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Signode v. Sigma Technologies Int'l

March 24, 2010

SIGNODE, A DIVISION OF ILLINOIS TOOL WORKS INC., PLAINTIFF,
v.
SIGMA TECHNOLOGIES INT'L, LLC, DEFENDANTS.



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

MEMORANDUM OPINION AND ORDER

Plaintiff Signode, a division of Illinois Tool Works Inc. ("Signode"), filed suit against Defendant Sigma Technologies International, LLC ("Sigma Tech"), alleging breach of contract, breach of express and implied warranties, negligent misrepresentation, negligent design, and rescission arising from the sale of an allegedly defective and non-conforming Plasma Machine. Sigma Tech moves to dismiss the case pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3) for lack of personal jurisdiction and improper venue, respectively. Alternatively, Sigma Tech moves for a transfer of venue to the District of Arizona pursuant to 28 U.S.C. § 1404(a). For the reasons discussed below, Sigma Tech's Motion to Dismiss or to Transfer is denied.

BACKGROUND

Signode manufactures steel straps and is a Delaware corporation with its principal place of business located in Glenview, Illinois. (R. 1, Compl. ¶ 1.) Sigma Tech manufactures large-scale industrial treatment systems and is a Delaware Limited Liability Company with its sole place of business in Tucson, Arizona. (Id. ¶ 2.) Part of the process of manufacturing steel straps requires the straps to be cleaned so paint can adhere to them. (Id. ¶ 7.) Signode contacted Sigma Tech seeking to replace its phosphate system for cleaning straps with electron beam technology. (R. 12, Decl. of Leonard E. Johnson ¶ 3.) On August 2, 2007, two Signode representatives traveled to Arizona and met with representatives of Sigma Tech. (Compl. ¶ 8; Decl. of Leonard E. Johnson ¶ 5.) At this meeting, the parties discussed Sigma Tech's capabilities to design and manufacture a system to clean Signode's steel straps and ultimately agreed that Sigma Tech would put together a proposal for the design and manufacture of a plasma machine that could clean the straps. (Compl. ¶ 9; Decl. of Leonard E. Johnson ¶ 7.)

On August 9, 2007, Signode sent samples of steel straps from its plant in Bridgeview, Illinois (the "Bridgeview plant") to Arizona so Sigma Tech could determine whether it had the technology needed to clean the straps. (Decl. of Leonard E. Johnson ¶ 6.) Later that year, Sigma Tech sent the proposal to Signode in Illinois. (Compl. ¶ 10; Decl. of Leonard E. Johnson ¶ 7.) The proposal set forth Sigma Tech's offer to design and manufacture a plasma machine for use in Signode's Bridgeview plant. (Id.) In February 2008, Signode sent another set of sample steel straps and paint to Sigma Tech in Arizona so Sigma Tech could test whether its plasma unit could clean Signode's steel straps. (Compl. ¶ 11.) After cleaning the straps in Arizona, Sigma Tech returned the steel straps to Signode in Illinois. (Id.) Signode then sent samples of the oil solution on the steel straps from the Bridgeview plant to Sigma Tech in Arizona. (Id. ¶ 12.)

On March 4, 2008, after a number of communications between the parties, Signode sent Sigma Tech a purchase order for a plasma machine. (Compl. ¶ 13; Decl. of Leonard E. Johnson ¶ 8.) Under the terms of the agreement, Sigma Tech agreed to design the plasma machine to fit in the Bridgeview plant, to supply drawings of the machine to Signode in Illinois, and to supply an engineer to supervise the installation and training at the Bridgeview plant. (Decl. of Leonard E. Johnson ¶ 9.) Signode, in turn, agreed to provide electrical service, supply drawings of the space available at the Bridgeview plant, provide labor to install the plasma machine, and make connections for exhaust and interconnecting duct work. (Id. ¶ 10.) Signode sent an amended purchase order three months later that added a stand-alone control console. (Compl. ¶ 14.) Signode agreed to pay Sigma Tech $427,000 for the plasma machine and $2,000 for the console. (Id.) Signode paid 30% of the purchase price at the time it issued the purchase order. (Id. Exh. C, Purchase Order.) Pursuant to the contract, Signode was to pay the remaining 60% at the time of shipping and 10% "upon installation or 30 days after delivery." (Id.) The agreement included a one-year warranty on the equipment and specified that Arizona law applied to the agreement. (Id. Exh. C, Quotation and Specification.)

