Harold M. Pitman Co. v. Typecraft Software, 84 C 3028.

CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
Citation626 F. Supp. 305
Docket NumberNo. 84 C 3028.,84 C 3028.
PartiesThe HAROLD M. PITMAN COMPANY, Plaintiff, v. TYPECRAFT SOFTWARE LTD., Thomas O'Connor, and Rangegrove Computing Ltd., Defendants.
Decision Date16 January 1986

Donald W. Rupert, Kirkland & Ellis, Chicago, Ill., for plaintiff.

Kevin M. Flynn, Coffield, Ungaretti, Harris & Slavin, Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

NORDBERG, District Judge.

This matter is before the court on the motion of defendants Typecraft Software, Ltd. ("Typecraft") and Thomas O'Connor to dismiss this action pursuant to Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction.1 For the reasons stated below, the court grants defendants' motion to dismiss.

I. Facts

Plaintiff Harold M. Pitman Company ("Pitman") is an Illinois corporation with its principal place of business in New Jersey. Pitman distributes, sells and services equipment used in the printing industry.

Typecraft is a company incorporated under the laws of the United Kingdom. Located in London, Typecraft develops, manufactures and sells computer software and hardware for use in the printing industry. Mr. O'Connor is currently an officer, director and a ninety percent shareholder of Typecraft. Rangegrove Computed, Ltd. ("Rangegrove") is the former corporate name for Typecraft, and both names describe the same entity.

This suit arises out of an exclusive distributorship agreement between Pitman and Typecraft Systems (Derby), Ltd. ("Systems"), a corporation not named as a defendant in this action. In July, 1982, Systems entered into an agreement with Pitman, giving Pitman the exclusive right to distribute the Typecraft Phototypesetting System in the United States. In August, 1982, Systems entered into another agreement with Pitman, under which Systems agreed to pay that portion of the salary of Pitman's employee, Mr. Ronald Johnson, that exceeded $3,000.00 per month. Mr. O'Connor negotiated this agreement with Pitman on behalf of Systems.

In October, 1982, Top Business Systems (Nottingham), Ltd. ("Top Business") assumed the worldwide marketing and distribution rights for the Typecraft Phototypesetting System. Mr. O'Connor, then Sales Director for Top Business, wrote Pitman in October, 1982, confirming that Pitman's distributorship agreement with Systems was effective between Pitman and Top Business. In October, 1983, Top Business sold the marketing and distribution rights to the Typecraft Phototypesetting System to Rangegrove. Mr. O'Connor signed the sales agreement both as a representative and a personal guarantor of Rangegrove.

On April 6, 1984, Pitman filed this action in federal court, alleging jurisdiction based on diversity of citizenship. In the complaint, Pitman alleges that when the defendants bought the phototypesetting system, they assumed the rights, obligations and liabilities of the distributorship agreement between Top Business and Pitman. Pitman contends that the defendants have breached both the exclusive distributorship agreement and the agreement regarding Mr. Johnson's salary. Pitman also contends that defendants misrepresented material facts relating to the distributorship agreement, and that defendants misused Pitman's confidential business information.2

In April, 1984, Mr. O'Connor traveled from England to attend "Type-X 1984," an annual three-day exhibition of companies in the printing industry. On April 6, 1984, the first day of the exhibition, Mr. O'Connor was served with the summons and complaint in this action, on behalf of himself and as an agent for Typecraft. Typecraft had a booth at the exhibition and was listed in the Directory of Exhibitors.3 During the show, Typecraft distributed a brochure describing one of its products.4 Also, Mr. O'Connor contacted several companies at the exhibition and explored possible distribution arrangements with them. Mr. O'Connor scheduled an appointment with one company to meet with Typecraft in London in order to evaluate Typecraft's products. In addition, Mr. O'Connor negotiated with several major manufacturers of phototypesetting systems for incorporation of Typecraft products into their systems.5

Defendants now move for dismissal based on lack of personal jurisdiction. Essentially, Mr. O'Connor and Typecraft assert that the court's exercise of personal jurisdiction over them will not satisfy the due process clause of the fourteenth amendment unless Pitman can demonstrate that defendants have had "minimum contacts" with this jurisdiction, as required under International Shoe Corp. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). Mr. O'Connor and Typecraft assert that their "transient presence" in Illinois is not sufficient to meet the International Shoe and Shaffer minimum contacts requirement.

