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INTEGRATED BUS. INFORMATION SERV. v. DUN & BRADSTR

January 18, 1989

INTEGRATED BUSINESS INFORMATION SERVICE (PROPRIETARY) LIMITED, a proprietary company of the Republic of South Africa, formerly known as A. C. Nielsen Company (Proprietary) Limited, Plaintiff,
v.
THE DUN & BRADSTREET CORPORATION, a Delaware corporation; A. C. NIELSEN COMPANY, a Delaware corporation; A. C. NIELSEN INTERNATIONAL, INC., a Delaware corporation; I.M.S. INTERNATIONAL, INC., a Delaware corporation, Defendants


Marvin E. Aspen, United States District Judge.


The opinion of the court was delivered by: ASPEN

MARVIN E. ASPEN, UNITED STATES DISTRICT JUDGE

 On January 4, 1989, we dismissed the plaintiff's complaint in this case. In the one-page order that accompanied the dismissal, we summarized the reasons for our decision, but promised that a more detailed explanation would follow.

 I. Background

 The plaintiff here, Integrated Business Information Services (Proprietary) Limited ("IBIS"), is a proprietary Company organized under the law of the Republic of South Africa. According to its complaint, IBIS performs market research concerning the manufacture, sale, distribution and use of grocery and Pharmaceutical products in South Africa. IBIS was formerly known as A. C. Nielsen Company (Proprietary) Limited ("ACN Proprietary") and was formerly owned by two of the defendants, A. C. Nielsen Company ("ACN") and A. C. Nielsen International, Inc. ("ACN International"). Both ACN and ACN International are Delaware corporations with their principal offices in Northbrook, Illinois, and are owned by another defendant, the Dun & Bradstreet Corporation ("D&B"), a Delaware corporation with its principal office in New York City. The exact corporate relationship between D&B, ACN, ACN International and ACN Proprietary is a little unclear from the materials before the Court. It is certain that ACN is a wholly-owned subsidiary of D&B, but it is not clear whether ACN International is a wholly-owned subsidiary of D&B or of ACN. Likewise, it is unclear whether ACN Proprietary was owned by ACN, by ACN International or perhaps by both. At any rate, D&B owns, in one fashion or another, ACN and ACN International; in turn, ACN and ACN International formerly owned ACN Proprietary. Because the presence of ACN International is superfluous to our legal analysis, we will treat ACN and ACN International as one entity and henceforth refer to them as ACN.

 On January 30, 1987, apparently because of stockholder pressure on D&B to divest its holdings in South Africa, ACN entered into a Memorandum of Agreement to sell ACN Proprietary to its managers. Four provisions of that agreement are of importance to this case. First, paragraph 22.1 provided that the agreement would be governed by South African law. Second, paragraph 16.1 contained a non-competition agreement, which provided in part as follows:

 
The Seller and its associates shall not compete with the Company in the Republic for a period of 5 (five) years commencing on the effective date and shall not sell or supply any other person or company in the Republic any technology or information about the market in the Republic which may be used by such other person or Company in competition with the Company in the Republic.

 Third, paragraph 1.1.12 defined "Seller and its associates" as "The Seller [that is, ACN] together with its subsidiary, holding and associated companies." Last, paragraph 22.5 contained an arbitration clause, which allowed any of the parties to require that a dispute be submitted to arbitration.

 But D&B's acquisition of IMS and IMS South Africa also caused problems with IBIS. After D&B announced IMS South Africa would be sold, IBIS informed IMS and ACN that it believed IMS South Africa was in competition with IBIS in the market research field in South Africa; therefore, IBIS claimed, ACN, D&B and IMS--the latter two as ACN's "associates" -- were in violation of the non-competition clause. See Affidavit of John A. Scott para. 12; Letter of D. Munro, Nov. 25, 1988, Defendants' Exh. 2, Objections to Complaint. IBIS suggested that the only way to cure this breach would be for IMS to sell IMS South Africa to IBIS, but this suggestion was rejected. Letter of D. Munro. It is not clear what happened for the next month, but on December 23, 1988, attorneys for ACN wrote IBIS and stated that ACN was invoking the arbitration provision in their contract. See Letter of Deneys Reitz, Dec. 23, 1988, Exh. 3, Defendants' Objections to Complaint. IBIS acknowledged receipt of the demand the same day, but informed ACN that it was on its way to Chicago to seek an "urgent injunction. " Letter of Munro Mittary Inc., Dec. 23, 1988, Exh. 4, Defendants' Objections to Complaint.

 As promised, IBIS filed suit against D&B, ACN and IMS on Tuesday, December 27, 1988, seeking both an injunction against the sale of IMS South Africa and damages for the breach of the non-competition clause. That same afternoon, IBIS filed a motion for a temporary restraining order to enjoin the sale of IMS South Africa, and this Court set a hearing on the motion for 2:00 p.m. on Wednesday, December 28, 1988. Shortly before the hearing, D&B and IMS filed motions to dismiss under Federal Rules of Civil Procedure 12(b)(2), for lack of personal jurisdiction, and 12(b)(3), for improper venue. In addition, on the premise that we would dismiss IMS for lack of personal jurisdiction, ACN moved to dismiss the entire complaint for failure to join an indispensable party, namely, IMS. See Fed.R.Civ.P. 19. Alternatively, ACN moved to stay the case pending the outcome of arbitration. *fn2"

 At the hearing, counsel for IBIS represented that his client would be willing to accept arbitration as long as the sale was stayed pending arbitration. We asked counsel for the defendants if his clients would be willing to agree to that; it was our hope that the status quo could be preserved while arbitration went on, without the exercise of our equitable powers. Defendants' counsel, however, appeared reluctant to wait even a few hours. Accordingly, we granted IBIS's motion for a TRO from the bench and enjoined the sale of IMS South Africa. On the day after the hearing and after further consultations with his clients, defendants' counsel represented to this Court that his clients would voluntarily agree not to Consummate the sale of IMS South Africa until January 7, 1989, or earlier if the case was dismissed. As a result, we vacated the TRO that we had entered the day before.

 Because both sides indicated that time was of the essence, we set an expedited briefing schedule at the hearing, and by January 3, 1989, briefing was complete. On January 4, 1989, we issued a one-page order dismissing the case. In the order, we summarized our conclusion: that we lacked personal jurisdiction over both D&B and IMS, and that D&B and IMS ...


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