INTERNATIONAL HONEYCOMB v. Transtech Service
| Decision Date | 24 August 1990 |
| Docket Number | No. 90 C 3062.,90 C 3062. |
| Citation | 742 F. Supp. 1011 |
| Parties | INTERNATIONAL HONEYCOMB CORP., Plaintiff, v. TRANSTECH SERVICE NETWORK, INC., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Arne M. Olson, Michael A. Hierl, Frank J. McGue, Olson & Hierl, Chicago, Ill., for plaintiff.
Charles A. Laff, Laff, Whitesel, Conta and Saret, Chicago, Ill., for defendant.
Before the Court is the motion of defendant, Transtech Service Network, Inc. (TSN) to dismiss the Complaint of the plaintiff International Honeycomb Corp. (IHC) under Federal Rule of Civil Procedure 12(b) or transfer the complaint to the Eastern District of New York pursuant to 28 U.S.C. § 1404.
TSN is a New York corporation with its principal place of business located in Rosedale, New York. IHC is an Illinois corporation with its principal place of business located in University Park, Illinois. TSN and IHC allegedly reached an agreement on July 14, 1989 to form a joint venture to produce insulated containers that preserve temperature-sensitive goods during shipping.1 TSN terminated the parties' relationship on May 3, 1990, pursuant to a letter which was sent to the University Park, Illinois office of IHC. Each party claims patent rights to the insulated containers that were to be jointly produced and marketed. TSN subsequently sent letters to some of IHC's customers, discussing the dispute between TSN and IHC with respect to the patent. IHC claims that the letters were threatening and they interfered with IHC's business relationships. IHC filed this complaint on May 29, 1990, seeking compensatory and injunctive relief. IHC's Complaint states three causes of action against TSN: unfair competition, breach of contract and a count seeking a declaratory judgment with respect to the patent issue.
TSN's motion to dismiss asserts that the Court does not have personal jurisdiction over TSN. The burden to establish jurisdiction is on the party asserting it. Saylor v. Dyniewski, 836 F.2d 341, 342 (7th Cir.1988). In deciding a motion to dismiss, however, the Court must resolve all factual disputes in favor of the plaintiff. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1215 (7th Cir.1984). A non-resident corporation is subject to suit if it performs one of the acts enumerated in the Illinois long-arm statute and jurisdiction is consistent with due process or if it is "doing business" in Illinois. Id. at 1212. Personal jurisdiction under the Illinois long-arm statute is considered separately from the question of whether the assertion of jurisdiction over a party would violate due process. Id. at 1214; See Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 427 N.E.2d 1203 (1981).
IHC alleges jurisdiction pursuant to the long-arm statute. The relevant provisions of the statute state:
Each cause of action must separately "arise from" the defendant's contacts in Illinois. Club Assistance Program, Inc. v. Zukerman, 594 F.Supp. 341, 345 (1984). The Seventh Circuit has held that the long-arm statute "requires only that the cause of action lie in the wake of the transaction of business." J. Walker & Sons, Ltd. v. DeMert & Dougherty, Inc., 821 F.2d 399, 403 (7th Cir.1987) (quoting, Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587 (7th Cir. 1984)).
IHC asserts that the Illinois long-arm statute confers jurisdiction over TSN because TSN sent a letter to Gard Inc., which is located in Illinois, and the letter constituted "(t)he commission of a tortious act" in Illinois within the scope of Section 2-209. Specifically, IHC argues that the letter was threatening and interfered with IHC's business relationship with Gard Inc.