Pitman, on the other hand, asserts that the court may properly exercise personal jurisdiction over the defendants, because the defendants were present in Illinois at the time service of process was made. According to Pitman, when defendants are personally served within the jurisdiction, personal jurisdiction is proper regardless of the existence of "minimum contacts" between the defendant, the litigation and the forum state. Alternatively, Pitman asserts that, assuming the minimum contacts rationale of International Shoe and Shaffer applies, the defendants' contacts with Illinois are sufficient for jurisdictional purposes.

II. Motion to Dismiss for Lack of Personal Jurisdiction

A federal court has personal jurisdiction in a diversity case only if the forum state would have jurisdiction. Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587, 589 (7th Cir.1984); Deluxe Ice Cream Company v. R.C.H. Tool Corp., 726 F.2d 1209, 1212 (7th Cir.1984); Fed.R.Civ.P. 4(e). The plaintiff bears the burden of proof on the jurisdictional issue. Grafon Corp. v. Hausermann, 602 F.2d 781 (7th Cir.1979). Plaintiff's burden of proof is two-fold: it must establish the existence of jurisdiction under Illinois law, and it must show that exercise of jurisdiction over the defendant will not offend the due process clause of the fourteenth amendment.

A. Peronal Jurisdiction Under Illinois Law

In its complaint and its response to defendants' motion to dismiss, Pitman does not specify which Illinois statutes or cases it relies upon for jurisdiction under Illinois law. From the facts of the case, the only jurisdictional bases Pitman may rely on are Ill.Rev.Stat. ch. 110, para. 2-203(a)(1), for personal jurisdiction over Mr. O'Connor, and Ill.Rev.Stat. ch. 110, para. 2-204, for personal jurisdiction over Typecraft.6

Section 2-203(a)(1) provides that "service of a summons upon an individual defendant shall be made (1) by leaving a copy thereof with the defendant personally. ..." Illinois cases interpreting section 2-203(a)(1) do not appear to impose an additional requirement of minimum contacts between the defendant, the litigation and the forum, separate from the minimum contacts requirement of the due process clause of the fourteenth amendment. Service upon Mr. O'Connor, therefore, comports with the requirements of Illinois law for personal jurisdiction over Mr. O'Connor.

Section 2-204 provides that service upon a private corporation may be made "(1) by leaving a copy of the process with its registered agent or any officer or agent of said corporation found anywhere in the State...." The Illinois Supreme Court has held that Illinois courts may not assert jurisdiction over nonresident corporations not licensed in Illinois under section 2-204, unless such corporations "do business" in Illinois. Maunder v. De Havilland Aircraft of Canada, Ltd., 102 Ill.2d 342, 350, 80 Ill.Dec. 765, 466 N.E.2d 217 (1984), cert. denied sub nom, De Havilland Aircraft of Canada, Ltd. v. Maunder, ___ U.S. ___, 105 S.Ct. 511, 83 L.Ed.2d 401 (1984). The Illinois Supreme Court has also held that this "doing business" requirement is not equivalent to the minimum contacts requirement for due process, but it is a separate state law requirement within the outer limits of the due process standard. Cook Associates, Inc. v. Lexington United Corporation, 87 Ill.2d 190, 201, 57 Ill.Dec. 730, 429 N.E.2d 847 (1981).

Cook involved facts very similar to those in the present case. In Cook, the defendant corporation, Lexington, was a Delaware corporation not licensed to do business in Illinois. Lexington's president was served with process while attending a housewares exhibition in Chicago. Lexington took orders at the exhibition, as it had at two other trade shows in Chicago in 1976 and 1977; however, on all three occasions, the orders amounted to less than $50,000.00, and Lexington accepted the offers later, at its St. Louis office. Lexington's other contacts with Illinois were minimal. Lexington did not have an office or employee in Illinois. It did not have an Illinois telephone number, nor did it advertise in Illinois, except in connection with the Chicago trade exhibitions. Lexington sold its merchandise in Illinois, but through an independent manufacturer's representative who sold the merchandise of other manufacturers and worked strictly on a commission basis.

Based on this evidence, the Illinois Supreme Court held that Lexington was not amenable to the jurisdiction of the court under either the Illinois long-arm statute or the doctrine of submitting to jurisdiction by virtue of "doing business" in Illinois. With regard to the "doing business" doctrine, the court stated:

The "doing business" approach, however, developed and was accepted as a means to obtain personal jurisdiction over foreign corporations. This court held that a foreign corporation doing business in Illinois was constructively present in this State and its assent to service upon an agent in Illinois could be implied under those circumstances. The corporation, therefore, could be served personally in Illinois in the same manner as
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