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VLASAK v. RAPID COLLECTION SYS.

May 7, 1997

ANNE VLASAK, f/k/a Anne Burmeister, Plaintiff,
v.
RAPID COLLECTION SYSTEMS, INC., BARBARA BRADFORD, DAN WOLFE, and MRS. SHERLYN, Defendants.



The opinion of the court was delivered by: GRADY

 Before the court is the defendants' motion to dismiss the complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). For the reasons stated in this opinion, the defendants' motion is denied.

 BACKGROUND

 Invoking the Fair Debt Collection Practices Act ("FDCPA" or "Act"), 15 U.S.C. §§ 1692-1692o (1994), Anne Vlasak has filed a series of claims against Rapid Collection Systems, Inc. ("Rapid"). *fn1" Vlasak, a former resident of Arizona, now resides in Chicago. Rapid is a debt collection agency located in Phoenix, Arizona. Vlasak alleges that Rapid's debt collection efforts violated the Act because Rapid made false and deceptive representations, engaged in oppressive and abusive conduct, and communicated directly with Vlasak without consulting her attorney. Vlasak contends that this court has jurisdiction over her claims pursuant to § 1692k(d) of the FDCPA *fn2" and 28 U.S.C. § 1331 (1993). *fn3"

 Viewed in the plaintiff's favor, the relevant facts are as follows. In March 1996, an Arizona county court entered a judgment against Philip Burmeister, Vlasak's former husband. Burmeister was ordered to pay $ 1,236.00 (plus interest and after--accruing costs) in relation to a lease agreement for an apartment in Gilbert, Arizona. Seeking to collect on the judgment, the manager of the property referred the matter to Rapid. On April 30, 1996, Rapid, from its Arizona office, placed a telephone call to Vlasak in Illinois and informed her that she was required to comply with the county court's judgment order. After this conversation had concluded, Vlasak called Rapid back the same day and was told that the debt would be fully discharged if Vlasak forwarded $ 700.00 via overnight delivery. Vlasak later received a letter at her residence in Illinois, dated April 30, 1996, in which Rapid urged her to remit $ 1,331.00 in connection with the judgment. On or about May 4, 1996, Vlasak received a message on her answering machine instructing her to call Rapid. Soon after, Vlasak received another letter, dated May 6, 1996, in which Rapid again insisted that Vlasak owed a total of $ 1,331.00. On or about May 7, 1996, Rapid called Vlasak and stated that because she failed to send $ 700.00 by overnight delivery, Rapid would not accept any payment less than $ 1,331.00. On or about May 10, 1996, Rapid made another phone call to Vlasak during which Rapid indicated that nonpayment could damage Vlasak's credit rating and result in the garnishment of Vlasak's wages. Vlasak subsequently received a third letter, dated June 4, 1996, in which Rapid stated that it would recommend legal action against Vlasak if she did not pay the $ 1,331.00 balance within five days. Three months later, in September 1996, Vlasak sued Rapid for alleged violations of the FDCPA based on these telephone calls and letters.

 Rapid has now filed a motion to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. Rapid notes that it is a small business with seven employees and a single office in Phoenix. Rapid also contends that all of its accounts come from clients whose principal place of business is in Arizona, and that approximately 95 percent of the debtors connected with those accounts reside in Arizona. Rapid further maintains that in its five-year history, it has made only two "contacts" with Illinois in relation to its debt collection activities. Finally, Rapid argues that it owns no property in Illinois, has no offices in Illinois, and neither solicits nor conducts business in Illinois. We hold, however, that Rapid may be called into Illinois court consistent with the Due Process Clause. We therefore deny Rapid's motion.

 DISCUSSION

 The standards by which the court must evaluate a 12(b)(2) motion to dismiss are straightforward. The plaintiff bears the burden of providing sufficient evidence to establish a prima facie case for personal jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997); Michael J. Neuman & Assocs. v. Florabelle Flowers, Inc., 15 F.3d 721, 724 (7th Cir. 1994); Arena Football League, Inc. v. Roemer, 947 F. Supp. 337, 339 (N.D. Ill. 1996). The jurisdictional allegations in the complaint are taken as true unless controverted by the defendant's affidavits. Any conflicts among affidavits must be resolved in the plaintiff's favor. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987); Cherry Communications, Inc. v. Coastal Tel. Co., 906 F. Supp. 452, 454 (N.D. Ill. 1995); Czarobski v. St. Kieran's Church, 851 F. Supp. 1219, 1220 (N.D. Ill. 1994). In disputes involving a federal question, a prima facie case for personal jurisdiction consists of two parts. First, the plaintiff must demonstrate that haling the defendant into court accords with the Due Process Clause of the Fifth Amendment. Second, the plaintiff must show that the defendant is amenable to service of process from the court. United States v. Martinez de Ortiz, 910 F.2d 376, 381-82 (7th Cir. 1990); Boston Chicken, Inc. v. Market Bar-B-Que, Inc., 922 F. Supp. 96, 97 (N.D. Ill. 1996). As we discuss in the paragraphs that follow, Vlasak has fulfilled both requirements.

