The opinion of the court was delivered by: Shadur, District Judge.
Knorr Brake Corporation ("Knorr Brake") has sued Harbil,
Inc. ("Harbil") and P.E.P. Industries, Ltd. ("P.E.P.") for
rescission, breach of contract and injunctive relief based on
their alleged breach of an agreement between Knorr Brake and
Harbil. Harbil has responded with a counterclaim charging
Knorr Brake and its corporate parent, Knorr-Bremse GmbH
("Knorr-Bremse"), with various torts and breaches of contract
and fiduciary duties. Harbil now seeks to join seven
individuals as additional counter-defendants.*fn1 For the
reasons stated in this memorandum opinion and order Harbil's
motion is denied and Count V of its First Amended
Counter-Complaint (the "Counter-Complaint") is stricken.
Knorr Brake filed its Complaint in December 1981. On
December 9 this Court entered a temporary restraining order
against Harbil and P.E.P. and promptly thereafter conducted an
evidentiary hearing on Knorr Brake's motion for preliminary
injunction. This Court's January 28, 1982 memorandum opinion
and order ("Opinion I") reflected its findings of fact and
conclusions of law, as required by Fed.R.Civ.P. ("Rule")
52(a), granting the motion. It issued the preliminary
injunction itself February 22, contemporaneously with a
supplemental memorandum opinion ("Opinion II").
Harbil alleges six of the proposed individual
counterdefendants are aliens and one is a citizen of Maryland.
When Harbil first tendered the Counter-Complaint for filing,
this Court specifically directed it to address two issues
(Aug. 17, 1982 Tr. 2, 6):
Harbil has been utterly unresponsive both to this Court and to
Knorr's arguments on the jurisdictional issue. That issue is
dispositive and will be addressed first.
Nonetheless, in light of Knorr's pending motion for
attorneys' fees, this opinion will also discuss Harbil's
misuse of controlling Illinois law*fn4 in its misguided
response on the intracorporate conspiracy issue. That
discussion also bears of course on the viability of
Counter-Complaint Count V.
Harbil alleges generally (Counter-Complaint ¶ 4) the seven
individuals acted in Illinois or caused acts in Illinois. But
when this Court, already familiar with the facts from the
preliminary injunction hearing, directed Harbil to provide at
least some threshold level of particularization as a condition
to haling the individuals into court here,
Its initial supporting memorandum did not even address the
jurisdictional issue as such, despite this Court's clear
directive. Spurred by Knorr's responsive memorandum, Harbil
now asserts (R. Mem. 13-14) jurisdiction over the seven
individuals is authorized by either of two provisions of the
Illinois long-arm statute, Ill.Rev.Stat. ch. 110, § 2-209
(1982) ("Section 2-209"). Harbil claims the individuals
transacted business (see Section 2-209(a)(1)) and committed
tortious acts (see Section 2-209(a)(2)) in Illinois.
Harbil is of course correct to repair to Section 2-209 in
this diversity action. See State Security Ins. Co. v. Frank B.
Hall & Co., 530 F. Supp. 94, 96 (N.D.Ill. 1981). But it cannot
find support there.
It asserts (R.Mem. 3-4, 13) the individuals had "personal
contacts" and were present in Illinois in connection with the
Harbil-Knorr joint venture. That claim was also dimly
reflected at Counter-Complaint ¶¶ 3A and 4, again without
specific names and acts. However, there is not even a
suggestion the individuals ever came to Illinois or engaged in
Illinois activities on their own (as opposed to Knorr's)
behalf. Thus Harbil has failed completely to allege business
transactions that would subject the named individuals to
jurisdiction under Section 2-209(a)(1), for "the conduct of a
person in a representative capacity cannot be relied upon to
exercise individual personal jurisdiction over that person."
Hurletron Whittier, Inc. v. Barda, 82 Ill. App.3d 443, 447, 37
Ill.Dec. 838, 841, 402 N.E.2d 840, 843 (1st Dist. 1980)
(interpreting the predecessor of Section 2-209(a)(1)). From
Harbil's own submissions, the named individuals have not
"transacted business" in Illinois within the meaning of Section
Harbil encounters a like problem in claiming the individuals
committed tortious acts in Illinois. Again it identifies no
specific Illinois acts by specific individuals.*fn7 True, the
injuries alleged in the Counter-Complaint are financial
injuries to Harbil (an Illinois corporation). But such an
injurious consequence in Illinois does not meet the test of
tortious acts in Illinois imposed by Section 2-209(a)(2). Green
v. Advance Ross Electronics Corp., 86 Ill.2d 431, 438, 56
Ill.Dec. 657, 661, 427 N.E.2d 1203, 1207 (1981)*fn8 and State
Security, 530 F. Supp. at 99 (both interpreting the predecessor
of Section 2-209(a)(2)).
