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GRAND VEHICLE WORKS HOLDINGS, CORPORATION v. FREY

April 5, 2004.

GRAND VEHICLE WORKS HOLDINGS, CORPORATION, Plaintiff,
v.
THOMAS FREY and RICHARD FISH, Defendants



The opinion of the court was delivered by: AMY J. ST. EVE, District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Grand Vehicle Works Holdings Corporation ("Grand Vehicle") filed a seven count complaint against Defendants Thomas Frey ("Frey") and Richard Fish ("Fish") (collectively, "Defendants") alleging breach of contract, tortious interference with contractual relations, breach of fiduciary duty, and unfair competition. Defendants moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. For the reasons set forth below, Defendants' motion is denied.

BACKGROUND

  Grand Vehicle is a Delaware limited liability corporation with its principal place of business in Highland Park, Illinois. (R. 1-1, Compl. ¶ 2.) Grand Vehicle develops, markets, and sells products and services related to the motor home industry. (Id. ¶ 8.) Workhorse Custom Chassis ("Workhorse") is a subsidiary of Grand Vehicle and has its principal place of business in Union City, Indiana, (Id.) Workhorse manufactures strip chassis for the motor home industry. (Id.) Defendants, both residents of Ohio, are former Workhorse employees who worked in Workhorse's Union City, Indiana facility, (Id. ¶¶ 3-4.) Frey served as President of Workhorse from June 1999 until January 2003, when he quit Workhorse to work for Universal Trailer Corporation ("Universal Trailer") in Cincinnati, Ohio. (Id. ¶ 10.) Universal Trailer manufactures and sells trailers and motor homes, (Id. ¶ 21.) Fish served as Workhorse's Vice President of Marketing for Recreational Vehicles from October 2000 until August 2003, when he also quit Workhorse to work for Universal Trailer. (Id. ¶ 11.)

  Anthony Monda served as Workhorse's Director of Marketing from May 1999 until he left Workhorse in September 2003 to join Frey and Fish at Universal Trailer. (Id. ¶ 25.) While the majority of Workhorse employees were based in Union City, Indiana, Monda and several other Workhorse employees worked in Highland Park, Illinois, (Andrew Taitz Aff. ¶ 2.)

  In May 2001, Grand Vehicle offered stock options to Defendants and other key employees. (R. l-l, Compl. ¶ 16.) Defendants accepted the offer and agreed to be bound by the Company's Stock Option Agreement, (Id.) As a condition of their receipt of the stock options, Frey and Fish each executed a Confidentiality and Non-Compete Agreement (the "Frey Non-Compete Agreement" and the "Fish Non-Compete Agreement associated with the Stock Option Agreement"), (Id. ¶ 17.) Pursuant to these agreements, Defendants agreed to certain post-employment restrictions in the event that they left Workhorse to work for a competitor.*fn1 (Id. ¶ 1.)

  In March 2002, Neville Dowell, a Grand Vehicle shareholder, agreed to sell his Grand Vehicle stock to Fish. (Id. ¶ 18.) To consummate the sale, Fish and Dowell executed a Share Purchase Agreement. (Id.) Fish needed Grand Vehicle's consent before he could purchase the stock from Dowell, (Id.) As a condition of Grand Vehicle's consent, Grand Vehicle required Fish to execute an additional Confidentiality and Non-Compete Agreement (the "Fish Non-Compete Agreement associated with the Share Purchase Agreement") contemporaneously with the Share Purchase Agreement, (Id.) The Share Purchase Agreement contained a forum selection clause in which Fish agreed to submit to personal jurisdiction in. Illinois for any disputes arising out of that agreement. (Share Purchase Agreement ¶ 6(c).)

  Grand Vehicle sued Defendants for a variety of claims arising out of the Frey Non-Compete Agreement and both Fish Non-Compete Agreements. Defendants argue that the Court lacks personal jurisdiction over them. This is the issue currently before the Court.

  LEGAL STANDARD

  When a defendant files a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the existence of personal jurisdiction over the defendant. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). The plaintiff, however, "need only make out a prima facie case of personal jurisdiction." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 715 (7th Cir. 2002). Accordingly, in determining whether personal jurisdiction exists, "[t]he allegations in the complaint are to be taken as true unless controverted by the defendants' affidavits; and any conflicts in the affidavits are to be resolved in [the plaintiff's] favor." Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Because each count of a complaint is ordinarily a separate statement of a claim, the plaintiff must establish that personal jurisdiction exists as to each count. Beveridge v. Mid-West Mgmt., Inc., 78 F. Supp.2d 739, 744 (N.D. Ill. 1999). An Illinois federal court has personal jurisdiction over a nonresident party "only if an Illinois state court could have such jurisdiction." RAR, 107 F.3d at 1275. The Illinois long-arm statute permits the Court to exercise personal jurisdiction over a party to the extent allowed under federal due process.*fn2 See 735 Ill. Comp. Stat. 5/2-209(c); Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992). In addition, the Court must ensure that the due process guarantees of the Illinois Constitution are satisfied before exercising personal jurisdiction over a nonresident defendant. RAR, 107 F.3d at 1276; Jamik, Inc. v. Days Inn of Mount Laurel, 74 F. Supp.2d 818, 821 (N.D. Ill, 1999). Because the Seventh Circuit has held that "there is no operative difference between the limits imposed by the Illinois Constitution and the federal limitations on personal jurisdiction," the Court will address a single due process inquiry. Hyatt, 302 F.3d at 715; see also Janmark, Inc. v. Reidy, 132 F.3d 1200, 1202 (7th Cir. 1997); Klump v. Duffus, 71 F.3d 1368, 1371 n.4 (7th Cir. 1995).

  Federal due process requires that the defendant have "certain minimum contacts with [the state] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice,'" RAR, 107 F.3d at 1277 (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct, 154, 158 (1945)). The minimum contacts standard varies depending on whether the plaintiff asserts general or specific jurisdiction. This case involves specific jurisdiction.*fn3

  Specific jurisdiction exists in cases "arising out of or related to the defendant's contacts with the forum." Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8, 104 S.Ct. 1868, 1872 n.8 (1984), In specific jurisdiction cases, a defendant's minimum contacts with Illinois must "result from the actions by the defendant himself that create a substantial connection with the forum state." Burger King v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2184 (1985) (citation omitted). The defendant's connection to the State must be substantial enough that "he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567 (1980).

  ANALYSIS

  Because specific jurisdiction requires that the lawsuit "arise out of or "be related to" a defendant's minimum contacts with the forum state, RAR, 107 F.3d at 1277, the Court must determine whether this lawsuit arises out of Defendants' contacts with Illinois in a manner sufficient to warrant ...


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