United States District Court, N.D. Illinois
January 15, 2004.
KEN-PIN, INC., Plaintiff,
VANTAGE BOWLING CORP., MARK SCHMIDT and COMPUTER SCORE PTY., LTD., Defendant
The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge
MEMORANDUM OPINION AND ORDER
In this diversity action, plaintiff Ken-Pin, Inc. ("Ken-Pin"), an
Illinois corporation with its principal place of business in Richmond,
Illinois, is maintaining a four-count complaint against Vantage Bowling
Corp. ("Vantage"), a Colorado corporation with its principal place of
business in Denver, Colorado, against Mark Schmidt ("Schmidt" and,
collectively with Vantage, "the Vantage Defendants"), a Colorado resident
and Vantage's chief executive officer, and against Computer Score Pty.,
Ltd. ("Computer Score"), a foreign corporation organized under the laws
of Australia with its principal place of business in Tweed Heads South,
New South Wales, Australia. Before the Court are the Vantage Defendants'
and Computer Score's motions to dismiss Ken-Pin's complaint. For the
following reasons, the motions are granted in part and denied in part.
The dispute at hand relates to the sale and servicing of computerized
scoring equipment used at bowling centers. The following facts are taken
from Ken-Pin's complaint and are construed as true. Ken-Pin is a
corporation that markets, sells, installs, and services products and
equipment used at bowling centers. In the early 1990s, Computer Score
developed an automatic bowling scoring system (the "Scoring system"). The
Scoring System was a gift to less mathematically adept bowlers as it
allowed them to score their games automatically and to display the
results on monitors. In a letter dated June 21, 1993, Computer Score
offered Ken-Pin in writing the option of entering into an exclusive or
nonexclusive distributorship of the Scoring Systems in the United States.
The letter offered Ken-Pin the right to market, install and service, or
to manufacture Scoring System equipment. Ken-Pin purchased the
non-exclusive rights for $60,000 and paid the amount in full by June
From 1993 until 1998, Ken-Pin sold Scoring Systems that had been
manufactured and assembled in Australia and then shipped to the United
States for delivery and installation. Wishing to avoid the freight costs
involved in this process, in late 1997 Ken-Pin began to negotiate a
subcontract with Vantage, a corporation also involved in the development,
marketing, and sale of products and services for the bowling industry,
for the manufacture of Scoring
System hardware. On May 18, 1998, Ken-Pin also entered into
employment agreements with Art and Craig Lackenbach (the "Lackenbachs")
to install and service the Scoring Systems. As part of their employment
contracts, the Lackenbachs entered into covenants not to compete that
restricted them from engaging in certain commercial activities in the
bowling industry for two years after their employment with Ken-Pin ended.
One of the projects the Lackenbachs completed for Ken-Pin was a manual
for the installation, maintenance, and operation of the Scoring Systems.
The project cost Ken-Pin $28,000.
On March 14, 2000, the Lackenbachs resigned from Ken-Pin, effective
April 17, 2000 and subsequently went to work for Vantage. According to
Ken-Pin, despite its warning that the Lackenbachs had entered into
restrictive covenants, Schmidt and Vantage engaged the Lackenbachs in
prohibited commercial activities. Ken-Pin learned of the violations on
November 6, 2000. Six months later, on May 8, 2001, Ken-Pin received
further bad news when it learned from Computer Score that Vantage was to
be Computer Score's sole and exclusive distributor for the Scoring
Systems in the United States and that Computer Score would no longer be
selling the Scoring System's electronic and software components to
On November 5, 2002, Ken-Pin filed a three-count complaint in this
Court. In response, the Vantage Defendants and Computer Score filed
motions to dismiss. Ken-Pin requested and received several
enlargements of time in which to respond to the pending motions,
but on August 1, 2003, filed an amended complaint instead. In the amended
complaint, it asserted claims for breach of contract against Computer
Score (Count I), promissory estoppel against Computer Score (Count II),
tortious interference with Ken-Pin's contracts against Vantage and
Schmidt (Count III), and tortious interference with Ken-Pin's prospective
economic advantage against Vantage and Schmidt (Count IV). The Vantage
Defendants and Computer Score again responded by filing motions to
dismiss the amended complaint pursuant to Federal Rules of Civil
Procedure 12(b)(6) and 12(b)(2).
