United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
ROBERT W. GETTLEMAN, District Judge.
Plaintiff Lighting Products Limited ("LPL") has sued defendant Robertson Transformer Co., d/b/a Robertson Worldwide ("Robertson") for breach of contract, seeking to recover on invoices for goods shipped to Robertson for which it allegedly failed to pay. Robertson responded by filing a seven count amended counterclaim against LPL, two allegedly related companies, Super X Manufacturing ("Super X") and Ampco Lighting Limited ("Ampco"), and Hoc Chung Siu ("Billy Siu"), who allegedly runs and has some ownership interest in all three companies. The counterclaim alleges: breach of a Manufacturing and Development Agreement ("MDA") (Count I); breach of a confirmed and implied-in-fact exclusivity contract (Count II); violation of the Illinois Trade Secrets Act, 765 ILCS 1065/2(d) (Count III); breach of contract set-offs/warranty claims (Count IV); violations of the Lanham Act (Counts V and VI); and common law unfair competition (Count VII). Counts I, II and IV are brought against LPL, Super X and Billy Siu. The remaining counts III, V, VI and VII are brought against all four counter-defendants.
Ampco and Billy Siu have moved under Fed.R.Civ.P. 12(b)(2) to dismiss all claims brought against them for lack of personal jurisdiction, and all counter-defendants have moved: 1) under Fed.R.Civ.P. 12(b)(6) to dismiss the entire counterclaim for failure to state a claim; and
2) to strike portions of Robertson's answer and counterclaim. For the reasons described below, Ampco's and Billy Siu's motion to dismiss for lack of personal jurisdiction is granted. The motion to dismiss for failure to state a claim is granted in part and denied in part, and the motion to strike is denied.
Robertson is an Illinois corporation with its principal place of business in Blue Island, Illinois. It is engaged in the development and production of ballasts for use in florescent lightening. Counter-defendants LPL, Super X and Ampco are Chinese companies that manufacture, among other things, ballasts. Billy Siu allegedly owns portions of and runs each of the three counter-defendant companies.
In 1989 Robertson and Super X entered into agreements under which Super X began supplying magnetic ballasts to Robertson according to Robertson's specifications. In the 1990s electronic ballasts started to become the norm, and Robertson began to develop its own proprietary electronic ballasts. On August 14, 2001, Robertson and Super X entered into the MDA, under which Super X agreed to manufacture and supply ballasts to Robertson pursuant to purchase orders submitted by Robertson. The MDA specifically provided that all designs, schematics, specifications and proprietary data belonged exclusively to Robertson, and that Super X or any other person or entity acting under the contract with or on its behalf in the production of the ballast was not to disclose any intellectual property nor have any right to the intellectual property except for the sale of products to Robertson. The MDA also provided that products manufactured as a result of a purchase order or pursuant to unique Robertson's specifications were to be manufactured and distributed to Robertson only.
The MDA had an initial term of three years and an automatic renewal provision for an additional three years. Neither party defaulted or terminated in writing, meaning the contract remained in force until August 14, 2007, assuming the automatic renewal provision was valid. In any event, the counterclaim alleges that the parties continued to conduct business according to the MDA's terms up to and after August 14, 2007. The counterclaim further alleges that after August 14, 2007, Billy Siu continued to represent to Robertson that Super X would protect Robertson's confidential and proprietary information and technology.
Robertson claims that between 2003 and 2005 it disclosed to Billy Siu, Super X, and Ampco its proprietary information. Siu, Super X and Ampco then used that information to develop products and supplied those products to Robertson's competitors, including General Electric Company, Etlin-Daniels, and ARN Industries, Inc., without Robertson's consent.
Sometime around 2006, Super X began supplying Robertson's electronic ballasts to Super X's other customers, which are Robertson's competitors. Robertson never authorized Super X to sell its proprietary electronic ballast to Robertson's competitors.
In March 2012 Robertson received an email from Billy Siu's son Larry, stating that Ampco had been reorganized and formed:
"a new company called Lighting Products Limited (LPL). This new company consists of Super X, which you already know, plus some of our companies that manufacture components for the lighting industry in Europe and the USA. The purpose of this consolidation is to provide better service to our customers, improve focus on new product development and streamline operations while also reducing expenses. Since our financial year begins on April 1, we are asking our customers to start placing all orders to LPL effective immediately. For orders already placed with Super X, with ship dates later than April 1, please reissue new P.O.s to LPL."
I. Billy Siu's and Ampco's Motion to Dismiss for Lack of Personal Jurisdiction
Both Billy Siu and Ampco argue that this court lacks personal jurisdiction over them. As counter-plaintiff, Robertson bears the burden of establishing a prima facie case of personal jurisdiction. Hyatt Int'l. Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). In analyzing personal jurisdiction "the allegations in the complaint are to be taken as true unless controverted by the defendants' affidavit; and any conflicts in the affidavits are to be resolved in the [plaintiff's] favor." Turnock v. Cope, 816 F.2d, 332, 333 (7th Cir. 1987).
Robertson's two claims against Ampco are both brought under state law. When there are no federal claims, this court determines whether personal jurisdiction exists under the Illinois Long Arm Statute which is coextensive with the requirements of the Due Process Clause of the United States Constitution. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). Two of Robertson's claims against Billy Siu are based on the Lanham Act, but that statute does not authorize nationwide service of process. be2, LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir. 2011). As a result, personal jurisdiction over Billy Siu is also governed by the Illinois Long Arm Statute. Tamburo, 601 F.3d at 700. That leaves the key question as whether Siu and/or Ampco "has sufficient minimum contacts' with Illinois ...