TSN responds that the letter sent to Howard Klehm of Gard Inc. was not a tortious act in Illinois because it was sent in response to alleged aggressive tactics of the plaintiff, and the letters were merely informative rather than threatening. Although the letters may have been sent with the best intentions, they could reasonably be perceived as a threat of litigation as reflected in the affidavit of Mr. Klehm submitted by IHC. Illinois case law has consistently held that mailings by a nonresident, "when coupled with an intent to affect Illinois interests," are sufficient to confer jurisdiction based on the commission of a tortious act. FMC Corp. v. Varonos, 892 F.2d 1308, 1313 (7th Cir.1990). Moreover, this factual dispute must be resolved in favor of plaintiff. Deluxe Ice Cream, 726 F.2d at 1215. The sending of infringement letters has been considered sufficient to confer jurisdiction under the "transaction of any business" section of the long-arm statute. E.J. McGowan & Assoc. v. Biotechnologies Inc., 736 F.Supp. 808, 811 (N.D.Ill.1990). Both IHC's cause of action for unfair competition and patent claims "arise from" the sending of the infringement letter into Illinois, thus conferring the jurisdiction of this court. See E.J. McGowan & Assoc. v. Biotechnologies Inc., 736 F.Supp. 808 (N.D.Ill.1990).
IHC also contends that the contractual contacts between its Illinois office and TSN were sufficient to satisfy the "transaction of any business" requirement of the long-arm statute, thereby invoking the Court's jurisdiction as to the breach of contract claim. The letter terminating the agreement was sent by TSN's president, David Hollander, to IHC's Illinois office. Representatives of the two parties also met in Illinois for two days in September, 1989, to discuss pricing and various aspects of the joint venture. Although TSN alleges that the visit to Illinois was merely intended for the officers to meet, again all factual disputes at this stage must be resolved in favor of the plaintiff. Deluxe Ice Cream Co., 726 F.2d at 1215. IHC further alleges that the two parties discussed the pricing and marketing of the product involved in the proposed joint venture through communications sent to the Illinois office of IHC. The Court finds that it also has jurisdiction with respect to the breach of contract claim because the claim "lies in the wake" of the defendant's transaction of business in Illinois.
The court now examines whether asserting jurisdiction over TSN meets the due process requirement. The Seventh Circuit has noted that the sufficiency of minimum contacts can not be determined by a rule of thumb, but depends on the reasonableness of subjecting the particular defendant to suit in the state. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1213 (7th Cir.1984). The central element in the due process analysis is whether "the defendant purposefully established `minimum contacts' in the forum state." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). The Supreme Court has defined minimum contact as "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958). "The requirement of `purposeful availment' insures that the defendant will not be haled into a jurisdiction based on `random, fortuitous or attenuated contacts.'" McGowan & Assoc., Inc. v. Biotechnologies Inc., 736 F.Supp. 808, 812 (N.D.Ill.1990) (quoting Burger King, 471 U.S. at 475, 105 S.Ct. at 2183). A critical element of a defendant's activity in the due process analysis is whether "the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).
Judge Norgle recently held that although the sending of infringement letters falls within the ambit of the long-arm statute, additional contacts are necessary to satisfy due process. E.J. McGowan & Assoc., Inc. v. Biotechnologies Inc., 736 F.Supp. 808 (N.D.Ill.1990). In McGowan, the defendant did not have any other contacts related to the cause of action in the forum. Therefore, the Court found that the defendant's contacts with the state were too tenuous to satisfy due process. Id.
The facts of this case are distinguishable from those presented in McGowan. The fact that an Illinois corporation was affected by the act of a non-resident corporation is clearly not enough to satisfy due process. Heritage House Restaurants, Inc. v. Continental Funding Group, Inc., 906 F.2d 276 (7th Cir.1990). TSN, however, purposefully availed itself of a business transaction with an Illinois corporation and it would not be unreasonable or unforeseeable for the defendant to be haled into an Illinois court. Although lack of presence in a forum is not determinative of jurisdiction, a relevant factor in a contract case is the presence of the defendant in the state while conducting business related to the dispute. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., ...
To continue reading
Request your trial
-
Beveridge v. Mid-West Management, Inc., 98 C 4689.
...whether the court has personal jurisdiction over the defendant, must be individually determined); International Honeycomb Corp. v. Transtech Service, 742 F.Supp. 1011, 1012 (N.D.Ill.1990) (same). Thus, although Mefford's contacts with Illinois are sufficient to subject him to this jurisdict......