The opinion of the court was delivered by: Alesia, District Judge.
MEMORANDUM OPINION AND ORDER
When originally filed with this court, the complaint brought by
plaintiff J.C. Whitney ("plaintiff") alleged multiple counts
against defendant Renaissance Software Corporation
("Renaissance"). By the consent of those two parties, this case
was transferred to Magistrate Judge Schenkier on August 9, 1999.
On December 16, 1999, plaintiff filed an amended complaint adding
defendants Robert Saltzman ("Saltzman") and John Jackson
("Jackson"). In January of 2000, Saltzman and Jackson filed
motions to dismiss Counts X and XI of the amended complaint
(those counts alleging claims against the individual defendants
Saltzman and Jackson) or, in the alternative, to transfer the
case to Massachusetts. On April 19, 2000, Magistrate Judge
Schenkier issued a Memorandum Opinion denying defendants Saltzman
and Jackson's motions to dismiss and motions to transfer. J.C.
Whitney & Co. v. Renaissance Software Corp., No. 99 C 3714, 2000
WL 556610 (N.D.Ill. Apr.19, 2000). However, the newly added
defendants Saltzman and Jackson had not consented to being before
Magistrate Judge Schenkier. As a result, the Magistrate Judge
lacked jurisdiction over the case and his Memorandum Opinion was
not binding on the parties. See Williams v. General Elec.
Capital Auto Lease, Inc., 159 F.3d 266, 268-69 (7th Cir. 1998)
(ruling that parties added to a case, where the original
litigants have consented to transfer to the magistrate judge,
must also agree to the transfer or else they are not bound to the
magistrate's exercise of authority). The case was then reassigned
to this court. Following the reassignment, defendants Saltzman
and Jackson filed objections to
Magistrate Judge Schenkier's Opinion dated April 19, 2000. In
addressing defendants' objections, the court will treat the April
19th Opinion as a Report and Recommendation.
In the April 19th Opinion, Magistrate Judge Schenkier found
that (1) the court has personal jurisdiction over defendant
Jackson based on his alleged tortious conduct in Illinois; (2)
the court has personal jurisdiction over defendant Saltzman under
the conspiracy theory of jurisdiction; (3) the fiduciary shield
doctrine does not protect either Saltzman or Jackson; (4)
plaintiff sufficiently stated a claim for common law fraud; (5)
plaintiff sufficiently stated a claim under the Illinois Consumer
Fraud and Deceptive Business Practices Act; (6) venue is proper
in the Northern District of Illinois; and (7) the factors
considered weigh against transfer of the case under
28 U.S.C. § 1404(a). J.C. Whitney, 2000 WL 556610. Upon careful review, the
court adopts in part and rejects in part the findings contained
in the April 19th Opinion. Specifically, the court rejects the
finding that it has personal jurisdiction over defendants
Saltzman and Jackson under the conspiracy theory of jurisdiction.
The court rejects the finding that the court has personal
jurisdiction over Saltzman based upon the conspiracy theory of
jurisdiction. Under Illinois law, a court may assert jurisdiction
over a nonresident defendant if that defendant is part of a
conspiracy. However, the conspiracy theory of jurisdiction can
only be asserted if (1) the defendant is part of an actionable
conspiracy and (2) the co-conspirator performed a substantial act
in furtherance of the conspiracy. Textor v. Bd. of Regents of
Northern Illinois Univ., 711 F.2d 1387, 1392-93 (7th Cir. 1983).
Thus, to subject Saltzman to personal jurisdiction plaintiff must
show that he was part of an actionable conspiracy. However,
Illinois law is clear: a civil conspiracy does not exist "between
a corporations' own officers or employees." Van Winkle v.
Owens-Corning Fiberglas Corp., et al., 291 Ill. App.3d 165, 225
Ill.Dec. 482, 683 N.E.2d 985, 991 (1997); see also Salaymeh v.
InterQual, Inc., 155 Ill. App.3d 1040, 108 Ill. Dec. 578,
508 N.E.2d 1155, 1158 (1987); Jamaica Citizens Bank, Ltd. v. North
Am. Special Risk Assoc., Inc., No. 96 C 4203, 1996 WL 648712, at
*5 (N.D.Ill. Nov.1, 1996).
In this case, plaintiff alleges that Saltzman, as CEO of
Renaissance, conspired with Jackson, as President and selling
agent for Renaissance, to defraud plaintiff. However, any "group
effort" between Saltzman and Jackson was for the purposes of
selling Renaissance software to plaintiff as they were both
acting as agents of the company. (See Pl.Compl. at 31 ¶ 15-17.)
Thus, their actions are related to business and corporate
affairs. As officers of the same company, acting within their
scope of employment, Saltzman and Jackson could not commit a
civil conspiracy. Thus, as alleged, plaintiff's complaint does
not state an actionable conspiracy. Accordingly, the conspiracy
theory of jurisdiction is not a viable option in this case and,
therefore, the court cannot assert jurisdiction over defendant
Saltzman based upon the conspiracy theory. However, the court
agrees with Magistrate Judge Schenkier's finding that Saltzman is
subject to the jurisdiction of this court under Illinois' long
arm statute and the United States Constitution. See J.C.
Whitney, 2000 WL 556610, at *7-8. Thus, the court has personal
jurisdiction over Saltzman.
However, while this court may have personal jurisdiction over
Saltzman and Jackson, the court lacks subject matter
jurisdiction. In this case, jurisdiction is based upon diversity
of citizenship. In order for this court to have subject matter
jurisdiction based upon diversity of citizenship, all parties
involved in the action must be citizens of different states and
the amount in controversy must exceed $75,000. 28 U.S.C. § 1332.
It is the plaintiff who bears the burden of establishing
of citizenship and, in order to meet this burden, plaintiff must
clearly allege the citizenship of each party. Tylka v. Gerber
Prod. Co., 211 F.3d 445, 447-48 (7th Cir. 2000). The Seventh
Circuit is clear that "allegations of residence are insufficient
to establish diversity jurisdiction." Id.; see also Guaranty
Nat'l Title Co. v. J.E.G. Assocs., 101 F.3d 57, 58 (7th Cir.
1996) (holding that a lawsuit must be dismissed when residence is
alleged but not citizenship).
In its complaint, plaintiff alleges that both defendants
Saltzman and Jackson are residents of Massachusetts, (Pl.Am.
Compl., Count X ¶¶ 1-2), but plaintiff makes no allegation
regarding the citizenship of Saltzman or Jackson. Thus, plaintiff
has failed to meet its burden in establishing complete diversity
of citizenship. See Tylka, 211 F.3d 445, 447-48 (stating that
the party seeking to invoke federal diversity jurisdiction bears
the burden of establishing the statutory requirements).
Accordingly, the court dismisses defendants Jackson and Saltzman
from this suit.
In conclusion, the court rejects Magistrate Judge Schenkier's
finding of personal jurisdiction over Saltzman based upon the
conspiracy theory. The court adopts all of the remaining findings
made in Magistrate Judge Schenkier's Opinion dated April 19,
2000. However, because plaintiffs have not properly alleged
diversity jurisdiction, defendants Saltzman and Jackson are
dismissed for lack of subject matter jurisdiction. See
FED.R.CIV.P. 12(b)(1). Plaintiff has until June 14, 2000 to file
an amended complaint which properly alleges the citizenship of
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