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Strabala v. Zhang

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

November 18, 2016

JAY MARSHALL STRABALA, individually and doing business as 2DEFINE ARCHITECTURE, Plaintiff,
v.
QIAO ZHANG and ZHOU SHIMIAO, d/b/a/ PUFINE SHANGHAI ARCHITECTS DESIGN FIRM GENERAL PARTNERSHIP, also d/b/a DIFINE SHANGHAI ARCHITECTS DESIGN FIRM GENERAL PARTNERSHIP, Defendants.

          MEMORANDUM OPINION AND ORDER

          Honorable Thomas M. Durkin United States District Judge

         Plaintiff Jay Marshall Strabala brought this action against Defendants Qiao Zhang and Zhou Shimiao (referred to collectively as “Defendants” and individually as “Zhang” and “Zhou”)[1] alleging defamation and intentional interference with his business. The parties are former partners in an architectural services firm called 2DEFINE Architecture (“2DEFINE”). For reasons that are very much in dispute, the partnership soured and litigation ensued, first in China where the partnership was centered, and then in Illinois with the current lawsuit. In a minute order entered on October 31, 2016, the Court ruled on several pending motions as follows: (1) Plaintiff's Motion to Strike Exhibits to Defendants' Reply, R. 41, was granted; (2) Defendants' Rule 12(b) Motion to Dismiss, R. 30, was granted in part and denied in part, with (a) the motion to dismiss for lack of subject matter jurisdiction being denied, (b) the motion to dismiss for lack of service of process being denied, (c) the motion to dismiss for lack of personal jurisdiction being denied as to Count 1 (Defamation) and granted as to Count II (Intentional Interference), (d) the motion to dismiss Count II (Intentional Interference) for failure to state an adequate claim for relief being granted; and (3) Defendants' Motion to Vacate Default Judgment, R. 22, was granted. The Court now sets forth the reasons for these rulings.

         BACKGROUND [2]

         Strabala is an American architect whose practice focuses on the design of performing arts complexes, convention centers, and high-rise office buildings. See R. 33-1 (Strabala Decl., ¶ 3); R. 33-9 at 10; www.flickr.com/people/architectural-design/?ytcheck=1 (stating that Strabala is an expert in supertall building design, sustainable design of commercial buildings, and the design of performing arts venues). In promotional materials for his architectural firm, Strabala is described as a leader of “the next generation of Super-tall Building Designers, ” who designed the two tallest skyscrapers in the world-the Dubai Burj Khalifa in the United Arab Emirates (currently the tallest building in the world) and the Shanghai Tower in China (currently the second tallest building in the world, the tallest building in China, and the tallest building in the world with “two skins”[3]). Other notable projects of Strabala's include the Houston Ballet Center for Dance, the Yingkou Convention and Exposition Center in China, and the Convention and Exhibition Center in Hong Kong.

         Strabala was born in Seattle and grew up in San Francisco. He went to undergraduate school at UCLA and then received a Master of Architecture at Harvard. His first job after graduating from Harvard was with the architectural firm of Skidmore Owings & Merrill (“SOM”) in Chicago. He lived in a rented apartment for roughly his first ten years, and then, in or around 1999, he and his wife purchased a condominium in a well-known high-rise building in Chicago designed by the famed architect Ludwig Mies van der Rohe (hereinafter “the Lake Shore Drive Condo”). Strabala worked at SOM until March 2006, at which time he accepted a position with the Houston office of another architectural design firm, M. Arthur Gensler Jr. & Associates, Inc. (“Gensler”). From 2006 until 2008, Strabala made frequent trips to Shanghai as part of Gensler's team preparing to offer a design bid for the Shanghai Tower. In 2008, it was announced that Gensler had won the design competition, and thereafter Strabala began working almost exclusively from Shanghai while the Tower was being constructed.

         In March 2010, before the Tower was completed, Strabala had a falling out with Gensler and his employment with that firm terminated. A short time later, Strabala formed his own architectural firm called Strabala & Woo Architects, LLC.[4]Strabala is the majority shareholder of S&W and his wife is the Secretary. In June 2010, Strabala and three Chinese partners (Zhang, Zhou, and one other who has since left the partnership) founded 2DEFINE, with Strabala funding the partnership's start-up costs through a transfer of capital from S&W.[5]

         From 2010 to 2014, 2DEFINE was commissioned to design four super tall towers in China, with Strabala as the lead designer. Strabala remained in Shanghai during this time. While working on those projects from China, Strabala also was being sued in the United States by his two former employers. In a lawsuit filed in the Northern District of Illinois in June 2011, Gensler alleged that after Strabala founded his own firm he publicly misrepresented his role in several projects, including the Shanghai Tower, while minimizing or entirely omitting the nature of Gensler's contribution. The day after Gensler filed its lawsuit, SOM made similar allegations against Strabala (including the allegation that he falsely took design credit for the Burj Khalifa) in a lawsuit filed in the Southern District of New York. In February 2012, the district court in Gensler's lawsuit dismissed the case for failure to state a claim, while, in June 2012, the district court in SOM's lawsuit transferred the case to the Northern District of Illinois where the court would have personal jurisdiction over Strabala. About six months after the SOM lawsuit was transferred to Illinois, that case settled. Meanwhile, Gensler had filed an appeal from the district court's dismissal of its lawsuit. Approximately two years after the district court's dismissal, the Seventh Circuit issued an opinion vacating and remanding the case with instructions to the district court to conduct further proceedings.[6] Approximately six months after the Seventh Circuit's ruling (which was shortly after the present lawsuit was filed), Gensler voluntarily dismissed the case.

