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Jackson v. N'Genuity Enterprises

August 2, 2010

VINCENT E. JACKSON, PLAINTIFF,
v.
N'GENUITY ENTERPRISES, CO.; VALERIE LITTLECHIEF; ALFRED BOWEN; AND DUSTIN THOMAS BOWEN DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Vincent "Bo" Jackson filed a twelve-count complaint against N'Genuity Enterprises, Valerie Littlechief, Alfred Bowen and Dustin Bowen in the Circuit Court of the Eighteenth Judicial Circuit, DuPage County, Illinois, arising from the alleged mismanagement N'Genuity. The defendants removed the case to the this court pursuant to 28 U.S.C. § 1446,*fn1 and Alfred and Dustin Bowen now seek dismissal for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). The only counts in question are those brought against one or both of the Bowens, namely Count V for breach of fiduciary duty against Alfred; Count VI for breach of fiduciary duty against Dustin; Count VII for violation of the Arizona Business Corporation Act against all defendants; Count IX for demand for accounting against all defendants; Count XI for civil conspiracy against Littlechief, Alfred and Dustin; and Count XII for injunctive relief against all defendants. For the following reasons, the motion [21] is denied.

BACKGROUND

N'Genuity is an Arizona corporation which sells health foods. Littlechief and Jackson founded the company in 2001. Since incorporation, Littlechief has been corporate president and owner of 51% of N'Genuity's stock. Jackson has served as secretary and owned 49% of the corporation's stock. Beginning in 2004, Dustin Bowen, who is Alfred Bowen's son and Littlechief's stepson, was an N'Genuity employee handling administrative tasks such as filling orders and making bank deposits. On November 25, 2004, Dustin was appointed as a director. Jackson alleges this appointment was a sham. Alfred, Littlechief's husband, was allegedly responsible for business relations and "day-to-day operations," including management of N'Genuity's finances. Jackson alleges that in addition to his role as secretary, he was responsible for marketing N'Genuity's products, a task he managed from an office in his Burr Ridge, Illinois home with a phone line paid for by and registered to N'Genuity.

Jackson is a retired star athlete, famous for his exploits on the gridirons of Auburn University and the National Football League, the diamonds of Major League Baseball, and Nike's legendary "Bo Knows" advertising campaign. He alleges that he entered into an oral contract with N'Genuity for the use of his name and image in the sale of its products, conditioned on his continued consent and affiliation with N'Genuity. The relationship between Jackson and N'Genuity has since soured and as of June 25, 2009, he has withdrawn his consent for the use of his image.

Jackson alleges a series of deceptive and illegal practices in the period leading up to his revocation of consent for the use of his image. After growing suspicious of N'Genuity's business practices, Jackson demanded copies of financial records, making his demands in written form, and in person when he met with Littlechief and Alfred on November 9, 2008 in Bolingbrook, Illinois. Jackson alleges that most of these demands went unanswered.*fn2 In addition to his demands for records, Jackson had several exchanges with the defendants regarding corporate meetings,*fn3 which he alleges were surreptitiously and deceptively scheduled to keep him from attending. These decisions included increasing the number of shares N'Genuity would offer, increasing the number of corporate directors from two (Jackson and Littlechief) to three, and appointing Dustin to the third directorship.

Jackson alleges that Alfred and Dustin misappropriated N'Genuity's corporate funds for their personal use, that they mismanaged corporate assets, and that they worked in concert with Littlechief to achieve these aims, dilute Jackson's interest in the company, and keep Jackson from assessing the well-being of the company. As part of these actions, they also misappropriated funds personally belonging to Jackson for their own personal use, including at least $100,000 that Jackson allegedly advanced to the company. As a result, he claims to have suffered reputational and economic damages.

LEGAL STANDARD

The plaintiff bears the burden of establishing personal jurisdiction once challenged by the defendant. See Purdue Research Found. v. Sanofli-Synthelabo S.A., 338 F.3d 773, 782 (7th Cir. 2003); RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). Where, as here, the court must rule on such a challenge on the basis of written materials and prior to an evidentiary hearing, the plaintiff must make a prima facie case for personal jurisdiction to avoid dismissal. The court may receive and consult affidavits in making this determination, see Nelson v. Park Indus., Inc., 717 F.2d 1120');">717 F. 2d 1120, 1123 (7th Cir. 1983), while also resolving "all disputes concerning relevant facts in the record" in the plaintiff's favor. Purdue, 338 F.3d at 782 (quoting Nelson v. Park Indus., 717 F.2d 1120, 1123 (7th Cir. 1983)).

ANALYSIS

I. Relevant Law

In diversity cases, a federal court has personal jurisdiction over a defendant "'only if a court of the state in which [the district court] sits would have such jurisdiction.'" Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995) (quoting Wilson v. Humphreys (Cayman) Ltd., 916 F.2d 1239, 1243 (7th Cir. 1990)). Illinois's long-arm statute allows its courts to exercise personal jurisdiction to the full extent allowed by United States Constitution. Id. (citing 735 Ill. Comp. Stat. 5/2-209(c)). Under the Due Process Clause, courts may exercise personal jurisdiction if "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, 565 N.E.2d 1302, 1316, 141 Ill.2d 244, 152 Ill. Dec. 384 (1990).

In order to satisfy the Due Process Clause, the defendant must have "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Millikin v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). The defendant has such minimum contacts where his "conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed. 2d 490 (1980).

Personal jurisdiction comes in two forms: general and specific. Where the events that are the basis of the lawsuit do not arise out of and are not related to any activities within the forum state, the minimum contacts requirement is satisfied if the court has general jurisdiction-that is to say, jurisdiction stemming from the defendant's "continuous and systematic" contacts with the forum state. See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415-416, 104 S.Ct. 1868, 80 L.Ed. 2d 404 (1984). The second form of personal jurisdiction is specific jurisdiction, which is appropriate where "the defendant has 'purposefully directed' his activities at residents of the forum, and the litigation results from alleged injuries that 'arise out of or relate to' those activities." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed. 2d 528 (1985). In either case, "each defendant's contacts with ...


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