The opinion of the court was delivered by: SUZANNE CONLON, District Judge
MEMORANDUM OPINION AND ORDER
In this diversity action, American Top English ("American") sues Golden
Gate Capital ("Golden Gate") for breach of contract and violations of the
Illinois Franchise Disclosure Act ("IFDA"), 815 ILCS 705/1, et seq., and
Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS
505/1, et seq. Golden Gate responds with a motion to dismiss for lack of
personal jurisdiction, improper venue and insufficiency of service of
process pursuant to Fed.R.Civ.P. 12(b)(2), 12(b)(3) and 12(b)(5).
American is an Illinois corporation headquartered in Chicago. Compl. at
¶ 3. Golden Gate is a private equity investment firm incorporated under
Delaware law and headquartered in San Francisco, CA. Id. at ¶ 4.
American is in the business of selling a popular videocassette language
course called "Ingles Sin Barreras," literally, "English Without
Borders" an instructional video that teaches English to Spanish
speakers. Id. at ¶ 3. American does not produce the course itself, nor
does it develop the course's content. Instead, it has the exclusive
rights to distribute the video course in parts of Illinois, Indiana,
Wisconsin and Arizona, pursuant
to a series of distribution agreements. Id. at ¶¶ 7-24. According to
American, Golden Gate is a party to these contracts under an asset
purchase agreement or assignment. This dispute centers on the rights and
responsibilities flowing from these three contracts.
The first agreement was executed in 1990 ("1990 agreement"). Id. at ¶¶
7-12. Alejandro Daniel Itkin, American's president, negotiated the
agreement with Hispanic-American Educational Materials, Inc. ("HAEM"),
the original producer of "Ingles Sin Barreras." Id. Itkin subsequently
assigned his interest in the agreement to American. Id. The 1990
agreement granted American the right to distribute the video course
within the 312 and 708 area codes. Id. The agreement required American to
advertise individually. However, HAEM pledged to advertise nationally.
The 1990 agreement set forth a schedule for apportioning sales generated
by HAEM's national advertising within American's exclusive distribution
area. Id. The agreement required American to purchase sales kits and a
certain amount of video courses to activate its distribution rights. Id.
To retain these exclusive distribution rights, American was required to
purchase additional video courses each month. Id. HAEM was obligated to
ensure timely delivery of American's inventory needs. Sometime prior to
May 1, 1994, HAEM's interest in the agreement was assigned to its
successor, Hispaem of California, Inc. ("Hispaem"). Id. at Ex. B.
According to American, Hispaem's rights in the agreement were eventually
assigned to Golden Gate. In the complaint, American alleges Golden Gate
breached the 1990 contract by selling video courses in Illinois, within
American's exclusive distribution area.
In 1994, American entered into a second distribution agreement ("1994
agreement") with Hispaem. Compl., Ex. B. The 1994 agreement granted
American exclusive distribution rights in Arizona. Id. Like the 1990
agreement, the 1994 agreement required American to purchase a
minimum number of video courses each month, as well as an initial
purchase of sales kits and video courses. Id. The 1994 agreement included
a forum selection clause, which required the parties to file suit in
California to enforce the agreement. Id. According to American, Hispaem's
interest in the 1994 agreement has been assigned to Golden Gate. American
alleges Golden Gate breached the agreement by competing with American in
In 1997, American and Hispaem executed a handwritten letter agreement
("1997 agreement") that modified the 1990 and 1994 agreements.*fn1
Compl. at ¶¶ 18-27. Importantly, the 1997 agreement enlarged the scope of
American's distribution zone to include Wisconsin and Indiana. Id. Like
the previous agreements, the 1997 agreement required American to purchase
video courses and sales kits, as well as maintain certain sales levels to
retain distribution rights. Id. According to American, Hispaem's rights
and obligations under this agreement were assigned to Golden Gate.
