The opinion of the court was delivered by: BUCKLO
The plaintiff, YKK USA, Inc., ("YKK"), has sued the defendants, Edward and Hope Baron, under state law. The defendants have moved to dismiss the complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). For the following reasons, the motion is denied.
In a diversity action such as this one, federal courts in Illinois have personal jurisdiction over a non-resident party only if Illinois courts would have personal jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). The plaintiff has the burden of establishing the existence of personal jurisdiction. Id. at 1276. The following facts are from the complaint to the extent that the Barons' affidavit did not controvert them, Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987) (complaint allegations uncontroverted by defendant's affidavit must be accepted as true), and from the affidavit of Michael Weiss, Vice President of YKK.
Where the Barons controvert Mr. Weiss' statements, I resolve the dispute in favor of the plaintiff. Saylor v. Dyniewski, 836 F.2d 341, 342 (7th Cir. 1988) (in resolving motion to dismiss complaint for lack of personal jurisdiction, court may consider affidavits and must resolve disputes in favor of plaintiff).
YKK is a foreign corporation, which maintains its principal place of business and is authorized to transact business in Illinois. E. Baron Industries, Inc. ("Baron Industries"), a New Jersey corporation, sells webbing, zippers, and thread to manufacturers and secondary users. Mr. Baron is the president, shareholder, and director of Baron Industries. Ms. Baron is an officer, shareholder, and director of Baron Industries. Both reside in New Jersey.
For the past ten years, Baron Industries requested, paid for, and received goods supplied by YKK. For the past five years, the Barons have contacted YKK's Vice President, Michael Weiss, based in Illinois, by telephone and mail. During such communications, Mr. Weiss and the defendants discussed orders, payment arrangements, shipping instructions, and other issues related to the purchase and sale of YKK goods by and to Baron Industries. During the past eighteen months, the discussions have revolved around Baron Industries' having become significantly delinquent in paying YKK.
On November 26, 1996, YKK obtained a default judgment against Baron Industries in a Northern District of Illinois court for merchandise sold and delivered, but not paid for. YKK USA Inc. v. Baron Indus., Inc., No. 96 C 5674.
In the instant case, YKK seeks to enforce this default judgment by piercing the corporate veil of Baron Industries and holding the plaintiffs, Baron Industries' officers and shareholders, liable for Baron Industries' obligations. The defendants have moved to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2).
YKK seeks to establish personal jurisdiction over the Barons on the basis of their business dealings with YKK in Illinois. The defendants contend, inter alia, that they are protected from the court's assertion of personal jurisdiction by the "fiduciary shield" doctrine. "To the extent the fiduciary shield doctrine does not apply, jurisdiction over [the Barons] may be proper on the basis of [the Baron Industries'] contacts with Illinois." See Torco Oil Co. v. Innovative Thermal Corp., 730 F. Supp. 126, 127-28 (N.D. Ill. 1989). Therefore, the first issue is whether Baron Industries' contacts with Illinois would support assertion of personal jurisdiction over it. See id.
To determine whether personal jurisdiction exists, the court must determine whether (1) the Illinois long-arm statute grants personal jurisdiction, and whether assertion of jurisdiction is consistent with (2) the United States and (3) the Illinois Constitutions. RAR, 107 F.3d at 1276. The Illinois long-arm statute provides that an Illinois court "may . . . exercise jurisdiction on any . . . basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." 735 ILCS 5/2-209(c) (1992). "Because the Illinois statute authorizes personal jurisdiction to the constitutional limits, the three inquiries mentioned above collapse into two constitutional inquiries--one state and one federal." RAR, 107 F.3d at 1276; Allied Metal Co. v. Edgerton Metal Prods., Inc., 908 F. Supp. 576, 580-81 (N.D. Ill. 1995).
The due process clause of the Fourteenth Amendment requires that a defendant "have certain minimum contacts with [the state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." RAR, 107 F.3d at 1277 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). This standard varies depending on whether the state asserts "specific" or "general" jurisdiction. "Specific jurisdiction refers to jurisdiction over a defendant in a suit 'arising out of or related to the defendant's contacts with the forum.'" Id. (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984)); Allied Metal, 908 F. Supp. at 580.
In a "specific" jurisdiction case, the court must decide whether the defendant has "'purposefully established minimum contacts within the forum state' and consider whether, by traditional standards, those contacts would make personal jurisdiction reasonable and fair under the circumstances." RAR, 107 F.3d at 1277 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985)). The focus is whether, given his contacts, the defendant "should reasonably anticipate being haled into court" in the forum state, because he "purposefully avail[ed himself] of the privilege of conducting activities there." Id. (quoting Burger King, 471 U.S. at 474-75).
In this case, YKK's Mr. Weiss has affirmed that over the past ten years, Baron Industries placed orders with the plaintiff in Illinois, YKK products were delivered from Illinois to Baron Industries in New Jersey, and Baron Industries failed to pay for some of the goods. (Weiss Aff. PP 1(d)-1(h).) The suit in which YKK won a default judgment grew out of Baron Industries' failure to pay for YKK's goods. YKK also alleges that, upon realizing that YKK was going to execute on its November 26, 1996 judgment, the Barons stripped Baron Industries of its assets on January 17, 1997 by entering into an assignment agreement with its creditors, leaving Baron Industries with assets insufficient to satisfy the judgment. (Compl. PP 17, 19.
) I conclude that Baron Industries has "minimum contacts" with Illinois for the purposes of "specific" jurisdiction. Dehmlow v. Austin Fireworks, Inc., 1996 U.S. Dist. LEXIS 1049, No. 90 C 4666, 1996 WL 41494, at *4 (N.D. Ill. Feb. 1, 1996) (relying on Calder v. Jones, 465 U.S. 783, 789-90, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984), "specific" jurisdiction found where defendant was alleged intentionally to hide assets to avoid satisfying Illinois plaintiff's judgment); Allied Metal, 908 F. Supp. at 580 ("specific" jurisdiction found where defendant initiated nine separate orders of merchandise from Illinois plaintiff, goods were delivered from Illinois, and defendant failed to pay for them pursuant to agreement with plaintiff); Autotech Controls Corp. v. K.J. Elec. Corp., 256 Ill. App. 3d 721, 628 N.E.2d 990, 994-95, 195 Ill. Dec. 526 (1993) (federal due process requirements satisfied where defendant maintained contractual relationship with Illinois plaintiff through telephone and fax purchase orders); see also Heritage House Restaurants, Inc. v. Continental Funding Group, Inc., 906 F.2d 276, 283-84 (7th Cir. 1990) (ongoing telephone and mail business relationship, initiated by defendant, satisfies federal due process requirements).
"Once minimum contacts have been established, [the defendant] can only escape jurisdiction by making a 'compelling case' that forcing it to litigate in [Illinois] would violate traditional notions of fair play and substantial justice." Logan Prod., Inc. v. Optibase, Inc., 103 F.3d 49, 53 (7th Cir. 1996) (quoting ...