United States District Court, N.D. Illinois
February 4, 2004.
ZENITH ELECTRONICS CORPORATION, Plaintiff/Counter-Defendant
WH-TV BROADCASTING CORPORATION, Defendant/Counter-Plaintiff
The opinion of the court was delivered by: GEORGE LINDBERG, Senior District Judge
MEMORANDUM OPINION AND ORDER
WH-TV Broadcasting Corporation ("WH-TV") is a Puerto Rico corporation
that operates a wireless cable television system in Puerto Rico. Zenith
Electronics Corporation ("Zenith") is a Delaware corporation, with its
principal place of business in Illinois. On February 20, 2002, this court
denied WH-TV's motion to dismiss this action for lack of personal
jurisdiction. Discovery was completed long ago, and WH-TV now moves for
reconsideration of this court's February 20, 2002 order. For the reasons
stated below, WH-TV's motion for reconsideration is denied.
I. Factual Background
In 1998, WH-TV sought a proposal for the sale of set-top boxes ("STBs")
from Zenith's Georgia office, for use in WH-TV's conversion to a digital
television service. Negotiations ensued between WH-TV and Zenith. It
appears that most of these negotiations took place in Puerto Rico and
Georgia.*fn1 In May 1999, WH-TV sent three purchase orders, for a total
STBs, to Zenith's Illinois office. The STBs, which were manufactured in
Mexico, were delivered to WH-TV in multiple shipments beginning in June
1999. WH-TV made payments to Zenith's Illinois office for the STBs
shipped pursuant to these three purchase orders.
In July 1999, WH-TV faxed its specifications for an electronic
programming guide for the STBs to Zenith's Illinois office. Also in July
1999, Zenith's Illinois office sent WH-TV sample logos for WH-TV's new
digital television service. WH-TV chose one of the samples, and sent its
decision to Zenith's Illinois office by e-mail. In August 1999, WH-TV
sent an e-mail to Zenith's Illinois office, with an additional inquiry
relating to the logo.
Beginning in August 1999, WH-TV reported problems with the STBs to
Zenith's engineers in Illinois, and requested technical support. Between
August 1999 and the end of 1999, WH-TV initiated numerous discussions
with Zenith's Illinois office regarding the performance of the STBs.
During that time, Zenith supplied several revised versions of software
for the STBs in an effort to correct problems.
On December 14, 1999, WH-TV sent a letter to Zenith's Illinois office
requesting 2,000 additional STBs by March 7, 2000. The letter also
requested technical support on a number of issues, requested additional
training, and requested a simpler remote control. WH-TV sent a fourth
purchase order, for the 2,000 STBs, to Zenith's Illinois office on
December 23, 1999. Zenith shipped STBs pursuant to WH-TV's fourth
purchase order in multiple shipments, with a final shipment of 500 STBs
delivered on July 10, 2000.
Between January 2000 and July 2000, when the final shipment of STBs was
delivered, discussions continued between WH-TV and Zenith's Illinois
office regarding the performance of the STBs. During that time, WH-TV
sent numerous e-mails to Zenith's Illinois office reporting
problems, as well as reporting the results of Zenith's attempted fixes.
On June 11, 2001, Zenith brought this action against WH-TV in the
Northern District of Illinois, alleging breach of contract for WH-TV's
failure to pay for the final shipment of STBs. WH-TV later counterclaimed
for breach of contract and fraud.
II. Legal Standard
On a motion to dismiss for lack of personal jurisdiction, the plaintiff
bears the burden of proving that personal jurisdiction exists. Central
States, S.E. & S.W. Areas Pension Fund v. Reimer Express World Corp.,
230 F.3d 934, 939 (7th Cir. 2000). In a case based on diversity of
citizenship, a federal district court sitting in Illinois has personal
jurisdiction over a nonresident defendant only if an Illinois court would
have jurisdiction. RAR.Inc. v. Turner Diesel. Ltd., 107 F.3d 1272, 1275
(7th Cir. 1997).
An Illinois court would have personal jurisdiction over a nonresident
defendant only where it is permitted by state statutory law, state
constitutional law, and federal constitutional law. Id. at 1276.
Illinois' long-arm statute extends personal jurisdiction to the limit
allowed under the Illinois Constitution and the Constitution of the
United States. 735 ILCS 5/2-209(c); RAR. Inc., 107 F.3d at 1276. Thus, the
court's inquiry collapses into a state and federal constitutional
inquiry. RAR. Inc., 107 F.3d at 1276.
Under the Illinois Constitution, jurisdiction is to be `"asserted only
when it is fair, just, and reasonable to require a nonresident defendant
to defend an action in Illinois, considering the quality and nature of
the defendant's acts which occur in Illinois or which affect interests
located in Illinois.'" Hyatt Int'l Corp. v. Coco. 302 F.3d 707, 715 (7th
Cir. 2002) (quoting Rollins v. Ellwood, 565 N.E.2d 1302, 1316 (Ill.
1990)). Since there is little guidance available regarding
the reach of the Illinois Due Process Clause, court typically look to the
federal Due Process Clause for guidance. See, e.g., id. at 715-16; RAR,
107 F.3d at 1276-77. Thus, the court turns to the federal constitutional
limits on jurisdiction.
Under the United States Constitution, the Due Process Clause of the
Fourteenth Amendment limits a state court's power to assert personal
jurisdiction over a nonresident defendant. RAR. Inc., 107 F.3d at 1277. A
defendant must have "certain minimum contacts [with the forum state] such
that the 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) (citation omitted).
