Robb Container Corp. v. Sho-Me Co., 82 C 6313.

Citation566 F. Supp. 1143
Decision Date06 July 1983
Docket NumberNo. 82 C 6313.,82 C 6313.
PartiesROBB CONTAINER CORPORATION, Plaintiff, v. SHO-ME COMPANY, Elmer C. Lynn, Marco Products, Inc., and Robert Beckwith, Jr., d/b/a General Container Technology and General Container of Michigan, Defendants. Elmer C. LYNN and Sho-Me Company, Counter-plaintiffs, v. ROBB CONTAINER CORPORATION, Counter-defendants.
CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)

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Paul G. Juettner, Thomas R. Juettner, Michael Piontek, Gary, Juettner & Pyle, Chicago, Ill., for plaintiff.

Robert M. Ward, Cook, Wetzel & Egan, Chicago, Ill., James D. Hall, Oltch, Knoblock & Hall, South Bend, Ind., for defendants.

MEMORANDUM OPINION AND ORDER

ASPEN, District Judge:

Plaintiff Robb Container Corporation ("Robb") sued Sho-Me Company ("Sho-Me"), Elmer C. Lynn ("Lynn"), Marco Products, Inc. ("Marco"), Robert Beckwith, Jr. ("Beckwith") and General Packaging Technologies, Inc. ("GPT") for unfair competition, passing-off, trade disparagement, breach of contract, breach of fiduciary duty, common law trademark infringement, deceptive trade practices and conspiracy to interfere with contractual relations. Jurisdiction is asserted pursuant to 28 U.S.C. § 1332(a), and the amount in controversy is alleged to exceed $10,000 exclusive of interest and costs.1 Defendants Lynn and Sho-Me filed a counterclaim for breach of contract, trade disparagement, deceptive trade practices, unfair competition, conspiracy and various federal antitrust violations. Presently pending before the Court are (1) Robb's motion for a preliminary injunction; (2) defendants Marco, Beckwith and GPT's motion to dismiss or, in the alternative, for summary judgment; and (3) Robb's motion to dismiss or strike Lynn and Sho-Me's counterclaim. For reasons set forth below, Marco, Beckwith and GPT's motion to dismiss or for summary judgment is denied; Robb's motion for a preliminary injunction is granted; and Robb's motion to dismiss or strike is granted in part and denied in part.

Facts

Robb, a Delaware corporation with its principal place of business in this district, manufactures and sells blow-molded plastic containers. In 1975, defendant Lynn, a resident of Iowa, while representing Robb as a sales agent or manufacturer's representative, designed a container for which he and a partner, Leonard Slaughter, received a design patent, No. D246,029. This patent was granted on October 11, 1977, for fourteen years. Robb, Lynn and Slaughter had previously entered into two documents, a contract and an assignment concerning the container, which is known as Robb style 70105 container or the Canister Pack container, on June 29, 1976. Lynn and Slaughter were partners in Sho-Me Sales Agency, and they allegedly assigned to Robb all rights, title and interest in the container, its design, as well as the then pending design patent application. In the fall of 1980, the Sho-Me Agency partnership ended. Lynn subsequently incorporated his business under the name Sho-Me Company, which is a resident of Iowa and a defendant in this case. The aforementioned contract was terminated, and Slaughter was released from obligations to Robb; however, the patent assignment contract was not terminated, and Robb retained Lynn as a manufacturer's representative for container style 70105. In the fall of 1981, Robb alleges that Lynn, Beckwith, a resident of Indiana, and other individual co-conspirators formed defendant GPT, a resident of Indiana. GPT through defendant Marco, a resident of Michigan, engaged a mold maker to make two molds for the manufacturer of a container which is alleged to be virtually identical to Robb's style 70105 container. Marco subsequently began producing a container known as GPT-60. Lynn is the vice-president, secretary, director and shareholder in GPT. Beckwith is president, treasurer, director and shareholder in GPT.

