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MG Design Associates, Corp. v. Costar Realty Information, Inc.

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

December 1, 2016

MG DESIGN ASSOCIATES, CORP., Plaintiff,
v.
COSTAR REALTY INFORMATION, INC., APARTMENTS, LLC d/b/a APARTMENTS.COM, and NORTHWIND ENTERPRISES, INC. d/b/a ATLANTIC EXHIBITS, Defendants.

          OPINION AND ORDER

          SARA L. ELLIS United States District Judge.

         Believing Defendants used its work to construct a tradeshow exhibit, Plaintiff MG Design Associates, Corp. (“MG”) brings suit against Defendants CoStar Realty Information, Inc. (“CoStar”), Apartments, LLC d/b/a Apartments.com (“Apartments”), and Northwind Enterprises, Inc. d/b/a Atlantic Exhibits (“Atlantic”), alleging copyright infringement in violation of the Copyright Act of 1976 (the “Copyright Act”), 17 U.S.C. § 101 et seq., fraudulent misrepresentation, breach of contract, and tortious interference with both contract and prospective economic advantage. Defendants move to dismiss MG's claims for lack of personal jurisdiction and for failure to state a claim. The Court finds that Defendants possess sufficient contacts with Illinois to authorize personal jurisdiction, but that MG fails to properly allege a copyright claim. With the dismissal of the federal claims, the Court declines to address MG's state law claims until it alleges a basis for the Court's subject matter jurisdiction. The Court therefore denies in part and grants in part Defendants' motions [11, 23], dismissing MG's lawsuit without prejudice.

         BACKGROUND[1]

         MG and Atlantic both design and construct trade show exhibits. In 2014, CoStar, a real estate information company acquired Apartments, which runs the website Apartments.com. Before the events at issue here, MG had a 15-year business relationship with Apartments. In April 2015, Apartments' Tradeshow Manager, Sharon Patenaude, [2] contacted MG to design a trade show exhibit for an upcoming conference in Las Vegas, Nevada. Patenaude communicated with MG's Executive Vice President and then traveled to MG's office in Pleasant Prairie, Wisconsin to discuss design plans. MG produced an initial set of design renderings, proposing a layout and appearance for an Apartments-branded exhibit. After receiving feedback, MG submitted a second set of design renderings (the “Renderings”) and waited for a response. But two days later, MG learned that it would not handle any future work for CoStar and Apartments and that it would not construct an exhibit for the Las Vegas conference. MG sent an invoice for the Renderings to CoStar, and CoStar paid MG $16, 500 for the work. MG would have charged significantly more, approximately $340, 000, had it also constructed an exhibit based on the Renderings.

         After CoStar paid the invoice for the Renderings, CoStar hired Atlantic to construct an exhibit at the Las Vegas conference (the “Las Vegas Exhibit”), using the Renderings “as the basis” for the construction. Doc. 1 ¶ 46. Atlantic then advertised on its website that it designed the Las Vegas Exhibit. The Renderings bore a legend on each page stating “[a]ll designs and ideas . . . are the creative property of [MG], ” the paid invoice stated that the Renderings “remain the property of [MG], ” and both the invoice and the Renderings stated that the Renderings “may not be reproduced in any manner without the express approval of [MG].” Doc. 1 ¶¶ 38, 45; Doc. 1-2. MG never received a request from anyone to use the Renderings or to construct exhibits based on the Renderings. MG has not performed any work for CoStar or Apartments following this dispute.

         MG is an Illinois corporation with its principal place of business in Pleasant Prairie, Wisconsin. Doc. 1 ¶ 10. CoStar is a Delaware corporation with its corporate headquarters in Washington, D.C. Doc. 1 ¶ 11; Doc. 12-1 (Campbell Declaration) ¶ 2. CoStar has an office in Chicago, Illinois and is registered to do business in Illinois. Doc. 1 ¶ 11. Apartments is a Delaware limited liability company, and CoStar is Apartments' sole member. Doc. 12-1 ¶¶ 3-4. Although MG alleges that Apartments' primary office is in Chicago, Doc. 1 ¶ 12, Apartments' corporate executives, including its Chief Executive Officer, Executive Vice President of Operations, Executive Vice President of Accounting and Finance, and General Counsel and Secretary have “directed, controlled, and coordinated its business from Washington, D.C, ” Doc. 12-1 ¶ 7. Apartments' only other corporate officer, its President, resided in Illinois until January 2016. Doc. 12-1 ¶ 9. Between April 2014 and the summer of 2015, Apartments maintained its departments for product design and development, multi-family field sales, finance, and customer service in Chicago. Id. ¶ 11. Apartments then moved the “majority of [its] departments, ” including its finance, marketing, and customer service departments, to Atlanta, Georgia between the summer of 2015 and January 2016. Id. ¶ 12. It is unclear whether any departments remain in Chicago. See Id. Atlantic is a Virginia corporation with its principal place of business in Chantilly, Virginia, Doc. 24-1 (Beach Declaration) ¶ 2, and competes with MG in their design field and for clients, id. ¶ 9.