         The complaint in this case alleges that while all of the above was taking place, Zhang and Zhou were secretly diverting money from 2DEFINE. Strabala alleges that, in approximately March 2014, he discovered the existence of two separate Chinese partnerships with similar-sounding names to 2DEFINE's Chinese name (the DeFan entity). Strabala claims Zhang and Zhou secretly formed those entities to facilitate their embezzlement. Zhang and Zhou, of course, deny any wrongdoing. Whatever the reason for the partnership's break-up, litigation in China between the parties followed Strabala's alleged discovery. The complaint before this Court asserts that, while the Chinese litigation was on-going, [7] Zhang and Zhou sent e-mails to various business and professional associates of Strabala's falsely accusing him of numerous improprieties, including forging signatures on documents, engaging in “visa fraud, ” engaging in the unauthorized use of copyrighted software, misrepresenting his accomplishments and status as a designer and architect, and engaging in “money laundry [sic]” and “tax fraud.” R. 1 at 8 (¶ 33). At least some of the individuals who received the e-mails are located in Chicago, including Strabala's accountant, his attorney, several former colleagues at SOM, and the Executive Director of the Council of Tall Buildings, of which Strabala is a member. Strabala also alleges that Zhang and Zhou have communicated Strabala's confidential business information to Gensler and SOM, stolen property belonging to 2DEFINE, and interfered with 2DEFINE's clients and employees.

         Strabala filed this complaint on February 9, 2015 and attempted to effect service on Zhang and Zhou through the Chinese Ministry of Justice pursuant to the procedures set forth in the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”). On November 10, 2015, Strabala informed the Court that he was having trouble serving Zhang and Zhou in China, and requested that the Court enter an order granting him permission to serve by alternative means. On November 17, 2015, the Court entered an order permitting alternative service by e-mail and Federal Express. On January 12, 2016, believing that the e-mail service had been successful and with the time for an answer or response to the complaint having expired, Strabala filed a motion for default judgment. The Court granted Strabala's motion on January 14, 2016, and an Order of Default Judgment was entered on the docket on January 19, 2016. See R. 17. Approximately four weeks later, Zhang and Zhou appeared in the case and filed the Motion to Vacate and Motion to Dismiss, in which they argue the Court's entry of default is void and the case should be dismissed because the Court lacks subject matter jurisdiction over the complaint and personal jurisdiction over them and because Strabala's service of process on them was invalid. In the alternative, Zhang and Zhou argue in their Motion to Vacate that, even if the entry of default against them was not void, it should be vacated because they had good cause for their default, they took quick action to correct it, and a meritorious defense to the complaint exists. They also argue that Count II of the complaint should be dismissed because it fails to state a legally adequate claim for relief.

         MOTION TO VACATE DEFAULT JUDGMENT

         Federal Rule of Civil Procedure 55(c) provides that the district court may set aside an entry of default “[f]or good cause shown, ” and may set aside a default judgment “in accordance with Rule 60(b).” Fed.R.Civ.P. 55(c). Regardless of which standard applies, [8] Defendants would be entitled to an order vacating the default entered against them if the Court lacks subject matter jurisdiction over the case or personal jurisdiction over them, or if Defendants received insufficient service of process. See, e.g., Trade Well Int'l v. United Cent. Bank, 825 F.3d 854, 859 (7th Cir. 2016) (a final judgment is void and must be set aside if the court lacked personal jurisdiction or if the party against whom the judgment was entered was not adequately served); United States v. Indoor Cultivation Equip. from High Tech Indoor Garden Supply, 55 F.3d 1311, 1316 (7th Cir. 1995) (“a judgment is void for purposes of Rule 60(b)(4) if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law”) (internal quotation marks and citation omitted). A district court's refusal to vacate a void judgment constitutes a per se abuse of discretion. Trade Well Int'l, 825 F.3d at 859. But even if the entry of default against Defendants was not void on jurisdictional grounds, the Court can still vacate it under general “good cause” principles applicable to Rule 55(c) motions. The Court will begin by assuming for present purposes only that the entry of default is not void on jurisdictional grounds, and resolve the easier question first of whether the entry of default should be vacated for “good cause.” Finding good cause to exist for vacating the entry of default, the Court will then go on in the next sections to address Defendants' jurisdictional arguments for dismissal of the complaint.