II. STANDARD OF REVIEW
A motion to dismiss under Rule 12(b)(6) tests whether the plaintiff has
properly stated a claim upon which relief could be granted, not whether
the plaintiff will ultimately prevail on the merits. Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974). In ruling on a motion to dismiss,
a court must construe all well-pleaded allegations of the complaint as
true, and draw all reasonable inferences in favor of the plaintiff.
Id. A motion to dismiss will not be granted unless it "appears
beyond doubt that the plaintiff can prove no set of facts in support of
his claims which would entitle him to relief." Conley v. Gibson,
355 U.S. 41, 45-46 (1957). The parties agree that the applicable law is
that of Illinois.
In assessing the merits of a Rule 12(b)(6) motion, a court is usually
confined solely to the pleadings, which consist generally of the
complaint and any exhibits attached to it, and supporting briefs.
Thompson v. Ill. Dep't of Prof'l Regulation, 300 F.3d 750, 753
(7th Cir. 2002). If additional evidence is placed before the court and
not excluded, the court must typically convert the motion into a
Rule 56(c) motion for summary judgment. Id. Under a narrow exception
to this rule, however, a court may consider documents attached by a
defendant to the motion to dismiss if those documents are referred to in
the plaintiff's complaint and are central to his or her claim.
Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir. 1998);
see also Tierney v. Vahle, 304 F.3d 734, 738-39 (7th Cir. 2002)
(collecting cases). The Vantage Defendants attach several documents to
their motion to dismiss that Ken-Pin refers to in its amended complaint
and that the Court believes are central to Ken-Pin's claims. These are
the June 21, 1993 letter from Computer Score to Ken-Pin, in which
Computer Score offered Ken-Pin the United States distributorship for the
sale of the Scoring System, and the employment agreements between Ken-Pin
and the Lackenbachs. As the Seventh Circuit explained in Levenstein, it
is particularly appropriate to consider such pertinent documents in
contract interpretation cases. Levenstein, 164 F.3d at 327.
Accordingly, the Court will consider these documents in addressing the
Defendants' motion to dismiss without converting the motion to a
motion for summary judgment.
A. Computer Score's Motion to Dismiss
Computer Score brings its motion pursuant to Rule 12(b)(6) and argues
that Ken-Pin has failed to state a claim against Computer Score for
either breach of contract or promissory estoppel.
1. Count I
In Count I, Ken-Pin alleges that Computer Score breached its
distributorship agreement when it decided that it would no longer sell
Ken-Pin Scoring Systems or components of Scoring Systems. Under Illinois
law, to state a cause of action for breach of contract, a plaintiff must
allege sufficient facts to establish four elements: (1) the existence of
a valid and enforceable contract containing both definite and certain
terms; (2) performance by the plaintiff; (3) breach of the contract by
the defendant; and (4) injury to the plaintiff. Bensdorf &
Johnson, Inc. v. N. Telecom Ltd., 58 F. Supp.2d 874, 877 (N.D. Ill.
1999). In order to allege the existence of a contract, Ken-Pin must
present facts in its complaint indicating an offer, acceptance and
consideration. Id. In order for the contract to be binding and
enforceable, the terms must be "sufficiently definite and certain so that
a court can determine what the agreement was and what conduct constituted
a breach." Id. Computer Score contends that
the claim must be dismissed because: (1) the alleged agreement between
the parties lacked essential terms establishing mutuality of obligation
and therefore was unenforceable; (2) the alleged agreement lacked a
specific term of duration and was terminable at will; and (3) the alleged
agreement was not; reduced to writing and its enforcement is barred by
the Statute of Frauds as set forth in the Uniform Commercial Code.
Because the Court agrees with Computer Score's first contention,
viz., that the alleged agreement lacks specific terms and is
therefore unenforceable, it need not reach the remaining two arguments.