         LEGAL STANDARD

         A motion to dismiss under Rule 12(b)(2) challenges whether the Court has jurisdiction over a party. The party asserting jurisdiction has the burden of proof. See Tamburo v. Dworkin, 601 F.3d 693, 701 (7th Cir. 2010). The Court may consider affidavits and other competent evidence submitted by the parties. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). If the Court rules on the motion without a hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. GCIU-Emp'r Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir. 2009). The Court will “read the complaint liberally, in its entirety, and with every inference drawn in favor of” the plaintiff. Cent. States, Se. & Sw. Areas Pension Fund v. Phencorp Reinsurance Co., 440 F.3d 870, 878 (7th Cir. 2006) (quoting Textor v. Bd. of Regents of N. Ill. Univ., 711 F.2d 1387, 1393 (7th Cir. 1993)). “[O]nce the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, ” however, “the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.” Purdue, 338 F.3d at 783. Any dispute concerning relevant facts is resolved in the plaintiff's favor. Id. at 782-83.

         A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not its merits. Fed.R.Civ.P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion to dismiss, the Court accepts as true all well-pleaded facts in the plaintiff's complaint and draws all reasonable inferences from those facts in the plaintiff's favor. AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint must not only provide the defendant with fair notice of a claim's basis but must also be facially plausible. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

         ANALYSIS

         I. Personal Jurisdiction

         CoStar, Apartments, and Atlantic each argue that the Court does not have personal jurisdiction over them. Because Defendants raise a jurisdictional issue with respect to MG's claims, the Court addresses it first. Bunker Ramo Corp. v. United Bus. Forms, Inc., 713 F.2d 1272, 1279 (7th Cir. 1983). MG brings claims under the Copyright Act and state law. The Copyright Act does not authorize nationwide service of process, and so the Court may exercise jurisdiction over Defendants only if authorized both by the United States Constitution and Illinois law. Monster Energy Co. v. Wensheng, 136 F.Supp.3d 897, 902 (N.D. Ill. 2015); see also United Airlines, Inc. v. Zaman, 152 F.Supp.3d 1041, 1046-47 (N.D. Ill. 2015) (“When subject matter jurisdiction rests on a federal question . . . and supplemental jurisdiction, and no special federal rule for personal jurisdiction applies, as here; this Court may exercise personal jurisdiction over Defendant only if it is (1) proper under the forum state's personal jurisdiction statute and (2) comports with the requirements of the Due Process Clause.”).

         Illinois “permits its courts to exercise personal jurisdiction on any basis permitted by the constitutions of both Illinois and the United States.” be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir. 2011); 735 Ill. Comp. Stat. 5/2-209. To the extent the federal constitutional and Illinois statutory inquiries diverge, “the Illinois constitutional standard is likely more restrictive than its federal counterpart, ” but both essentially focus on whether exercising jurisdiction over a defendant is fair and reasonable and thus a single inquiry suffices. KM Enters, Inc. v. Global Traffic Techs., Inc., 725 F.3d 718, 732 (7th Cir. 2013); C.H. Johnson Consulting, Inc. v. Roosevelt Rds. Naval Station Lands & Facilities Redevelopment Auth., No. 1:12-cv-08759, 2013 WL 5926062, at *2 (N.D. Ill. Nov. 5, 2013). The Court, therefore, asks one constitutional question: do Defendants have “certain minimum contacts with [Illinois] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice[?]'” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Millikin v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)). Minimum contacts exist where “the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1984).

         Personal jurisdiction comes in two forms: general and specific. uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010). General jurisdiction arises when the defendant has “continuous and systematic” contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984). A defendant is subject to general jurisdiction only where its contacts with the forum state are so substantial that it can be considered “constructively present” or “at home” in the state. Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011); Purdue, 338 F.3d at 787; see also Tamburo, 601 F.3d at 701 (“The threshold for general jurisdiction is high; the contacts must be sufficiently extensive and pervasive to approximate physical presence.”). Alternatively, the Court has specific jurisdiction “when the defendant purposefully directs its activities at the forum state and the alleged injury arises out of those activities.” Mobile Anesthesiologists Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d 440, 444 (7th Cir. 2010). “The inquiry whether a forum State may assert specific jurisdiction over a nonresident defendant focuses on the relationship among the defendant, the forum, and the litigation” and “the defendant's suit-related conduct must create a substantial connection with the forum state.” Walden v. Fiore, ___ U.S. ___, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014). MG elects to demonstrate that the Court has specific jurisdiction over Defendants.[3]

         To find specific jurisdiction:

(1) the defendant must have purposefully availed himself of the privilege of conducting business in the forum state or purposefully directed his activities at the state, (2) the alleged injury must have arisen from the defendant's forum-related activities, and (3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice.

Felland, 682 F.3d at 674 (citations omitted). “Whether a defendant has purposefully directed activities at a forum ‘depends in large part on the type of claim at issue'” and “whether the conduct underlying the claims was purposely directed at the forum state.” Monster Energy Co., 136 F.Supp.3d at 903 (quoting Felland, 682 F.3d at 674). There is no “‘pendent' or ‘supplemental' theory of specific personal jurisdiction, ” and “personal jurisdiction over the defendant must be established as to each claim asserted.” In re Testosterone ReplacementTherapy Prod. Liab. Litig. Coordinated Pretrial Proceedings, 164 F.Supp.3d 1040, 1048-49 (N.D. Ill. 2016) (rejecting plaintiffs' attempts to establish personal jurisdiction over defendants by invoking similarities between defendants' conduct against other plaintiffs that established specific jurisdiction and defendants' conduct against other plaintiffs that was related to conduct that created personal jurisdiction); ...


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