Oce-Industries, Inc. v. Coleman

• Decision Date: 07 April 1980
• Docket Number: No. 79 C 689.,79 C 689.
• Parties: OCÉ-INDUSTRIES, INC., a corporation, Plaintiff, v. Jim COLEMAN, an Individual, d/b/a Jim Coleman Co., a sole proprietorship, Defendant.
• Court: U.S. District Court — Northern District of Illinois

487 F. Supp. 548

OCÉ-INDUSTRIES, INC., a corporation, Plaintiff, v. Jim COLEMAN, an Individual, d/b/a Jim Coleman Co., a sole proprietorship, Defendant.

No. 79 C 689.

United States District Court, N. D. Illinois, E. D.

April 7, 1980.

Richard A. Zachar of Pope, Ballard, Shepard & Fowle, Chicago, Ill., for plaintiff.

Samuel L. Boyd of Kelsoe & Boyd, Dallas, Tex., for defendant.

MEMORANDUM OPINION

GRADY, District Judge.

Plaintiff Océ-Industries, Inc. ("Oce") filed this suit against one of its distributors, Jim Coleman Company ("Coleman"), to recover $180,267.89 for photocopy equipment, supplies and replacement parts ordered during November 1977 and February 1979. Plaintiff is a Delaware corporation with its principal place of business in Illinois. Defendant is a sole proprietorship doing business in Dallas, Texas. Jurisdiction of this court is based on 28 U.S.C. § 1332.

Defendant has filed a motion to dismiss for lack of personal jurisdiction or improper venue. In the alternative, he has sought the transfer of this action under 28 U.S.C. § 1404(a) to the Northern District of Texas, Dallas Division, where defendant has brought suit against the plaintiff concerning the same subject matter.

For the following reasons, we will deny the defendant's motion.

Personal Jurisdiction

Personal jurisdiction over a nonresident defendant does not depend upon physical presence of the defendant within the state. Section 17 of the Civil Practice Act, Ill.Rev. Stat.1975, ch. 110, § 17, the so-called "long arm statute," establishes the standard for the exercise of personal jurisdiction over a nonresident defendant:

(1) 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 personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:

(a) The transaction of any business within this State; . . ..

The Illinois Supreme Court has stated in Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673, 679 (1957), that the long arm statute reflects "a conscious purpose to assert jurisdiction over nonresident defendants to the extent permitted by the due process clause." Accord, McBreen v. Beech Aircraft Corp., 543 F.2d 26, 28 (7th Cir. 1976).

The issue here is whether the defendant has had sufficient contacts with Illinois to satisfy requirements of due process and not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958).

In considering a challenge to its jurisdiction, this court may receive and weigh affidavits. O'Hare International Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971). While the burden of proof rests on the party asserting jurisdiction, for purposes of making such a determination, conflicts in the affidavits submitted by the parties must be resolved in favor of the plaintiff. United States Railway Equipment Co. v. Port Huron & Detroit Railway Co., 495 F.2d 1127, 1128 (7th Cir. 1974); O'Hare International Bank v. Hampton, supra, 437 F.2d at 1176. In this case the defendant has filed three affidavits of James Coleman, proprietor of the defendant-company, and two medical affidavits. The plaintiff has filed two affidavits of Robert Fortune, Director of Sales for the Copier Division of the plaintiff, and one affidavit of Edward Regal, the plaintiff's National Credit Manager since November 1976.¹

Applying the above rules, the jurisdictional facts appear as follows: Defendant initially solicited business from the plaintiff, and a sales agency relationship was established in 1973 as a result of a meeting occurring in Illinois. Fortune Affidavit, May 2, 1979, ¶ 3. In late 1974 the defendant became a distributor for plaintiff for portions of the southern region, including Texas. This arrangement was at the behest of the defendant. Fortune Affidavit, May 2, 1979, ¶ 4. During the subsequent four years, Coleman his personnel in Texas initiated numerous phone conversations—ranging in the hundreds — to the plaintiff's headquarters in Illinois. Fortune Affidavit, May 2, 1979, ¶ 6. It was through these phone calls to Illinois that orders were placed for the plaintiff's products by the defendant. Fortune Affidavit, May 2, 1979, ¶ 9. Each order for goods gave rise to a separate contract of sale. Fortune Affidavit, May 2, 1979, ¶ 10; Regal Affidavit, ¶ 4. Goods were shipped from Illinois and payment was sent to Illinois. Fortune Affidavit, May 2, 1979, ¶ 3. Most significantly, the course of dealing between the parties included shipment of the goods f. o. b. Chicago. Regal Affidavit, ¶ 3. The defendant thus assumed the risk for the goods in Illinois from the point at which they were delivered to the defendant's carrier.² Finally, Coleman and his agents during the period 1973-1978 attended several Oce sales meetings each year in Chicago. Fortune Affidavit, May 2, 1979, ¶¶ 6, 8; Coleman Affidavit, June 28, 1979, p. 3.