The agreement between Computer Score and Ken-Pin is actually the June
21, 1993 letter from a Tony Uccello on behalf of Computer Score to Ken
Schroeder at Ken-Pin. The letter presents "a proposal . . . with regards
to [Ken-Pin's] approach on distributing [Computer Score's] product in the
U.S.A." Ken-Pin accepted the offer contained in the letter and chose to
acquire non-exclusive distributorship rights. Ken-Pin's claim that this
agreement was breached cannot succeed because the agreement is neither
sufficiently definite nor certain with respect to numerous essential
terms. There is no way for the Court to determine, either from the
complaint or from the agreement itself, the duration of the contract, the
geographical area involved, the pricing scheme, the nature and extent of
incidental services to be performed, standards of performance, or the
means of termination.
Bensdorf & Johnson, Inc., 58 F. Supp.2d at 877-78.
Illinois courts consider terms such as duration and sales quotas
essential terms of a distribution agreement. Magid Mfg. Co., Inc. v.
U.S.D. Corp., 654 F. Supp. 325, 333 (N.D. Ill. 1987). Lacking not
only these terms but numerous other critical contract elements, the Court
has no way of assessing whether or when a breach occurred and,
accordingly, the contract is unenforceable. Acad. Chicago Publishers
v. Cheever, 578 N.E.2d 981, 984 (Ill. 1991) ("[I]f the essential
terms [of a contract] are so uncertain that there is no basis for
deciding whether the agreement has been kept or broken, there is no
Although Ken-Pin claims that the only term missing from the contract is
that of duration, it does not demonstrate that other essential terms are
in fact included in the letter. Instead it contends that because the
price for the distributorship was clearly stated and paid, and because
Ken-Pin expended expense, effort and manpower during the course of its
relationship with Computer Source, the contract is enforceable. If
Computer Score were arguing that the contract was unenforceable because
there was no mutuality of obligation, Ken-Pin's response would be
persuasive. After all, while mutuality of obligation is a requirement of
an enforceable contract, Kraftco Corp. v. Kolbus,
274 N.E.2d 153, 155 (Ill.App. Ct. 1971), it is satisfied if each party
has given sufficient consideration for the other's promise. Hofmeyer
Willow Shores Condo. Ass'n, 722 N.E.2d 311, 315 (Ill.App.
Ct. 1999). Computer Score does not argue that there was any lack of
consideration from each party. Unfortunately for Ken-Pin, however, the
lack of mutuality of obligation is not the critical problem with the
agreement. The problem is more fundamental: while there is arguably an
offer, an acceptance and consideration, the agreement is lacking definite
and certain essential terms and cannot be enforced. As a result, Computer
Score's motion to dismiss Count I is granted.
2. Count II
In Count II, Ken-Pin asserts a claim for promissory estoppel against
Computer Score and argues that based on Computer Score's unambiguous
promises, it spent more than $228,000 on various systems associated with
distribution of the Scoring System that are now worthless. In Illinois,
in order to state a claim for promissory estoppel, Ken-Pin must allege:
(1) an unambiguous promise by Computer Score; (2) reasonable and
justifiable reliance by Ken-Pin on that promise; (3) that the reliance
was expected and foreseeable by Computer Score; and (4) that Ken-Pin
relied upon the promise to its detriment. Fischer v. First Chicago
Capital Mkts., Inc., 195 F.3d 279, 283 (7th Cir. 1999). Computer
Score challenges the sufficiency of Ken-Pin's complaint on several
grounds: (1) it fails to identify a clear and unambiguous promise made by
Computer Score; (2) it fails to establish reasonable reliance given that
relationship with Computer Score was terminable at will; and (3) it
fails to establish actual reliance to its detriment.
Computer Score first faults Ken-Pin for failing to allege any
particular words of promise and for failing to state when the purported
promises were made. Computer Source also argues that Ken-Pin fails to
allege actual words regarding the duration of the promise. This level of
specificity, however, is not required under federal pleading standards.
Ken-Pin need only allege that Computer Source made unambiguous promises
and this it has done. In its complaint, Ken-Pin alleges that Computer
Score made "numerous unambiguous promises," in writing and orally, that
it would continue to make the Scoring Systems available to Ken-Pin for
distribution. It further alleges that Computer Score made initial
promises and then continued to make such promises over the course of its
relationship with Ken-Pin. While it may become obvious as this action
develops that the promises, like the alleged agreement, were neither
unambiguous nor clear as to duration or other critical elements, that is
not an appropriate inquiry at this stage.
