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BRANDON APPAREL GROUP v. QUITMAN MANUFACTURING CO.

March 18, 1999

BRANDON APPAREL GROUP, INC., PLAINTIFF,
v.
QUITMAN MANUFACTURING COMPANY INC., DEFENDANT.



The opinion of the court was delivered by: Alesia, District Judge.

      MEMORANDUM OPINION AND ORDER

Before the court is defendant Quitman Manufacturing Company, Inc.'s motion (1) to dismiss for lack of personal jurisdiction; (2) to dismiss for improper venue; or, alternatively, (3) to transfer venue. For the following reasons, the court denies defendant's motion in full.

I. BACKGROUND

Plaintiff Brandon Apparel Group, Inc. ("Brandon") is a Delaware corporation that has its corporate headquarters and principal place of business in Chicago, Illinois. Defendant Quitman Manufacturing Company, Inc. ("Quitman") is a Georgia corporation that has its principal place of business in Georgia. Brandon is a manufacturer and distributor of licensed apparel that is embroidered with the logos of various athletic teams. Brandon purchases blank garments from companies such as Quitman, embroiders the logos on the garments, and then sells the garments to its customers, which include major retail department stores. Brandon also purchases fully embroidered garments from companies such as Quitman and then packages and sells these garments to its customers.

In October or November of 1997, Suzanne Anderson of Brandon sent Quitman a letter, asking whether Quitman would be available to cut and sew garments for Brandon. In response to the letter, Bruce Feinberg ("Bruce"), who is President of Quitman, contacted Anderson and told her that Quitman was not interested in being a contractor for Brandon but was interested in producing finished product for Brandon. Bruce asked Anderson to send him information so that he could provide a price quote. Anderson sent the requested information and asked Bruce to advise her as to what Quitman's best F.O.B. price was. On January 7, 1998, Bruce sent a letter to Anderson in Chicago stating Quitman's best price for the garments.

After sending the letter and before March 4, 1998, Bruce tried calling Anderson, but she never returned his calls, During this time, Bruce spoke with Steve Everhart, who is associated with another apparel manufacturer and who spoke periodically with Brad Keywell ("Keywell"), who is the President of Brandon. Bruce asked Everhart to tell Keywell about Quitman.

On March 4, 1998, Keywell called Bruce, stating that Everhart had told him to call. Keywell invited Bruce to come visit Brandon's distribution center in Chicago to talk about doing business together. Bruce then made arrangements for him and Larry Snyder, a Quitman sales representative, to go visit Brandon in Chicago.

On March 13, 1998, Bruce and Snyder visited Brandon in Chicago. Bruce, Snyder, Keywell, and Eric Lefkofsky, who is Brandon's Chief Executive Officer, were present for the meeting, during which the parties discussed Brandon's needs for production and how Quitman could meet those needs. The parties also discussed Quitman's quest to form an alliance with another company in the sports apparel business. The meeting ended with parties agreeing that Brandon would supply Quitman with information about Brandon's needs for the Fall of 1998 so that Quitman could prepare a price quote and that discussions would continue about how the two companies could form an alliance of some sort. After the meeting, Bruce and Snyder toured Brandon's facility.

After the March 13th meeting and before April 13, 1998 (the date on which Quitman representatives would visit Brandon in Chicago again), the parties sent a number of communications to one another. This included Brandon faxing Bruce the information about Brandon's production needs for the Fall of 1998 and Bruce faxing Brandon a list of the orders that Brandon had given Quitman, which listed the quantities ordered and agreed upon ship dates.

On April 14, 1998, Bruce and Snyder returned to Chicago, along with Phillip Feinberg, who is the Secretary/Treasurer of Quitman, to visit Brandon. The parties toured Brandon's facilities and discussed various ways of integrating their organizations.

During April of 1998 through June of 1998, Brandon faxed Quitman many purchase orders for the purchase and manufacture of thousands of garments. The purchase orders identified the garments being purchased by Brandon from Quitman, the garments being manufactured by Quitman for Brandon, and the amount of money to be paid by Brandon to Quitman. The purchase orders were prepared and completed in Chicago and were faxed to Quitman's offices in New York. As part of the agreement, Brandon agreed to, and did, supply Quitman with materials and supplies for the manufacture of garments, which ended up being over $100,000 worth of materials.

After the April 14th meeting and before the end of June 1998 (the time at which Quitman representatives would visit Brandon for a third and final time), the parties communicated back and forth with one another by phone, fax, and letter with respect to matters concerning the purchase orders. These communications included letters and faxes sent by Quitman to Brandon in Chicago and telephone calls between Bruce and Keywell or Lefkofsky in Chicago.

Meanwhile, discussions about the possibility of a merger between the two companies continued. In June of 1998, Quitman representatives visited Brandon in Chicago to conduct a due diligence investigation, during which Quitman representatives discovered what they believed to be problems with Brandon's accounting records. After the due diligence investigation, Quitman representatives made no further trips to Illinois on behalf of Brandon and all merger negotiations ceased. After that occurred, all discussions between Brandon and Quitman were via telephone and fax and consisted of discussions about shipping and payment. During the months from June through mid-October of 1998, over 200 calls were placed from Quitman to Brandon in Chicago, with at least 38 of those calls lasting longer than two minutes.

According to Brandon, during the months from May through October of 1998, Bruce and Phillip made representations to Lefkofsky and Keywell that Quitman would supply Brandon with quality goods in a timely fashion and would use only the materials supplied by Brandon to Quitman for use in garments that Quitman was making pursuant to a Brandon purchase order. At the time that these representations were made, Lefkofsky and Keywell were in Lefkofsky's office in Chicago. Brandon alleges that despite these representations, Quitman failed to deliver the garments ordered by Brandon in an acceptable condition and at the dates and times agreed to by the parties. Brandon further alleges that Quitman refused to use the materials and supplies provided by Brandon to manufacture the garments ordered by Brandon and refuses to return the materials and supplies to Brandon.