         “A party seeking to vacate an entry of default prior to the entry of final judgment must show: (1) good cause for the default; (2) quick action to correct it; and (3) a meritorious defense to the complaint.” Cracco v. Vitran Express, Inc., 559 F.3d 625, 630 (7th Cir. 2009) (internal quotation marks and citation omitted) Strabala argues that Defendants cannot show good cause for failing to respond to this lawsuit in a timely manner because, among other things, they knew about the litigation as early as May 2015 when Strabala personally hand-delivered a copy of the complaint to Zhou at a court proceeding in Shanghai. Moreover, Strabala points out that both Zhou and Zhang were served with a copy of the complaint and summons by e-mail and still did not file a timely response. Instead, they waited until an e-mail was sent notifying them of the motion for entry of default, and only then did they take action to obtain an attorney in the United States and file the Motion to Vacate.

         In response, Defendants admit that, in May 2015, Strabala “threw a copy of the Complaint at Defendant Zhou” at a court proceeding in Shanghai and that Zhou immediately showed it to Zhang. But Defendants contend “they did not appreciate that they had been sued in Illinois” at this time because they “are Chinese architects with no legal training or familiarity with the U.S. legal system.” R. 22 at 5. Further, because Strabala already had filed a lawsuit against them in Shanghai, they argue they reasonably assumed that if he intended to sue them again “he would do so in China.” Id. They also contend that receipt of e-mail service did not adequately notify them of the lawsuit because it was their belief, based on Chinese law, “that service could only be properly made on them through formal government service, as opposed to an e-mail to one of them from a secretary at counsel's office.” Id.

         Before the break-up of 2DEFINE, Defendants were involved in Strabala's defense of the SOM and Gensler litigation. Therefore, the Court takes Defendants' assertion that they have no “familiarity with the U.S. legal system” with a grain of salt. While they may not be familiar with the specifics of American civil procedure, they are business professionals with past experience working for American companies (in Zhang's case, living and working in the United States). Even without this business background, a reasonably diligent person would have made inquiries or sought expert advice as to how to respond, not simply ignore something which they both claim they did not understand. The Court also is skeptical of Defendants' assertion that they did not realize Strabala was intending to sue them in the United States. Both Zhang and Zhou have represented to the Court that they are fluent in English, and the case caption on the complaint clearly informed them that the lawsuit was in the United States. Finally, the Court does not accept as “good cause” Defendants' explanation that they did not respond to the complaint because they questioned whether service by e-mail was legally sufficient. “[S]ervice of process laws are designed to ensure defendants receive notice in accordance with concepts of due process.” United States v. Jiles, 102 F.3d 278, 282 (7th Cir. 1996). For this reason, the plaintiff must effect proper service pursuant to Rule 4, even if the defendant has actual notice of the lawsuit. See McMasters v. United States, 260 F.3d 814, 817 (7th Cir. 2001). Nevertheless, the requirement of formal service is not intended to provide a defendant who has actual knowledge that a lawsuit was filed against him with an excuse for ignoring service. To be sure, a defendant who receives actual notice of a lawsuit has the right to insist on strict adherence to procedural formalities. But the issue here is not whether Defendants' actual knowledge of the litigation conferred jurisdiction when process was not properly served. Rather, the issue is, assuming valid service of process, whether Defendants' belief that there were defects in the service of process constituted good cause for their default. Defendants are free to do exactly as they did, which is, to simply ignore the lawsuit. But by doing so, they assumed the risk they might be wrong about whether the form of service was legally sufficient. Defendants were not forced to take that risk because, knowing about the lawsuit, they could have immediately obtained legal representation and filed a motion to quash service. Being wrong about what is legally sufficient service, however, is not good cause to excuse their default. See O'Brien v. R.J. O'Brien & Assocs., Inc., 998 F.2d 1394, 1402-04 (7th Cir. 1993) (where defendant was aware of the lawsuit but believed, erroneously, that service of process was defective, court would not overturn district court's denial of motion to vacate default judgment, even if, as defendant argued, a party has no duty “to challenge service of process before proper service of process has been obtained”; “[t]he district court was not compelled to relieve [defendant] of the consequences of its improvident tactical decision”).

         Looking at the record as a whole, the Court suspects that Defendants might have been trying to evade service.[9] But the Court will give Defendants the benefit of the doubt and assume instead that they did not respond to the complaint out of confusion caused by the rather complicated situation with multiple lawsuits in different countries and service effected through an atypical and thus unexpected method. Nevertheless, the Court need not decide whether Defendants' confusion rises to the level of good cause for their default. Rule 55(c)'s “good cause” standard is a lenient one that does not depend on there being a good excuse for the defendant's failure to appear in a timely manner. Instead, “Rule 55(c) requires ‘good cause' for the judicial action, not ‘good cause' for the defendant's error.” Sims v. EGA Prods., Inc., 475 F.3d 865, 868 (7th Cir. 2007). Thus, “[d]amages disproportionate to the wrong afford good cause for judicial action, even though there is no good excuse for the defendant's inattention to the case.” Id. (emphasis in original). Here, the Court's refusal to vacate the default would result in “damages disproportionate to the wrong” for a number of reasons.

