Ragold, Inc. v. Ferrero, USA, Inc.

• Decision Date: 08 August 1980
• Docket Number: No. 80 C 3980.,80 C 3980.
• Citation: 506 F. Supp. 117
• Court: U.S. District Court — Northern District of Illinois
• Parties: RAGOLD, INC., a Delaware Corporation, Plaintiff, v. FERRERO, U.S.A., INC., a Delaware Corporation, and Altschiller, Reitzfeld, Jackson & Solin, Inc., a New York Corporation, Defendants.

506 F. Supp. 117

RAGOLD, INC., a Delaware Corporation, Plaintiff, v. FERRERO, U.S.A., INC., a Delaware Corporation, and Altschiller, Reitzfeld, Jackson & Solin, Inc., a New York Corporation, Defendants.

No. 80 C 3980.

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

August 8, 1980.

COPYRIGHT MATERIAL OMITTED

William Freivogel, Robert E. Wangard, Monica A. Carroll, Ross, Hardies, Babcock, O'Keefe & Parsons, Henry L. Mason, Sidley & Austin, Chicago, Ill., for plaintiff.

Malcolm A. Chandler, Burditt & Calkins, Chicago, Ill., Robert A. Schwartz, Davis & Gilbert, New York City, for defendants.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiff, Ragold, Inc. ("Ragold"), a Delaware corporation with its principal place of business in Illinois, has brought an action against defendants, Ferrero, U.S.A., Inc. ("Ferrero"), a Delaware corporation with its principal place of business in New York, and Altschiller, Reitzfeld, Jackson & Solin ("Altschiller"), a New York corporation with its principal place of business in New York. Jurisdiction for this action is based upon the Lanham Act, 15 U.S.C. § 1121 and upon 28 U.S.C. § 1338.

In brief, plaintiff alleges that defendants have conspired to develop and disseminate an advertising campaign that falsely describes and misrepresents the properties of Tic Tac, a candy mint that is sold and distributed by Ferrero, in its comparison to Velamints, a candy mint imported and distributed by Ragold. Altschiller is alleged to be an advertising agency engaged by Ferrero for the advertising and promotion of Tic Tac. Plaintiff claims that defendants' actions constitute violations of section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), various state statutes and common law.

This matter is now before the Court on defendants' motion to dismiss for want of jurisdiction or, in the alternative, to transfer, and on plaintiff's motions for a temporary restraining order and for an expedited discovery schedule. Each of these motions will be treated separately and in the order listed above.

I. The Illinois Long-Arm Statute

Defendants have moved to dismiss plaintiff's complaint on the ground that this Court lacks personal jurisdiction over defendants under the Illinois long-arm statute, Ill.Rev.Stat. ch. 110, § 17(1), which provides:

Any person, whether or not a citizen 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 such acts:

(a) The transaction of any business in this State;

(b) The commission of a tortious act within this State....

Plaintiff, who bears the burden of proving that jurisdiction is appropriate, KVOS, Inc. v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 200, 81 L.Ed. 183 (1936), argues that defendant has both transacted business and committed tortious acts in Illinois. Though both parties have introduced affidavits in support of their claims, where the affidavits contain conflicting statements, this Court must assume the facts related in plaintiff's affidavits and complaint to be true. O'Hare Int'l Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971).

Plaintiff claims that defendants transact business in Illinois by virtue of their continuous sales and advertising in this state. Plaintiff supports this claim with affidavits by persons who state (1) that defendants' trade materials have been distributed to brokers and other persons in Illinois; (2) that defendant Ferrero distributes Tic Tacs nationally; and (3) that defendant Altschiller created the television commercials at issue and caused them to be broadcast on local television stations in Chicago since mid-June, 1980.

Defendants respond by arguing that plaintiff's complaint does not contain allegations adequate to support its claim that defendants engage in business activities in Illinois. Defendants assert that the only transaction of business in Illinois alleged in plaintiff's complaint is the extensive sale of Tic Tacs in Illinois (Complaint ¶ 6), and that this allegation cannot suffice as grounds for a finding of personal jurisdiction because the alleged cause of action does not arise out of the sale of Tic Tacs.¹ While it is true that plaintiff's cause of action does not arise out of the sale of Tic Tacs, plaintiff has alleged other acts that bring defendants under the jurisdiction of this Court. In paragraph 7 of the complaint, plaintiff alleges that defendants collaborated and conspired in the development of an advertising campaign, including television commercials, promotional brochures, and other materials that falsely describe and misrepresent the properties of Tic Tac, and that this campaign was disseminated to consumers, brokers, wholesalers, and retail outlets "throughout the United States." Implicit in this allegation is the obvious fact that the term "throughout the United States" includes Illinois. Plaintiff's affidavits provide the details necessary to flesh out the general allegations of the complaint. While plaintiff's complaint may have benefitted from greater specificity, that does not constitute cause to dismiss this action. "When a court is considering a challenge to its jurisdiction over defendant or over a res, it may receive and weigh affidavits; `matters of jurisdiction ... are very often not apparent on the face of the summons or complaint'." Wright & Miller, Federal Practice and Procedure: Civil § 1351, at 565-566 (1973).

