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UNITED PHOSPHORUS, LTD. v. ANGUS CHEMICAL COMPANY

March 24, 1999

UNITED PHOSPHORUS, LTD., ET AL., PLAINTIFFS,
v.
ANGUS CHEMICAL COMPANY, ET AL., DEFENDANTS.



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

    MEMORANDUM AND ORDER

Defendant Lupin Laboratories, Ltd. and D.B. Gupta's renewed motion to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12 (b)(2) is before the court. For the following reasons, the motion is denied.

I. Background

The plaintiffs in this antitrust action claim that the defendants — Angus Chemical Company and its corporate officers, Freeman Hughes, Ollie Chandler, Lowell Pals, and Gary Granzow (collectively, "Angus"), Angus Chemie GmbH ("Chemie"), and Lupin Laboratories, Ltd. and its officer and owner D.B. Gupta (collectively, the "Lupin defendants") — engaged in various anti-competitive acts to prevent them from entering the United States and world markets for two chemicals, 1-Nitropropane ("1-NP") and 2-Amino-1-Butanol ("AB"). AB is the key ingredient in Ethambutol, a drug used to treat tuberculosis, while 1-NP is the raw material used to make AB.

For the purposes of this order, the court will assume familiarity with its prior decisions: (1) granting the Lupin defendants' first motion to dismiss for lack of personal jurisdiction and permitting the plaintiffs to amend their complaint; and (2) denying the plaintiffs' motion to reconsider. See United Phosphorus, Ltd. v. Angus Chemical Co., No. 94 C 2078, 1996 WL 164394 (N.D.Ill. Apr.2, 1996); United Phosphorus, Ltd. v. Angus Chemical Co., No. 94 C 2078 (N.D.Ill. Mar. 20, 1997) (unpublished order); see also United Phosphorus, Ltd. v. Angus Chemical Co., No. 94 C 2078, 1994 WL 577246 (N.D.Ill. Oct.18, 1994). At this time, the plaintiffs have amended the jurisdictional allegations in their complaint directed at the Lupin defendants and the parties have completed the discovery necessary to determine if personal jurisdiction over the Lupin defendants is proper.

II. Discussion

A. Standard for a Motion to Dismiss Under Fed.R.Civ.P. 12(b)(2)

In ruling on a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(2) based on lack of personal jurisdiction, the court may consider matters outside the pleadings, such as affidavits and other materials submitted by the parties. See Fed.R.Civ.P. 12(b). The plaintiffs bear the burden of establishing personal jurisdiction by a preponderance of the evidence. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). In making its determination regarding personal jurisdiction, the court must resolve any factual disputes in the plaintiffs' favor, but must accept the allegations in the plaintiffs' complaint as true only to the extent that they are not controverted by other evidence in the record. The court must also accept uncontested jurisdictional facts presented by the defendants as true. Connolly v. Samuelson, 613 F. Supp. 109, 111 (N.D.Ill. 1985). With these standards in mind, the court turns to the parties' contentions regarding jurisdiction.

B. Can the Court Consider Contacts by the Lupin Defendants Which Occurred After the Complaint was Filed?

As a threshold matter, the court must first address whether the Lupin defendants' contacts with Illinois after the filing of the complaint on April 4, 1994 are relevant. The Lupin defendants assert that the clock stopped on the day the complaint was filed, while the plaintiffs claim that all contacts with Illinois, regardless of when they occurred, are relevant. For the purposes of this inquiry, it is important to note that this is a specific jurisdiction case, as the Lupin defendants' contacts with Illinois arise from their alleged involvement in a conspiracy and the Angus defendants. Thus, a brief recap of principles relating to specific jurisdiction is in order.

