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Macneil Automative Products Limited, An Illinois Corporation v. Cannon Automotive Limited

September 22, 2011

MACNEIL AUTOMATIVE PRODUCTS LIMITED, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
CANNON AUTOMOTIVE LIMITED, F/K/A CANNON RUBBER LIMITED, AUTOMOBILE DIVISION, AND C.A. HOLDINGS, PLC, UNITED KINGDOM COMPANIES, DEFENDANTS.



The opinion of the court was delivered by: Judge Joan B. Gottschall

MEMORANDUM OPINION AND ORDER

MacNeil Automotive Products Limited ("MacNeil") initially named only Cannon Automotive Limited ("Cannon") as a defendant in this lawsuit, but subsequently filed a second amended complaint adding C.A. Holdings, plc ("C.A."), Cannon's parent company, as a defendant. C.A. has moved to dismiss MacNeil's second amended complaint on the basis of forum non conveniens or, alternatively, for lack of personal jurisdiction. MacNeil asks this court to deny C.A.'s motion to dismiss or, in the alternative, to wait to rule on the motion until MacNeil has the opportunity to take additional discovery. Because the court concludes it lacks personal jurisdiction over C.A., the motion to dismiss is granted.

I.BACKGROUND

MacNeil, an Illinois corporation, manufactures and supplies automotive accessories such as floor liners and mats for various automobile manufacturers. Cannon, an English corporation, manufactures and supplies rubber floor mats for automobiles. C.A., also incorporated in England, is Cannon's parent corporation. According to MacNeil, Mr. Edward Atkin and his family own almost 100% of the shares in both Cannon and C.A.

MacNeil and Cannon began doing business together in 1989. The relationship between these parties began to deteriorate based on orders filled in 2001 and 2004, and in January 2008 MacNeil filed a complaint against Cannon in this court.*fn1 In the second amended complaint, MacNeil has alleged nine counts, only two of which are directed at C.A: Count VIII, entitled "Alter Ego/Piercing the Corporate Veil," alleges that C.A. is the alter ego of Cannon and that the defendants inadequately capitalized Cannon, failed to observe corporate formalities, failed to act in Cannon's best interests, and removed substantial assets from Cannon to other wholly owned and controlled subsidiaries. Count IX, entitled "Substantial Control," alleges that C.A. exerted "total control" over Cannon's operations and that C.A. fraudulently transferred Cannon's assets to itself. In relevant part, MacNeil requests that this court pierce Cannon's corporate veil and hold Cannon and C.A. jointly and severally liable for any judgment or damages. Cannon answered this amended complaint, setting forth various affirmative defenses and counterclaims, whereas C.A. filed the motion to dismiss presently at issue.

II.LEGAL STANDARD

A party may move to dismiss the claims against it if the court lacks personal jurisdiction over that party. See Fed. R. Civ. P. 12(b)(2); Philos Techs., Inc. v. Philos & D, Inc., 645 F.3d 851, 855 (7th Cir. 2011) ("A court without personal jurisdiction of the defendant is wholly without power to proceed to an adjudication binding on that defendant.") (internal quotations and citation omitted). The plaintiff's original complaint need not include facts in support of personal jurisdiction, but if a defendant moves to dismiss under Rule 12(b)(2), the plaintiff bears the burden of establishing that the court has personal jurisdiction. Purdue Research Found. v. SanofiSynthelabo, S.Am.,338 F.3d 773, 782 (7th Cir. 2003). When the district court holds an evidentiary hearing to determine jurisdiction, the plaintiff's burden is preponderance of the evidence, but when the court proceeds based on written submissions, the plaintiff need only make out a prima facie case. See uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 423-24 (7th Cir. 2010) (citing Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010) and Purdue,338 F.3d at 782).

