nothing the Edgemons or Peter
Kohler say suggests that the outcome would be different under Illinois as
opposed to federal constitutional law, and so I move on to an analysis of
the exercise of personal jurisdiction under the United States
Constitution. See RAR, Inc., 107 F.3d at 1276-77.
Under federal due process, a state may exercise personal jurisdiction
over nonresidents if "maintenance of the suit does not offend traditional
notions of fair play and substantial justice. International Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945). General jurisdiction is proper when
a defendant has "continuous and systematic business contacts" with a
state, and it allows a defendant to be sued there regardless of the
subject matter of the lawsuit. Helicopteros Nacionales de Colombia, S.A.
v. Hall, 466 U.S. 408, 416 (1984). I may exercise specific jurisdiction
when the defendant has less contact, but the litigation "arises out of or
is related to" those contacts. Id. at 414 n. 8.
If the plaintiff's "allegations of jurisdictional facts are challenged
by his adversary in any appropriate manner, he must support them by
competent proof." McNutt v. GM Acceptance Corp., 298 U.S. 178, 189
(1936). The Seventh Circuit construes this to mean "proof to a reasonable
probability that jurisdiction exists." Shaw v. Dow Brands, Inc.,
994 F.2d 364, 366 (7th Cir. 1993). Disputed facts are interpreted in
favor of the party asserting jurisdiction. Nelson by Carson v. Park
Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983).
I first consider specific jurisdiction. The litigation concerns the
Edgemons' and Peter Kohler's allegedly unlawful activities related to the
infringement of Kohler Co.'s trademarks. "In specific jurisdiction
cases, I decide whether a 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, Inc., 107 F.3d at 1277. I determine
whether the defendant "should reasonably anticipate being haled into
court in the forum state." Burger King Corp. v. Rudzewicz, 471 U.S. 462,
474 (1985). A defendant may have "fair warning" that it would be called
to defend a suit in the forum state if the defendant "purposefully avails
itself of the privilege of conducting activities within the forum State
thereby invoking the benefits and protections of the forum's laws." Klump
v. Duffus, 71 F.3d 1368, 1372 (7th Cir. 1995). To satisfy due process,
the plaintiff's cause of action must arise out of or be related to these
minimum contacts and comport with fairness and justice. See
Helicopteros, 466 U.S. at 414 & n. 8.
Because this case is based in part on an alleged conspiracy, the
plaintiff may use "the conspiracy theory of jurisdiction." See united
Phosphorus, Ltd., et al., in Angus Chem. Co., 43 F. Supp.2d 904, 912
(N.D. Ill 1999). Under this theory, I may assert jurisdiction "over all
of the co-conspirators, both resident and non-resident, based on their
involvement in a conspiracy which occurred within the forum." Id. (citing
Chromium Indus., Inc. v. Mirror Polishing & Plating Co., 448 F. Supp. 544
(N.D. Ill. 1978), superceded by 735 ILCS 5/2-209, see In re Vitamins
Antitrust Litig., 94 F. Supp.2d 26, 32 (D.D.C. 2000) (citing Cameron v.
Owens-Corning Fiberglas Corp., 695 N.E.2d 572, 576-77 (Ill.App. Ct. 1998)
(civil conspiracy a basis for personal jurisdiction)).
Under the conspiracy theory, the plaintiff must:
(1) make a prima facie factual showing of a conspiracy
(i.e., point to evidence showing the existence of the
conspiracy and the defendant's knowing participation
in that conspiracy); (2) allege specific facts
warranting the inference that the defendant was a
member of the conspiracy; and (3) show that the
defendant's co-conspirator committed a tortious act
pursuant to the conspiracy in the forum.
Id. The evidence relating to the conspiracy may be direct or
circumstantial. United States v. Hickok, 77 F.3d 992, 1005 (7th Cir.
1996). Simply alleging that a defendant participated in a conspiracy and
that another member of the conspiracy committed an unlawful act in the
forum state is not enough to reach a nonresident co-conspirator. Id.
(citing Chromium Indus., 448 F. Supp. at 552); see also Chrysler Corp.
v. Fedders Corp., 643 F.2d 1229, 1236 (6th Cir. 1981) (same).
Kohler Co. offers the following undisputed circumstantial evidence of
conspiracy as to the Edgemons. The Edgemons own Dimensional Millwork of
Chicago, which they recently established as a very small closely held
corporation in which they are the sole shareholders. They own the
building in Orland Park out of which it operates, and rent that building
to the corporation. They hold the positions of President and
Secretary-Treasurer of the corporation, and so are responsible for
corporate oversight and finances. It is not unreasonable to infer that
they are aware of, and agree to, the major business decisions involved in
running the company. See Deluxe Ice Cream Co. v. R.C.H. Tool Corp.,
726 F.2d 1209, 1216 (7th Cir. 1984) (It is a "reasonable inference" that a
managing director "was invested with the general conduct and control of
the defendants' business."). In fact, the Edgemons do not dispute that
they "own, direct, control, authorize, and operate" the firm, as alleged
in the complaint, stating only that they do not run its day-to-day
operations. The supplementary materials which they submitted at my
direction merely attest to this limited statement, and do not add
anything that would undermine a conspiracy theory of jurisdiction. It is
properly alleged that Dimensional Millwork of Chicago sold and marketed
products by Kohler International under that name and using the disputed
marks. I may infer that the Edgemons agreed to this with the other
defendants, including Peter Kohler and his corporations, thus conspiring
to engage in wilful infringement and other wrongful acts.