         First and foremost, the delay occasioned by Defendants' default did not prejudice Strabala by impinging upon his ability to pursue the litigation. “[D]elay that imposes slight injury does not call for multi-million-dollar awards.” Id. at 869; see, e.g., Fed. Trade Comm'n v. Construct Data Publishers, 2014 WL 7004999, at *6 (N.D. Ill.Dec. 11, 2014) (“the disproportionate size of the default judgment-$9.1 million-in comparison with the minimal prejudice suffered by the FTC represents good cause to vacate the default judgment”). In addition, “this Circuit has a well established policy favoring a trial on the merits over a default judgment.” Sun v. Bd. of Trustees of Univ. of Ill., 473 F.3d 799, 811 (7th Cir. 2007) (citing C.K.S. Eng'rs, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1205 (7th Cir. 1984) (collecting cases)). “For that reason, a default judgment should be used only in extreme situations, or when other less drastic sanctions have proven unavailing.” Id. Defendants moved to set aside the default approximately four weeks after entry of default was made. It appears that they only acted when they learned that the Court had set a date for Strabala to prove-up his damages, and, in that sense, they did not act as expeditiously as they could have. But once having decided to act, the Court is willing to assume that it takes longer for a defendant located in a foreign country to find legal representation in the United States than a defendant in another state. For that reason, the cases cited by Strabala holding that an out-of-state litigant's difficulty in obtaining counsel does not constitute good cause to set aside default, see R. 38 at 3, are distinguishable. Defendants acted relatively quickly upon learning of the entry of default and responded to the litigation before the prove-up hearing took place. At least in this respect, they were diligent.

         Defendants also have shown a meritorious defense as to Count II of the complaint, as discussed later in this opinion, and have raised non-frivolous arguments regarding the Court's assertion of personal jurisdiction over them as to Count I. While the Court ultimately rejects Defendants' arguments as to Count I (as discussed later in this opinion), that rejection only reaches the issue of whether Strabala has made out a prima facie showing of personal jurisdiction. The Court therefore concludes that Defendants have shown a possible meritorious defense as to both counts in the complaint. Since Defendants entered an appearance, they have participated in the litigation by filing a motion to dismiss on jurisdictional grounds, followed by jurisdictional discovery and extensive briefing on the jurisdictional issues. Thus, Defendants have now shown that they are committed to actively defending themselves. Given the Seventh Circuit's preference for deciding cases on the merits and the lack of prejudice to Strabala, the Court concludes that it has good cause to overlook Defendants' initial failure to respond, and accordingly grants the Motion to Set Aside the Default Judgment.

         MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

         Defendants have moved to dismiss the complaint for lack of subject matter jurisdiction. Before addressing the parties' substantive arguments on that motion, however, the Court must address Strabala's Motion to Strike.

         A. Motion To Strike

         1. Background

         The documents at issue in Strabala's Motion to Strike are Exhibits F and G[10]to Defendants' reply brief in support of their Motion to Dismiss. See R. 39-6; R. 39-7. Exhibit F appears to be a letter from Strabala to his wife, delivered by Strabala via e-mail. Exhibit G appears to be an e-mail to Strabala from someone named “Ding Qing” from the “Shanghai Institute of American Studies, ” who purportedly interviewed Strabala for a book called “Americans in Shanghai.” Defendants also have included as part of Exhibit G a document they identify as the English translation of the article about Strabala purportedly written by Ding Qing, which is referenced in the e-mail from her as being attached. Strabala suggests that both the e-mail to his wife with the attached letter, and the e-mail from Ding Qing with the attached article, may be fake or else doctored from documents found on his personal laptop, which he alleges Zhang and Zhou stole from him. Zhang and Zhou admit that the e-mails came from Strabala's laptop, but assert that the laptop in question was a company laptop and therefore that Strabala had no privacy interest in its contents.

         As a preliminary matter, the Court notes that, for reasons that will be made clear in the next section, Exhibits F and G, even if considered by the Court, would not change the Court's ruling on whether subject matter jurisdiction exists over this lawsuit. Indeed, Defendants themselves refer to these documents as “a relatively minor point of corroborative evidence.” R. 45 at 6 n.4. With this admission and the Court's analysis and conclusions in the next section regarding subject matter jurisdiction, the Court could simply deny the Motion to Strike without prejudice as being moot and omit any discussion of the merits of that motion. Nevertheless, the Court has determined that the Motion to Strike should be addressed on the merits for two reasons: first, the overlap and potential impact of the issues raised in the parties' briefing on the Motion to Strike with the merits issues likely to be in dispute in the case going forward; and, second, the Court's concerns about potential misconduct by the parties to this litigation.[11]