Based on the above, Brandon filed a complaint against Quitman in this court, which was amended on November 16, 1998. The first amended complaint contains claims for breach of contract, fraud and misrepresentation, and unjust enrichment. This court has subject matter jurisdiction over the case pursuant to 28 U.S.C. § 1332 as there exists complete diversity between the parties and the amount in controversy exceeds $75,000. In response to Brandon's complaint, Quitman filed a motion to dismiss for lack of personal jurisdiction, to dismiss for improper venue, or, alternatively, to transfer the case to the United States District Court for the Middle District of Georgia pursuant to 28 U.S.C. § 1404 (a).

II. DISCUSSION

A. Quitman's motion to dismiss for lack of personal jurisdiction

Quitman has moved to dismiss for lack of personal jurisdiction, arguing that Quitman's "contacts with Illinois do not meet the requirements of due process under either the Illinois or United States Constitutions." (Def.'s Mot. at 6.) Brandon opposes the motion, arguing that this court's assertion of jurisdiction would not violate due process.

The standard for deciding a motion to dismiss for lack of personal jurisdiction is straightforward. The plaintiff bears the burden of proving that personal jurisdiction exists. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997); McIlwee v. ADM Indus., Inc., 17 F.3d 222, 223 (7th Cir. 1994). In deciding a motion to dismiss for lack of personal jurisdiction, the court may receive and consider affidavits from the parties. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). The court resolves factual disputes in the pleadings and affidavits in favor of the plaintiff but takes as true those facts contained in the defendant's affidavits that remain unrefuted by the plaintiff. BAR, 107 F.3d at 1275; Boese v. Paramount Pictures Corp., No. 93 C 5976, 1994 WL 484622, at "2 (N.D.Ill. Sept. 2, 1994) (citing Nelson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983)). The court must also accept as true those allegations in the complaint which are uncontroverted by the defendant.'s affidavits. Turnock, 816 F.2d at 333.

In a case based on diversity of citizenship, a federal district court sitting in Illinois has personal jurisdiction over a nonresident defendant only if an Illinois court would have jurisdiction. RAR, 107 F.3d at 1275. For an Illinois court to have personal jurisdiction over a nonresident defendant, personal jurisdiction must be permitted by (1) Illinois statutory law; (2) the Illinois Constitution; and (3) the Constitution of the United States. Id. at 1276. With respect to Illinois statutory law, the Illinois long-arm statute extends personal jurisdiction to the limit allowed under the due process clauses of the Constitution of the United States and Illinois Constitution. 735 ILL.COMP.SAT. § 5/209(c); RAR, 107 F.3d at 1276; Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992). Thus, in Illinois, the court need only inquire whether personal jurisdiction is permitted by (1) the Illinois Constitution and (2) the Constitution of the United States. RAR, 107 F.3d at 1276; Banwell v. Illinois College of Optometry, 981 F. Supp. 1137, 1139 (N.D.Ill. 1997). If jurisdiction is improper under either the United States or Illinois Constitution, the court cannot exercise jurisdiction over the defendant. Glass v. Kemper Cop., 930 F. Supp. 332, 337 (N.D.Ill. 1996).

1. Whether the Illinois Constitution permits personal jurisdiction

The Illinois Constitution contains a guarantee of due process which is separate and independent from the federal due process clause. Rollins v. Ellwood, 141 Ill.2d 244, 152 Ill.Dec. 384, 565 N.E.2d 1302, 1316 (1990). "[T]he doctrine of constitutional avoidance counsels that `federal courts should avoid addressing federal constitutional issues when it is possible to dispose of a case on state grounds.'" RAP, 107 F.3d at 1276 (quoting Triple G Landfills, Inc. v. Board of Comm'rs of Fountain County, Ind., 977 F.2d 287, 291 (7th Cir. 1992)). Accordingly, the court must first attempt to address whether the Illinois Constitution permits personal jurisdiction in this case.

There are two problems with the court's attempting to address this issue first. The first problem is that although "[t]he Illinois Supreme Court has made it clear that the Illinois due process guarantee is not necessarily co-extensive with the federal due process protections, . . . the Illinois courts have given little guidance as to how state due process protection differs from federal protection in the context of personal jurisdiction." RAR, 107 F.3d at 1276. The Illinois Supreme Court has only explained "that "`[j]urisdiction is to be asserted only when it is fair, just, and reasonable to require a nonresident defendant to defend an action in Illinois, considering the quality and nature of the defendant's acts which occur in Illinois or which affect interests located in Illinois.'" id. However, other than this general statement, there is a paucity of case law on the issue.

The second problem with attempting to address the state constitutional issue first is that the parties have failed to address this issue in their briefs. Although Quitman argues that personal jurisdiction is not permitted by the Illinois Constitution, Quitman offers not even a scintilla of analysis on this issue. Quitman only analyzes the federal constitutional issue.

Because there is no guidance on the difference between Illinois and federal due process protections and because the parties have not addressed this issue in their briefs, the court's analysis will focus on the federal constitutional issue. See infra Part II.A.2. After addressing the federal constitutional issue, the court will then revisit the state constitutional issue. See infra Part II.A.3; see also Michael. J. Neuman & Assocs. v. Florabelle Flowers, Inc., 15 F.3d 721, 725 (7th Cir. 1994) ("While a ...


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