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Csm Fastener Products Co v. E.J. Peck

February 15, 2012

CSM FASTENER PRODUCTS CO., PLAINTIFF,
v.
E.J. PECK, INC., DEFENDANT.



The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:

MEMORANDUM OPINION AND ORDER

Defendant E.J. Peck, Inc. (Peck) has moved pursuant to Federal Rule of Civil Procedure 12(b)(2) to dismiss the claims of plaintiff CSM Fastener Products Co. (CSM) for lack of personal jurisdiction. In the alternative, Peck has moved to transfer the case to the Eastern District of Michigan pursuant to 28 U.S.C. § 1404(a). For the reasons stated below, the Court denies Peck's motions.

Background

CSM is an Illinois corporation with its principal place of business in Elk Grove Village, Illinois. It manufactures specialized fasteners and makes custom fasteners to specification.

Peck is a Michigan corporation with its principal place of business in Bloomfield Hills, Michigan. It is a manufacturer's representative that specializes in the marketing and sale of fasteners. Peck does not maintain a branch office or comparable facilities in Illinois and does not have a telephone listing or mailing address in Illinois. Peck also does not hold bank accounts or tangible personal or real property in Illinois. No Peck employees reside or are domiciled in Illinois, nor has Peck contracted with persons residing in Illinois to market any of its services.

On or about August 1, 2002, CSM and Peck entered into a manufacturer's representative agreement. The party's affidavits provide different accounts of how this contract came into being. Peck contends that the initial contact between the parties took place at an Ohio trade show and that negotiations continued thereafter "by phone, emails, faxes, etc., over a period of months . . . primarily conducted from Michigan." Peck Aff. ¶ 2.

By contrast, CSM contends that Peck approached CSM in late March or early April 2002, when two representatives of Peck visited CSM's facility in Bensenville, Illinois. The Peck representatives told CSM that "they were in town to visit [another company] and thought they'd stop by to find out more about CSM." Weber Aff. ¶ 10. One of the representatives said that Peck had a relationship with one of CSM's competitors and "wanted to get out of it." Id. The Peck representatives toured CSM's facility, and CSM contends that "before they left we negotiated the essential terms of a sales representative agreement after exchanging views on what each company wanted." Id. Shortly after this visit, Peck faxed a draft contract to CSM's Illinois office, and CSM commented on the draft and sent it back. Peck then sent a signed agreement to CSM, which executed the contract in Illinois.

Over the next nine years, Peck regularly promoted and solicited orders on behalf of CSM to customers, primarily in Michigan. CSM processed these orders from its Illinois facility, shipped products from Illinois to fill those orders, and sent Peck a total of $906,055.61 in commission payments from Illinois. CSM also contends that throughout their nine-year relationship, CSM and Peck's employees were in daily contact: it says that "[l]iterally thousands of emails, and hundreds of voice telephone calls" were received by CSM in Illinois from Peck in Michigan every year. Ignots Aff. ¶ 10 & Ex. A. These contacts were, CSM contends, "an integral part of Peck's sales function," as their purpose was to convey information about customer needs and orders, quality problems, and issues requiring follow-up. Finally, Jeff Peck, Peck's president, made a total of five trips to Illinois during the parties' relationship.

In December 2010, one of CSM's major Michigan customers contacted CSM to express dissatisfaction with Peck's service. CSM contends that it worked with Peck to improve its performance. In February 2011, frustrated with Peck's poor performance, CSM gave Peck notice of its intent to terminate the parties' contract. In October 2011, CSM filed the present action, seeking a declaratory judgment that it had terminated the contract for cause.

Discussion

A. Personal jurisdiction

A federal district court in Illinois has personal jurisdiction over a party involved in a diversity action only if an Illinois court would have personal jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). "[W]hen the district court rules on a defendant's motion to dismiss based on the submission of written materials . . . the plaintiff need only make out a prima facie case of personal jurisdiction." See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (internal quotation marks and citation omitted). Because Peck has submitted affidavits in support of its Rule 12(b)(2) motion, CSM "must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction." Id. at 783. Courts resolve factual disputes in the record and conflicting affidavits in the plaintiff's favor. Id. at 782-83.

1. Illinois long-arm statute

The Illinois long-arm statute provides that an Illinois court may exercise specific jurisdiction over a non-resident defendant if the defendant transacts business in Illinois and those activities give rise to the claim asserted in the suit. 735 ILCS 5/2-209(a)(1), (f). A corporation is engaged in the transaction of business in Illinois if the defendant engaged in "commercial activities" with the state such that it "submitted to the jurisdiction of Illinois courts." General Elec. Railcar Servs. Corp. v. Wilmington Trust Co., 208 Ill. App. 3d 459, 465, 567 N.E.2d 400, 404 (1990). Factors that ...


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