         2. Lack of Foundation

         Zhang and Zhou, as the proponents of Exhibits F and G, bear the burden of establishing a foundation for their admission. See United States v. Cejas, 761 F.3d 717, 723 (7th Cir. 2014) (the admitting party bears the “burden of making a prima facie showing that the item is genuine”). This is done by submitting evidence “sufficient to support a finding that the item is what the proponent claims it is.” Fed.R.Evid. 901(a); see Thanongsinh v. Bd. of Educ. Dist. U-46, 462 F.3d 762, 779 (7th Cir. 2006) (“Rule 901's requirements are satisfied if evidence has been introduced from which a reasonable juror could find that the document is authentic.”). “Only a prima facie showing of genuineness is required; the task of deciding the evidence's true authenticity and probative value is left to the jury.” United States v. Fluker, 698 F.3d 988, 999 (7th Cir. 2012); see also United States v. Vidacak, 553 F.3d 344, 349 (4th Cir. 2009) (“The district court's role is to serve as gatekeeper in assessing whether the proponent has offered a satisfactory foundation from which the jury could reasonably find that the evidence is authentic.”). Defendants offer several reasons why Exhibits F and G have an adequate foundation, each of which are considered and rejected below.

         First, the Court rejects Defendants' argument that the e-mails do not need to be authenticated because they do not have to be admissible in court to be considered on a motion to dismiss for lack of subject matter jurisdiction. The cases cited by Defendants involve preliminary, non-final rulings, such as a jurisdictional ruling at the pleadings stage concerning the amount in controversy, see Boncher-Wales Mktg. Grp., Inc. v. GXI Int'l, LLC, 2009 WL 1259354, at *3 (N.D. Ill. May 1, 2009), and a preliminary injunction decision, see Dexia Credit Local v. Rogan, 602 F.3d 879, 885 (7th Cir. 2010). As the Court will discuss in the next section, Defendants have presented a factual challenge to the Court's subject matter jurisdiction. If the Court were to rule in Defendants' favor, the ruling would not be preliminary but rather would result in dismissal of the case. A final decision in Defendants' favor actually terminating the case must be based on competent evidence. Cf. Whitted v. Gen. Motors Corp., 58 F.3d 1200, 1204 (7th Cir. 1995) (unauthenticated evidence that would have been inadmissible at trial may not be considered in ruling on summary judgment).

         Second, the Court also cannot accept Defendants' contention that Exhibit F has been authenticated by Strabala himself when, at the direction of this Court after a hearing was held on his Motion to Strike, he confirmed through his counsel that the letter to his wife attached to his e-mail was in fact sent by him. Strabala specifically stated that, although he sent his wife a letter similar to the one included in Exhibit F, he believes Defendants' copy of that letter may have been doctored. Accordingly, Strabala did not authenticate the version of the letter on which Defendants rely.[12]

         Third, the Court rejects Defendants' contention that Exhibits F and G are self-authenticating under Federal Rule of Evidence 902(7). Rule 902(7) provides that “[a]n inscription, sign, tag, or label purporting to have been affixed in the course of business and indicating origin, ownership, or control, ” need not be supported by extrinsic evidence of authenticity. According to Defendants, (1) Strabala's electronic signature on his e-mail, (2) the 2DEFINE letterhead on Strabala's letter to his wife, and (3) the typed name “Ding Qing” on her e-mail, together with her contact information at the “Shanghai Institute of American Studies, ” constitute “trade inscriptions” within the meaning of Rule 902(7). Defendants, however, cite no case law that would support finding that either an electronic signature or a typed name and address in an e-mail constitute trade inscriptions under Rule 902(7). Moreover, their argument is inconsistent with Seventh Circuit case law holding that a trade inscription on the cover of an owner's manual does not authenticate the contents of the manual. See Whitted, 58 F.3d at 1204 (“The owner's manual is not a trade inscription and admitting the manual because it had a trade inscription on its cover does not comport with the rule”). In any event, even if the letterhead on the letter to Strabala's wife constitutes a “trade designation, ” it would be one for 2DEFINE not Strabala personally. And, even if the e-mail from Ding Qing is authenticated by her typed name and address, the article submitted as part of Exhibit G is not authenticated by the e-mail because Defendants have not submitted an affidavit or other evidence establishing that the article they include in Exhibit G is a true and correct copy of the attachment referenced by Ding Qing in the e-mail.

         Aside from the above, Rule 902(7) only provides for “presumptive authenticity, ” and “does not preclude the opponent from challenging the authenticity of the offered writing, such as with proof that the document is a phony or bears a forged signature. Nor does it resolve questions as to the source or accuracy of information that is reported in self-authenticated documents. Objections can still be made that inadmissible hearsay statements or expert opinions are included in, for example, newspapers or periodicals.” 2 McCormick On Evid. § 229.1 (7th ed.). Strabala has presented evidence through his declaration rebutting the presumptive authenticity that might be conferred by Rule 902(7). For instance, he states that his signature is an electronic one which could have been placed there without his permission because Zhang and Zhou had access to it through 2DEFINE's computers. He also states that these e-mails were located on the hard drive of his personal laptop, which was stolen from him by Zhang and Zhou.

