Kadala v. Cunard Lines, Ltd.

• Decision Date: 28 February 1992
• Docket Number: No. 1-89-1565,1-89-1565
• Citation: 226 Ill.App.3d 302,589 N.E.2d 802
• Parties: , 168 Ill.Dec. 402 Vivian KADALA, Plaintiff-Appellant, v. CUNARD LINES, LTD., a foreign corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

Page 802

589 N.E.2d 802

226 Ill.App.3d 302, 168 Ill.Dec. 402

Vivian KADALA, Plaintiff-Appellant, v. CUNARD LINES, LTD., a foreign corporation, Defendant-Appellee.

No. 1-89-1565.

Appellate Court of Illinois First District, Fifth Division.

Feb. 28, 1992.

Michael A. Snyder & Associates, (Richard A. Forster, Michael A. Snyder, of counsel), Chicago, for defendant-appellee.

Lawrence H. Hyman, Lawrence H. Hyman & Associates, Chicago, for plaintiff-appellant.

Justice GORDON delivered the opinion of the court:

Plaintiff Vivian Kadala appeals from an order of the trial court granting defendant Cunard Lines, Ltd.'s motion to quash service and to dismiss plaintiff's complaint for lack of personal jurisdiction. For the reasons set forth below, we affirm.

On December 26, 1985, plaintiff, an Illinois resident, was a passenger on defendant's cruise ship, the M/V Queen Elizabeth II, which embarked from New York to the Caribbean. While on board defendant's ship, plaintiff sustained personal injuries using a whirlpool bath. Plaintiff filed a complaint on December 23, 1986, alleging that defendant was careless and negligent in improperly instructing, controlling, operating and supervising whirlpool baths on the ship, and that as a result she sustained second degree burns on her legs after the use of the whirlpool.

In her complaint, plaintiff alleged that during the year 1985 defendant for promotional purposes "published and placed into the stream of commerce" various informational brochures about the Queen Elizabeth II. She further alleged that she was provided with one of these brochures through the Americana Travel Agency in Northfield, Illinois. The complaint went on to allege that plaintiff entered into a contractual agreement with defendant for a Caribbean cruise, and defendant issued a passenger contract to the plaintiff for the cruise.

Defendant is a foreign corporation, organized under the laws of the United Kingdom, with its principal place of business and corporate offices in Southhampton, England. Defendant maintains an office in New York City. Summons was served on defendant's registered agent in New York, New York, on January 6, 1987.

Defendant filed a Special and Limited Appearance contesting jurisdiction, and moved to quash service of process and dismiss the complaint for lack of personal jurisdiction. In support of its motion to quash and dismiss, defendant offered the affidavit of Frank Kelly, defendant's Administrator of Legal Affairs, as evidence that it did not transact business in Illinois.

In his affidavit, Kelly stated that defendant is not registered to do business in Illinois, nor does it have a registered agent in Illinois. Defendant does not own or occupy any real or personal property in Illinois. Its only telephone numbers published in Illinois are its New York office number and an 800 toll free number. Cunard ships no goods into Illinois nor does it sell any goods or services within the state. None of defendant's vessels ever sail into Illinois waters.

Kelly's affidavit also stated that defendant has no agents, employees, officers or directors who reside in Illinois. Kelly further stated that Illinois travel agents who receive fares and book passage on Cunard vessels are acting as agents for the passenger and that Cunard has not authorized any travel agent to hold itself out as an agent of Cunard. All contracts for cruises are "made" in New York, and all tickets are issued from New York. Plaintiff's ticket was issued in New York.

In response to defendant's motion to quash and dismiss, plaintiff submitted the deposition of Mark T. Carlesimo, Assistant Vice President of Legal Affairs for Cunard, which plaintiff contended showed that defendant spent hundreds of thousands of dollars per year in advertising in the State and derived millions of dollars of revenues from Illinois residents as a result.

In his deposition, Carlesimo stated that he knew that Cunard had one employee in Illinois, a sales representative, who may also have been employed 18 months earlier when Kelly prepared his affidavit denying the presence of any Cunard employees in Illinois. Carlesimo explained that the Cunard sales representatives generally cover a multi-state territory. Their duties are to service travel agents in their area by answering questions or distributing materials to them, including brochures and special offers on particular cruises. They do not, however, have the authority to write passenger contract tickets and have no contact with potential passengers.

