Opinion
Civ. No. 00 CV 0057.
March 10, 2000.
MEMORANDUM OPINION AND ORDER
Plaintiff Competitive Strategies Group, Ltd. ("Competitive") filed a complaint against defendant IP Communications Corp. ("IP"), seeking to collect money it alleges is due and owing for the services it provided to IP. Defendant IP has filed a motion to dismiss for lack of personal jurisdiction under Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure or, in the alternative, a motion to transfer venue to the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). Defendant IP argues that it is not subject to personal jurisdiction in Illinois because it has had insufficient contacts with the State of Illinois in order for this court to exercise in personam jurisdiction over it. In the alternative, defendant IP argues that a transfer of venue is appropriate in this case because the interest of justice and convenience of the parties and witnesses weighs in favor of transferring this case to the Northern District of Texas. For the following reasons, defendant IP's motion to dismiss for lack of personal jurisdiction is DENIED. Defendant IP's motion to transfer is also DENIED.
BACKGROUND
Plaintiff Competitive is an Illinois corporation with its principal place of business in Chicago, Illinois. Competitive provides telecommunications consulting services to its clients. Defendant IP is a Texas corporation with its principal place of business in Dallas, Texas. IP does not maintain a place of business in Illinois nor does IP have a designated agent in Illinois. IP provides high-speed network and internet access solutions for residential and business customers.
In the summer of 1998, Competitive contacted Alt Communications ("Alt") to discuss the services offered by Competitive. In late November 1998, Competitive entered into a consulting relationship with Alt. Competitive's main contact at ALT was Sean Minter ("Minter"). At some point in early 1999, Minter left Alt to begin his own business venture, defendant IP. Minter thereafter contacted Competitive by telephone and requested Competitive to perform consulting work for IP. After preliminary negotiations, on or about February 22, 1999, Competitive and IP entered into a written agreement for Competitive to provide consulting services for IP. This written agreement and services allegedly performed are the subject of this lawsuit. The written agreement was signed by Competitive in Illinois; IP signed it in Texas; and IP faxed a copy to Competitive in Illinois.
Defendant IP's argument that it was Competitive, not itself, who initiated the business relationship that resulted in the agreement between IP and Competitive is disingenuous at best. While it may be true that Competitive solicited Alt, Minter's former employer, for business back in 1998, the facts before the court clearly establish that it was Minter who contacted Competitive inquiring about the services Competitive could offer his new business IP. At no time, in his affidavit or otherwise, does Minter reject Competitive's assertion that it was Minter who in fact contacted Competitive regarding transacting business for IP. In addition, in deciding a motion to dismiss for lack of personal jurisdiction, this court must resolve all relevant factual disputes in plaintiff's favor. Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996).
Over the following months, all of the contacts between Competitive and IP occurred either by telephone, e-mail correspondence, or facsimile. No representative of IP traveled to Illinois. However, in all instances, Competitive performed its services for IP from its Illinois offices.
STANDARD OF REVIEW
The plaintiff bears the burden of proving facts sufficient to establish personal jurisdiction. Steel Warehouse of Wis., Inc. v. Leach, 154 F.3d 712, 714 (7th Cir. 1998). In ruling on a motion to dismiss for lack of personal jurisdiction, a court must accept all allegations of the complaint as true, and any conflict in affidavits must be resolved in favor of the plaintiff. Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996) (citing Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987)).
ANALYSIS
I. Personal Jurisdiction — Motion to Dismiss under Rules 12(b)(2) and 12(b)(3)
A federal court sitting in diversity has personal jurisdiction only if a court in the state in which it sits has jurisdiction.RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). Thus, this court must look to the laws of the State of Illinois to determine whether defendant IP is subject to personal jurisdiction. Illinois authorizes personal jurisdiction on any basis permitted by the Illinois Constitution as well as to the full extent under the United States Constitution. Id. at 1276. This court must look first to the Illinois Constitution then to the United States Constitution in order to determine if personal jurisdiction is appropriate in this case. Id.