The central inquiries with respect to specific jurisdiction are whether the defendant purposefully established minimum contacts with the forum state and whether those contacts would make personal jurisdiction reasonable and fair under the circumstances. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1277 (7th Cir. 1997), citing Burger King v. Rudzewicz, 471 U.S. 462, 476-77, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). "Crucial to the minimum contacts analysis is showing that the defendant `should reasonably anticipate being haled into court' [in the forum state] because the defendant has `purposefully avail[ed] itself of the privilege of conducting activities there.'" Id. (citations omitted). Factors such as the parties' negotiations, the future consequences contemplated by the parties, the terms of any contract at issue, and the parties' actual course of dealings are relevant and must indicate the kind of purposeful availment that makes litigation in the forum state foreseeable to the defendant. Id.

The focus on whether a defendant has purposefully availed itself of the privilege of conducting activities in the forum state necessarily implies that only conduct prior to the accrual of the cause of action or, at the very latest, the filing of the lawsuit is relevant. In other words, "purposeful availment" implies that the defendant, as shown by its activities, intended to be amenable to suit in the forum state. Conduct post-dating the filing of a complaint by definition cannot show that, when the defendant engaged in the post-complaint acts purportedly supporting jurisdiction, it intentionally exposed itself to the possibility of an event which had already occurred (the filing of a complaint in the forum state).

This conclusion is supported by Sportmart, Inc. v. Frisch, 537 F. Supp. 1254 (N.D.Ill. 1982). In that case, Sportmart filed suit against ski and ski boot manufacturers and distributors alleging that they conspired to refuse to accept orders for Rossignol skis and Nordica boots for delivery to Sportmart. One of the defendants — Nordica US — did not commence operations until five months after the alleged conspiracy began. Sportmart nevertheless sued Nordica US, alleging that, after the complaint was filed, it refused to accept Sportmart's orders for boots. The court found that "the relevant time period for jurisdiction and venue purposes is the time that the cause of action accrued." 537 F. Supp. at 1259. Thus, the court concluded that the post-complaint allegations were "jurisdictionally irrelevant" because they went beyond the conspiracy alleged in the complaint. Id.

While Sportmart understandably occupies a starring role in the Lupin defendants' briefs, the plaintiffs assert that the Seventh Circuit has subsequently held that all contacts — both pre and post-filing — are relevant, citing to Logan Productions, Inc. v. Optibase, Inc., 103 F.3d 49, 53 (7th Cir. 1996), Dehmlow v. Austin Fireworks, 963 F.2d 941, 947-48 (7th Cir. 1992), and Daniel J. Hartwig Associates, Inc. v. Kanner, 913 F.2d 1213, 1218-20 (7th Cir. 1990). They also direct the court to the Supreme Court's decision in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102, 114, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).

The Lupin defendants attempt to distinguish these cases by claiming that this is a specific jurisdiction case but that the cited cases address whether general personal jurisdiction (which is based on evidence of continuous and systemic contacts between the defendant and the forum state) exists. See Dehmlow v. Austin Fireworks, 963 F.2d at 948 n. 6 (general jurisdiction requires evidence of continuous and systematic contacts with the forum state, while specific jurisdiction "rests on the defendant's contacts with the forum state regarding the transaction underlying [the] litigation"). They also attempt to distinguish the cases by contending that they turn on whether the defendants had the requisite ongoing intent to serve the forum state (i.e., a "stream of commerce" or "intent to serve the forum state" theory). According to the Lupin defendants, because this case deals with contacts arising out of a conspiracy, the "stream of commerce"/"intent to serve the forum state" cases are inapposite.

Both sides' positions are problematic. First, an attempt to distinguish these cases based on the distinction between specific and general jurisdiction is unconvincing, as at least one of the cases cited by the plaintiffs — Logan Productions, Inc. v. Optibase, Inc. — unequivocally states that it is a specific jurisdiction case. 103 F.3d at 52. Second, the Lupin defendants' "stream of commerce"/"intent to serve the forum state" distinction is unavailing because the complaint expressly alleges that the conspiracy is ongoing. An ongoing conspiracy is analogous to ongoing contacts with ...


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