American alleges Golden Gate breached the 1997 agreement in two ways:
Golden Gate improperly terminated the 1997 agreement on October 8, 2001;
and, Golden Gate sold video courses in Indiana and Wisconsin in violation
of American's exclusive distribution rights.
Because Golden Gate was not an original party to these agreements,
American has tendered evidence in an attempt to establish Golden Gate's
liability as a successor to Hispaem. Chief among this documentation is a
January 15, 2003 assignment agreement between Lexicon
Marketing International Limited ("LMI") and American. Pl's Opp., Ex. A.
LMI is a portfolio company of Golden Gate. The assignment agreement
establishes that Hispaem's rights in the three distribution agreements
were succeeded by Lexicon Marketing Corporation ("LMC"). LMC then entered
into an asset purchase agreement with LMI, whereby LMI purchased
"substantially all of the assets" of LMC, including LMC's contract with
American. Id. American consented to the assignment. Id. The assignment
agreement is supported by an affidavit from American's president,
Alejandro Itkin. Pl's Opp., Ex. L. Itkin attests that Golden Gate is
Hispaem's successor in interest via the network of assignments discussed
above. According to Itkin, Golden Gate has continued to fill American's
needs under the distribution agreements by providing American with
marketing materials, telephone leads and video courses. Id. at ¶ 20.
Golden Gate contends it is not subject to personal jurisdiction in
Illinois because it is not the successor in interest to American's
distribution contracts. According to Golden Gate the agreements are an
insufficient basis to establish jurisdiction. American has the burden of
demonstrating that this court has personal jurisdiction over Golden
Gate. Purdue Research Foundation v, Sanofi-Synthelabo, S.A., 338 F.3d 773,
782-83 (7th Cir. 2003) (plaintiff must make out a prima facie case of
personal jurisdiction); RAR, Inc. v. Turner Diesel, Ltd. 107 F.3d
1272, 1276 (7th Cir. 1997)*fn2. In deciding a motion to dismiss for
lack of personal jurisdiction, all well-pleaded jurisdictional
allegations in the complaint are accepted as true unless controverted by
affidavit. Willard v. Ingersoll-Rand Co., No. 03 C 4665, 2003 WL 22175582
(N.D.Ill.2003). Conflicts in affidavits or pleadings are resolved in
American's favor; the court accepts unrefuted facts offered by defendants
as true. Interlease Aviation Investors II (Aloha) L.L. C., et al. v.
Vanguard Airlines, Inc., 262 F. Supp.2d 898, 905 (N.D.III. 2003).
This court has jurisdiction over Golden Gate if an Illinois court would
have jurisdiction. Fed.R.Civ.P. 4(k)(1)(A); Hyatt Int'l Corp. v. Coco,
302 F.3d 707, 713 (7th Cir. 2002). An Illinois court may exercise
jurisdiction over a nonresident defendant to the extent permitted by the
Illinois and United States Constitutions. 735 ILCS 5/2-209(c); Hyatt Int'l
Corp., 302 F.3d at 713. The allegations in the complaint and the evidence
attached to American's opposition are insufficient to establish general
jurisdiction over Golden Gate. Taken as true, they merely show that
Golden Gate had a business relationship with an Illinois distributor and
occasionally sold video tapes in Illinois. They do not demonstrate that
Golden Gate had continuous and systematic contacts with Illinois. See
RAR, Inc., 107 F.3d at 1277, citing Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984). Accordingly, American must
establish that Golden Gate's contacts with Illinois gave rise to this
To establish specific jurisdiction, American must demonstrate Golden
Gate "purposefully established minimum contacts within the forum State."
Burger King Corp, v. Rudzewicz,
471 U.S. 462, 476-77 (1985). Whether Golden Gate had sufficient minimum
contacts with Illinois depends on whether it could "reasonably anticipate
being haled into court" in Illinois. World-Wide Volkswagen Corp. v.
Woodsen, 444 U.S. 286, 297 (1980). These contacts may not be fortuitous
or attenuated. Instead, this requirement is satisfied when the defendant