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Baker Dental Corp. v. Aurex Dental Inc.

United States District Court, N.D. Illinois, Eastern Division

September 5, 2014



MANISH S. SHAH, District Judge.

Baker Dental Corporation filed a breach-of-contract suit against Aurex Dental, Inc., Milton Pokladnik (Aurex's CEO and principal shareholder), and others, alleging a failure to pay for products sold by Baker Dental to Aurex in 2011 and Aurex's failure to collect payment on goods sold to downstream customers. Aurex and Pokladnik are citizens of Texas and move to dismiss this case for lack of personal jurisdiction. Fed.R.Civ.P. 12(b)(2). For the reasons discussed below, I find that Aurex and Pokladnik did not purposefully avail themselves of the benefit and protection of Illinois's laws when Aurex bought Baker Dental's goods from Illinois. Therefore, defendants' motion to dismiss, [39], is granted.

Baker Dental's complaint need not include facts alleging personal jurisdiction, but once a defendant moves to dismiss the complaint under Rule 12(b)(2), the plaintiff bears the burden of demonstrating the existence of jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (citation omitted). In this case, the parties have submitted affidavits in support of their positions, and I have not conducted an evidentiary hearing. Thus, the plaintiff need only make out a prima facie case of personal jurisdiction. Id. To the extent there are any factual disputes, I resolve them in the plaintiff's favor. Id.

I. Background

Baker Dental sells precious metals for dentistry and for use in dental labs (no more detailed description of its products is in the record). [1] ¶ 11.[1] Aurex is in the business of selling dental supplies and equipment. [39] at 24 ¶ 3. Baker Dental sold products to Aurex starting in 1999 and continuing until approximately 2013. [1] ¶ 23; [41-1] ¶ 5. Aurex resold Baker Dental products to other customers. [1] ¶ 16. Aurex was a "dealer" of Baker Dental products. [1] ¶ 12. Other than stating that Aurex promised to pay Baker Dental (within 30 days) for the goods it received and promised to collect payment on the sales Aurex made to others, Baker Dental provides no further definition of the relationship between the parties. [1] ¶¶ 13-16. Baker Dental did not submit to the court a written contract governing its relationship with Aurex, and the complaint does not allege the existence of such a contract (other than individual invoices).

Baker Dental is an Illinois company and shipped its products from Illinois to Aurex in Texas. [41-1] ¶¶ 3, 9. Aurex never sold products in Illinois. Id. ¶ 16. To place an order from Baker Dental, Aurex would call or fax Baker Dental in Illinois, averaging 12 to 15 orders per month between 1999 and 2011. Id. ¶¶ 9, 11. Baker Dental's performance occurred in Illinois. Id. ¶¶ 9, 15. Once, in 1999, Pokladnik came to Illinois to discuss business with the then-principals of Baker Dental. [41-1] ¶¶ 12-13.[2] Aurex is a Texas company; it does not own property in Illinois; it does not have an office in Illinois; it does not advertise or market products in Illinois. [39] at 25 ¶¶ 3, 7. Aurex primarily sells to customers who are located in Texas, with occasional sales to customers in Colorado, Nebraska, New Mexico and Oklahoma. [39] at 26 ¶ 8.

This lawsuit is based on sales made in 2011. [1] ¶ 26; Exhibit C, [1-1]. Aurex owes Baker Dental over $125, 000, due on over 20 invoices dated in 2011, and this suit seeks payment on those invoices. [1] ¶ 28-29; [1-1]. In addition, Baker Dental is suing to collect on promissory notes from Aurex customers (promising to pay for Baker Dental products sold by Aurex) that Aurex assigned to Baker Dental in 2011. [1] ¶¶ 20-21. The Aurex customers are named as defendants but have not appeared in the case. (They are the subject of separate motions for default judgment filed by Baker Dental. [25, 27, 29, 33].)

II. Personal Jurisdiction

"A federal district court's personal jurisdiction over a defendant is established in a diversity-jurisdiction case when the plaintiff serves the defendant with a summons or files a waiver of service, but only so long as the defendant is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located-here, Illinois." Northern Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014) (citing Fed.R.Civ.P. 4(k)(1)(A)). The Illinois long-arm statute enumerates certain acts by which a nonresident defendant is deemed to subject itself to the jurisdiction of Illinois courts. 735 ILCS 5/2-209(a). In addition, the state courts may exercise jurisdiction "on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States, " 735 ILCS 5/2-209(c); see also Keller v. Henderson, 359 Ill.App.3d 605, 612 (2d Dist. 2005) (describing analysis under the other, enumerated acts of the long-arm statute as "wholly unnecessary"). In this diversity-jurisdiction case, if the United States Constitution does not permit Baker Dental to hale Aurex and Pokladnik into an Illinois court, then I do not have jurisdiction over them.

"The Due Process Clause of the Fourteenth Amendment constrains a State's authority to bind a nonresident defendant to a judgment of its courts. Although a nonresident's physical presence within the territorial jurisdiction of the court is not required, the nonresident generally must have certain minimum contacts... such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Walden v. Fiore, ___ U.S. ___, 134 S.Ct. 1115, 1121 (2014) (internal citation and quotation marks omitted) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

A. General Jurisdiction

"A defendant with continuous and systematic' contacts with a state is subject to general jurisdiction there in any action, even if the action is unrelated to those contacts." Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir. 2010) (quoting Helicopteros Nacionales de Colombia, S.A. 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. (citation omitted). General jurisdiction "is proper only in the limited number of fora in which the defendant can be said to be at home.' For a corporation, such places include the state of incorporation and the state of the principal place of business." Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796, 800 (7th Cir. 2014) (citation omitted).

Baker Dental's argument in support of general jurisdiction, [41] at 8, is conclusory and undeveloped. By failing to develop the argument in any meaningful way, plaintiff has waived it. United States v. Adams, 625 F.3d 371, 378 (7th Cir. 2010). Even if the argument were not so undeveloped as to amount to a waiver, it does not meet the high threshold for general jurisdiction. Baker Dental says Aurex was plaintiff's agent and sold a substantial amount of Baker Dental product. This is not enough to make Aurex "at home" in Illinois. Aurex is a Texas company with a principal place of business in Texas, and sells products to customers outside Illinois. Plaintiff makes no showing with respect to the individual defendant, Pokladnik- who ...

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