Jurisdiction over a corporation simply does not translate
into jurisdiction over those with whom it may have common
interests. See Green, 86 Ill.2d at 440, 56 Ill.Dec. at 662, 427
N.E.2d at 1208. Nor is this conclusion altered by the charge of
a conspiracy among the corporate and proposed individual
counterdefendants. No "agent" for any individual is alleged to
have committed the requisite and specific Illinois tortious
acts that might be attributable to his or its "principal." See
id., 86 Ill.2d at 440-41, 56 Ill.Dec. at 662, 427 N.E.2d at
Harbil quotes (R.Mem. 2) this Court's specific directive
that counsel address the "intracorporate conspiracy issue," a
directive sparked by Harbil's tender of Counter-Complaint
Count V. Illinois courts
have consistently held "in a tort action, a civil conspiracy
cannot exist between a corporation and its agents or employees
since the acts of an agent are considered to be the acts of
the principal." Bonanno v. LaSalle & Bureau County R.R.,
87 Ill. App.3d 988, 995, 42 Ill.Dec. 866, 891, 409 N.E.2d 481, 486
(3d Dist. 1980). See also, e.g., John Deere Co. v. Metzler,
51 Ill. App.2d 340, 355, 201 N.E.2d 478, 486 (4th Dist. 1964).
Harbil was better, though, at quoting than at understanding
the Court's question. Its initial memorandum was devoted
largely to presently irrelevant issues: whether a corporation
can conspire at all, and whether a conspiracy can be inferred
from surrounding events.*fn9 It also talked about a quite
different (but equally inapt) question: whether individuals
might be liable for malicious interference with their own
corporation's contracts. After all, the individuals were not
named in Counter-Complaint Count IV (which charges
Knorr-Bremse maliciously interfered with the Agreement), but
rather in Count V.
Even on the contract interference non-issue, however, Harbil
has played fast and loose with Illinois law. It first cited
Mellor v. Budget Advisors, Inc., 415 F.2d 1218, 1221 (7th Cir.
1969), in which our Court of Appeals briefly discussed the
question of the scope of a corporate officer's good faith
"privilege" to interfere with his own corporation's contracts
We think that application of the good faith test
requires consideration of the existence and
reasonableness of the director's belief at the
time he voted that the corporate act was not a
breach of contract or that the interest of the
corporation would be served even if it was a
Harbil sought comfort in Mellor's citation of an Illinois case
that found corporate officers could be personally liable for
"wilfully and maliciously" inducing their corporation's breach
of contract. W.P. Iverson & Co. v. Dunham Manufacturing Co.,
18 Ill. App.2d 404, 417,
, 621 (1st Dist. 1958).
Though Harbil has not in fact alleged wilfulness or malice by
it apparently saw in Iverson authority
for narrowing the scope of the corporate official's "privilege"
to interfere with corporate contracts.
What Harbil did not say was that the Iverson analysis has
since been specifically disapproved by the Illinois Supreme
Court. Swager v. Couri, 77 Ill.2d 173, 190-91, 32 Ill.Dec. 540,
547, 395 N.E.2d 921, 928 (1979). Moreover, Swager has led to at
least one recent case in which, on facts similar to those here,
an Illinois court has refused to find the requisite "malicious"
interference where corporate officers have acted only in their
corporation's interest. Baker, Bourgeois & Associates, Inc. v.
Taylor, 84 Ill. App.3d 909, 915, 43 Ill.Dec. 55, 60,
410 N.E.2d 55, 60 (1st Dist. 1980). See also Idlehour Development Co. v.
City of St. Charles, 88 Ill. App.3d 47, 50-52, 42 Ill.Dec. 929,
932-933, 409 N.E.2d 544, 547-48 (2d Dist. 1980).
Undaunted, Harbil's reply memorandum attempts to distinguish
Knorr's references to Swager, Baker, Bourgeois and Idlehour
Development. Harbil's analysis is as faulty as its reliance on
the discredited Iverson doctrine. What matters really comes
down to is that Harbil's counsel are simply unwilling to
acknowledge the untenability of having tendered Iverson as good
authority. And when they assert (R.Mem. 11) a Second Circuit
case interpreting New York law is "controlling," this Court can
conclude only that they are well aware of the indefensibility
of the position they have taken.