In early April 2008, two of Sigma Tech's representatives spent three days at the Bridgeview plant. (Decl. of Leonard E. Johnson ¶ 12.) The representatives learned about the chemical cleaning system in place at the time, the paint application and curing process, and how the plasma machine would fit in Signode's existing system. (Id.) The representatives also provided Signode with a more complete understanding of electrode design and plasma generation. (Id.) After visiting the Bridgeview plant, Sigma Tech told Signode that it would supply two plasma units, instead of one, and Sigma Tech advised Signode of additional undertakings by Sigma Tech and modifications Sigma Tech would make to the plasma machine. (Id. ¶¶ 13-14.)

Signode accepted delivery of the completed plasma machine "freight on board" ("FOB") in Tucson, Arizona. (Compl., Exh. B, Purchase Order.) Later in January, as set forth in the agreement, three of Sigma Tech's representatives traveled to the Bridgeview plant to oversee the installation of the plasma machine. (Decl. of Leonard E. Johnson ¶ 16.) From the beginning, Signode alleges, the plasma machine did not work according to specifications. (Compl. ¶ 16; Decl. of Leonard E. Johnson ¶ 16.) The same three representatives traveled back to the Bridgeview plant and spent nine days attempting to find a solution to what Signode claims is a flaw in the machine. (Id.) Again in May 2009, two of Sigma Tech's representatives spent two days at the Bridgeview plant trying to fix the machine. (Id.) In August of that year, Signode removed the plasma machine from the Bridgeview plant, and moved it to another location in Bridgeview, Illinois. (Compl. ¶ 22; Decl. of Leonard E. Johnson ¶ 17.)

On December 18, 2009, Signode brought this case for breach of contract, breach of express and implied warranties, negligent misrepresentation, negligent design, and rescission. (Compl. ¶3.) That same day, Sigma Tech filed suit against Signode in Arizona state court, alleging breach of contract and unjust enrichment, and seeking the remaining 10% owed on the contract. (R. 9, Mem. in Supp. of Mot. to Dismiss, Exh. 1.) Sigma Tech moved to dismiss this case, arguing that this Court lacks personal jurisdiction over Sigma Tech and that venue is improper. Alternatively, Sigma Tech argues that this case should be transferred to the District of Arizona.

DISCUSSION

I. Motion to Dismiss Based on Lack of Personal Jurisdiction and Improper Venue

A. Personal Jurisdiction

Signode bears the burden of showing that this Court has personal jurisdiction over Sigma Tech. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). Signode need only make a prima facie showing of jurisdiction. See Michael J. Neuman & Assocs., Ltd. v. Florabelle Flowers, Inc., 15 F.3d 721, 724-25 (7th Cir. 1994). When ruling on a motion to dismiss for lack of personal jurisdiction and improper venue, the Court may rely on evidence outside the pleadings, such as the affidavits and declarations that have been presented here. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (addressing personal jurisdiction); Auto. Mechs. Local 701 Welfare & Pension Funds v. Vanguard Car Rental USA, Inc., 502 F.3d 740, 746 (7th Cir. 2007) (addressing improper venue). The Court will resolve all factual disputes in Signode's favor. See Nelson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir. 1983).

A federal court sitting in diversity jurisdiction has personal jurisdiction only if a court in the state in which it sits would have jurisdiction. See RAR, 107 F.3d at 1275. The Illinois long-arm statute, applicable here, contains a "catch-all" provision that "permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United States Constitutions." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 714-15 (7th Cir. 2002) (citing 735 ILCS 5/2-209(c)). There is no "operative difference" between the limits imposed by the Illinois Constitution and the federal limits on personal jurisdiction. Hyatt, 302 F.3d at 715 (citing RAR, 107 F.3d at 1276). Accordingly, the personal jurisdiction analysis collapses into a federal due process inquiry. See RAR, 107 F.3d at 1276; Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th ...


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