If the contacts between the defendant and the State of Illinois are sufficient to satisfy the requirements of due process, then the requirements of both the Illinois and the United States Constitution have been met and the court may assert personal jurisdiction over a defendant. Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995), cert. denied, 518 U.S. 1004 (1996). To satisfy the requirements of due process, a defendant must have minimum contacts with the forum state "such that the maintenance of the suit does 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 (1945). The contacts must be established by the purposeful acts of the defendant. Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir. 1990). Critical to the analysis is a showing that the defendant reasonably anticipated being haled into court in the forum state. RAR, 107 F.3d at 1277. The Due Process Clause limits when a state may assert personal jurisdiction over nonresident individuals and corporations. Id. Thus, a state may assert general or specific jurisdiction over a defendant. General jurisdiction is present when the defendant has continuous and systematic contacts with the forum, while specific jurisdiction is present in a suit arising out of or relating to the defendant's contacts with the forum state. Id.
In this case, Competitive argues that IP transacted business in Illinois, thus, Competitive has asserted specific jurisdiction using 110 ILCS 5/2-209(a)(1), transacting business in Illinois, to justify jurisdiction in this case. In specific jurisdiction cases, the court "must decide whether a defendant has `purposefully established minimum contacts with the forum State' and consider whether, by traditional standards, those contracts would make personal jurisdiction reasonable and fair under the circumstances." RAR, 107 F.3d at 1277 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985)). Specific jurisdiction requires that the lawsuit "arise out of" or "be related to" the minimum contacts defendant had with the forum state. Id. A defendant will have fair warning that it could be required to defend a lawsuit in the state if the defendant purposefully availed itself to Illinois. Klump, 71 F.3d at 1372 (citing Burger King, 471 U.S. at 477-78). Finally, as previously stated, even if minimum contacts exist, jurisdiction must be consistent with traditional notions of fair play and substantial justice. Logan, 103 F.3d at 52.
A. Minimum Contacts
Competitive has made a sufficient showing of IP's contacts with Illinois to establish personal jurisdiction over IP. First of all, the record before the court establishes that IP, through its President Minter, contacted Competitive to procure Competitive's consulting services. Personal jurisdiction may be conferred by the initiation of the business transaction in Illinois. Heritage House Restaurants, Inc., v. Continental Funding Group. Inc., 906 F.2d 276, 280 (7th Cir. 1990) (citing Madison Consulting Group v. State of South Carolina, 752 F.2d 1193, 1202 (7th Cir. 1985)). In addition, the record shows that IP made several requests for different business services over a six month period. As the Seventh Circuit stated, "when a defendant is responsible for initiating several significant links with the forum plaintiff leading to the transaction at issue, this is sufficient to satisfy the Fourth Amendment." Madison, 752 F.2d at 1203. Based on this evidence, it should have been reasonably foreseeable to IP that it could be subjected to jurisdiction in an Illinois forum.
Second, the parties' negotiations, contract, and actual course of dealing all demonstrate that IP purposely established contacts with Illinois such that it should have reasonably anticipated the possibility of litigation in Illinois. IP negotiated the contract by telephone to Illinois and sent materials to Illinois. See Mid-America Tablewares Inc. v. Mogi Trading Co., 100 F.3d 1353, 1360 (7th Cir. 1996) (sending of faxes and materials to state during initial contract discussion supported jurisdiction). The parties entered into the written agreement in Illinois. See Asset Allocation Management Co. v. Western Employers Insurance Co., 892 F.2d 566, 570 (7th Cir. 1989). The contract calls on Competitive to perform various consulting services for IP, first in connection with preparing a business plan and financial models for IP, then in assisting with securing financial backing for IP and IP knew that Competitive would be doing this work from Illinois. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479-80; 105 S.Ct. 2174, 2186 (1985); Madison, 752 F.2d at 1204 (while defendant's contemplation of plaintiff's performance of contract in forum state is not dispositive, it does constitute meaningful contact between defendant and forum). Moreover, the parties had an ongoing business relationship as IP continued to send additional materials and information to Competitive in Illinois during the performance of the contract. Daniel J. Hartwig Associates, Inc. v. Kanner, 913 F.2d 1213, 1219 (7th Cir. 1990) (substantial factor when defendant maintains an ongoing relationship with a resident of the forum state); Burger King, 471 U.S. at 487; 105 S.Ct. at 2190 (substantial and continuing relationship with Florida headquarters). Under Burger King and recent Seventh Circuit precedent, IP had sufficient minimum contacts with Illinois to make litigation here reasonable and foreseeable.
