Morton Grove Pharm. v. National Pediculosis Ass'n

• Decision Date: 30 November 2007
• Docket Number: No. 06 C 3815.,06 C 3815.
• Citation: 525 F.Supp.2d 1039
• Parties: MORTON GROVE PHARMACEUTICALS, INC., Plaintiff, v. The NATIONAL PEDICULOSIS ASSOCIATION, INC., Ecology Center, Inc., MD, William B. Weil, MD, Defendants.
• Court: U.S. District Court — Northern District of Illinois

525 F.Supp.2d 1039

MORTON GROVE PHARMACEUTICALS, INC., Plaintiff, v. The NATIONAL PEDICULOSIS ASSOCIATION, INC., Ecology Center, Inc., MD, William B. Weil, MD, Defendants.

No. 06 C 3815.

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

November 30, 2007.

Timothy Joseph Rivelli, Cherish M. Keller, W. Gordon Dobie, William Charles O'Neil, Winston & Strawn LLP, Chicago, IL, for Plaintiff.

Richard M. Waris, Amy Joan Thompson, James Joseph Sipchen, Pretzel & Stouffer, Chtd., Debbie L. Berman, Amanda S. Amert, Jennifer Ann Hasch, Wade A. Thompson, Jenner & Block LLP, Chicago, IL, Edward J. Aucoin, Jr., Hinshaw & Culbertson, Lisle, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

ELAINE E. BUCKLO, District Judge.

Defendants Ecology Center, Inc. ("the Center") and William B. Weil, MD ("Weil") have brought a motion to dismiss counts II, III and IV of the second amended complaint filed by plaintiff Morton Grove Pharmaceuticals, Inc., ("MGP") for lack of personal jurisdiction under FED.R.CIV.P. 12(b)(2), improper venue under FED. R.CIV.P. 12(b)(3), or, in the alternative, to transfer the case to the Eastern District of Michigan, and for failure to state a claim under FED.R.CIV.P. 12(b)(6). For the following reasons, the motion is granted in part and denied in part.

I.

The following is a brief review of facts already set forth in Morton Grove Pharm., Inc. v. Nat'l Pediculosis Ass'n, Inc., 485 F.Supp.2d 944 (N.D.Ill.2007) ("Morton Grove I") and Morton Grove Pharm., Inc. v. Nat'l Pediculosis Ass'n, Inc., 494 F.Supp.2d 934 (N.D.Ill.2007) ("Morton Grove II"). MGP, a Delaware corporation, is a pharmaceutical company with its principal place of business in Morton Grove, Illinois. MGP manufactures Lindane Lotion and Lindane Shampoo ("collectively Lindane"), which are FDA-approved medications for the treatment of lice and scabies. These products are named after their active ingredient — lindane.¹ Presently, MGP is the only United States manufacturer and distributor of Lindane.

The Center is a non-profit corporation in Michigan. The Center's sole place of business is Ann Arbor, Michigan and has never maintained offices, registered agents or employees in Illinois. Weil is a physician licensed to practice in the field of pediatric medicine in Michigan. Weil is not licensed or alleged to have practiced medicine in Illinois and resides in Michigan.

MGP has filed claims for defamation (Count II), trade disparagement (Count III), and violations of the Illinois Deceptive Trade Practices Act, 815 ILCS 510/2 (Count IV) against defendants. The second amended complaint specifically alleges that the Center and Weil engaged in a false, misleading and defamatory attack campaign on MGP and its product, Lindane. (Sec. Am. Compl. at ¶¶ 8, 32.) As a result, MGP is alleged to have suffered a decline in the sale of Lindane and reputational injury. (Id. at ¶ 36.) With regard to jurisdiction, the complaint alleges the Center "actively solicits donors by mail and distributes `fact sheets' and `newsletters' ... in Illinois;" "has raised money from eleven Illinois residents since December 2003;" "and has spent $2,900 in business and travel expenses in Illinois since February 2004." (Id. at ¶ 11.)

II.

On a motion to dismiss for lack of personal jurisdiction, I read the complaint liberally and draw all reasonable inferences in favor of the plaintiff. Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir.1999). Where conflicting evidence is presented, I resolve factual disputes in the plaintiff's favor. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir.1997); Rotec Indus., Inc. v. Aecon Group, Inc., 436 F.Supp.2d 931, 933 (N.D.Ill.2006). The plaintiff has the burden of demonstrating that this court has personal jurisdiction over the defendant. RAR, 107 F.3d at 1276; Rotec Indus., 436 F.Supp.2d at 933. When ruling on a motion to dismiss based on the submission of written materials, the plaintiff "need only make out a prima facie case of personal jurisdiction." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002).

