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DMC Machinery America, Corp. v. Heartland Machine & Engineering, LLC

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

November 2, 2016

DMC MACHINERY AMERICA, CORP., Plaintiff,
v.
HEARTLAND MACHINE & ENGINEERING, LLC; FFG DMC CO., LTD.; HANHWA CORPORATION; and ILRIM NANO TEC CO., LTD., Defendants.

          MEMORANDUM OPINION AND ORDER

          JOHN W. DARRAH United States District Court Judge

         On January 8, 2016, Plaintiff, DMC Machinery America, Corp., filed a Complaint against Defendants, Heartland Machine & Engineering, LLC (“Heartland”); FFG DMC Co., Ltd. (“FFG”); Hanhwa Corporation; and Ilrim Nano Tec Co., Ltd. (“Ilrim”). Plaintiff alleges one count of tortious interference with contractual relations, Count III, against Hanhwa. Hanhwa filed a Motion to Dismiss [46] pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(3), or, in the alternative, on the basis of forum non conveniens. For the reasons discussed below, Hanhwa's Motion to Dismiss [46] is granted.

         BACKGROUND

         Plaintiff is a Michigan Corporation, registered to conduct business in Illinois, that imports and distributes computer numerical control (“CNC”) machine tools. (Compl. ¶ 1.) Heartland is an Indiana limited-liability company that sells and services CNC machine tools. (Id. at ¶ 2.) FFG is a Korean CNC machine manufacturing company that exports and sells its products in the United States. (Id. at ¶ 3.) Hanhwa is a Korean corporation that exports CNC machine tools internationally, including in the United States. (Id. at ¶ 4.) Ilrim is a Korean CNC machine manufacturing company that exports and sells its machine tools in the United States. (Id. at ¶ 5.)

         DMC Co., Ltd. (“DMC”) is a Korean CNC machine tool manufacturer that established DMCA in August 2012. (Id. at ¶ 9.) DMCA, since its organization, has operated as the exclusive importer and master distributor of DMC products in the United States. (Id. at ¶ 10.) DMCA distributes DMC products in the United States through several dealers. (Id. at ¶ 11.) Heartland purchases DMC products from DMCA and sells them to customers located in Indiana, Ohio, Michigan, and Kentucky. (Id.)

         On October 23, 2014, DMC spun-off its machinery division and established a separate entity, named FFG DMC Co., Ltd., which now produces the CNC machine tools. (Id. at ¶¶ 16, 17.) FFG was created when DMC entered into an agreement with Fair Friend Enterprises Co. Ltd. (Id. at ¶ 17.) The agreement was called “Investment Agreement for M&A of Machinery Division of Daehan Machinery Corporation.” (the “Investment Agreement). (Id.) In Article 2(e), the Investment Agreement states that “[a]ny contracts entered into by DMC as a contracting party related to the machinery division shall be transferred to [FFG DMC].” (Compl. Exh. 3, p. 16.)

         On January 28, 2015, DMC entered into a Share Transfer Agreement with Ilrim and sold all DMCA shares to Ilrim. (Id. at ¶ 12.) In Article 3, ¶ 4, the Share Transfer Agreement states that “[DMC] shall maintain the dealer network and distributorship of DMCA in the American market . . . for 10 years.” (Compl. Exh. 1, p. 3.) In Article 3, ¶ 8, the Share Transfer Agreement also states that the obligations of Article 3 shall be effective “[no] matter whether [Ilrim] transfers the shares of DMCA to a third party.” (Id. at p. 4.) In Article 7, the Share Transfer Agreement states: “If [the parties are] required to file litigations [sic] on any right and obligation prescribed by this Agreement, Changwon District Court shall have the exclusive jurisdiction over the first instance trials.” (Id. at p. 5.)

         On the same date, DMC and Ilrim also executed an Export Agency Agreement. The Export Agency Agreement, in Article 5, ¶ 2, states that DMC “shall respect the dealer network and the sales agency right of DMCA . . . in the American market . . . and acknowledge [Ilrim's] exclusive export agency status for 5 years from the date when this Agreement was made.” (Compl. Exh. 2, p. 4.) In Article 9, the Export Agency Agreement states: “If [the parties are] required to file litigations [sic] on any right and obligation prescribed by this Agreement, Chan[g]won District Court shall have the exclusive jurisdiction over the first instance trials.” (Id. at p. 4.)

         The Complaint alleges that DMC and Ilrim intended to maintain DMCA's status as the exclusive importer and master distributor of DMC products in the United States. (Compl., ¶ 13.) In September 2015, DMCA learned that FFG was selling CNC machine tools to Hanhwa and that Hanhwa was selling machines to Heartland. (Id. at ¶ 20.) DMCA met with Heartland and confirmed that Heartland was purchasing CNC machine tools through Hanhwa from FFG. (Id. at ¶ 21.) On January 6, 2016, DMCA received an e-mail from one of their dealers, stating that FFG had told the dealer that Heartland is “in charge of [the] North [A]merican market.” (Id. at ¶ 22.)

         LEGAL STANDARD

         A motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2) challenges personal jurisdiction over a defendant. Plaintiff bears the burden of establishing that personal jurisdiction exists. Advanced Tactical Ordnance Systems, LLC v. Real Action Paintball, Inc., 751 F.3d 796, 799 (7th Cir. 2014). When deciding a Rule 12(b)(2) motion without an evidentiary hearing, plaintiffs need only make a prima facie showing of personal jurisdiction. uBID, Inc. v. GoDaddy Group, Inc., 623 F.3d 421, 423-24 (7th Cir. 2010).

         Under Federal Rule of Civil Procedure 12(b)(3), a party may move to dismiss a case for “improper venue.” Atl. Marine Const. Co. v. U.S. Dist. Court for W. Dist. of Texas, 134 S.Ct. 568, 577 (2013); Fed.R.Civ.P. 12 (West 2016). Whether venue is “wrong” or “improper” is governed by 28 U.S.C. § 1391. Id.

         A federal court may dismiss a case on the ground of forum non conveniens “when an alternative forum has jurisdiction to hear [the] case, and . . . trial in the chosen forum would establish . . . oppressiveness and vexation to a defendant . . . out of all proportion to plaintiff's convenience, or . . . the chosen forum [is] inappropriate because of considerations affecting the court's own administrative and legal problems.” Sinochem Int'l Co. v. ...


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