B. Jurisdiction Does Not Offend Traditional Notions of Fair Play and Substantial Justice
Now that minimum contacts have been established, IP can escape jurisdiction only by making a compelling case that forcing them to litigate in Illinois would violate traditional notions of fair play and substantial justice. Logan, 103 F.3d at 53. Making a defendant litigate in a state in which that defendant engages in economic activity is not traditionally unfair. Id. at 54. A court, however, may look to following factors to determine the fairness of a court's exercise of jurisdiction over a defendant: (1) the burden on the defendant; (2) the interests of the forum state; and (3) plaintiff's interest in obtaining relief.World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564 (1980).
Upon weighing these factors in this case, it is clear that haling IP into an Illinois court would be both fair and reasonable. First of all, IP has not demonstrated that it would be unduly burdensome to travel to Illinois in order to defend this case. Second, there is no other compelling evidence to show that subjecting IP to personal jurisdiction in Illinois would violate traditional notions of fair play and substantial justice. Finally, Illinois has a strong interest in "assuring adequate remedial relief for its citizens who have been injured" by out-of-state actors. Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992); Heritage House, 906 F.2d at 284.
Based on the totality of the facts established, IP has purposefully established adequate minimum contacts with Illinois such that the exercise of personal jurisdiction over it in Illinois under the circumstances is consistent with the traditional notions of fair play and substantial justice. Therefore, defendant IP's motion to dismiss for lack of personal jurisdiction must be denied.
II. Motion to Transfer Venue
Defendant IP argues that if this court determines, as it has, that the case should not be dismissed because they are subject to personal jurisdiction in Illinois, this case nevertheless should be transferred to the United States District Court for the Northern District of Texas pursuant to 28 U.S.C. § 1404(a). Section 1404(a) allows the district court to transfer venue upon a showing that: (1) venue is proper in the transferor district; (2) the transferee court is in a district where the action may have been brought originally; and (3) the transfer is for the convenience of parties and witnesses and in the interest of justice. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986). Because weighing the pertinent circumstances for and against transfer necessarily involves a case-by-case determination, a decision to transfer an action is committed to the district court's sound discretion. Id. at 219.
Regarding the first part of the test, IP concedes that venue is proper in this district since a substantial portion of the events giving rise to Competitive's claim occurred in Chicago, Illinois which is within this court's district. 28 U.S.C. § 1391(a)(2). The second part of the test is also met since Competitive could have originally instituted this lawsuit in the Northern District of Texas since IP is a Texas corporation, 28 U.S.C. § 1391(a)(1).
Turning to the third part of the test, this court finds that the transfer would not serve the convenience of the parties and the witnesses nor be in the interest of justice. Coffey, 796 F.2d at 220. The interests of the parties that may support a transfer include: (1) the plaintiff's choice of forum; (2) the situs of material events; (3) the relative ease of access to sources of proof in each forum, including the power to compel the appearance of witnesses and the costs of obtaining the attendance of witnesses; and (4) the parties' convenience, including their respective residences and abilities to bear the expense of trial in a particular forum. Von Holdt v. Husky Injection Molding Sys., Ltd., 887 F. Supp. 185, 188 (N.D.Ill. 1995).
In this case, Competitive chose the Northern District of Illinois as its desired forum. While the plaintiff's choice of forum is one factor among many to be considered, id., after addressing the other factors, this court found that IP has failed to demonstrate that, for the convenience of the parties and witnesses and in the interest of justice, this case should be transferred to Texas. IP merely makes a conclusory statement that "[t]hird party witness, material proof, and IP's principal place of business are all located in the Northern District of Texas." (IP's Brief, p. 15). IP has failed to demonstrate what witnesses or material proof relevant to this litigation would be in Texas. This court cannot transfer the case in the interest of justice based on conclusory statements and speculation. Moreover, Competitive asserts that since the performance of the written agreement took place in Illinois, the relevant documents and witnesses are all located in Illinois. Thus, this court finds no benefit in transferring this case with regard to the convenience of the witnesses and parties.
Finally, Competitive has never maintained an office in Texas. Therefore, Competitive will suffer some hardship by litigating this case in the Northern District of Texas. Thus, based on the totality of the circumstances, the transfer of this case to the Northern District of Texas is not warranted because it does not serve the interests of justice or the convenience of the parties and witnesses. Accordingly, defendant IP's motion to transfer this case to the Northern District of Texas must be denied.
CONCLUSION
For the above stated reasons, defendant IP's motion to dismiss for lack of personal jurisdiction is DENIED. Defendant IP's motion to transfer is also DENIED. The parties are strongly urged to discuss settlement. The case is set for a report on status at 10:00 a.m. on April 6, 2000.