It is the advertising and solicitation by plaintiff that give rise to this cause of action. This case is markedly different from Lindley v. St. Louis-San Francisco Railway Co., 407 F.2d 639, 641-642 (7th Cir. 1968), cited by defendants, where the court held that a railroad, whose only activity in Illinois was the solicitation of business, did not come under the Illinois court's jurisdiction, because the cause of action did not arise from the solicitation. However, Lindley is distinguishable from the instant case because this cause of action arises from defendants advertising and solicitation of customers and retailers in Illinois. The Court, therefore, concludes that defendants have transacted business under section 17(1)(a) of the Illinois long-arm statute.

Personal jurisdiction over defendants also exists by virtue of section 17(1)(b) of the long-arm statute, since those acts which constitute the transaction of business are also tortious acts committed in Illinois. Violations of section 43(a) of the Lanham Act constitute a tort of unfair competition. F.E.L. Publications, Ltd. v. Nat'l Conference of Catholic Bishops, 466 F.Supp. 1034, 1044 (N.D.Ill.1978). It is irrelevant that defendants may have effected distribution in Illinois through independent distributors, Bodine's, Inc. v. Sunny-O, Inc., 494 F.Supp. 1279 (N.D.Ill.1980), or through agents. Ill. Rev.Stat. ch. 110, § 17(1).

The decision in Novel v. Garrison, 294 F.Supp. 825 (N.D.Ill.1969), is not to the contrary. The court in Garrison relied upon the decision in Gray v. American Radiator & Standard Sanitary Corp., 22 Ill.2d 432, 176 N.E.2d 761 (1961), as being controlling. 294 F.Supp. at 831. Recognizing the legislative intent of the Illinois long-arm statute to exert jurisdiction over non-residents to the extent permitted under due process, the court in Gray held that, "the relevant inquiry is whether defendant engaged in some act or conduct by which he may be said to have invoked the benefits and protections of the law of the forum." 22 Ill.2d at 440, 176 N.E.2d at 765. It is undisputed that defendants have placed allegedly deceptive trade materials and commercials for shipment into Illinois; that the materials have been distributed in Illinois; and that the commercials have been shown in Illinois. To the extent that plaintiff has suffered injury from the tortious conduct alleged, a significant proportion of that injury has occurred in Illinois.

For the foregoing reasons, defendants' motion to dismiss for want of jurisdiction must be denied.

II. Motion to Transfer

Having determined that the Court possesses jurisdiction over defendants on the basis of the Illinois long-arm statute, the Court now turns to defendants' request to have this matter transferred to the Southern District of New York.² The Court begins from the premise that since plaintiff is a resident of this judicial district, its choice of venue is entitled to considerable deference. Hess v. Gray, 85 F.R.D. 15, 24 (N.D.Ill.1979). Consequently, movant must persuade the Court that the considerations embodied in section 1404(a) weigh heavily in favor of transfer. Illinois Tool Works, Inc. v. Sweetheart Plastics, Inc., 436 F.2d 1180, 1188 n.19 (7th Cir. 1971); Cunningham v. Cunningham, 477 F.Supp. 632, 634 (N.D.Ill.1979). Whether this burden has been met is a decision committed to the discretion of the Court upon a review of all the circumstances of the case. General Foods Corp. v. Carnation Co., 411 F.2d 528, 533 (7th Cir. 1969); Hess id. at 23.

There is no dispute that venue would be proper both in the transferror and transferee courts. Defendants, however, have not convinced the Court that the other essential considerations — convenience of the parties, convenience of the witnesses, and the interests of justice — weigh heavily in favor of transfer.

While it is correct that defendants' employees, accountants and records are located in New York, it is likewise true that plaintiff's records, employees, and advertising agency's records are all located in Chicago. Consequently, insofar as convenience of parties is concerned, transfer would shift, rather than eliminate, inconvenience.

Similarly, the Court finds that convenience of witnesses would not be furthered by transfer. Defendants have suggested that many of their witnesses reside in the New York area. Most of these proposed witnesses are...