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A. M. Manufacturing Co, Inc. v. J.C. Ford Co.

July 12, 2006

A. M. MANUFACTURING COMPANY, INCORPORATED, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
J.C. FORD COMPANY, A CALIFORNIA CORPORATION, AND RUHE CORPORATION, A CALIFORNIA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Charles P. Kocoras, Chief District Judge

MEMORANDUM OPINION

The following matter comes before the court on Defendants', JC Ford Company ("JC Ford") and Ruhe Corporation ("Ruhe"), (collectively referred to as "Defendants"), Motion to Dismiss Plaintiff's, AM Manufacturing Company, Incorporated ("AM"), complaint pursuant to Fed. R. Civ. P. 12(b)(2). For the reasons set forth in the opinion below, Defendants' Motions are granted.

BACKGROUND

AM is an Illinois corporation in the business of designing and manufacturing tortilla presses. Ruhe, a holding company, is a California corporation with its principal place of business in La Habra, California. JC Ford, in addition to being a subsidiary of Ruhe, is also a California corporation with its principal place of business in California and has been in the business of producing automated tortilla, tortilla chip and taco/tostada manufacturing systems since 1945. JC Ford has no offices, no production facilities, no employees, and no distributor in Illinois. The following facts are taken from AM's complaint as well as the subsequent filings submitted by the parties, which we assume are true for the purposes of this Motion.

The relationship between AM and JC Ford began in 2001 and allegedly was akin to a partnership. In 1999, AM designed a continuous tortilla press, and sold three of said presses to JC Ford and/or JC Ford's customers in November 2001, May 2003, and September 2003. While AM was designing its continuous press, various persons from JC Ford made visits to AM in Illinois to understand how AM's presses worked. Further, between 2001 and 2003, one of AM's sales personnel went from Illinois to California to help promote and market JC Ford's tortilla lines. Since the first shipment of AM's continuous press to one of JC Ford's customers, JC Ford has continued to consult AM about installation, servicing, maintenance and marketing issues regarding the continuous presses. In addition, since November 2001, JC Ford has been acting as an intermediary between its tortilla line customers and AM to improve and/or modify AM's continuous press or to maintain and service the presses. AM alleges that as recently as April 7, 2006, one of JC Ford recommended to an AM employee posing as a potential customer that he contact two of JC Ford's previous customers in Chicago to observe the operation of JC Ford's presses and lines.

JC Ford has since manufactured a flour tortilla machine with a continuous press, which is the patented device that AM alleges the Defendants infringed. JC Ford markets its products at trade shows and on its web-site (without pricing information); however, JC Ford conducts all of its sales in-house from its corporate office in California.

On April 19, 2006, AM initiated this suit against the Defendants alleging patent infringement pertaining to its continuous tortilla press. Subsequently, on May 25, 2006, Defendants filed the instant Motions to Dismiss AM's complaint on the basis that AM has failed to establish personal jurisdiction over Defendants.

LEGAL STANDARDS

Fed. R. Civ. P. 12(b)(2) governs motions to dismiss claims based upon lack of personal jurisdiction. Under this rule, the burden of proof rests upon the party asserting jurisdiction; however, this party is only required to make a prima facie showing that jurisdiction exists. SeeSaylor v. Dyniewski, 836 F.2d 341, 341 (7th Cir. 1988). In a motion to dismiss based upon lack of personal jurisdiction, the court must accept all well-pleaded facts within the complaint as true, resolve all factual disputes in favor of the party asserting jurisdiction, and draw any reasonable inferences from those facts in the asserting parties favor. Dawson v. General Motors Corp., 977 F.2d 369, 372 (7th Cir. 1992).

DISCUSSION

When a case comes before a court on the basis of diversity jurisdiction, a federal district court in Illinois may exercise personal jurisdiction over a nonresident defendant only if an Illinois state court would have jurisdiction. See RAR Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997); Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992). Under the Illinois long-arm statute, a court may exercise jurisdiction over nonresident defendants for a cause of action arising from acts such as transacting any business within the state, committing a tortious act within the state, or making or performing any contract or promise substantially connected with the state. 735 ILCS 5/2-209(a). Furthermore, the statute provides that a court may exercise jurisdiction on any basis permitted by either the Illinois or federal constitutions. 735 ILCS 5/2- 209©. To determine the reach of Illinois due process, courts look to Federal Due Process limits on jurisdiction. RAR, 107 F.3d at 1276-1277.

Personal jurisdiction can be either general or specific. General jurisdiction arises when a defendant's activities are continuous and systematic, to the extent that it is proper for a court to exercise jurisdiction over the party for any action it takes. See Helicopteros Nacionales de Colombia, SA v. Hall, 466 U.S. 408, 104 S.Ct 1868 (1984).

Specific jurisdiction, by contrast, can be exercised when a suit arises out of or is related to the defendant's contacts with the forum. See id. at 414 n.8.

AM has failed to provide any evidence or make an argument that either of the Defendants are subject to our specific jurisdiction; however, AM contends that general jurisdiction exists as to both Defendants because JC Ford's business dealings are continuous and systematic in Illinois and Ruhe, as JC Ford's parent company, exerts a substantial amount ...


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