The Edgemons do not deny that they conspired to infringe the
plaintiff's trademarks. This is case is therefore distinguishable from
Chrysler v. Fedders, 643 F.2d 1229 (6th Cir. 1981), in which the Sixth
Circuit rejected the exercise of personal jurisdiction under a conspiracy
theory where a defendant offered sworn testimony denying any involvement
in the conspiracy:
[Plaintiff's] "allegation of a conspiracy . . . is
unsupported by any factual assertions. In support of
its motion to dismiss, [one defendant] filed two
affidavits of its managing director . . . .
stat[ing], in pertinent part, that [it] was not
involved in the contract negotiations between [the
plaintiff and another defendant] and had no knowledge
of or connection with any conspiracy.
Id. at 1236. "`[T]he situation would have been quite different if the
defendants had denied the allegations.'" id. (quoting Mandelkorn v.
Patrick, 359 F. Supp. 692, 696 (D.D.C. 1973)). The Edgemons do not even
testify that they did not know or agree that the challenged product was
sold. See Defs. Additional Statement, Ex. B & D.
Likewise the plaintiff alleges that Peter Kohler is a director,
officer, and major stockholder in Kohler International as well as Kohler
Windows, and conspired with the Edgemons and other defendants to violate
the plaintiff's rights. Now, while the Edgemons are out of state
shareholders, officers, and directors of a corporation doing business and
located in Illinois, Peter Kohler is an out of state (indeed a Canadian)
shareholder, officer, and director of foreign corporations that are not
located in Illinois. However, there is circumstantial evidence that Peter
Kohler' s alleged co-conspirators, including the Edgemons and Dimension
Millwork of Chicago, committed tortious acts related to selling
infringing products in Illinois, and that there existed a conspiracy,
discussed above in connection with the Edgemons.
The remaining issue is whether there is evidence that Peter Kohler
participated in the conspiracy. And here there is evidence that he
founded, owned, operated, and managed a company that used his own name to
promote the allegedly infringing product, see P1. Mem. in Opposition to
the Motion to Dismiss, Ex. E, which were sold to Dimensional Millwork of
Chicago, in Illinois. Peter Kohler denies under oath that he ever
"personally marketed or sold" the allegedly infringing products in
Illinois, but that is not the issue for the conspiracy theory, which is
rather whether he agreed to their sale in Illinois, knowing that they
infringed. In his Answer, Peter Kohler states that he knew of plaintiff
Kohler Co.'s existence when he adopted and used the Kohler name, so the
remaining question is whether he knew of and agreed to sell the allegedly
infringing product in Illinois. Peter Kohler's affidavit states that he
has an active role in the work of the corporate defendants using the
contested name, and is involved in the day-today operations of one of
them (Kohler Windows). He states that his involvement is "limited to my
role as a corporate officer of the company," but this is a legal
conclusion, not a piece of factual evidence. Like the Edgemons,
moreover, he does not deny that he so conspired. The total evidence is
such that it would be reasonable to infer that Peter Kohler agreed to the
sale to an Illinois firm of products he knew to infringe Kohler Co.'s
I find that Kohler Co. has carried its burden to show by competent
proof circumstantial evidence of a conspiracy in which the Edgemons and
Peter Kohler participated, involving their coconspirators' undertaking
the unlawful acts in Illinois that was its object.
The same facts will support the exercise of personal jurisdiction under
the usual long-arm theory as well: having recited the evidence of the
minimum contacts, it is obviously that Edgemons and Peter Kohler have
"purposefully availed" themselves of the protection of Illinois law, and
could reasonably anticipate being haled into an Illinois court. Either
way, there is enough to justify exercise of specific personal
jurisdiction over the Edgemons and Peter Kohler.
Under federal due process, I may exercise general jurisdiction over a
defendant in lawsuits that neither arise out of nor are related to the
defendant's contacts if he has had "continuous and systematic general
business contacts" with Illinois." Helicopteros, 466 U.S. at 415 n. 8. No
such general jurisdiction is argued with respect to Peter Kohler,
although the fiduciary shield doctrine discussed below is relevant to his
motion. The Edgemons say that they have no such contacts. They own a
building which Dimensional Millwork of Chicago rents, and they are
corporate officers and owners of
Dimensional Millwork of Chicago, but,
they contend, these factors do not support exercise of personal
jurisdiction over them individually.
