay. In March 2017, Empire agreed to provide Fireclay with certain sink designs, and Fireclay agreed to treat them as confidential and to produce sinks based on the designs exclusively for Empire and not for any other sellers in the United States.
That same month, however, Fireclay began to market the designs to other customers and prospective customers, including Winslyn, another seller of kitchenproducts, which is located in Illinois. Empire alleges that, in March and April, Winslyn ordered certain sinks from Fireclay. It has submitted copies of e-mails exchanged in April between Peter Shilling, Fireclay's managing director, and Bill Stuebner, Winslyn's president, founder, and part owner, regarding arrangements for the shipment of four "sample pieces" to Winslyn. WINSLYN00000450. In one e-mail, Stuebner wrote that each sample piece would "come to our warehouse." Id. Empire has also submitted Winslyn's response to an interrogatory request in which Winslyn stated that it received sink samples from Fireclay in early March, late April and/or early May.
By June, Winslyn had secured a significant order of sinks from Menards, a major retailer, but the sinks Menards selected were based on the designs Fireclay had agreed to make exclusively for Empire. Fireclay advised Winslyn that the sinks were not available, but, after pressure from Winslyn, Fireclay agreed to make a minor, inconsequential alteration to one panel of the sink for Winslyn. In doing so, Fireclay used the mold forms that it had already set up for Empire, swapping out one piece from the forms.
By July 2017, Winslyn's customers placed orders for these new sinks, which Fireclay fulfilled starting in January 2018. The exact locations to which Fireclay shipped those sinks are not clear from the evidence before the Court on the present motion.
In the meantime, Fireclay delivered sinks to Empire at a slower-than-expected pace. In November 2017, Jacob Goren, Empire's chief executive, visited Fireclay's factory in the UAE and noticed sinks that varied only slightly from the sinks he had designed. When confronted, Fireclay's managing director Shilling initially denied that Fireclay was shipping any sinks using Empire's mold to North America and reaffirmedthe exclusivity agreement. Later, however, Empire learned that Fireclay was, in fact, selling these sinks to Winslyn. In December 2017, Fireclay terminated its relationship with Empire.
In January 2018, Empire filed this suit against Winslyn. It amended its complaint in March and moved for a preliminary injunction in April. On May 15, while its motion for a preliminary injunction was pending, Empire again amended its complaint and added as defendants Fireclay and Niko, an associated entity.
In June 2018, after an evidentiary hearing, the Court granted Empire's motion for a preliminary injunction. Preliminary Injunction Ruling, 327 F. Supp. 3d at 1118. In July, Winslyn moved to clarify the injunction order, and the Court granted that motion in part. As clarified, the preliminary injunction enjoined Winslyn and "anyone else affiliated or acting in concert with it, pending the trial or other disposition of this case, from purchasing, marketing, or selling sinks obtained from [Fireclay] with a design that is identical to or visually indistinguishable from" certain of Empire's designs. Dkt. no. 105.
In October 2018, Empire amended its complaint a third time and added as a defendant Imperial, another company that sells sinks. Niko and Imperial each moved to dismiss the complaint for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The Court granted the motions to dismiss in part, and, as indicated, dismissed all of the claims against Niko and all claims against Imperial except for Empire's request for a contempt finding. Ruling on Motions to Dismiss, 2019 WL 339544, at *5.
In the third amended complaint, which is the operative complaint, Empire assertsfive claims against Fireclay. Count 3 is a claim seeking injunctive relief from all of the defendants, which the Court has dismissed because it does not assert a separate claim. Dkt. no. 151. Count 4 is a breach of contract claim. Count 5 is a claim against Fireclay for fraud, based on allegedly false statements by Shilling that Empire was not selling sinks based on Empire's design in North America, which Shilling said at Fireclay's factory, as well as unspecified statements made in writing. Count 6 is a claim against Fireclay for conversion in which Empire alleges that the sinks produced by Fireclay using Empire's design are Empire's property and that Fireclay converted them by retaining them and shipping them to Winslyn before the Court issued the preliminary injunction and, after the Court issued it, shipping more of Empire's sinks to Winslyn and/or Imperial. Count 7 is a claim against all defendants for civil conspiracy. Empire alleges that Fireclay, Niko, and Imperial have schemed to interfere with and breach Empire's contractual rights; unjustly obtain benefits from Empire's designs; carry out Fireclay's fraudulent scheme to use Empire's designs for its own benefit; and "attempt to evade the effect of the Court's [Preliminary Injunction Ruling] and dispose of inventory subject to that order." 3d Am. Compl. ¶ 95.
Though Empire had added Fireclay as a defendant in May 2018, by February 2019, Empire had not served Fireclay. On February 21, 2019, Empire filed a motion requesting the issuance of a letter rogatory and leave to issue a summons upon Fireclay. Fireclay filed a response to that motion. In April 2019, the Court held a hearing on the motion and, in particular, arguments by Fireclay that Empire failed to diligently attempt service. Empire explained that it delayed serving Fireclay in part by saying it anticipated difficulties in serving summons in the UAE—a reason the Courtindicated might not be "terribly significant in the scheme of things." April 23, 2019 Hr'g Tr. at 11:19-25. The Court found Empire's other reason was more significant: Empire had hoped or expected that the Court's issuance of a preliminary injunction in June 2018 would resolve the dispute between the parties, rending service of process upon Fireclay unnecessary. As the Court indicated at the hearing, Empire alleged that subsequent activity involving Fireclay led it "to conclude that it needed to proceed with the case" and therefore take steps to effectuate service upon Fireclay. Id. at 12:1-11. At the end of the hearing, the Court found that Empire had good cause to excuse the delay in service of process up to that point, granted Empire leave to serve Fireclay, and issued a letter of rogatory.
On May 10, 2019, Fireclay issued a summons as to Fireclay. On January 16, 2020, Empire served Fireclay in the UAE by sending the third amended complaint and a summons via a standard courier, and Fireclay accepted the package.
As indicated, Fireclay has moved to dismiss Empire's claims against it for improper process under Rule 12(b)(5), lack of personal jurisdiction under Rule 12(b)(2), and under the doctrine of forum non conveniens.
Fireclay has moved under Rule 12(b)(5) to dismiss the case for insufficient service of process. It argues that Empire's service of process was insufficient because, it contends, Empire took too long to attempt to serve Fireclay or complete service.2Specifically, Fireclay contends the claims against it should be dismissed because Empire did not attempt to serve it for 274 days3 and did not complete service until two years after the filing of the lawsuit. On the latter point, the Court notes that service was accomplished just under one year and eight months after Empire named Fireclay as a defendant—603 days, to...
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