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Industrial Models, Inc. v. SNF, Inc.

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

May 18, 2015

INDUSTRIAL MODELS, INC., Plaintiff,
v.
SNF, INC. d/b/a BRAND FX BODY COMPANY, Defendant.

MEMORANDUM OPINION AND ORDER

JOHN ROBERT BLAKEY, District Judge.

This case is before the Court on defendant's motion to dismiss for lack of personal jurisdiction or, alternatively, for lack of venue [4]. For the reasons explained below, the Court grants the motion and dismisses the case.

Factual Background

In January 2012, Industrial Models, a closely-held and family-owned corporation that manufactures machined components for use in a wide variety of industries, decided to enter the United States market for fiberglass utility truck bodies. Complaint [1], ¶¶5-6. To that end, Industrial Models "took costly, specific and extensive steps to prepare to enter" the market and, "in doing so, spent a substantial amount of money and invested other valuable resources on development of an Industrial Models product line of [truck bodies] and preparations to manufacture and sell such products in the United States, " including purchasing "a set of unique and valuable molds" necessary for manufacturing the truck bodies. Complaint [1], ¶¶6-8. Beginning in early February 2013, Industrial Models began receiving communications from SNF, Inc. d/b/a Brand FX Body Company ("Brand FX") indicating Brand FX's desire to purchase the molds. Id., ¶10. Industrial Models advised Brand FX that it had incurred significant costs in not only purchasing the molds, but also in setting up shop to enter the fiberglass truck body market. Id., ¶11. According to the complaint, Brand FX responded with a lawsuit. Id., ¶¶12-13.

In March 2013, Brand FX sued Industrial Models in Texas alleging trade dress infringement; Brand FX filed a notice of non-suit in August 2014 and the case was dismissed without prejudice. Complaint, ¶18. At some point in this time period, Brand FX also allegedly told at least one other entity (Badger Truck, with whom Industrial Models had a business relationship) that Industrial Models was infringing its intellectual property rights. Complaint, ¶¶47-51. Industrial Models alleges that Brand FX publicly (to Badger Truck) claimed trade dress infringement, even though it knew it had no trade dress or other intellectual property in the molds, in an attempt to interfere with Industrial Models' business. Id., ¶¶52-53. According to Industrial Models, neither the Texas lawsuit, nor the allegations that Industrial Models was infringing Brand FX's trade dress by using the molds, were well-founded. Id., ¶¶17, 19.

On October 23, 2014, Industrial Models brought the present suit against Brand FX, alleging violation of the Sherman Act §1 (Count I) and §2 (Count II) and seeking damages under the Clayton Act; Industrial Models also claims tortious interference with prospective economic advantage (Count VI) and alleges that it is entitled to a declaratory judgment of non-infringement of Brand FX's purported trade dress rights (Count III), patent rights (Count IV) and copyrights (Count V). With respect to venue, Industrial Models alleged that:

[v]enue is proper in this judicial district pursuant to 15 U.S.C. §22 because Brand FX transacts business in this district and, upon information and belief, may be found in this district. Venue is also proper in this judicial district pursuant to 28 U.S.C. §§1391(b), (c) and (d) because a substantial part of the events giving rise to the claims occurred in this district, a substantial part of property that is the subject of this action is situated in this district, Brand FX transacts business in this district, and, upon information and belief, Brand FX has continuous and systematic business contacts with this district such that Brand FX is subject to personal jurisdiction here.

Complaint [1], ¶4.

Brand FX moved to dismiss for lack of personal jurisdiction [4], arguing that it has no meaningful contacts with Illinois to justify its being haled into court here; in the alternative, Brand FX argues that venue is improper here and seeks a transfer to the Northern District of Texas. See Motion to dismiss [4]. In support of its motion, Brand FX submitted a declaration from Lee Finley, the company's Vice President. See [4-1]. According to Finley's declaration, Brand FX is a Texas corporation with its principal place of business and primary office in Fort Worth, Texas; it has no physical presence in Illinois, has never had an office or distribution center in Illinois, has never had an employee located in Illinois, has no assets in Illinois and does not exercise control over a subsidiary or distributor that transacts business in Illinois. Finley Declaration [4-1], ¶¶2, 4, 5. Finley represents that Brand FX does not sell its products directly to consumers in Illinois and has never promoted its products in Illinois. Id., ¶ 6. He represents that Brand FX's employees have travelled to Illinois less than one time per year. Id., ¶7.

Finley concedes that Brand FX's truck bodies are sold in all 50 states, including Illinois, but he represents that sales are accomplished through independent, unaffiliated dealers who sell multiple brands and product lines, not just Brand FX's products. Id., ¶6. He represents that product sold in Illinois through such dealers amounts to less than 1% of Brand FX's total sales. Id., ¶6.

Finley denies that Brand FX ever communicated with Badger Truck with the intent of interfering with Industrial Models' business and represents that any communication with Badger (or Industrial Models for that matter) would have been telephonic and initiated by Brand FX's attorneys, who are located in Texas.

Industrial Models does not dispute Finley's factual claims, though it argues that the 1% of sales in Illinois is a substantial figure, given that defendant's annual revenues are approaching $80 million. Industrial Models also emphasizes that Brand FX has a manufacturer in Joliet, which also distributes promotional material, has dealers in Illinois and operates a website, accessible in Illinois, which directs customers to the Illinois dealers. Response [5], pp. 5-6.

Discussion

"The plaintiff bears the burden of establishing personal jurisdiction." Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc., 751 F.3d 796, 799 (7th Cir. 2014). Where, as here, the Court resolves the motion on the papers, without an evidentiary hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. Kipp v. Ski Enterprise Corp. of Wisconsin, Inc., ___ ...


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