         Defendants do not expressly deny Strabala's accusation that they stole his personal laptop. Their only argument is that the e-mails were found on Strabala's work laptop. If the e-mails came from Strabala's personal laptop and if Defendants stole that laptop, the evidence would be inadmissible. See Xyngular Corp. v. Schenkel, 2016 WL 4126462, at *33 (D. Utah Aug. 2, 2016) (court “may use its inherent powers to sanction a party who circumvents the discovery process and the rules of engagement employed by the federal courts by improperly obtaining evidence before litigation and then attempting to use that evidence in litigation”); cf. Coal. for an Airline Passengers' Bill of Rights v. Delta Air Lines, Inc., 693 F.Supp.2d 667, 675 (S.D. Tex. 2010) (“hacking into a person's private computer and stealing personal correspondence would represent an intentional intrusion on the victim's private affairs . . . highly offensive to a reasonable person”). But even if, as Defendants contend, the e-mails came from Strabala's work laptop, Strabala is the majority shareholder, legal representative, and design partner for 2DEFINE. Defendants do not explain how or why they are in possession of his work laptop. Nor do they cite any precedent for the Court to consider on whether their appropriation of information from Strabala's work computer was legally permissible because the computer was owned by the partnership and not Strabala personally and/or because Defendants had the ability as administrators of the partnership's computer system to view the laptop's contents without breaking into it. The Court is not prepared to summarily rule in Defendants' favor on those issues without development of the legal arguments supporting Defendants' position. See Valley Air Serv. v. Southaire, Inc., 2009 WL 1033556, at *18 (N.D. Ill. Apr. 16, 2009) (“[t]he court is not required to construct arguments for a party”).

         While a conclusory foundational challenge made without any “sound reason to doubt” a document's authenticity, Cejas, 761 F.3d at 724, may be disregarded, Strabala's stated reasons for doubting the authenticity of the e-mails here are neither conclusory nor lacking in sound reason. This is particularly true given the nature of e-mails in general.

Both email and electronic chats are faceless means of communication, with users identified by an email address or username. The recipient cannot, simply by looking at the email address or username provided in the document, readily identify the true identity of a message's sender. Even where the email address or username employed by the sender is an eponym, as likely is the case here, the sender's identity is not immediately discernable. In neither case can the recipient rely on the use of an email address or username to conclude that a third party has not made surreptitious use of an otherwise familiar account.

United States v. Shah, 125 F.Supp.3d 570, 577 (E.D. N.C. 2015); see also Jimena, 2011 WL 2551413, at *6 (“‘[w]hen the recipient of an e-mail attempts to prove that the message was authored by a particular individual whose name appears in the header, such self-identification by designated sender is insufficient to establish authorship.'”) (quoting Paul R. Rice, Electronic Evidence: Law & Evidence 348 (2d ed. 2008)); Note, “God Mail”: Authentication And Admissibility of Electronic Mail In Federal Courts, 34 Am. Crim. L. Rev. 1387, 1388 (1997) (stating that “the increasing use of electronic mail in the United States, combined with the ease with which it can be forged, should at least give courts pause”).

         Direct proof of authenticity would consist of testimony by Strabala and Ding Qing, or someone who witnessed those individuals sending the e-mails, attesting that the documents in question are the actual, un-doctored emails sent by the authors. See Fluker, 698 F.3d at 999 (citing Mark D. Robins, Evidence at the Electronic Frontier: Introducing E-Mail at Trial in Commercial Litigation, 29 Rutgers Computer & Tech. L.J. 219, 226 (2003)). But indirect evidence of authenticity also may be sufficient. Id. Indirect evidence generally consists of testimony from “someone who personally retrieved the e-mail from the computer to which the e-mail was allegedly sent” together with other circumstantial evidence such as the e-mail address in the header and the substance of the email itself. U.S. Equal Emp't Opportunity Comm'n v. Olsten Staffing Servs. Corp., 657 F.Supp.2d 1029, 1034 (W.D. Wis. 2009). Defendants rely solely on indirect evidence of authenticity consisting of their own affidavits in which they state that the e-mails were taken by them from what they claim to be Strabala's work computer.[13]Defendants are interested parties and the persons accused of theft. While Defendants state in their affidavits that they did not doctor the e-mails, given Strabala's theft charges and testimony that the e-mails do not appear the same as he remembers, [14] the Court finds that Defendants' testimony is insufficient by itself to establish an adequate foundation for admission. See, e.g., United States v. Jackson, 208 F.3d 633, 638 (7th Cir. 2000) (web postings excludable for lack of foundation because defendant had not shown they “actually were posted by the groups, as opposed to being slipped onto the groups' web sites by [defendant] herself, who was a skilled computer user”); Brown v. Great-W. Healthcare, 2007 WL 4730651, at *4 (N.D.Ga. June 8, 2007) (holding that “[t]here is simply insufficient evidence of [the e-mails'] authenticity . . . [to] overcome the lack of trustworthiness caused by the facts that: (1) [the plaintiff] found the questioned e-mails on her chair; (2) [she] had access to [the alleged sender's] private e-mail account; (3) neither party's expert could find the questioned e-mails on [the defendant's] computer system; and (4) the purported authors and recipients deny that they are authentic”).

