Opinion
MDL NO. 1430, MASTER FILE NO. 01-CV-10861-RGS
February 19, 2003
MEMORANDUM AND ORDER ON DEFENDANT TAKEDAS MOTION TO RECONSIDER
Takeda's motion to reconsider is well presented, but unpersuasive. Wishful thinking and strained distinctions cannot make the Japax case go away. The Japax court was willing to assume that Sodick USA (Sodick's Illinois affiliate) was sufficiently independent of its parent to be accorded corporate respect. But as the court continued
[w]hile we need not determine whether Sodick USA is the alter ego of Sodick Japan for all purposes, we believe that the record contains enough links between the two companies to impute Sodick USA's marketing and servicing activities in Illinois to its parent corporation. (cf. People v. Parsons Co. (1984), 122 Ill. App.3d 590, 597-98, 78 Ill. Dec. 74, 80-81, 461 N.E.2d 658, 664-65.) To find otherwise would allow foreign corporations to purposefully exploit local markets and reap the benefits and advantages of doing business directly while insulating themselves from lawsuits by using "separate" subsidiaries and distribution networks to implement their business activity. See Maunder v. DeHavilland Aircraft of Canada (1983), 112 Ill. App.3d 879, 883, 68 Ill. Dec. 450, 453, 445 N.E.2d 1303, 1306, aff'd (1984), 102 Ill.2d 342, 80 Ill. Dec. 765, 466 N.E.2d 217 ("The fact that [defendant's] sales were conducted indirectly through a third party does not excuse [it] from the jurisdiction of Illinois courts.").Japax, Inc. v. Sodick Co. Ltd., 186 Ill. App.3d 656, 665, 542 N.E.2d 792, 797 (1989).
simply do not understand Takedas suggestion that the Japax court found that Sodick USA was a "mere service arm" of Sodick Japan. TheJapax court made it abundantly clear that whether or not Sodick USA was an "alter-ego" of its corporate parent had no relevance to its decision.
It is true, as Takeda argues, that the Japax court adapted the specific jurisdiction "stream of commerce plus" theory set out in Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980), and Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987), to the Illinois doing business test. "Here, Sodick Japan certainly appears to have targeted Illinois as a State in which it indended for its products to be sold, advertised, and serviced. Unlike the Japanese defendant in [Asahi Metal], Sodick Japan had more than mere knowledge that its products would likely end up in Illinois. The distribution scheme and advertising for its EDM systems, along with its control over the activities of Sodick USA makes it reasonable for this defendant to the subject to the Illinois courts' jurisdiction." Id., 186 Ill. App. at 666, 542 N.E.2d at 798. I must assume that the Japax court was as aware as I am that Volkswagen andAsahi Metal are specific jurisdiction cases. But like the Japax court, I am not persuaded that this makes any difference. In Asahi Metal, the Supreme Court was clearly of the view that in a modern economy, jurisdiction can properly be asserted on a stream of commerce basis alone. Indeed, half of the Court, led by Justice Brennan, would have permitted jurisdiction on the mere foreseeability of a product's arrival in the forum state. The ultimate finding of an absence of jurisdiction inAsahi Metal turned on fairness factors, rather than on the absence of contact with the forum state. Takeda does not argue that like the Japanese defendant in Asahi Metal, it did not purposefully direct its products towards Illinois. Takeda has never disputed that it has a major and longstanding presence in the Illinois market, deliberately targets sales of pharmaceutical and vitamins products at Illinois, and through its affiliates uses Illinois as a base of operations for the sales of its products in the United States as a whole. See Provident National Bank v. California Fed. Savings Loan Ass'n, 819 F.2d 434, 438 (3d Cir. 1987) (finding the general jurisdiction test satisfied where defendant's contacts with the forum were "central to the conduct of its business").
While it is true, as Takeda points out, that any number of federal courts have refused to apply the "stream of commerce" theory as a test for general jurisdiction, the test applied by the Japax court relied on the "plus" factors identified by Justice O'Connor, and not merely a flow of goods into the forum state. The First Circuit, among others, has approved the consideration of the volume of a defendant's sales in the forum in assessing the existence of general jurisdiction. See Noonan v. The Winston Co., 135 F.3d 85, 93 n. 8 (1st Cir. 1998).
As explained in the Memorandum and Order of January 24, 2003, at pp. 27-28, the fairness factors are easily satisfied in Takeda's case.
Takeda did not, as it claims, simply place its products in a free flowing "stream of commerce" with Illinois as an incidental destination. It shipped them directly to Illinois for distribution in Illinois and elsewhere in the United States. Nor did the court "implicitly" find that Takeda had purposefully established sufficient contacts with Illinois. it explicitly found so.
It is true that general jurisdiction as a doctrine has received little by way of elucidation from the Supreme Court, the doctrine having figured in only three cases, International Shoe Co. v. Washington, 326 U.S. 310 (1945), Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), and Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984). See Kristina L. Angus, The Demise of General Jurisdiction: Why the Supreme Court Must Define the Parameters of General Jurisdiction, 36 Suffolk U. L. Rev. 63 (2002) (arguing that the Court has regrettably neglected general jurisdiction while expanding the role of specific jurisdiction as the principal protection of state residents doing business with nonresident defendants). What is, however, clear from this handful of cases is that general jurisdiction is a "substantial contacts and continuity" test focusing on the quality (or in some cases, the quantity) and duration of a defendant's contacts with the forum in which jurisdiction is asserted. See, e.g., International Shoe, 326 U.S. at 318. Illinois's understanding of the test is no different. "[T]he Illinois courts . . . insist that the business done by the defendant in Illinois be intentional, substantial, and continuous rather than inadvertent, trivial, or sporadic, that it continue up to the time of suit, and that it evidence a purpose on the part of the defendant to avail [it]self of the protection of the laws of Illinois." Asset Allocation and Management Co. v. Western Employers Ins. Co., 892 F.2d 566, 570 (7th Cir. 1989). See also Publications International, Ltd. v. Burke/Triolo, Inc., 121 F. Supp.2d 1178, 1182-1183 (N.D. Ill. 2000) (finding an assertion of general jurisdiction proper where the defendant California company maintained an interactive website in Illinois soliciting orders for its sales catalogue). Because I am confident that the Illinois courts would find Takeda's commercial presence in Illinois to be both sustained and substantial, I remain convinced that the Illinois doing business test has been satisfied.
Helicorteros was the first Supreme Court case to adopt the distinguishing terms "specific" and "general" jurisdiction.
ORDER
For the foregoing reasons, Takeda's motion to reconsider is DENIED .