Computer Score also argues that Ken-Pin fails to establish actual
reliance to its detriment. More specifically, it argues that Ken-Pin does
not allege that any of the costs it incurred were required by Computer
Score, That is not required. Ken-Pin only need allege that its reliance
was reasonable and justifiable and that the reliance was expected and
foreseeable by Computer Score.
In its complaint, Ken-Pin alleges that based on Computer Score's
continuing promises to make the Scoring Systems available to Ken-Pin for
distribution, it spent $28,000 to develop a manual, $40,000 to set up a
four-booth display for the Scoring Systems at an expo in Tennessee, and
incurred administrative costs of more than $100,000 developing a market
for Scoring Systems and setting up a distribution network. It further
alleges that Computer Score knew that Ken-Pin would rely on its promises.
Finally, Computer Score argues that the claim for promissory estoppel
is barred by the statute of frauds. Without knowing more about the
promises themselves, the Court cannot address the merits of this
argument. The argument would be more appropriately raised in a motion for
For the reasons stated above, Computer Score's motion to dismiss Count
II is denied.
B. The Vantage Defendants' Motion to Dismiss
Like Computer Score, the Vantage Defendants argue that Ken-Pin fails to
state any claim against them upon which relief may be granted. They
further contend that Schmidt is entitled to dismissal because this Court
lacks personal jurisdiction over him. The Court will address each
argument in turn.
1. Failure to State a Claim
a. Count III
In Count III, Ken-Pin alleges that Vantage and Schmidt tortiously
interfered with its contract with Computer Score and with its covenants
with the Lackenbachs. Under Illinois law, the elements of a claim for
tortious interference with contractual rights are: (1) the existence of a
valid and enforceable contract between the plaintiff and another party;
(2) the defendant's awareness of the contract; (3) the defendant's
intentional and unjustified inducement of a breach of the contract; (4) a
subsequent breach by the other party caused by the defendant's wrongful
conduct; and (5) damages. A-Abart Elec. Supply v. Emerson Elec.
Co., 956 F.2d 1399, 1404 (7th Cir. 1992)(citing Mannion v.
Stallings & Co., 561 N.E.2d 1134, 1139 (Ill.App. Ct. 1990));
HPI Health Care Servs., Inc. v. Mt. Vernon Hosp., Inc.,
545 N.E.2d 672, 676 (Ill. 1989). The Vantage Defendants argue that Ken-Pin
cannot show the existence of a valid, enforceable distribution contract
with Computer Score or of enforceable employment covenants with the
Lackenbachs. They further contend that Ken-Pin has not sufficiently
alleged that their conduct was malicious or unjustified.
As already discussed, the alleged agreement with Computer Score is
unenforceable and, accordingly, Ken-Pin has no claim for tortious
interference with that alleged contract. Because the
Lackenbach covenants are also unenforceable, the Vantage
Defendants' motion to dismiss Count III is also granted.
The covenants not to compete entered into by the Lackenbachs are
identical. In the covenants, the Lackenbachs agreed that they would not
"directly or indirectly engage in a business or other activity generally
described as: the distribution or servicing of bowling lane equipment,
supplies or services to bowling centers notwithstanding whether said
participation be as an owner, director, employee, agent, consultant,
partner or stockholder (except as a passive stockholder in a publicly
owned company)." The covenants applied "within the states [sic]
of Illinois, it's [sic] contiguous states and Minnesota with the
exception that the covenant not to compete shall enlarge to apply to the
entire United States of America regarding any and all activities
involving the installation or servicing of automatic scoring equipment
for bowling." The covenant expired two years after the Lackenbachs
terminated their employment with Ken-Pin.
The validity of a restrictive covenant is a question of law.
Applied Micro, Inc. v. SJI Fulfillment, Inc., 941 F. Supp. 750,
753 (N.D. Ill. 1996). Illinois courts will not enforce a restrictive
covenant unless the terms of the agreement are reasonable and necessary
to protect an employer's legitimate business interests. Hanchett
Paper Co. v. Melchiorre, 792 N.E.2d 395, 400 (Ill.App. Ct. 2003).
