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Spivey v. Adaptive Marketing

April 24, 2009

QUINTEN E. SPIVEY, INDIVIDUALLY AND ON BEHALF OF OTHERS SIMILARLY SITUATED, PLAINTIFF,
v.
ADAPTIVE MARKETING, LLC, DEFENDANT AND THIRD-PARTY PLAINTIFF,
v.
WEST DIRECT, LLC, THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Reagan, District Judge

MEMORANDUM and ORDER

I. Introduction and Background

Plaintiff Quinten Spivey, individually and on behalf of others similarly situated, alleges that Adaptive Marketing, LLC, ("Adaptive") charged him excessive and unauthorized amounts for membership in a retail discount program. Spivey submits that Adaptive made unauthorized charges to his credit card based on a January 2003 telephone conversation which he does not recall. He contends that he neither authorized a membership in the Homeworks Plus program nor received a "welcome kit" from Adaptive nor read and signed the Membership Agreement that Adaptive contends governs the relationship between him and Adaptive. Spivey contends that when he attempted to recover the payments he had made, an Adaptive representative agreed to a pro rata refund of one charge and refused to refund any other portion of the charges to his credit card.

On November 21, 2008, Adaptive filed a third-party complaint against West Direct, LLC (Doc. 76). Adaptive contends that, under the Wholesale and Retail Marketing Agreement (the "West Agreement") between West and Adaptive's predecessor in interest, as amended, West is solely responsible for the marketing and sale of the membership program that Plaintiff has challenged in his First Amended Class Action Complaint against Adaptive. As such, according to Adaptive, should Spivey prevail in this action, West is liable for part or all of any recovery.

Spivey is a citizen of the State of Illinois; Adaptive is a citizen of Delaware and Connecticut; and West is a citizen of Delaware and Nebraska. The contract under which Adaptive has sued West for indemnification is a Nebraska contract. The Court determined that it has diversity jurisdiction over this class action under the federal diversity statute. 28 U.S.C. § 1332(d).

By motion to dismiss filed December 23, 2008, West challenges this Court's personal jurisdiction (Doc. 90). The motion is fully briefed and comes now before the Court for resolution.

II. Analysis

Due process limits when a state may exercise personal jurisdiction over nonresident defendants. Asahi Metal Indus. Co. v. Superior Court of California, 480 U.S. 102, 108 (1987); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980). This limitation permits potential defendants to structure their contacts and plan where their business activities will and will not render them liable to suit.See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985); World-Wide Volkswagen, 444 U.S. at 297.

In diversity cases, personal jurisdiction may not be exercised over nonresident defendants unless "minimum contacts" have been established between the defendants and the particular state in which the court sits (the forum state). Jennings v. AC HydraulicA/S, 383 F.3d 546, 551 (7th Cir. 2004). In Burger King, 471 U.S. at 474, the Supreme Court emphasized that, notwithstanding modern modes of transportation and communication, "the constitutional touchstone remains whether the defendant purposefully established 'minimum contacts' in the forum State."

Stated another way, a federal court's assertion of personal jurisdiction must comport with "traditional notions of fair play and substantial justice," to satisfy the Due Process Clause of the United States Constitution. International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Defendants must have "purposely availed" themselves of the privilege of conducting activities within the forum state, such that they should reasonably anticipate being haled into court there. World-Wide Volkswagen, 444 U.S. at 297. Defendants may not be forced to defend a suit solely "as a result of random, fortuitous, or attenuated contacts" with that state. Burger King, 471 U.S. at 476.

In addition to examining whether the exercise of personal jurisdiction squares with federal due process requirements, courts must also ascertain whether the exercise of personal jurisdiction offends state statutory or constitutional limits. The Seventh Circuit has stated: "Three distinct obstacles to personal jurisdiction must generally be examined: 1) state statutory law; 2) state constitutional law; and 3) federal constitutional law." RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). Accord Jennings, 383 F.3d at 548 ("In diversity cases, such as this one, a federal court must determine if a court of the state in which it sits would have personal jurisdiction over the defendant.... Thus, the jurisdictional inquiry begins with an application of the statutory law of the forum state....").

Illinois's long-arm statute provides that an Illinois court "may ... exercise 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). Because the Illinois statute authorizes personal jurisdiction to the constitutional limits, the three inquiries mentioned above collapse into two constitutional inquiries -- one state and one federal.

The Illinois Supreme Court has explained that personal jurisdiction may be asserted "only 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." RAR, 107 F.3d at 1276, quoting Rollins v. Ellwood, 565 N.E.2d 1302, 1316 (Ill. 1990). In the case at bar, Adaptive has not demonstrated that West has sufficient contacts with Illinois to support the exercise of either general or specific personal jurisdiction in this forum.

Illinois's long-arm statute lists various kinds of conduct in Illinois which allow the exercise of personal jurisdiction. ...


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