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ELECTRONIC SIGNALS PRODS. v. EASTERN ELEC. CO.

January 6, 1992

ELECTRONIC SIGNALS PRODUCTS, INC., an Illinois Corporation, Plaintiff,
v.
EASTERN ELECTRONIC CO., LTD., (Taiwan), and EASTERN INTERNATIONAL, INC., an Indiana Corporation, Defendants.


ASPEN


The opinion of the court was delivered by: MARVIN E. ASPEN

MARVIN E. ASPEN, District Judge:

 Plaintiff Electronic Signal Products, Inc. ("ESP") brings this two-count complaint against Eastern Electronic Co., Ltd. ("EEC") and Eastern International, Inc. ("EII"), seeking an accounting and damages for breach of contract. Presently before this court are (1) EEC's motion to dismiss for lack of personal jurisdiction and insufficient service of process, and (2) ESP's motion to assess costs for personal service of process. For the reasons as set forth below, both motions are denied.

 I. Motion to Dismiss Standard

 A motion to dismiss should not be granted unless it "appears beyond doubt that the plaintiff can prove no set of facts in support of his claims which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957); see also Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir. 1988); Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985), cert. denied, 475 U.S. 1047, 106 S. Ct. 1265, 89 L. Ed. 2d 574 (1986). We take the "well-pleaded allegations of the complaint as true and view them, as well as reasonable inferences therefrom, in the light most favorable to the plaintiff." Balabanos v. North Am. Inv. Group, Ltd., 708 F. Supp. 1488, 1491 n.1 (N.D. Ill. 1988) (citing Ellsworth).

 II. Background

 ESP is a corporation duly organized and existing under the laws of the State of Illinois, having its principal place of business in Cook County, Illinois. EEC is an entity incorporated under the laws of the Republic of China, with its principal place of business in Taiwan. EII, formerly known as Dantec, Inc. ("Dantec"), is an Indiana corporation, having its principal place of business in Bloomington, Indiana.

 On April 8, 1981, ESP and EEC entered into a contract whereby ESP granted EEC license to manufacture certain radio frequency devices developed by ESP. In accordance with the terms of the contract, EEC was to pay ESP a license fee of ten percent of the net sales price (FOB Taiwan) of each unit sold by EEC in the United States, Canada or Mexico, and five percent of the net sales price (FOB Taiwan) of each unit sold elsewhere. In addition, the license agreement explicitly appoints Dantec, now known as EII, as the representative of EEC in the United States.

 In the years 1981 through 1983, Dantec and its successor EII effected regular accountings and royalty payments to ESP for EEC's sales. These payments, however, ceased in or about June of 1983--the resignation date of John Ma, president of ESP. Upon leaving ESP, Ma claimed the rights to the royalties under the April 8, 1981 contract. ESP disputed Ma's claim, bringing an action in the Circuit Court of Cook County. During the pendency of that action, EEC notified both EII and ESP that in light of the controversy, EEC would not pay royalties to either ESP or Ma. Further, EEC appointed EII as its agent in the United States to negotiate and execute a settlement. In 1988, the ESP-Ma action was resolved in favor of ESP. Despite such resolution and despite the fact that EEC continues to manufacture and sell the radio frequency devices, EEC and EII have refused to make any further royalty payments. Accordingly, on May 22, 1991, ESP filed this action against EEC and EII, contending that defendants' refusal to tender such payments constitutes a breach of contract.

 III. Personal Jurisdiction

 EEC now moves for dismissal pursuant to Fed. R. Civ. P. 12(b)(2) for lack of jurisdiction over the person. The party asserting the existence of jurisdiction--in the instant case, ESP--bears the burden of proof. Publications Int'l, Ltd. v. Simon & Schuster, Inc., 763 F. Supp. 309, 310 (N.D. Ill. 1991); Boden Products, Inc. v. Novachem, Inc., 663 F. Supp. 226, 229 (N.D. III. 1987). As this case is brought in diversity, this court has jurisdiction over EEC (a non-resident party) only if an Illinois state court could have such jurisdiction. Publications Int'l, 763 F. Supp. at 310; E.J. McGowan & Assoc., Inc. v. Biotechnologies, Inc., 736 F. Supp. 808, 809 (N.D. III. 1990).

 An Illinois state court may obtain jurisdiction over a non-resident party by demonstrating either that the defendant is "doing business" within the state, or that it is "subject to jurisdiction under the state's long arm statute." E.J. McGowan, 736 F. Supp. at 809 (citing, inter alia, Asset Allocation & Management Co. v. Western Employers Ins. Co., 892 F.2d 566, 570 (7th Cir. 1989)). EEC clearly is not "doing business" in, Illinois, as that phrase is used in the common-law context. See Publications Int'l, 763 F. Supp. at 310; E.J. McGowan, 736 F. Supp. at 809-10. EEC does not maintain an office, mailing address, or telephone number in Illinois. Nor does it have any agents, employees, or real property in Illinois. Therefore, the existence of personal jurisdiction in this case turns on the application of the Illinois long-arm statute. Ill. Rev. Stat. ch. 110, para. 2-209 (Supp. 1991).

 The Illinois long-arm statute is measured by federal constitutional standards. Sidley & Austin v. Hill, 763 F. Supp. 366, 368 n.3 (N.D. Ill. 1991); Publications Int'l, 763 F. Supp. at 311. More specifically, the statute's parameters are contiguous to the due process "minimum contacts" standard. FMC Corp. v. Varonos, 892 F.2d 1308, 1310 n.5 (7th Cir. 1990); Publications Int'l, 763 F. Supp. at 311. Thus, the entity over who personal jurisdiction is sought--EEC--must "have certain minimum contacts" with Illinois "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, 90 L. Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 343, 85 L. Ed. 278 (1940)); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528 (1985) (The "constitutional touchstone" is "whether the defendant purposefully established 'minimum contacts' in the forum State."); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490 (1980).

 It is "foreseeability," and not physical presence, that is critical; the due process analysis entails a determination of whether EEC's "conduct and connection with the forum State are such that [they] should reasonably anticipate being hauled into court there." World-Wide Volkswagen, 444 U.S. at 297, 100 S. Ct. at 567; see also Heritage House Restaurants, Inc. v. Continental Funding Group, Inc., 906 F.2d 276, 283 (7th Cir. 1990). Contacts with Illinois that are "random" or merely "fortuitous" will not be sufficient to "establish that exercise of [Illinois'] jurisdiction was foreseeable." Heritage House Restaurants, 906 F.2d at 283 (citation omitted). In other words, the minimum contacts requirement is satisfied if there is "'some act by which [EEC] ...


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