In fact, they have cautioned that because restrictive
covenants "impair the availability of services and interfere with
competition . . . such covenants are carefully scrutinized by the
courts." Hamer Holding Group, Inc. v. Elmore, 613 N.E.2d 1190,
1198 (Ill.App. Ct. 1993). Covenants, such as those in this case, that
are collateral to an employment contract are viewed less favorably than
those that are ancillary to the sale of a business. Id. at 1197.
The purpose of a restrictive covenant ancillary to an employment
contract is to protect the employer from the possibility of losing
clients to an employee who appropriates proprietary customer information
for his own benefit, and to shield him from the possibility of losing
customers with whom he enjoys a near-permanent relationship. Cent.
Water Works Supply, Inc. v. Fisher, 608 N.E.2d 618, 621-622
(Ill.App. Ct. 1993). Accordingly, if the covenant is ancillary to an
employment agreement, it will only be enforced if the employer (1) shows
that the restriction is reasonable as to time, geographical area and
scope of prohibited business activity, and (2) demonstrates special
circumstances, such as a near-permanent relationship with his employee's
customers and that the former employee would not have had contact with
the customers but for his association with the employer, or the existence
of customer lists, trade secrets or other confidential information.
Hamer Holding Group, Inc. v. Elmore, 560 N.E.2d 907, 915-16
(Ill.App. Ct. 1990).
In its complaint, Ken-Pin alleges that subsequent to their employment
with Ken-Pin and while employed by Vantage, the Lackenbachs sold,
installed, and serviced Scoring Systems in Illinois and other states for
Vantage. It does not allege that the Lackenbachs misused customer lists,
trade secrets or other confidential information or that they stole
clients with whom Ken-Pin enjoyed a near-permanent relationship. In
short, it alleges no facts that support its contention that the covenants
Even if Ken-Pin had alleged that the covenants are enforceable to
protect its legitimate business interests, the broad scope of the
agreements make them unreasonable as a matter of law. The determination
of reasonableness depends on the facts and circumstances of each case.
Eichmann v. Nat'l Hosp. & Health Care Servs., Inc.,
719 N.E.2d 1141, 1143 (Ill.App. Ct. 1999). Courts will only uphold
restrictive covenants that "protect the employer's legitimate proprietary
business interests and not those whose effect is to prevent competition
per se." Id. at 1147. While Ken-Pin claims that the
covenants are designed to prevent employees from taking customers and
"everything they have learned" to a direct competitor, there is no
limitation in Ken-Pin's covenants on the class of customers to whom the
agreements apply. Instead, the covenants prohibit the Lackenbachs from
working not only with customers they had while employed by Ken-Pin, but
also with future
customers with whom neither they nor Ken-Pin had ever worked.
Courts are reluctant to enforce precisely these types of prohibitive
agreements because their purpose is to restrict competition, not to
protect an employer from losing long-standing clients. Id. After
all, as a matter of law, Ken-Pin "cannot have a protectable interest in
future customers who do not yet exist." Id. at 1148. In this
case, the chilling effect the covenants at issue have on competition is
further heightened by the unreasonably broad geographic scope of the
Because the covenants, like the alleged contract with Computer Score,
are invalid, Ken-Pin is not entitled to relief on its claim for tortious
interference with contractual rights. Accordingly, the Court need not
reach the merits of the Vantage Defendants' argument that Ken-Pin has not
sufficiently alleged that their conduct was malicious or unjustified.
Count III of the Amended Complaint is dismissed.
