The opinion of the court was delivered by: Honorable David H. Coar
MEMORANDUM OPINION AND ORDER
Plaintiff Erie Foods International ("Plaintiff") is an Iowa corporation with its principal place of business in Erie, Illinois. Defendant Apollo USA, Inc. ("Apollo USA") is a Louisiana corporation with its principal place of business in Metairie, Louisiana. Defendant Apollo Group N.V. (incorrectly sued, it maintains, as "Apollo Group;" hereinafter "Apollo N.V.") is a Dutch company with its principal place of business in Nijmegen, Netherlands. It is also the parent company of Apollo USA. Before this Court is Defendant Apollo N.V.'s motion to dismiss Plaintiff's complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). For the reasons stated below, the motion is GRANTED.
Plaintiff specializes in the research and manufacture of milk protein technology products. In processing some of these products, Plaintiff uses a milk protein known as casein. Casein is the principal protein of cow's milk and the most commonly used milk protein the food industry. Plaintiff also uses acid casein, a granular milk protein, for a number of applications.
Defendants are involved in the global trade of diary ingredients, including casein and acid casein. Apollo USA, Inc. is the United States office of Apollo Group N.V. for this purpose. On each of the following dates, January 26, 2004, February 3, 2004, and April 2, 2004, Plaintiff entered into contracts with Apollo USA for the purchase and delivery of specified amounts of acid casein and unground casein. The three contracts specified delivery dates from March to September of 2004. Defendants failed to deliver the casein as required by the contracts. Moreover, Defendants indicated that they did not intend to make the August and September 2004 deliveries pursuant to the February and April contracts. Plaintiff, therefore, has sued Defendants for breach of contract. Apollo USA has waived any jurisdictional defenses by appearing and answering Plaintiff's complaint, but Apollo N.V., its parent corporation, contests this Court's personal jurisdiction.
When a defendant challenges a court's jurisdiction over his or her person, the plaintiff has the burden of showing that personal jurisdiction exists. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). The allegations in the plaintiff's complaint are taken as true unless controverted by the defendant's affidavits. See Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Any conflicts in the parties' affidavits are to be resolved in the plaintiff's favor. See id.
"A federal district court exercising diversity jurisdiction has personal jurisdiction only if a court of the state in which it sits would have such jurisdiction." RAR, 107 F.3d at 1275. The Due Process Clause of the Fourteenth Amendment, however, limits a state's exercise of personal jurisdiction over a nonresident defendant.*fn1 See id. For personal jurisdiction to be proper, a defendant must have certain minimum contacts with the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76 (1985); Central States, Southeast and Southwest Areas Pension Fund v. Reimer, 230 F.3d 934, 942-43 (7th Cir. 2000). The central question is whether the defendant reasonably should have anticipated being hailed into court in the forum because it "purposefully availed itself of the privilege of conducting activities in the forum, invoking the benefits and protections of its laws." Central States, 230 F.3d at 943. "Once minimum contacts have been shown to exist, a court must examine other factors, such as the forum's interest in adjudicating the dispute and the burden on the defendant, to determine whether the exercise of personal jurisdiction satisfies traditional notions of fair play and substantial justice." Id. To exercise specific personal jurisdiction,*fn2 the plaintiff's cause of action must arise out of or be related to these minimum contacts. See id.; Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984).
Plaintiff seeks to establish jurisdiction over Apollo N.V., not because of any particular conduct of Apollo N.V. in Illinois, but because of Apollo USA's activities in Illinois. As a general rule, however, the jurisdictional contacts of a wholly-owned subsidiary are not imputed to the parent corporation. See Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 788 n.17 (7th Cir. 2003); Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n.13 (1984). The rule is stated in Central States, 230 F.3d at 943:
. . . we hold that constitutional due 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.
This rule also identifies the exception: Jurisdiction over a parent can be based on jurisdiction over a subsidiary if (1) the parent and subsidiary have not observed corporate formalities or (2) the parent exercises an unusually high degree of control over the subsidiary. Accord Salon Group, Inc. v. Salberg, 156 F. Supp. 2d 872, 876 (N.D. Ill. 2001) ("Illinois courts recognize two methods by which a plaintiff can establish jurisdiction over a foreign parent based on the activities of its subsidiary."). The Court will address each method in turn.
A. Have Apollo N.V. And Apollo USA Observed Corporate Formalities?
Under the first method, Plaintiff can establish jurisdiction over Apollo N.V. by providing evidence that would justify piercing the corporate veil of its subsidiary, Apollo USA. The law of the state of incorporation governs whether to pierce the corporate veil. See Stromberg Metal Works, Inc. v. Press Mechanical, Inc., 77 F.3d 928, 933 (7th Cir. 1996).*fn3 In Louisiana, where Apollo USA is incorporated, factors to consider when determining whether to pierce the corporate veil include, but are not limited to: 1) commingling of corporate and shareholder funds; 2) failure to follow statutory formalities for incorporating and transacting corporate affairs; 3) undercapitalization; 4) failure to provide separate bank accounts and bookkeeping records; and 5) ...