 Due Process

 Generally, a court's assertion of personal jurisdiction must comport with "'traditional notions of fair play and substantial justice'" to satisfy the Due Process Clause. International Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 61 S. Ct. 339 (1940)); see also Quill Corp. v. North Dakota, 504 U.S. 298, 307, 119 L. Ed. 2d 91, 112 S. Ct. 1904 (1992) (reiterating the "fair play and substantial justice" standard of International Shoe). The Clause requires that individuals have fair warning that, based on their conduct, they may be haled into a particular court. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 85 L. Ed. 2d 528, 105 S. Ct. 2174 (1985). This requirement "gives a degree of predictability to the legal system that allows potential defendants to structure their primary conduct with some minimum assurance as to where that conduct will and will not render them liable to suit." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 62 L. Ed. 2d 490, 100 S. Ct. 559 (1980). The touchstone of the due process analysis is whether the defendant purposefully established "minimum contacts" with the political unit encompassing the forum. Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 108-09, 94 L. Ed. 2d 92, 107 S. Ct. 1026 (1987) (citing Burger King, 471 U.S. at 474). These minimum contacts must be grounded in "'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.'" Burger King, 471 U.S. at 475 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958)). Once it has been determined that the defendant established minimum contacts within the forum, a court may consider factors such as the defendant's interest in avoiding burdensome and gravely inconvenient litigation, the plaintiff's interest in obtaining accessible relief, and the judicial system's interest in efficiently resolving controversies. World-Wide Volkswagen, 444 U.S. at 292.

 The polity with which a defendant must have minimum contacts often depends on the nature of the court's subject matter jurisdiction. A federal district court exercising diversity jurisdiction has personal jurisdiction over a nonresident "'only if a court of the state in which it sits would have such jurisdiction.'" Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995) (quoting Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir. 1990)), cert. denied, 135 L. Ed. 2d 1047, 116 S. Ct. 2523 (1996). If the defendant has not established minimum contacts with the state, then no court located within that state may exercise judicial power over the defendant; "limitations on the power of the state therefore carry over to diversity litigation." Lisak v. Mercantile Bancorp, Inc., 834 F.2d 668, 671 (7th Cir. 1987). When subject matter jurisdiction is based on federal law, however, the defendant must have sufficient contacts "with the United States as a whole rather than any particular state or other geographic area." Martinez de Ortiz, 910 F.2d at 382; see also United Rope Distribs., Inc. v. Seatriumph Marine Corp., 930 F.2d 532, 534 (7th Cir. 1991) ("When a national court applies national law, the due process clause requires only that the defendant possess sufficient contacts with the United States."). The reason is simple: Instead of implementing the policies of a particular state, a federal court in a federal question case is exercising the power of the United States. Lisak, 834 F.2d at 671; see also Diamond Mortgage Corp. of Ill. v. Sugar, 913 F.2d 1233, 1244 (7th Cir. 1990) (observing that the number of contacts between a defendant and the forum state "has no bearing upon whether the United States may exercise its power over the [defendant] pursuant to its federal question jurisdiction").

 Here, the threshold inquiry into "minimum contacts" need not detain us. Indeed, most challenges to personal jurisdiction in federal question cases revolve around the defendant's amenability to service, since the due process requirement is easily satisfied. Merrill Lynch Bus. Fin. Servs., Inc. v. Marais, 1995 U.S. Dist. LEXIS 15106, No. 94 C 3316, 1995 WL 608573, at *4 (N.D. Ill. Oct. 12, 1995); see also Brujis v. Shaw, 876 F. Supp. 975, 977 (N.D. Ill. 1995) (bypassing the minimum contacts analysis altogether); Morris v. Genmar Indus., Inc., 1993 U.S. Dist. LEXIS 8352, No. 91 C 5212, 1993 WL 217246, at *2 (N.D. Ill. June 18, 1993) (noting that, when subject matter jurisdiction is predicated on the existence of a federal question, "personal jurisdiction devolves into the issue of whether the defendant is amenable to service of process in that district"). A defendant "has sufficient contacts with the United States to support the fairness of the exercise of jurisdiction over him by a United States court" if he resides or conducts business on American soil. Fitzsimmons v. Barton, 589 F.2d 330, 333 (7th Cir. 1979); see also Lifeway Foods, Inc. v. Fresh Made, Inc., 940 F. Supp. 1316, 1319 (N.D. Ill. 1996) (finding that a corporation engaging in business in the United States established minimum contacts). Rapid was incorporated and continues to do business in the continental United States. All of Rapid's employees -- including the company president -- reside in the United States. Rapid's jurisdictional objections cannot, therefore, be based on the Due Process Clause of the Fifth Amendment.

 Amenability to Service

 Minimum contacts with the United States are necessary, but not sufficient, to authorize a district court's assertion of personal jurisdiction. Aside from these contacts, a defendant must also be amenable to service of process. See Omni Capital Int'l, Ltd. v. Rudolf Wolff & Co., 484 U.S. 97, 104, 98 L. Ed. 2d 415, 108 S. Ct. 404 (1987) (holding that before a court may exercise personal jurisdiction there must be both "a constitutionally sufficient relationship between the defendant and the forum" and "a basis for the defendant's amenability to service of summons"); see also Swaim v. Moltan Co., 73 F.3d 711, 719 (7th Cir.), cert. denied, 135 L. Ed. 2d 191, 116 S. Ct. 2499 (1996) (commenting that "valid service of process is a prerequisite to a district court's assertion of personal jurisdiction"). Service of process in both diversity and federal question cases provided for in Federal Rule of Civil Procedure 4(k). Rule 4(k) provides that service of a summons is effective to establish jurisdiction over the person of a defendant (1) who could be subjected to the jurisdiction of a court in the state in which the district court is located, or (2) when authorized by a statute of the United States. *fn4" Some federal legislation expressly provides for nationwide service of process. See, e.g., 29 U.S.C. § 1132(e)(2) (the Employment Retirement Income Security Act); 18 U.S.C. § 1965(a) (the Racketeer Influenced ...


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