b. Count IV
While Ken-Pin cannot recover for interference with existing contractual
rights in the absence of a valid, enforceable contract, it may still
recover for tortious interference with prospective business advantage. In
order to do so, Ken-Pin must show: (1) its reasonable expectancy of
entering into a valid business relationship; (2) the defendant's
knowledge of that expected relationship; (3) purposeful interference by
the defendant that
prevents the expectancy from developing into a valid business
relationship; and(4) damages to the plaintiff resulting from that
interference. Int'l Mktg., Ltd. v. Archer-Daniels-Midland Co.,
192 F.3d 724, 731 (7th Cir. 1999). (citing Dowd & Dowd, Ltd. v.
Gleason, 639 N.E.2d 358, 370 (Ill. 1998)
With respect to this claim, Ken-Pin's complaint states a claim upon
which relief could be granted. Ken-Pin alleges that it had a reasonable
expectation that its business relationship with Computer Score would
continue, based on the; consideration it paid for a nonexclusive
distributorship and on its course of dealing with Computer Score. It
further asserts that Vantage and Schmidt knew of the relationship between
Ken-Pin and Computer Score and of Ken-Pin's expectation that the
relationship would continue. According to the complaint, Vantage and
Schmidt nonetheless intentionally caused Computer Score to enter into an
exclusive agreement with them that was fatal to Ken-Pin's expectation of
a continuing nonexclusive distributorship. Ken-Pin alleges that Vantage
and Schmidt's actions caused it to lose anticipated further profits from
Vantage and Schmidt do not argue that Ken-Pin's complaint fails to
allege the elements of the tort. Instead, they claim that Vantage, as a
competitor of Ken-Pin, is protected in its actions by a competitor's
privilege. As the Seventh Circuit has explained, "the process known as
competition, which though painful, fierce,
frequently ruthless, sometimes Darwinian in its pitilessness, is
the cornerstone of our highly successful economic system." Speakers
of Sport, Inc. v. ProServ, Inc., 178 F.3d 862, 865 (7th Cir. 1999).
As such, "competitions is not a tort, but on the contrary provides a
defense (the `competitor's privilege') to the tort of improper
interference." Id. (internal citations and quotation marks
omitted). In Illinois a competitor is ineligible for this privilege if
its conduct is motivated solely by spite or ill will. Int'l Mktg.,
Ltd., 192 F.3d at 731.
While the competitor's privilege is typically an affirmative defense,
where a complaint clearly reveals its existence, judgment on the
pleadings is possible. Id. Ken-Pin clearly states that Vantage
is one of its competitors and therefore, the question is whether
Vantage's actions were privileged. In its complaint, Ken-Pin alleges that
Vantage and Schmidt: (1) used the Lackenbachs to undermine Ken-Pin's
business in violation of the covenants not to compete; and (2)
deceptively encouraged Ken-Pin to introduce Vantage to Computer Score as
a Ken-Pin vendor so that Vantage could enter into an exclusive
distributorship relationship with Computer Score. Ken-Pin argues that,
under the federal notice pleading requirements, these allegations are
sufficient to charge the Vantage Defendants with a motivation of
ill-will. The Court disagrees. Nothing in the complaint supplies any
reason to believe
that the Vantage Defendants were motivated by ill-will or spite or,
indeed, by anything other than pure competitive instinct.
Contrary to the Vantage Defendants' argument, however, a party that has
behaved unfairly, or used "wrongful" means, is ineligible for the
competitive privilege even if it acted purely with competitive motive.
E.J. Brach Corp. v. Gilbert Int'l, Inc., No. 90 C 1399, 1991 WL
148914, at * 7 (N.D. Ill. June 18, 1991). Ken-Pin alleges that the
Vantage Defendants "deceptively encouraged Ken-Pin to introduce Vantage
to Computer Score . . . while hiding from Ken-Pin that their intention
was not to enhance Ken-Pin's enjoyment of its right to distribute Scoring
Systems, but to abrogate that right altogether." Ken-Pin also describes
the Vantage Defendants' actions as "wrongful" in its complaint. While the
Vantage Defendants question whether the conduct was actually wrongful,
this appears to be a question of fact that is premature at this early
stage of the action. Given the liberal federal rules of notice pleading,
for now at least, Ken-Pin's allegations are sufficient to state a claim
of tortious interference of prospective economic advantage.
2. Personal Jurisdiction
Given that the Vantage Defendant's motion to dismiss Count IV is
denied, the Court must address the Vantage Defendants' final claim: that
the Court does not have personal jurisdiction over Schmidt. Ken-Pin bears
the burden of proving the existence of
personal jurisdiction by a preponderance of the evidence. Webeq
Int'l, Inc. v. RFD Publ'ns, LLC, No. 03 C 3986, 2003 WL 22455516, at
*2 (N.D. Ill. Oct. 29, 2003). In this diversity action, the Court can
only exercise jurisdiction over Schmidt if an Illinois court could do so.
Under the Illinois long-arm statute, 735 ILL. COMP. STAT. ANN.
5/2-209(c), Illinois courts may assert personal jurisdiction to the
maximum extent permitted by the Illinois and United States Constitutions.
