United States District Court, Northern District of Illinois, E.D
April 7, 1980
OC&EACUTE;-INDUSTRIES, INC., A CORPORATION, PLAINTIFF,
JIM COLEMAN, AN INDIVIDUAL, D/B/A JIM COLEMAN CO., A SOLE PROPRIETORSHIP, DEFENDANT.
The opinion of the court was delivered by: 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
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.*fn1
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.*fn2
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 non-forum 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.*fn3
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 "[t]he cause of action for venue purposes can
be said to arise wherever substantial material events took
place." United States ex rel. Flemings v. Chafee, 330 F. Supp. 193,
194 (E.D.N.Y. 1971) (Weinstein, J.) (interpreting
28 U.S.C. § 1391(e)), aff'd, 458 F.2d 544 (2d Cir. 1972), rev'd
on other grounds, 413 U.S. 665, 93 S.Ct. 2926, 37 L.Ed.2d 873
(1973); see also Bastille Properties, Inc. v. Hometels of
America, Inc., 476 F. Supp. 175, 180 (S.D.N.Y. 1979) (claim can
arise in more than one district under § 1391(a)).*fn4
Applying once again the rule that where the parties'
versions of the facts conflict the plaintiff's affidavits
shall be credited, we find the following contacts with
Illinois in the instant case: the place where the individual
contracts sued upon by the plaintiff were performed, the place
where the contracted orders were accepted, and the place where
the breach resulted because of the failure to make payment
there. Without considering any additional nexus to the forum
state, such as the place of negotiation of certain terms of
the individual contracts (see Fortune Affidavit, May 2, 1979,
¶ 8), the instant claim can be said to have "arisen" in
Illinois. Compare Gardner Engineering Corp. v. Page Engineering
Co., 484 F.2d 27, 33 (8th Cir. 1973) (place of performance is
proper venue in contract action); Océ-Industries, Inc. v.
Three B Distributors, et al., 79 C 688, Mem. Op. at pp. 6-7
(N.D.Ill. August 13, 1979) (place where individual contracts
performed, accepted, and where payment due proper venue);
Deering Milliken Research Corp. v. Textured Fibres, Inc.,
310 F. Supp. 491, 500 (D.S.C. 1970) (place where payment due proper
venue in contract action).
As an alternative basis for decision, we find that because
the defendant was subject to jurisdiction in this forum on a
cause of action arising out of the "transaction of business"
in Illinois within the meaning of the Illinois long-arm
statute, this claim necessarily arose in Illinois (more
particularly, the Northern District of Illinois) for purposes
of 28 U.S.C. § 1391(a). The Illinois long-arm statute, supra,
confers personal jurisdiction only where the cause of action
sued upon is one "arising from" the defendant's transaction of
business within the state. Several courts, while not expressly
considering the matter, have assumed that the "arising out of"
requirements of the similar New York long arm statute*fn5 and
§ 1391 are coextensive. Car-Freshner Corp. v. Broadway
Manufacturing Co., 337 F. Supp. 618 (S.D.N.Y. 1971); McCrory
Corp. v. Cloth World, Inc., 378 F. Supp. 322 (S.D.N.Y. 1974).
Judge Robert Carter in Bastille Properties, Inc. v. Hometels of
America, Inc., 476 F. Supp. 175 (S.D.N.Y. 1979), specifically
adopted this approach. See generally his treatment of the issue
at 476 F. Supp. 179-182. A leading commentator has also favored
the parallel treatment of personal jurisdiction and venue. See
1 Moore's Federal Practice, ¶ 0.142[5.-2] at 1430. But see,
Honda Associates, Inc. v. Nozawa Trading, Inc., 374 F. Supp. 886,
889 (S.D.N.Y. 1974) (disapproving approach); 15 Wright,
Miller & Cooper, Federal Practice and Procedure § 3806
(emphasizing conceptual problem with equating personal
jurisdiction, a matter of state law, with venue, a matter of
federal law).*fn6 We adopt and commend this so-called
"identity approach," which will allow courts to get away from
the frequent hypertechnical weighing of "contacts" under §
1391. In cases where the forum is clearly inconvenient to the
defendant, a § 1404(a) transfer may be considered.*fn7
Under either approach, venue properly lies in the Northern
District of Illinois.
Finally, defendant has moved to transfer this case to the
Northern District of Texas, Dallas Division, under 28 U.S.C. § 1404(a),
For the convenience of parties and witnesses, in
the interest of justice, a district court may
transfer any civil action to any other district
or division where it might have been brought.
A moving party has a strong burden to show that another
forum is more appropriate, and unless the balance strongly
favors the defendant, plaintiff's choice of forum should not
be disturbed. Magnavox Co. v. Bally Manufacturing Corp.,
414 F. Supp. 891, 892 (N.D.Ill. 1976) and cases cited therein. Only
if "none of the conduct complained of occurred in the forum
selected by the plaintiff," should plaintiff's choice be given
"minimal value." Chicago, Rock Island & Pacific Railway Co. v.
Igoe, 220 F.2d 299, 304 (7th Cir. 1955); Brindle v. Chesapeake
& Ohio Railway Co., 357 F. Supp. 1116, 1118 (N.D.Ill.
Subsequent to the filing of this lawsuit, the defendant
brought suit against the plaintiff in the Northern District of
Texas. The claims in that suit, arising out of the same
contractual transactions as the plaintiff's cause of action
here, allege breach of contract, breach of warranty, fraud and
deceptive trade practices on the part of the plaintiff.
Defendant relies upon the pendency of the Texas case as one
reason for a transfer. In addition, defendant asserts that
most of his witnesses are in Texas or that region and that he
has compulsory process problems with witnesses if the action
is maintained in this district. Defendant also points to the
disproportionate financial means of the plaintiff, certain
medical problems of the proprietor of the defendant company,
and the less crowded state of the Dallas federal court docket.
We note that the action filed in this district could have been
brought in the proposed transferee district.
Upon closer examination, defendant's justifications for
transfer reduce to complaints of mere discomfort and
annoyance. Defendant essentially concedes that the hardship to
the parties in the respective forums can be analogized to a
zero-sum game: convenience to one party in one jurisdiction is
offset by inconvenience to the other. See, e.g., Defendant's
Motion to Dismiss or Transfer, p. 3. A transfer will not be
ordered if the result is merely to shift the inconvenience from
the defendant to the plaintiff. Van Dusen v. Barrack,
376 U.S. 612, 84 S.Ct. 805, 11 L.Ed.2d 945 (1964); Bastille Properties,
Inc. v. Hometels of America, Inc., 476 F. Supp. 175, 182
Reviewing the specifics, the locus of the defendant's
witnesses in Texas is countered by plaintiff's list of
witnesses in Illinois. See generally, Fortune Affidavit,
January 22, 1980. Defendant's counterclaims filed in Texas
involve principally claims of misrepresentation (Defendant's
Complaint, Counts I-VIII), and we cannot say that plaintiff's
witnesses seeking to rebut statements of falsehood or deceit
should not be considered. Nor does the defendant alone suffer
the risk of compulsory process problems with non-party
witnesses. The plaintiff has provided evidence to document this
same claim. Fortune Affidavit, January 22, 1980, ¶ 5.*fn9
Defendant admits that discovery
difficulties of the same order exist regardless of where the
case is tried. Defendant's Supplemental Memorandum in Support
of Motion to Transfer, p. 13. Finally, while there is an
indication that this suit could be more expeditiously heard in
Texas (Defendant's Supplemental Memo, p. 12), given the rough
equilibrium of the other factors, this alone is not enough to
tip the scales.*fn10
Defendant's motion to transfer the instant action to Texas