The sales representatives do not advertise in the yellow or white pages of the telephone directory as representatives of Cunard, nor is any travel agency authorized to advertise Cunard cruises in their telephone listings. When shown a copy of the Chicago yellow pages for 1986/87 listing Cunard cruises with two travel agencies, Carlesimo said that he had no knowledge of the two agencies, and assumed the listings were an unauthorized use of Cunard's marks.

According to Carlesimo, ninety-five to ninety-nine percent of defendant's business is done through travel agents. Carlesimo outlined the procedure which a customer dealing with a travel agent would be required to follow to purchase a ticket for one of defendant's cruises. According to Carlesimo, the prospective customer would never enter into direct dealings with Cunard. All contact was with the travel agent. If a customer wished to travel on a Cunard cruise, he would advise his travel agent, who in turn would call defendant's New York office to reserve the cruise, and would be told the price of the cruise. The passenger would then pay the travel agent, who after deducting its commission would remit the balance to Cunard. Upon Cunard's receipt of the balance due, Cunard would issue a ticket out of its New York office and send it to the agent.

Regarding revenue, Carlesimo stated that for the fiscal year 1986/87, Cunard derived $167 million in "total sea revenue", 95% attributable to passenger fares from the United States, of which $5.8 million, or almost 3.5% of defendant's U.S. revenue, came from Illinois. (Carlesimo did not have readily available figures for 1985, the year in question, due to a new computer system acquired by defendant in 1986.) In 1987/88, national revenues were $182 million, while Illinois revenues were $6.4 million (3.5%).

Carlesimo also reviewed advertising expenditures by Cunard. For the 1987/88 fiscal year, total print advertising nationally was $5.5 million, with $562,000 being spent in Illinois, primarily in the Chicago area. According to invoices from its advertising agency, in calendar year 1985, Cunard placed 82 advertisements in the Chicago Tribune, at a cost of slightly over $500,000. In 1986, Cunard spent $233,000 for 48 advertisements in the Chicago Tribune, and in 1987, $470,000 for 51 advertisements.

As a result of these expenditures and the revenue derived from Illinois, plaintiff contended that defendant had performed sufficient acts to constitute the "transaction of business" in the State, so as to make defendant subject to jurisdiction pursuant to the Illinois Long-Arm Statute. Ill.Rev.Stat.1987, ch. 110, par. 2-209.

The trial court rejected plaintiff's arguments and granted defendant's motion to quash service and dismiss the complaint. Plaintiff now appeals.

OPINION

It is the plaintiff's contention that defendant's "extensive and voluntary commercial activities within the State of Illinois" are sufficient to constitute "transaction of business" under the Illinois Long Arm Statute. (Ill.Rev.Stat.1987, ch. 110, par. 2-209.) That statute provides, in relevant part:

"(a) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and, if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any such acts:

(1) The transaction of any business within this State;

* * * * * *

(f) Only causes of action arising from acts enumerated herein may be asserted against a defendant in action in which jurisdiction over him or her is based upon subsection (a)." (Ill.Rev.Stat.1987, ch. 110, par. 2-209.)

Defendant contends, as it did in the trial court, that Cunard's jurisdictional status was previously decided adversely to the plaintiff in the case of Wiedemann v. Cunard Line, Ltd. (1978), 63 Ill.App.3d 1023, 20 Ill.Dec. 723, 380 N.E.2d 932, and should not be altered on present reconsideration. We agree. There, on facts which defendant argues are virtually identical to those here, we found that defendant's activities in this State did not amount to the "transaction of business" in the State.

In Wiedemann, the plaintiff sought damages for injuries suffered while on a beach in the West Indies, which he alleged was controlled by the defendant. There, as here, defendant filed a Special and Limited Appearance contesting in personam jurisdiction. In support of his claim that the defendant had transacted business in Illinois, the plaintiff pointed to the following facts: (1) defendant employed two Illinois residents whose job it was to promote, in Illinois, travel on defendant's ships; (2) defendant paid for telephones for those two employees; (3) defendant permitted an Illinois travel agency to list itself in the telephone directory as agent for defendant; (4) plaintiff received his "passage contract ticket" in Illinois; (5) defendant advertised in Illinois newspapers and national publications which were circulated to Illinois residents; and (6) defendant mailed questionnaires and newsletters to Illinois promoting fly/cruise/resort tour packages. Wiedemann, 63 Ill.App.3d at 1030, 20 Ill.Dec. 723, 380 N.E.2d 932.

In Wiedemann, the defendant by affidavit admitted to having two employees in Illinois. The primary duty of those employees was to promote travel on d...