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Morton Grove Pharmaceuticals, Inc. v. National Pediculosis Association

May 3, 2007

MORTON GROVE PHARMACEUTICALS, INC., PLAINTIFF,
v.
THE NATIONAL PEDICULOSIS ASSOCIATION, INC., ECOLOGY CENTER, INC., JOHN FLIEGEL, MD, WILLIAM B. WEIL, MD, DEFENDANTS.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Defendants Ecology Center, Inc. ("the Center"), John Fliegel, MD ("Fliegel"), and William B. Weil, MD ("Weil") have brought a motion to dismiss counts II, III and IV of the complaint brought by plaintiff Morton Grove Pharmaceuticals, Inc., ("MGP") for lack of personal jurisdiction under FED. R. CIV. P. 12(b)(2), improper venue under FED. R. CIV. P. 12(b)(3), or, in the alternative, to transfer the case to the Eastern District of Michigan, and for failure to state a claim under FED. R. CIV. P. 12(b)(6). For the following reasons, the motion to dismiss for lack of personal jurisdiction is granted.

I.

MGP, a Delaware corporation, is a pharmaceutical company with its principal place of business in Morton Grove, Illinois. MGP manufactures Lindane Lotion and Lindane Shampoo ("collectively Lindane"), which are FDA-approved medications for the treatment of lice and scabies. These products are named after their active ingredient -- lindane. Presently, MGP is the only United States manufacturer and distributor of Lindane.

The Center is a non-profit environmental group in Michigan. The Center's sole place of business is Ann Arbor, Michigan and has never maintained offices, registered agents or employees in Illinois. Fliegel and Weil are physicians licensed to practice in the field of pediatric medicine in Michigan. Neither individual is licensed or alleged to have practiced medicine in Illinois. Both individuals reside in Michigan, where they have worked with the Center, and have never resided in Illinois.

MGP has filed claims for defamation (Count II), trade disparagement (Count III), and violations of the Illinois Deceptive Trade Practices Act, 815 ILCS 510/2 (Count III) against all defendants. The complaint specifically alleges that the Center, Fliegel, and Weil engaged in a false, misleading and defamatory attack campaign on MGP and its product, Lindane. As a result, MGP is alleged to have suffered a decline in the sale of Lindane and reputational injury. With regard to jurisdiction, the complaint alleges the Center "actively solicits donors by mail and distributes 'fact sheets' and 'newsletters' . . . in Illinois;" "has raised money from eleven Illinois residents since December 2003;" "and has spent $2,900 in business and travel expenses in Illinois since February 2004." (Compl. at ¶ 11.)

II.

On a motion to dismiss for lack of personal jurisdiction or improper venue, I read the complaint liberally and draw all reasonable inferences in favor of the plaintiff. Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir. 1999). Where conflicting evidence is presented, I resolve factual disputes in the plaintiff's favor. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997); Rotec Indus., Inc., v. Aecon Group, Inc., 436 F. Supp.2d 931, 933 (N.D. Ill. 2006). The plaintiff has the burden to demonstrate that venue is proper and that this court has personal jurisdiction over the defendant. RAR, 107 F.3d at 1276; Cent. States, Southeast and Southwest Areas Pension Fund, 440 F.3d 870, 875 (7th Cir. 2006); Rotec Indus., 436 F. Supp.2d at 933. A federal court exercising diversity jurisdiction has personal jurisdiction over the defendant if the state in which it sits would have such jurisdiction. RAR, 107 F.3d at 1275 (quoting Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995)). This court's exercise of personal jurisdiction must comport with Illinois statutory and constitutional law, and federal constitutional law. See id. at 1276. The Illinois long-arm statute provides that an Illinois court may exercise personal jurisdiction "on any . . . basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." 735 ILCS 5/2-209(c).

Therefore, I need only consider whether exercise of personal jurisdiction over defendants would be proper under Illinois and federal conceptions of due process.

Under the Due Process Clause of the Illinois Constitution, a court may exercise jurisdiction "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." Rollins v. Ellwood, 141 Ill.2d 244, 275, 152 Ill. Dec. 384, 398, 565 N.E.2d 1302, 1316 (1990) (citation omitted). Although the Illinois Supreme Court contended in Rollins that the due process requirements under the Illinois constitution are distinct from the requirements of federal due process, see id., the Seventh Circuit has since affirmed that it is only in the rare, and perhaps hypothetical, case that the federal due process analysis might actually differ from the Illinois due process analysis. See Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 715 (7th Cir. 2002) ("[W]e note that in no case post-Rollins has an Illinois court found federal due process to allow the exercise of jurisdiction in a case where Illinois limits prohibited it.").

Under the Due Process Clause of the Fourteenth Amendment, a defendant must 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.'" Hyatt Int'l, 302 F.3d at 716; Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting Miliken v. Meyer, 311 U.S. 457, 463 (1940)). Here, MGP argues that this court may exercise both general and specific jurisdiction over the Center and only specific jurisdiction over Fliegel and Weil. Specific jurisdiction is jurisdiction that arises out of or relates to the defendant's contacts with the forum. RAR, 107 F.3d at 1277 (citing Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984)). Minimum contacts are established for purposes of specific jurisdiction when the defendant's contacts with the forum state demonstrate that the defendant has purposefully availed itself of the privilege of conducting activities within the forum state, such that the defendant could reasonably anticipate being haled into court there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980); Hanson v. Denckla, 357 U.S. 235, 253 (1958); RAR, 107 F.3d at 1277 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985)). "General jurisdiction, meanwhile, is for suits neither arising out of nor related to the defendant's contacts, and it is permitted only where the defendant has 'continuous and systematic general business contacts' with the forum." RAR, 107 F.3d at 1277 (quoting Helicopteros, 466 U.S. at 416).

A. General Jurisdiction

MGP first argues for general jurisdiction over the Center. In support, plaintiff claims that the Center solicited donations in Illinois, sending two sets of newsletters to Illinois residents and receiving donations from Illinois over the last five years. MGP also identifies that the Center has received two large grants from an Illinois-based foundation in the amounts of $150,000 in 2002 and $120,000 in 2003. Moreover, plaintiff argues that the Center maintains an "interactive" webpage on which visitors can make donations or pledge non-financial support to environmental causes.

The standard for establishing general jurisdiction is a "fairly high standard and requires a great amount of contacts." Jamik, Inc. v. Days Inn of Mt. Laurel, 74 F.Supp.2d 818, 822 (N.D. Ill. 1999); see also Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 787 (7th Cir. 2003). "[N]either 'mere occasional solicitation' nor 'isolated, sporadic transactions with residents of the forum state' is enough to satisfy the requirements of general jurisdiction." Contrak, Inc. v. Paramount Entrs., Int'l., Inc., 201 ...


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