The Seventh Circuit has suggested that there is "no operative difference
between the limits imposed by the Illinois Constitution and the federal
limitations on personal jurisdiction" and accordingly, the two
constitutional analyses blend together. Hyatt Int'l Corp. v.
Coco, 302 F.3d 707, 715 (7th Cir. 2002).
The Court may exercise jurisdiction over a nonresident defendant when
that defendant has had "minimum contacts" with Illinois and when
maintenance of the suit does not "offend traditional notions of fair
play and substantial justice.'" RAR, Inc. v. Turner Diesel,
Ltd., 107 F.3d 1272, 1277 (7th Cir. 1997) (quoting Int'l Shoe
Co. v. Washington, 326 U.S. 310, 316 (1945)). Central to the minimum
contacts analysis is the question of whether the defendant "should
reasonably anticipate being haled into court in the forum state because
the defendant has purposefully availed itself of the privilege of
conducting activities there." Id. (internal citations and
quotation marks omitted). The level of
contact required depends on whether the state asserts "general" or
"specific" jurisdiction. Id. General jurisdiction permits
jurisdiction over suits that neither arise out of nor are related to the
defendant's contacts. These are only permitted when the defendant has
"continuous and systematic general business contacts with the forum."
Id. Because Ken-Pin does not allege that Schmidt has systematic
contact with Illinois, it has waived a general jurisdiction argument.
Id. In a specific jurisdiction case, the state has jurisdiction
over a defendant in a suit that arises out of or is related to the
defendant's contact with the forum. Id.
According to an affidavit filed by Schmidt and attached to the motion
to dismiss, Schmidt is a resident of Lakewood, Colorado and has been a
resident and domiciliary of Colorado since 1979. He does not own
property, engage in banking relationships, maintain an office, employ
agents, or conduct business in Illinois. He further states that none of
the negotiations between Vantage and Computer Score occurred in Illinois
and that the relationship between Vantage and the Lackenbachs was
initiated and conducted in Colorado. Indeed, the Vantage Defendants argue
that none of Schmidt's allegedly tortious acts occurred in Illinois.
Ken-Pin, however, contends that Vantage negotiated and entered into the
contract with Ken-Pin in Illinois to supply parts for Computer Score
products. It also contends that between 1997 and 2001, Vantage contracted
for and sold component parts that were
shipped to Ken-Pin in Illinois. Arguably, the claim for tortious
interference of prospective economic advantage is related to Vantage's
initial contract with Ken-Pin. After all, Ken-Pin alleges that Vantage
wrongfully used that contract to form a relationship with Computer
Source. The problem is that Ken-Pin provides the Court with no specific
information on what types of contacts Schmidt had with Illinois when
Vantage negotiated that contract. Indeed, the Court does not know whether
Schmidt negotiated the contract, where those negotiations took place, or
whether he ever met with Ken-Pin in Illinois. There is nothing in the
amended complaint to inform the Court. Ken-Pin cites to United Air
lines, Inc. v. Conductron, Corp., 387 N.E.2d 1272 (Ill.App. Ct.
1979), which states that "while physical presence in itself is not always
necessary, the act or transaction which is viewed as `doing business'
must have substantial connection with the State." Id. at 1275.
It is the quality of the contact between the act and the forum that
matters, and accordingly, a "single act may well be sufficient to subject
the defendant to the jurisdiction of the Illinois courts." Id.
Where the Court is given no specifics on the quality of the contact
between the act and the forum, it is impossible for it to find that there
was a sufficient connection to confer jurisdiction. The burden is on
Ken-Pin to provide those specifics and it has failed to meet that burden.
The Court finds that it does not haves personal jurisdiction over
Schmidt. As a
result, while the Vantage Defendants' motion to dismiss Count IV is
denied, Count IV is dismissed against Schmidt for lack of personal
For the foregoing reasons, Computer Score's motion to dismiss Count I
is GRANTED and its motion to dismiss Count II is
DENIED. The Vantage Defendants' motion to dismiss Count III is
GRANTED. The Vantage Defendants' motion to dismiss Count IV is
DENIED. Count IV is dismissed against Schmidt, however, for
lack of personal jurisdiction.
IT IS SO ORDERED.
© 1992-2004 VersusLaw Inc.