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SPHERION CORP. v. CINCINNATI FINANCIAL CORP.

January 31, 2002

SPHERION CORPORATION, ET AL., PLAINTIFFS,
V.
CINCINNATI FINANCIAL CORPORATION, DEFENDANT.



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

  MEMORANDUM OPINION AND ORDER

Plaintiffs, Spherion Corporation and Spherion Atlantic Enterprises LLC (collectively, "Spherion"), filed this diversity suit against defendant Cincinnati Financial Company ("CFC"), alleging breach of a computer consulting services contract. Spherion claims that CFC breached the contract by not paying fees due under the contract prior to its termination. One minute after Spherion filed this suit, CFC and several of its subsidiaries filed suit in the Southern District of Ohio against Spherion for breach of the same contract. In the present action, CFC has moved for dismissal for lack of personal jurisdiction and improper venue under Fed.R.Civ.P. 12(b)(2) and (b)(3), or, alternatively, for a stay of these proceedings. CFC has also moved for transfer of venue to the Southern District of Ohio under 28 U.S.C. § 1404(a). For the reasons set forth below, this court grants CFC's motion to transfer and denies as moot CFC's motion to dismiss or stay the proceedings.

I. Background

CFC is an Ohio corporation with its principal place of business in Ohio. Spherion Corporation is a Delaware corporation with its principal place of business in Florida. Spherion Atlantic Enterprises LLC is a Delaware limited liability company with its principal place of business in Florida. Spherion has offices in Oak Brook, Illinois, which oversaw at least part of its performance of the agreement. Spherion also maintained an Ohio office, which was opened specifically to work on the contract.

In 1996, CFC and its subsidiaries, collectively known as "the Cincinnati Companies," entered into an agreement with Anatec, a Michigan company, under which Anatec was to design and deliver software called the Commercial Personal Rewrite Project, or CPR Project. Anatec was a subsidiary of Norell Corporation, a Texas company, which merged in July 1999 with Interim Services, Inc. ("Interim"), a Florida company. Interim was the surviving entity and later changed its name to Spherion. Spherion administered its role in the CPR Project from its Illinois division in Oak Brook. According to CFC, the information department of its subsidiary, Cincinnati Insurance Company ("CIC"), administered the agreement on behalf of the Cincinnati Companies.

On July 18, 2000, CIC/CFC terminated Spherion, allegedly for cause. The parties attempted to negotiate their differences informally, then participated in mediation as mandated by the contract. The parties agreed during the course of mediation that either party could declare an impasse and an intent to terminate the mediation with seven days' notice. CFC did so on March 26, 2001, setting a termination date of April 2, 2001, at 12:00 p.m. Chicago time. On April 2, Spherion filed this suit, and the Cincinnati Companies filed suit against Spherion in Ohio.

II. Personal Jurisdiction and Venue

As plaintiff, Spherion has the burden of providing sufficient evidence to establish a prima facie case of personal jurisdiction. Michael J. Neuman & Assocs. v. Florabelle Flowers, Inc., 15 F.3d 721, 724 (7th Cir. 1994). The allegations in the complaint are taken as true unless controverted by the defendants' affidavits; and any conflicts in the affidavits are resolved in the plaintiff's favor. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). On this record, the question of whether Spherion has met this burden is very close.

Under Illinois law, the long-arm statute permits in personam jurisdiction over a party to the extent allowed under federal due process. See 735 ILCS 5/2-209(c); Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992). Jurisdiction is constitutional if haling CFC into this court would not offend "traditional notions of fair play and substantial justice." Int'l Shoe v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). The requisite minimum contacts are tantamount to conduct 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 v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). If defendant's contacts with the forum state are sufficiently "substantial[,] . . . continuous and systematic," personal jurisdiction may exist for a cause of action unrelated to those contacts. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447-48, 72 S.Ct. 413, 96 L.Ed. 485 (1952). If a nonresident defendant's contacts are not sufficient to support general jurisdiction, a defendant may still be subject to specific jurisdiction for claims arising out of or related to its purposefully directed activities within the state. Burger King, 471 U.S. at 472 n. 15, 476, 105 S.Ct. 2174. Spherion claims that this court has both specific and general personal jurisdiction over CFC.

Supported by affidavit, Spherion alleges that CFC management personnel traveled to the Chicago area on three different occasions for business purposes directly related to the goals of the CPR Project, that CFC solicited visits from and had numerous discussions with Spherion's management personnel in Oak Brook, that CFC retained two consultants based in the Chicago area to perform services for a companion project to the CPR Project, and that CFC requested and approved efforts by Spherion to recruit Illinois residents to work on the CPR Project. CFC responds with its own affidavit, asserting that all of the alleged conduct was undertaken by CIC, not CFC, personnel, that the Chicago consultants were working on an unrelated project, and that any relevant contact with the Oak Brook office occurred after 1999, near the end of the CPR Project. Spherion comes back with additional declarations stating that Don Doyle, acting on behalf of CFC, engaged in telephone conferences, email correspondence, and correspondence by United States mail with Oak Brook personnel. Spherion also argues that CIC was acting as CFC's agent.

General jurisdiction is similarly murky. In addition to the project-specific contacts, Spherion cites six suits brought by CFC in Illinois since 1996 and a website through which it solicits on-line employment applications from Illinois residents. On the lawsuits, CFC counters that it was not the real party-in-interest in five and that the court in the sixth held that CFC was not subject to taxation in Illinois because, inter alia, it had not office, assets, or employees in Illinois, had conducted no business in Illinois, and was not registered to do business in Illinois. Cincinnati Cas. Co. v. Bower, No. 00-L-050254, at 2, 15 (Ill.Cir. Ct. 2001). Even assuming that CFC was actually a plaintiff in all six lawsuits, general personal jurisdiction on this basis alone is constitutionally uncertain. Cf. Continental Cas. Co. v. State of New York Mortgage Agency, No. 94-C-1463, 1994 WL 532271, *7-10, 1994 U.S. Dist. LEXIS 13617, at *29-31 (N.D.Ill. Sept.21, 1994) (holding that bringing 13 lawsuits constituted purposeful availment).

CFC claims that the website solicited applications for its subsidiaries, not for itself, and that it has never hired anyone through the website. By inviting viewers to submit employment applications on-line, the website apparently falls in the middle ground between sites where contracts are actually entered into and purely passive sites where information is posted. See Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119, 1124 (W.D.Pa. 1997). Given that CFC claims to have no employees in Illinois, there is some question as to whether the invitation was truly directed to Illinois residents. Cf. LaSalle Nat'l Bank v. Vitro, 85 F. Supp.2d 857, 862 n. 5 (N.D.Ill. 2000) ("The most that [the plaintiff] can say is that [the defendant's website] is targeted to the Western Hemisphere, which happens to include Illinois."); Bensusan Rest. Corp. v. King, 937 F. Supp. 295, 301 (S.D.N.Y. 1996) (website created by Missouri nightclub was not directed at viewers in New York and did not constitute purposeful availment there), aff'd, 126 F.3d 25 (2d Cir. 1997). As in Search Force, Inc. v. Dataforce International, Inc., 112 F. Supp.2d 771, 779 (S.D.Ind. 2000), "[n]o evidence has been produced that communication via these sites has occurred between [the defendant] and potential IT recruits or employers residing in [the forum state], let alone that any communication occurred which gave rise to a contractual or on-going business relationship between [the defendant] and a[] [forum state] resident or entity." Standing alone, the website probably does not give rise to general personal jurisdiction.


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