The first point concerns the one area where Illinois law might give a
different result from federal law. In Illinois, one cannot normally
reach, as an individual, the employee of a corporation who acts in a
representative capacity, unless his conduct was performed "for his
personal benefit." Rollins, 565 N.E.2d at 1316-17. This "fiduciary shield"
doctrine, however, has been found not to apply with "an individual who is
a high-ranking company officer or shareholder [who] has a direct
financial stake in the company's health." R-Five, Inc. v. Sun Tui, Ltd.,
No. 94 C 4100, 1995 WL 548633, at *5 (N.D. Ill. Sept. 12, 1995)
(Williams, J.) (Personal jurisdiction existed where defendant "was
president, board member, and (most importantly) shareholder of
corporation" and "was not merely obeying the orders of his superiors.");
see also Continental Bank N.A. v. Everett, 742 F. Supp. 508, 510 (N.D.
Ill. 1990) (Bua, J.) (personal jurisdiction existed where defendant
shareholders who personally guaranteed loan to company would benefit
financially from that loan's being made); Plymouth Tube Co. v.
O'Donnell, No. 95 C 0277, 1995 WL 387595, at *3 (N.D. Ill. June 27, 1995)
(Zagel, J.) (personal jurisdiction proper where one defendant was
president of corporation; wife was secretary-treasurer of another that was
wholly owned by both spouses; making "their individual interests and the
corporate interests of [the corporations] coextensive.").
On the essentially identical facts of this case, the Edgemons cannot
hide behind the fiduciary shield doctrine, because their interests are
coextensive with the interests of Dimensional Millwork of Chicago.
Contrast Plastic Film Corp. v. Unipac, Inc., 128 F. Supp.2d 1143, 1146
(N.D. Ill. 2001) (Bucklo, J.) (Personal jurisdiction was improper where
wife shareholder had no contacts with Illinois and husband officer was
not a shareholder). Peter Kohler is in a similar position as founder,
officer, director, and chief shareholder of Kohler International and
The Edgemons argue, second, that they are protected because of "the
general rule that corporate ownership alone is not sufficient for
personal jurisdiction." RAR, Inc., 230 F.3d at 943. "[D]ue process
requires that personal jurisdiction cannot be premised on corporate
affiliation or stock ownership alone where corporate formalities are
substantially observed and the parent does not exercise an unusually high
degree of control over the subsidiary. Id. However, here there is not
just corporate ownership or stock ownership alone. The Edgemons are the
sole owners and stockholders of Dimensional Millwork of Chicago, as well
as the President and the Secretary-Treasurer, and they do not deny Kohler
Co.'s allegation that they "own, direct, control, authorize, and operate"
the firm. The same reasoning applies to the Edgemons' third argument,
that "[t]he mere presence of property in a state, without other ties
sufficient to satisfy the fairness standard of International Shoe, will
not . . . support the exercise of jurisdiction over an unrelated cause of
action." Stephens v. Northern Ind. Pub. Serv. Co., 409 N.E.2d 423, 427
(Ill.App. Ct. 1980). We have more than mere property ownership.
The Edgemons object to this approach, arguing that to determine whether
personal jurisdiction exists, "[e]ach defendant's contacts with the forum
State must be assessed individually." Keeton v. Hustler Magazine, Inc.,
465 U.S. 770, 781 n. 13 (1984). They interpret this to mean that I must
consider each contact for a defendant without
considering the defendant's
other contacts. That is inconsistent with the language of the cases,
which rather invites consideration of additional factors. Otherwise
ownership of land or of a corporation could never be the basis for
personal jurisdiction. The Edgemons also misinterpret note 13 of Keeton,
which continues: "The requirements of International Shoe . . . must be
met as to each defendant over whom a state court exercises jurisdiction"
(emphasis added). "Individually" does not mean "in isolation from other
factors" but "with respect to each defendant."
I find that Kohler Co. has made a prima facie showing of general
jurisdiction over the Edgemons.
Having determined that the minimum contacts test is satisfied I must
evaluate these contacts in light of other factors to determine whether
the assertion of personal jurisdiction would comport with "fair play and
substantial justice." Burger King Corp., 471 U.S. at 476. The most
important factors to consider are (1) the interests of the states
involved and (2) the relative convenience of litigating in that forum.
Asahi Metal Indus. Co., Ltd. in Superior Court, 480 U.S. 102, 113
(1987); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294
(1980). As to the first factor, Illinois has a substantial interest in
preventing trademark infringement in this state, and violation of its own
laws, alleged here to have been carried out by Dimensional Millwork of
Chicago, a company doing business in Illinois, and by the Edgemons, its
officers and owners. As to the second factor, the party objecting to a
forum bears the burden of presenting a "compelling case" that litigating
there would be unreasonable. Burger King, 471 U.S. at 476-77. The
Edgemons do not argue at all that it would be unduly burdensome to
litigate here. Therefore they have waived any such objection.
I DENY the motions to dismiss the complaint: (1) as to Tracy and Karan
Edgemon for (a) failure to state a claim or for (b) lack of personal
jurisdiction, and (2) as to Peter Kohler for (a) failure to state a claim
or for (b) lack of personal jurisdiction.