In addition to the well-pleaded facts in the complaint, the court may also consider facts set forth in affidavits. Tamburo, 601 F.3d at 700 ("At this stage . . . we take as true all well-pleaded facts alleged in the complaint and resolve any factual disputes in the affidavits in favor of the plaintiff."); Wendt v. Handler, Thayer & Duggan, LLC, 613 F. Supp. 2d 1021, 1027 (N.D. Ill. 2009) ("In determining whether a prima facie case has been established, the Court can consider materials such as affidavits.") (citing Purdue,338 F.3d at 782). But although factual disputes must be resolved in the plaintiff's favor, the Seventh Circuit has endorsed the view that the plaintiff cannot rest on its pleadings "once the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction"; at that point, the plaintiff must "submit affirmative evidence supporting the exercise of jurisdiction." Purdue, 338 F.3d at 782-83; see C.S.B. Commodities, Inc. v. Urban Trend (HK) Ltd., 626 F. Supp. 2d 837, 843 (N.D. Ill. 2009) ("The Court resolves factual disputes in the pleadings and affidavits in favor of the party asserting jurisdiction, but takes as true those facts contained in defendant's affidavits that remain unrefuted by the plaintiff.").

III.ANALYSIS

In this case, MacNeil has alleged diversity jurisdiction under 28 U.S.C. § 1332(a)(2). "A federal court exercising diversity jurisdiction has personal jurisdiction only where a court of the state in which it sits would have such jurisdiction. Illinois extends personal jurisdiction to the limits allowed by the United States Constitution, so the state and federal standards are congruent here." Philos Techs., Inc., 645 F.3d at 855 n.1 (citing RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997) and Citadel Grp. Ltd. v. Washington Regional Med. Ctr., 536 F.3d 757, 760-61 (7th Cir. 2008)); see 735 Ill. Comp. Stat. 5/2-209 ("A court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States."). For this reason, the court need only consider whether requiring C.A. to defend a lawsuit in this court is consistent with the requirements of federal due process.

The Due Process Clause is satisfied where a defendant has minimum contacts with Illinois such that requiring it to defend against a lawsuit in that state "'does not offend traditional notions of fair play and substantial justice.'" be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir. 2011) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1940)). The "minimum contacts" must be more than simply fortuitous; instead, the defendant must have "purposefully availed itself of the privileges" of conducting activity within Illinois, and the defendant must "reasonably anticipate being haled into court" there. Kinslow v. Pullara, 538 F.3d 687, 691 (7th Cir. 2008) (quoting Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 712 (7th Cir. 2002)); see Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985). This ensures that a non-resident will not have to litigate in a jurisdiction as a result of a random contact with the forum or the unilateral activity of the plaintiff. Burger King Corp., 471 U.S. at 475 (citations omitted).

Depending on defendant's contacts with the forum, personal jurisdiction can be general or specific. See Tamburo, 601 F.3d at 701. General jurisdiction exists when the defendant's contacts with the forum are unrelated to the plaintiff's claim but are nevertheless continuous and systematic. Id. (citing Helicopteros Nacionales de Colombia, S.Am. v. Hall, 466 U.S. 408, 416 (1984)). "The threshold for general jurisdiction is high; the contacts must be sufficiently extensive and pervasive to approximate physical presence." Id. (citing Purdue, 338 F.3d at 787 n.16). Specific jurisdiction, by contrast, is determined "by reference to the particular conduct underlying the claims made in the lawsuit." Id. at 702 (citing GCIU-Employer Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1024 (7th Cir. 2009)).

A. "Systematic and Continuous" Contacts with Illinois

MacNeil has alleged that the court has jurisdiction over C.A. by virtue of C.A.'s "systematic and continuous business connections and contacts with Illinois." With respect to these general jurisdiction allegations, C.A. acknowledges that Cannon has conducted business within Illinois-in fact, Cannon has admitted that the court has personal jurisdiction over it by virtue of its systematic and continuous contacts with the state (see Answer to Second Am. Compl. ¶ 3, ECF No. 238; Answer to First Am. Compl. ¶ 3, ECF No. 164)-but C.A. claims that C.A. has "neither purchased nor sold goods or services to or from this jurisdiction, or any jurisdiction, in the course of its five year existence" and that there is no basis for MacNeil's allegation that C.A. "has had any contact with Illinois." (See Mem. in Supp. of Mot. to Dismiss, at 2, ECF No. 250-1.) In support, C.A. has ...


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