By engaging in this continuing course of conduct with the plaintiff, whose facility was located in Lincolnwood, Illinois, the defendant "should have known that he might be liable to suit in Illinois if the bill were not paid." Colony Press, Inc. v. Fleeman, 17 Ill.App.3d 14, 308 N.E.2d 78, 80 (1st Dist. 1974); see also, O'Hare International Bank v. Hampton, 437 F.2d 1173, 1177 (7th Cir. 1971); International Merchandising Associates, Inc. v. Lighting Systems, Inc., 64 Ill.App.3d 346, 20 Ill.Dec. 838, 380 N.E.2d 1047, 1051 (1st Dist. 1978) (pattern of telephone and mail contacts, as well as scattered personal visits to plaintiff's offices). Each sales contract was "accepted" in Illinois and the parties contemplated that plaintiff's performance would be completed there. Colony Press, Inc. v. Fleeman, supra, 308 N.E.2d at 80 (interpreting an f. o. b. Chicago contract).

These contacts are clearly sufficient to invoke the jurisdiction of this court under the Illinois long arm statute. The maintenance of this suit in this forum does not offend due process notions of fair play. Courts have, in fact, found personal jurisdiction based on significantly fewer contacts with the forum state than those presented here. The leading Illinois cases of Colony Press, Inc. v. Fleeman, supra, and Cook Associates, Inc. v. Colonial Broach and Machine Co., 14 Ill.App.3d 965, 304 N.E.2d 27 (1st Dist. 1973), serve to illustrate this point. In both cases, jurisdiction was founded on a single act of contracting by phone to engage the plaintiff's services. In Colony Press, an Ohio-based defendant contacted the plaintiff, an Illinois printing company, in response to plaintiff's advertising. A proposed newspaper insert ad was sent to the defendants in Ohio for their review, and defendants returned the corrected copy to the plaintiff for printing. The completed advertisements were shipped to the defendants, f. o. b. Chicago. An action to recover payment followed. In Cook Associates, a Delaware corporation doing business in Michigan telephoned the plaintiff, an Illinois employment agency, in response to an advertising flier of the plaintiff. Plaintiff sued for its fee because the defendant employed someone as a result of this contact. The court held, as in Colony Press, that the single phone call was enough to constitute the "transaction of business" within the meaning of the Illinois long arm statute. Cook Associates, 304 N.E.2d at 31; Colony Press, 308 N.E.2d at 80. Compare also, United States Railway Equipment Co. v. Port Huron & Detroit Railroad Co., 495 F.2d 1127 (7th Cir. 1974) (Illinois long arm jurisdiction exercised even though Illinois plaintiff initiated the business relationship); Morton Environmental Land Systems, Ltd., 55 Ill.App.3d 369, 13 Ill.Dec. 79, 370 N.E.2d 1106 (1st Dist. 1977) (Illinois long arm jurisdiction exercised even though contract was accepted outside of Illinois).

Defendant relies principally on Geneva Industries, Inc. v. Copeland Construction Corporation, 312 F.Supp. 186 (N.D.Ill.1970), and Wessel Company, Inc. v. Yoffee and Beitman Management Corp., 457 F.Supp. 939 (N.D.Ill.1978), in arguing insufficient contacts with this jurisdiction. These cases may be distinguished on three independent bases: They involved (1) the single sale of goods, (2) initiated by an out-of-state agent of the plaintiff, and (3) accepted in a nonforum state. Wessel distinguished Colony Press and Cook Associates on the latter two grounds.

Defendant's motion to dismiss for lack of personal jurisdiction is denied.³

Venue

Defendants contend that even if they were properly served with process in this action, the venue requirements were not met in the Northern District of Illinois. The relevant statutory provision, 28 U.S.C. § 1391(a), provides:

A civil action wherein jurisdiction is founded only on diversity of citizenship may . . . be brought only in the judicial district where all plaintiffs or all defendants reside, or in which the claim arose.

Reuben H. Donnelley Corp. v. Federal Trade Commission, 580 F.2d 264 (7th Cir. 1978), holds that a plaintiff corporation resides only in the district in which it is incorporated. Inasmuch as the defendant does not reside in Illinois, the only issue to consider is where the instant cause of action arose.

The test most frequently applied in establishing venue under the "claim arose" prong is the "weight of contacts" test. See, e. g., Ghazoul v. International Management Services, Inc., 398 F.Supp. 307, 314-315 (S.D.N.Y.1975); B. J. McAdams, Inc. v. Boggs, 426 F.Supp. 1091, 1103 (E.D.Pa. 1977). This requires an assessment of the forum which has the most significant contacts with the cause of action. However, at least one judge has recognized that "the cause of action for venue purposes can be said to arise...