Personal jurisdiction may be specific or general. See RAR, Inc., 107
F.3d at 1277. Specific personal jurisdiction exists where the suit arises
out of, or is related to, the defendant's minimum contacts with the forum
state. Hyatt Int'l Corp., 302 F.3d at 716. A defendant is subject to
specific personal jurisdiction if he "purposefully established `minimum
contacts' in the forum State" such that he "should reasonably anticipate
being haled into court" in the forum state. See Burger King Corp, v.
Rudzewicz, 471 U.S. 462, 474 (1985). Zenith does not argue that general
personal jurisdiction exists in this case.
The court first examines whether WH-TV had sufficient contacts with
Illinois such that it should reasonably foresee being haled into court in
Illinois. WH-TV correctly observes that merely sending purchase orders
and payments to Illinois is not sufficient to support a finding of
personal jurisdiction. See RAR, Inc., 107 F.3d at 1277 ("an out-of-state
party's contract with an in-state party is alone not enough to establish
the requisite minimum contacts."). However, as
Zenith notes, WH-TV made numerous other contacts with Illinois, including
communicating regarding a customized logo, reporting problems, and
requesting support. WH-TV argues that the court should not consider these
contacts because they were forced by Zenith's shipment of defective
equipment, and thus were "unwilling" and not purposefully established
with Illinois. According to WH-TV, the court should only consider the
period prior to the time any defective equipment was delivered.
WH-TV cites only Jadair, Inc. v. Walt Keeler Co., 679 F.2d 131 (7th
Cir. 1982), in support of its argument that contacts it made with
Illinois after it received the STBs are irrelevant to the minimum
contacts analysis. In Jadair, the defendant, a Kansas corporation,
purchased a machine from the plaintiff, a Wisconsin corporation. Id. at
132. The machine did not work satisfactorily, and the defendant called
and wrote to the plaintiff in Wisconsin, requesting that the plaintiff
repair it. Id. at 132, 134. The plaintiff filed a declaratory judgment
action in Wisconsin state court. Id. at 131. The defendant removed the
case to federal court, where the district court dismissed the case for
lack of personal jurisdiction. Id. at 131-32. On appeal, the Seventh
Circuit affirmed the dismissal, rejecting the plaintiff's argument that
the defendant's efforts to persuade the plaintiff to repair the machine
constituted contacts sufficient to subject the defendant to the
jurisdiction of the Wisconsin courts. Id., at 134. Specifically, the
court reasoned that "[i] f selling the machine to a Kansas buyer is not
sufficient to warrant bringing him into a Wisconsin court, [defendant's]
later efforts to get the machine to work properly cannot add anything to
the calculations." Id.
This court finds that Jadair is distinguishable from the case at bar.
In Jadair, the defendant's contacts with the forum state were limited to
requests for repair of the single piece of
equipment it had contracted to buy. Here, by contrast, WH-TV established
an ongoing relationship with Zenith's Illinois office through a variety
of contacts involving the performance of a related series of contracts.
Moreover, although WH-TV characterizes its contacts as "unwilling," WH-TV
issued its fourth purchase order for additional STBs in the midst of its
continued negotiations with Zenith relating to the performance of the
STBs, and it is only this final contract that is the subject of Zenith's
breach of contract claim against WH-TV. WH-TV's contacts with Illinois
were neither "random," "fortuitous," "attenuated," nor a result of
Zenith's "unilateral activity," but rather were purposeful availment of
this forum. See Burger King, 471 U.S. at 475; see also Heritage House
Restaurants. Inc. v. Continental Funding Group, Inc., 906 F.2d 276, 284
(7th Cir. 1990) (the existence of a continuing relationship with an
Illinois company can subject a non-resident to the jurisdiction of the
Illinois courts). The court finds that, based on these contacts, WH-TV
should reasonably foresee being haled into an Illinois court.
Having determined that minimum contacts exist, the court next must
consider whether it would offend traditional notions of fair play and
substantial justice to exercise personal jurisdiction over WH-TV in this
case. See Burger King, 471 U.S. at 476-78. No single factor is
dispositive to this inquiry, but the most important are the interests of
the states involved and the relative convenience of litigating there. See
Kohler Co. v. Kohler Int'l. Ltd., 196 F. Supp.2d 690, 700 (N.D. Ill.
Illinois has an interest in protecting the contract rights of companies
located in Illinois, and Zenith's principal place of business is in
Illinois. In addition, although WH-TV argues that litigating in Illinois
would be inconvenient and expensive, the court does not find WH-TV's
burden in this regard to be a great one, given modern transportation and
Chicago's status as a
transportation hub. Nor is the court persuaded by WH-TV's argument that
litigating in Illinois would cause WH-TV confusion due to the different
language and business culture in Illinois. WH-TV was apparently able to
overcome any language and cultural barriers in dealing with Zenith, and
the court has not observed any such difficulties in the more-than-two
years WH-TV has been before this court in this case. The court concludes
that the exercise of personal jurisdiction over WH-TV in this case does
not offend traditional notions of fair play and substantial justice.
The exercise of personal jurisdiction over WH-TV in this case does not
violate either the United States Constitution or the Illinois
Constitution. Accordingly, the court will not disturb its February 20,
2002 order denying WH-TV's motion to dismiss for lack of personal
jurisdiction. Given this conclusion, the court need not consider Zenith's
arguments that WH-TV consented to personal jurisdiction based on a
consent to jurisdiction provision contained in Zenith's sales orders, or
that WH-TV waived its right to object to personal jurisdiction based on
WH-TV's actions in this litigation.
ORDERED: Defendant WH-TV Broadcasting Corporation's Motion for
Reconsideration of This Court's February 20, 2002 Order [764-1] is
denied. Plaintiff Zenith Electronics Corporation's Motion for Leave to
File Motion for Reconsideration of This Court's June 18, 2003 Order
[774-1] is denied as moot.