I. Defendants Marco, Beckwith and GPT's Motion to Dismiss or for Summary Judgment

The above defendants have moved (1) to dismiss Robb's complaint for lack of personal jurisdiction; (2) to dismiss Counts III and IV of the complaint for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6); and (3) for summary judgment. We will consider these arguments in turn, beginning with defendants' motion to dismiss for lack of personal jurisdiction. Marco, Beckwith and GPT argue that this Court cannot exercise personal jurisdiction over them, because they lack sufficient or minimal contacts with the State of Illinois to satisfy the requirements of due process. When a non-resident defendant challenges a court's personal jurisdiction, the burden of proving jurisdiction rests with the plaintiff. KVOS, Inc. v. Associated Press, 299 U.S. 269, 278, 57 S.Ct. 197, 201, 81 L.Ed. 183 (1936); Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir.1979). This burden, however, is met by a prima facie showing that jurisdiction is conferred by the long-arm statute. O'Hare International Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971). And, for this purpose, any conflicts in affidavits or pleadings submitted by the parties must be resolved in plaintiff's favor. Neiman v. Rudolph Woolf & Co., 619 F.2d 1189, 1190 (7th Cir.1980), cert. denied, 449 U.S. 920, 101 S.Ct. 319, 66 L.Ed.2d 148 (1980); United States Railway Equipment Co. v. Port Huron & Detroit Railroad Co., 495 F.2d 1127, 1128 (7th Cir.1974). Thus, where the defendants' affidavits vary from those of Robb, for purposes of this motion, we will rely upon Robb's.

A.

When federal jurisdiction rests upon diversity of citizenship, as in the instant case, in personam jurisdiction is determined in accordance with the law of the forum state. O'Hare International Bank v. Hampton, 437 F.2d 1173, 1175 (7th Cir. 1971); Sullair Leasing Corp. v. Woodland, No. 82-3442 at 2 (N.D.Ill. December 29, 1982). Where a foreign corporation does business of a sufficiently substantial nature in the forum state, the state may entertain suit against the foreign corporation notwithstanding the fact that a particular cause of action arose from activities distinct from conduct within the state. Lindley v. St. Louis-San Francisco Railway Co., 407 F.2d 639, 640 (7th Cir.1968); Bodine's, Inc. v. Sunny-O, Inc., 494 F.Supp. 1279, 1281 (N.D.Ill.1980). In the event that a foreign corporation is not "doing business" in Illinois, courts look to the Illinois Long-Arm Statute, which provides, in pertinent part, that

(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;
(2) The commission of a tortious act within this State;
* * * * * *

Until recently it was assumed that the Illinois legislature enacted its long-arm statute with the intention of providing a means of asserting jurisdiction over non-residents to the extent permitted by federal due process standards. Braband v. Beech Aircraft Corp., 51 Ill.App.3d 296, 9 Ill.Dec. 684, 367 N.E.2d 118 (1977), aff'd, 72 Ill.2d 548, 21 Ill.Dec. 888, 382 N.E.2d 252 (1979), cert. denied, 442 U.S. 928, 99 S.Ct. 2857, 61 L.Ed.2d 296 (1979); Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673, 679 (1957); Ragold, Inc. v. Ferrero, U.S.A., Inc., 506 F.Supp. 117 (N.E.Ill.1980). But recently the Illinois Supreme Court held that its interpretation of the state's long-arm statute is not to be equated with changing federal standards of due process. Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847 (1981); Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 436-37, 56 Ill.Dec. 657, 660, 427 N.E.2d 1203, 1206 (1981). After Cook and Green, it is clear that even if the proposed exercise of personal jurisdiction meets federal constitutional requirements of due process, it may not be authorized under the stricter Illinois statutory requirement. State Security Insurance Co. v. Frank B. Hall & Co., 530 F.Supp. 94 (N.D.Ill.1981). The relevant jurisdictional facts are as follows.

According to Robb's affidavits, GPT sold thirty percent of its sales of the GPT-60 container in Illinois, over 57,000 containers. Beckwith is president of GPT and admitted running its daily operations in his deposition. He also met with General Foods in Chicago in an effort to sell it containers, and he represents several Illinois firms. Marco has shipped the GPT-60 container into Illinois and has accepted and shipped several products other than the GPT-60 container to Illinois customers. Moreover, it buys materials from Illinois suppliers. The above activities indicate a continuous and systematic course of business in Illinois on the part of all three defendants which is sufficient to allow jurisdiction to attach. International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Braband v. Beech Aircraft Corp., 51 Ill.App.3d 296, 298, 9 Ill.Dec. 684, 686, 367 N.E.2d 118, 120 (1977). Federal due process standards, which require that "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 v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980), are not offended by the exercise of jurisdiction over these defendants.

Furthermore, the Illinois Long-Arm Statute provides yet another basis for the assumption of jurisdiction in this matter, for if a corporation transacts business within Illinois and a cause of action arises from that transaction, Illinois will have jurisdiction. Braband v. Beech Aircraft Corp., 51 Ill.App.3d 296, 298, 9 Ill.Dec. 684, 686, 367 N.E.2d 118, 120...

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