I have previously held I do not have general jurisdiction over defendants and, therefore, must only determine whether I have specific jurisdiction in light of the allegations in the second amended complaint. Specific jurisdiction is jurisdiction that arises out of or relates to the defendant's contacts with the forum. RAR, 107 F.3d at 1277 (citing 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)). Minimum contacts are established for purposes of specific jurisdiction when the defendant's contacts with the forum state demonstrate that the defendant has purposefully availed itself of the privilege of conducting activities within the forum state, such that the defendant could reasonably anticipate being haled into court there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980); Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); RAR, 107 F.3d at 1277 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)). Under the Due Process Clause of the Fourteenth Amendment, a defendant must have "certain minimum contacts with [the state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)) (further citations omitted); Hyatt Int'l, 302 F.3d at 716.

In support of the motion to dismiss, Weil has submitted an affidavit in which he states (1) he did not participate in the preparation or mailing of the April 2006 newsletter (which is the only allegedly defamatory mailing which contains his name) and (2) he was unaware it was going to be sent to any Illinois residents. Although Weil's first assertion arguably is contradicted by the April 2006 newsletter itself, MGP has not set forth any evidence to contradict the second. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782-83 (7th Cir.2003) ("[O]nce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction."). If Weil was not aware the letter was to be sent into Illinois, he did not purposefully avail himself in Illinois. See Burger King, 471 U.S. at 475, 105 S.Ct. 2174 ("This purposeful availment requirement ensures that a defendant will not be haled into a jurisdiction solely as a result of random, fortuitous, or attenuated contacts or of the unilateral activity of another party or a third person.") (quotations omitted); see also Nelson v. Bulso, 149 F.3d 701, 704 (7th Cir. 1998); Hy Cite Corp. v. Badbusinessbureau.com, L.L.C., 297 F.Supp.2d 1154, 1165-66 (W.D.Wis.2004). Accordingly, the second amended complaint is dismissed with respect to Weil for lack of personal jurisdiction.

In arguing against specific jurisdiction, the Center points out that although it did send two sets of allegedly defamatory newsletters in April and May of 2006 to Illinois residents, the contents of these newsletters and the fact that they sent the newsletters to fewer Illinois residents than Michigan residents weighs against a finding of specific jurisdiction. In support, the Center submits an affidavit by a Center employee attesting that the April and May 2006 newsletters were directed to Michigan residents. The affidavit and the Center do not dispute that the newsletters were sent to some Illinois residents, but argue that the small number of newsletters sent into Illinois in relation to the number sent in Michigan is inconsistent with purposeful availment. Finally, the Center argues that it was not aware of MGP as the manufacturer of the Lindane products and therefore was not targeting an Illinois resident.

A tortious act is not committed in Illinois merely because defendants allegedly caused MGP reputational and economic injury within the state; MGP must show that the tort occurred in the state of Illinois in some fashion. See Janmark, Inc. v. Reidy, 132 F.3d 1200, 1202 (7th Cir. 1997) (tort of interference with prospective economic advantage by making false claims of copyright infringement was not complete until Janmark's customer canceled the order in Illinois, therefore the injury and tort occurred in Illinois); Indianapolis Colts, Inc. v. Metro. Baltimore Football Club Ltd. P'ship, 34 F.3d 410, 412 (7th Cir.1994) (finding Maryland-based franchise subject to personal jurisdiction in Indiana because defendant entered Indiana through television broadcasts in allegedly infringing on plaintiff's intellectual property rights). Here, MGP alleges that the Center issued false, misleading and defamatory statements to Illinois residents. Defendant does not dispute that it intentionally mailed these letters to Illinois residents at their Illinois addresses. This is enough for specific jurisdiction, for the Center — through these newsletters — directed the allegedly improper statements to Illinois residents in Illinois, thereby committing a tort and causing injury within Illinois. MGP would not have a defamation claim, for example, if the Center had printed the newsletters and never distributed them to anyone. See Dubinsky v. United Airlines Master Executive Council, 303 Ill.App.3d 317, 323, 236 Ill.Dec. 855, 708 N.E.2d 441, 446-47 (1999) (in order to establish a claim for defamation, the defamatory statement must be published to a third party by defendant).² Whether defendant was aware that MGP was the manufacturer of Lindane or not is inconsequential in light of the fact that it allegedly defamed MGP, through its product, within state lines. See Janmark, 132 F.3d at 1202; Indianapolis Colts, 34 F.3d at 412; see also Nels...