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Ferris Mfg. Corp. v. S.P.R.D.

May 15, 2007

FERRIS MFG. CORP., PLAINTIFF,
v.
S.P.R.D., TH TRADING, INC., AND MDR SPECIALTY DISTRIBUTION CO., DEFENDANTS.



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

Ferris Mfg. Corp. ("Ferris") has brought suit against S.P.R.D., TH Trading, Inc., and MDR Specialty Distribution Co. ("MDR") for conspiracy to commit fraud.*fn1 MDR moves to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). Because Ferris has not made a prima facie case that this Court may exercise personal jurisdiction over MDR, MDR's Motion to Dismiss is granted.

Facts

When reviewing a motion to dismiss for lack of personal jurisdiction, the Court accepts all well-pleaded factual allegations in the complaint as true unless controverted by the defendant's affidavits. See Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987), superceded on other grounds. Where affidavits submitted by the plaintiff create a factual dispute, all disputed facts are construed in the plaintiff's favor. Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996).

Ferris, an Illinois corporation, manufactures wound dressings and related medical supplies. S.P.R.D., an Australian company, approached Ferris about discount pricing for supplies that S.P.R.D. claimed would be sold to aid organizations involved in helping victims of natural disasters in the South Pacific. On the basis of S.P.R.D.'s representations, Ferris agreed to sell supplies for the natural disaster victims to S.P.R.D. at a substantial discount.

On July 11, 2006, MDR placed an order to purchase Ferris products through Kramer Scientific ("Kramer"), located in New Jersey. See Def. Ex. C&E. Kramer is not a defendant in this case. MDR is a Virginia corporation with its principal place of business in Virginia. MDR does not own property in Illinois, is not licensed to do business in Illinois, and does less than three percent of its total sales in Illinois. MDR Ex. A. MDR has only one part-time employee in Illinois, a data processor hired in November 2006. MDR has never entered into any contracts with Ferris, S.P.R.D., or TH Trading, Inc. MDR Ex. B.

Around July 11, S.P.R.D. placed an order with Ferris for wound dressings and represented that the supplies would go to aid disaster victims. On August 21, 2006, Ferris delivered the products to Phoenix International Freight Services in Itasca, Illinois. On September 5, 2006, MDR received a shipment of Ferris products at its warehouse in Williamsburg, Virginia. MDR's employee testified that the shipment received on September 5 was the order MDR placed with Kramer. Def. Ex. B. at ¶ 4, 6.

Around October 6, 2006, MDR placed a second order for Ferris products with Kramer. Around the same time, S.P.R.D. placed a second order with Ferris for wound dressings for use by the agencies affiliated with the World Health Organization. Ferris delivered the second shipment to the same freight facility in Itasca, Illinois. On October 31, MDR accepted a second shipment in Virginia, sent from Kramer's offices in New Jersey. When MDR received a second shipment in Virginia, it rejected the shipment because the Ferris labels had been stripped off.

Standard of Review

Once a defendant challenges the court's exercise of personal jurisdiction, the plaintiff bears the burden of demonstrating that personal jurisdiction exists. See Jennings v. AC Hydraulic A/S, 383 546, 548 (7th Cir. 2004). When a court decides a motion solely on the written submissions, the plaintiff bears the burden to establish a prima facie case that jurisdiction may be exercised. See Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). The Court first reviews whether statutory grounds exist for personal jurisdiction, and then determines if the exercise of jurisdiction would be consistent state and federal constitutional law. See Central States, Southeast and Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 939 (7th Cir. 2000). A federal court sitting in diversity has personal jurisdiction over a defendant only if the courts of the state in which it sits would have personal jurisdiction. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997).

"A federal court borrowing a state jurisdictional statute may acquire personal jurisdiction only to the extent that the state law authorizes service of process." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). The Illinois long-arm statute governs service of process in Illinois and "permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United States constitutions." See 735 ILCS 5/2-209(c); Hyatt, 302 F.3d at 714. Due process requirements for jurisdiction under the Illinois Constitution parallel due process requirements for jurisdiction under the federal Constitution; therefore, the inquiry collapses into whether the exercise of jurisdiction over MDR would comport with the due process requirements of the federal Constitution.*fn2 See Central States, 230 F.3d at 940; accord Hyatt, 302 F.3d at 714-16.

To satisfy the requirements of due process, a defendant must have "minimum contacts" with Illinois and those minimum contacts must not offend "traditional notions of fair play and substantial justice." See RAR, 107 F.3d at 1275, discussing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). There exist two types of jurisdiction: "general" and "specific." See Hyatt, 302 F.3d at 713, discussing Helicopteros Nationales de Colombia v. Hall, 466 U.S. 408, 414 (1984). "General jurisdiction is proper only when the defendant has 'continuous and systematic' contacts with the state in question; if such contacts exist, the court may exercise personal jurisdiction over the defendant even in cases that do not arise out of and are not related to the defendant's forum contacts." Hyatt, 3102 F.3d at 713. Specific jurisdiction allows the Court to exercise jurisdiction over a defendant whose contacts with the forum state are limited but where "the plaintiff's cause of action must arise out of or be related to these minimum contacts that sufficiently comport with fairness and justice." Central States, 230 F.3d at 943.

General Jurisdiction

MDR does not have 'continuous and systematic' contacts with the state of Illinois to permit this Court to exercise general jurisdiction over MDR. "The continuous and systematic contacts standard under general jurisdiction is 'considerably more stringent' than the minimum contacts standard under specific jurisdiction." Winston v. Martinair, Inc., 2007 WL 684113 (N.D. Ill.) citing Purdue Research Foundation, 338 F.3d at 787. Factors that courts examine in determining general jurisdiction include: (i) whether and to what extent the defendant conducts business in the state; (ii) whether the defendant maintains offices in the state; (iii) whether the defendant maintains employees in the state; (iv) whether the defendant advertises or solicits business from the forum state; and (v) whether the ...


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