         The Court acknowledges counsel's statement in Defendants' reply brief that they take allegations of evidence tampering seriously and that they investigated the evidence before submitting it to the Court by verifying through metadata that no tampering took place. See R. 45 at 5. The Court does not question counsel's sincerity, although the proper way to submit this information for purposes of laying an evidentiary foundation would have been with a sworn declaration or affidavit rather than in statements made in a footnote of the reply brief. In any event, counsel also are not neutral third parties, nor have they shown that they are computer experts qualified to attest to the e-mails' authenticity. Moreover, it would be unfair to accept their word in a footnote in a brief without, at the very least, allowing Strabala the opportunity to conduct his own investigation of the laptop on which Defendants claim to have found the e-mails and to which Strabala states he has not had access. This is particularly true given, as Strabala points out in his supplemental declaration (R. 46 at 3, ¶ 12), the metadata submitted to “prove” counsel's representations (attached as an exhibit to Defendants' response to the Motion to Strike, R. 45-4) is not attested to, does not reference any particular document, shows a date for “last printed” which is three months prior to the date of creation, and lists Defendant “Qiao Zhang” as the “author.” For these reasons, the Court concludes that Exhibits F and G have not been properly authenticated, and grants Strabala's Motion to Strike.[15]

         B. Subject Matter Jurisdiction

         1. Standard of Proof

         A challenge to a district court's subject matter jurisdiction is made under Federal Rule of Civil Procedure 12(b)(1). Rule 12(b)(1) motions come in two varieties: (1) facial attacks and (2) factual attacks. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443-44 (7th Cir. 2009). Where a facial attack is made, the district court takes the allegations in the complaint as true, and merely questions the sufficiency of the pleading. Id. at 443. “In contrast, a factual challenge lies where the complaint is formally sufficient but the contention is that there is in fact no subject matter jurisdiction.” Id. at 444 (internal quotation marks and citation omitted) (emphasis in original). Zhang and Zhou submitted affidavits calling this Court's subject matter jurisdiction into question. Thus, they presented a factual challenge to the Court's subject matter jurisdiction.

         “The presumption of correctness that we accord to a complaint's allegations falls away on the jurisdictional issue once a defendant proffers evidence that calls the court's jurisdiction into question. At that point, a court need not close its eyes to demonstrated jurisdictional deficiencies in a plaintiff's case and accord a plaintiff's unproven allegations greater weight than substantive evidence to the contrary.” Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm'n, 149 F.3d 679, 685 (7th Cir. 1998). Responding to the affidavits filed by Zhang and Zhou, Strabala submitted his own declaration. The competing affidavits/declarations demonstrated to the Court that the relevant jurisdictional facts were in dispute. For this reason, the Court directed the parties to conduct jurisdictional discovery and then file supplemental briefs. The Court has now had the opportunity to consider all of the evidence submitted by the parties, as well as the initial and supplemental briefs. Strabala, as the litigant claiming the right to the federal forum, bears the burden of proving subject matter jurisdiction. Craig v. Ontario Corp., 543 F.3d 872, 876 (7th Cir. 2008). The standard is proof by preponderance of the evidence. See Meridian Sec. Ins. v. Sadowski, 441 F.3d 536, 543 (7th Cir. 2006) (“banish[ing] from our lexicon” the oft-repeated standard “[r]easonable probability that jurisdiction exists”).

         2. Analysis

         Strabala alleges that this Court has jurisdiction over the complaint pursuant to 28 U.S.C. § 1332(a)(2), which provides for original jurisdiction in the federal district court over claims between “citizens of a State and citizens or subjects of a foreign state.” The status of Zhang and Zhou as citizens of China, a foreign state, is undisputed. Therefore, the only issue is Strabala's status as a “citizen of a State.” Strabala alleges that he is a citizen of Illinois. But Zhang and Zhou argue that, because Strabala lives in China, he is a citizen of the United States without being a citizen of any State. If Strabala is indeed “stateless, ” he may not invoke this Court's diversity jurisdiction under 28 U.S.C. 1332(a)(2). See Sadat v. Mertes, 615 F.2d 1176, 1180 (7th Cir. 1980) (“settled precedent establishes that a citizen of the United States who is not also a citizen of one of the United States may not maintain suit under [the diversity statute]”).

         a. Rules For Determining A Party's Citizenship

          “In federal law citizenship means domicile, not residence.” Am.'s Best Inns, Inc. v. Best Inns of Abilene, L.P., 980 F.2d 1072, 1074 (7th Cir. 1992) (citing Gilbert v. David, 235 U.S. 561 (1915)). Residence is where a person lives. An individual's domicile, on the other hand, “is the place where that individual has a true, fixed home and principal establishment, and to which, whenever that person is absent from the jurisdiction, he or she has the intention of returning.” Wright & Miller, 13E Fed. Prac. & Proc. Juris., § 3612 (3d ed.); see Texas v. Florida, 306 U.S. 398, 424 (1939) (“Residence in fact, coupled with the purpose to make the place of residence one's home, are the essential elements of domicile.”). “Domicile, therefore, has both a physical and a mental dimension.” Wright & Miller, supra, § 3612; see generally Midwest Transit, Inc. v. Hicks, 79 Fed.App'x 205, 208 (7th Cir. 2003) (unpublished) (reversing district court's determination of citizenship because court failed to consider defendant's contacts with State in relation to his statements of intent regarding his citizenship). And, it “is more than an individual's residence, although the two typically coincide.” Wright & Miller, supra, § 3612. Yet, a person can have multiple residences but only one domicile. “The very meaning of domicil is the technically pre-eminent headquarters that every person is compelled to have in order that certain rights and duties that have been attached to it by the law may be determined. In its nature it is one[.]” Williamson v. Osenton, 232 U.S. 619 (1914).

