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Digisound-Wie, Inc. v. Bestar Technologies

May 16, 2008

DIGISOUND-WIE, INC., PLAINTIFF,
v.
BESTAR TECHNOLOGIES, INC., DIRK DE YOUNG, HELENE DE YOUNG, FLORIAN GREILING, LILLI GREILING, AND CC ELECTRO SALES, INC., DEFENDANTS.



The opinion of the court was delivered by: Hon. George W. Lindberg

MEMORANDUM OPINION AND ORDER

Before the court is defendants Florian Greiling ("Mr. Greiling") and Lilli Greiling's ("Ms. Greiling") (collectively "Greilings") joint motion to dismiss plaintiff's amended complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Proceedure ("Rule") 12(b)(2). For the reasons set forth more fully below, defendants' motion to dismiss is granted.

1. FACTUAL BACKGROUND

On March 3, 2008, plaintiff Digisound-WIE, Inc. ("Digisound") filed a ten-count amended complaint ("complaint") against defendants BeStar Technologies, Inc. ("BeStar"), Dirk De Young, Helene De Young, Mr. Greiling, Ms. Greiling, and CC Electo Sales, Inc. The Greilings are citizens and residents of Germany and were domiciled there during all times relevant to this case. The Greilings are not residents of Illinois and do not have any offices, agents, employees, telephone listings, bank accounts, property, or assets in Illinois. In fact, Ms. Greiling has never been to Illinois and Mr. Greiling was not in Illinois during any time relevant to this case. Further, the Greilings have not expressly consented to being sued in Illinois.

The Greilings were served with summons and a copy of the complaint in Germany through the procedures established by the Hague Convention for service of foreign parties. Counts V, VI, VII, IX, and X of the complaint are directed against the Greilings and include Illinois state law claims for tortious interference with customer contracts (Count V), tortious interference with reasonable expectation of economic advantage (Count VI), misappropriation of trade secrets (Count IX), civil conspiracy (Count X), and a federal claim for a violation of the Lanham Act, 15 U.S.C. § 1125(a) (Count VII). The Greilings move to dismiss the complaint on the ground that this court lacks personal jurisdiction over them.

Digisound is an Illinois corporation with its principal "office" in Illinois. Compl. at ¶ 4. Digisound also had an office and warehouse in Arizona until July 2007. Id. at ¶ 5. Dirk and Helene de Young were Digisound's only employees. Id. at ¶ 11. Florian Greiling is the former managing director of Digisound's parent company, Digisound-Electronic GmbH ("GmbH). GmbH is a German corporation and Mr. Greiling was its managing director until he resigned on May 25, 2007. As GmbH's managing director, Mr. Greiling was "in charge of [Digisound's] operations." Id. at ¶ 8.

II. LEGAL ANALYSIS

Digisound bears the burden of demonstrating that this court has personal jurisdiction over the Greilings. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). "When [a] district court rules on a defendant's motion to dismiss based on the submission of written materials, without the benefit of an evidentiary hearing, . . . the plaintiff need only make out a prima facie case of personal jurisdiction." Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). The court resolves any factual disputes in the pleadings and affidavits in Digisound's favor. Riddell, Inc. v. Monica, 03 C 2003, 2003 WL 21799935, *1 (N.D. Ill. July 25, 2003).

A. Zeich Affidavit

The court will not consider the affidavit Digisound submitted from Michael Zeich. In his affidavit, Mr. Zeich does not specify whether it was executed within the United States, or abroad. Mr. Zeich purports to be the Director of Operations for GmbH, a German corporation and it appears that Mr. Zeich executed his affidavit in Germany. Unsworn affidavits executed outside of the United States must include the statement, or a statement substantially similar to, " I declare (or certify, verify, or state) under penalty of perjury under the laws of the United States of America that the foregoing is true and correct." 28 U.S.C. § 1746; International Ins. v. Caja Nacional De Ahorro y Seguro, 293 F.3d 392, 398 (7th Cir. 2002). Mr. Zeich's affidavit does not include the phrase "under the laws of the United States of America," or any substantially similar statement. Therefore, the court will not consider Mr. Zeich's affidavit.

B. Minimum Contacts with the United States as a Whole

According to Digisound, the court can exercise personal jurisdiction over the Greilings (1) based on Rule 4(k)(2) and the Lanham Act, and (2) because it possesses specific jurisdiction over the Greilings based on their minimum contacts with Illinois. Turning to plaintiff's first argument, the court finds that it lacks merit. Digisound argues that in cases such as this, involving federal question subject matter jurisdiction -- as opposed to diversity jurisdiction -- the court can assert personal jurisdiction over a defendant based on his or her sufficient contacts with the United States as a whole. Digisound contends that it is not required to make a prima facie showing that a defendant has minimum contacts with a particular forum state. In support of this argument, plaintiff cites Zurich Capital Markets, Inc. v. Coglianese, 388 F.Supp.2d 847 (N.D. Ill 2004). The analysis in Zurich is not applicable to the facts of this case. In Zurich, the plaintiff alleged a violation of the Securities Exchange Act of 1934 ("Exchange Act"). Section 27 of the Exchange Act provides for nationwide service of process. 15 U.S.C. § 78aa (2000). Rule 4(k)(2) allows nationwide service of process when it is specifically authorized by the Exchange Act, or another federal law.

The Lanham Act, the basis for federal question jurisdiction in this case, does not provide for nationwide service of process. See 15 U.S.C. § 1121(a). When federal question jurisdiction is based on a statute that does not authorize nationwide service of process, the federal district court must determine if a court of the state in which it sits would have personal jurisdiction. Search Force, Inc. v. Dataforce Int'l Inc., 112 F.Supp.2d 771, 774 (S.D. Ill. 2000). Therefore, the Greilings are only amenable to service of process if they would be subject to the jurisdiction of an Illinois state court ...


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