         The Seventh Circuit has said that the test for domicile works well for cases in which residence coincides with intent, but is “becoming increasingly outdated as more people buy second or even third residences in different states.” Midwest Transit, Inc., 79 Fed.App'x at 208. In the latter situation, “the test can turn into a complex, even arbitrary, inquiry into an individual's intent.” Id. (citing Galva Foundry Co. v. Heiden, 924 F.2d 729, 730 (7th Cir. 1991)). As a result of the difficulties inherent in the domicile inquiry, courts primarily look at intent through objective factors. See Sadat, 615 F.2d at 1181 (“[i]ntent is a state of mind which must be evaluated through the circumstantial evidence of a person's manifested conduct”) (internal quotation marks and citations omitted). Some of the objective factors relevant to a person's intent include “current residence, voting registration and voting practices, location of personal and real property, location of financial accounts, membership in unions and other associations, place of employment, driver's license and automobile registration, and tax payments.” Midwest Transit, Inc., 79 Fed.App'x at 208. “The existence of one or more of these factors may weigh in favor of a finding of citizenship, but no single factor is conclusive.” Id. For this reason, each case necessarily turns on its own unique combination of facts.

         Before examining the evidence in the record relevant to Strabala's domicile, the Court notes that it finds extremely troubling Strabala's refusal to provide Defendants with any pre-2014 discovery on the ground that jurisdiction is determined as of the date on which the lawsuit is filed. See Denlinger v. Brennan, 87 F.3d 214, 216 (7th Cir. 1996) (“Jurisdiction depends on citizenship at the time a case begins.”). While the issue for the Court is Strabala's domicile on February 9, 2015, which is the date Strabala filed this lawsuit, the facts relevant to determining his domicile on that date relate back to Strabala's intent when he moved to Houston in 2006 and then to Shanghai in 2008. Thus, jurisdictional discovery should have encompassed the entire time period between 2006 and 2015, and Strabala's position to the contrary was frivolous. See, e.g., Perry v. Pogemiller, 16 F.3d 138, 140 (7th Cir. 1993) (“Perry's hyper-technical interpretation of assessing domicile [in which he argued that the inquiry is restricted to information about that party's activities on the date suit is filed] is totally lacking in support and in substance and thus, an appeal based on this argument was destined to fail. . . . Therefore, we conclude that sanctions are appropriate[.]”).

         Zhang and Zhou could have moved to compel pre-2014 discovery, but they did not. Even so, the Court will infer from Strabala's failure to provide pre-2014 discovery that any documents from this time period, had they been produced, would have pointed to Strabala's domicile being somewhere other than Illinois. In addition, the Court will accord little to no weight to documents submitted by Strabala that concern a time period after the date on which the complaint was filed, finding that such documents are more likely to show a post-filing attempt by Strabala to create jurisdiction rather than a bona fide pre-existing intent regarding his domicile.[16]

         Notwithstanding the negative inference and discounting the post-February 9, 2015 evidence submitted by Strabala, the Court concludes that the preponderance of the evidence still supports subject matter jurisdiction in this case. In reaching this conclusion, the Court has relied on the undisputed facts in the record, [17]evaluating those facts in light of the well established principle that “[a] domicile once existing continues until another is acquired.” Desmare v. United States, 93 U.S. 605, 610 (1876); see Sadat, 615 F.2d at 1181 (quoting Restatement (Second) of Conflict of Laws, § 19 (1971)); Wright & Miller, supra, § 3612 (the rule that an established domicile continues until a new one is acquired “represents the conflicts of law solution to the problem of locating the domicile of an individual” who “pulled up stakes” from his former domicile “but either has not arrived physically at a new one or has arrived but has not yet formulated an intention to remain there for the indefinite future”).[18]

         It is undisputed that Strabala was domiciled in Illinois from roughly 1987 or 1988 until at least March 2006. Therefore, for Illinois to no longer be Strabala's domicile, there must be evidence not only that Strabala physically resides at a new location but that he does so with the “intention to remain there indefinitely, or, as some federal courts articulate it, the absence of any intention to go elsewhere.” Wright & Miller, supra, ยง 3613. Zhang and Zhou argue that the evidence overwhelming shows that Strabala is now domiciled in China. But the Court concludes otherwise, finding that the objective evidence of Strabala's intent to maintain his previously established domicile in Illinois as against his residential status, ...


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