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Johnson v. Barrier

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

January 4, 2017

SYL JOHNSON a/k/a Sylvester Thompson, Plaintiff,
ERIC BARRIER, p/k/a ERIC B., WILLIAM GRIFFIN, p/k/a RAKIM, ERIC B. MUSIC INC., f/k/a ERIC B. AND RAKIM MUSIC, INC., a New York corporation, UMG RECORDINGS, INC., a Delaware corporation as successor in Interest to MCA Records, Inc. and Universal Records, Inc., Defendants.


          AMY J. ST. EVE, District Court Judge:

         On June 28, 2016, the Court dismissed Plaintiff Syl Johnson (“Johnson”)'s Second Amended Complaint against Defendant UMG Recordings, Inc. (“UMG”), granting leave to re-plead following limited jurisdictional discovery (the “June Opinion”). (R.99; R.102; R.119). On October 27, 2016, Plaintiff filed a Third Amended Complaint. (R.120). Before the Court is UMG's motion to dismiss the Third Amended Complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). (R.123). UMG has also renewed its motion to dismiss pursuant to Rules 12(b)(6) and 12(c). (Id.). For the reasons set forth below, the Court grants UMG's Rule 12(b)(2) motion and dismisses the Third Amended Complaint without prejudice to refile where the court has personal jurisdiction. Given this disposition, the Court does not reach UMG's renewed arguments in favor of Rule 12(b)(6) or 12(c) dismissal.

         BACKGROUND [1]

         Plaintiff Johnson is a Chicago-based rhythm and blues musician. He is the vocalist, guitarist, and band leader of the sound recording, “I Feel an Urge.” (R.120, Third Am. Compl. ¶ 5). This case concerns the alleged misappropriation of a 3.094 second slice of that recording (the “Johnson Sample”) into products titled variously as “Know the Ledge, ” “Juice” and “Juice (Know the Ledge).” (Id. ¶ 1). Johnson alleges 358 unlawful uses since 1991, ranging from theater and television movies to DVDs, greatest hits compilations, music videos, video games, and commercials (the “Juice Products”). (Id. ¶¶ 1, 65; R.120-4). He now brings claims for misappropriation (Count I) and injunctive relief (Count II) against Defendant UMG.

         In the June Opinion, the Court declined to exercise jurisdiction over UMG. (R.99, June Opinion). In relevant part, the Court concluded that Johnson had failed to demonstrate either (i) that UMG's contacts were “so substantial as to render [it] ‘essentially at home' in Illinois” under a general jurisdiction theory, or (ii) that “UMG's suit-related conduct created a ‘substantial connection' with Illinois” under a specific jurisdiction theory. (Id. at 6, 10). The Court exercised its discretion to permit targeted jurisdictional discovery, granting Johnson the opportunity to serve interrogatories and to examine a Rule 30(b)(6) witness concerning the sale of Juice Products by UMG and/or any distribution affiliate within Illinois, as well as concerning any Illinois-focused marketing or targeting activity of UMG as related to Juice Products. (Id. at 10-11). The Court granted Johnson leave to re-plead following the completion of jurisdictional discovery. (Id.).

         According to Johnson's Third Amended Complaint: “UMG is amenable to suit in an Illinois court under Illinois' Long-Arm Statute, 735 ILCS 5/2-209(a)(2), by the commission of intentional torts in Illinois; and in that UMG established minimum due process contacts with Illinois, 735 ILCS 5/2-209(c), through its 1991 through 2016 sales of Juice Products in Illinois… together with UMG's shipments of Juice Products to Illinois and by negotiated arrangements with distributors and retailers located in Illinois to distribute and/or sell its products in Illinois such that UMG should reasonably anticipate being haled into court in Illinois regarding injury inflicted by virtue of its Illinois sales[.]” (R.120, Third Am. Compl. ¶ 10). In support of these allegations, Johnson's pleading attaches a UMG spreadsheet-obtained during the course of jurisdictional discovery-showing four categories of information for various Juice Products throughout 2000 - 2016: (1) Product Shipments in Illinois; (2) Product Shipments to the Rest of the U.S.; (3) Total Product Shipments to U.S., including Percentage to Illinois, by Quantity; and (4) Total Product Shipments to U.S., including Percentage to Illinois, by Revenue. (R.120-1, Ex. A to the Third Am. Compl.). UMG derived this information from “invoices regarding shipments of physical ‘Juice' products to Illinois addresses, which do not reflect the location of ultimate retail sales.” (R.105-1, UMG Interrogatory Responses at 5; see also R.120-2, Cho Dep. Tr. at 56 (testifying that the spreadsheet reflects UMG's “wholesale shipments but not necessarily where the sales were actually made”)). As both parties acknowledge, this spreadsheet demonstrates that:

UMG's revenues from wholesale shipments of Juice products to Illinois between 2000 and 2016 were only $47, 000, but its revenues from nationwide shipments for the same time period were over $4 million. Thus, the Illinois revenue represents just one percent (1%) of nationwide revenue for the same time period. Over that time period, a mere 6, 194 units of Juice products were shipped to Illinois, compared with 534, 986 units shipped nationwide. Again, the Illinois units represent only one percent (1%) of nationwide units shipped.

(R.123, Opening Br. at 3-4; R.120, Third Am. Compl. ¶ 24 (estimating “Total Illinois Sales” since 1991)).[2] As UMG's corporate designee testified, UMG does not make retail sales to consumers. Instead, it ships physical product either (i) to retailers, or (ii) to distribution companies, such as its affiliate UMG Commercial Services, Inc. (“UMGCS”), as well as non-affiliated distributors. (R.120-2, Cho Dep. Tr. at 42, 49, 64, 68-70, 81-82). In addition, UMG has no record of “Illinois-specific marketing” associated with the Juice Products. (Id. at 94).


         A motion to dismiss for lack of personal jurisdiction pursuant to Rule 12(b)(2) tests whether a federal court has personal jurisdiction over a defendant. See Fed. R. Civ. P. 12(b)(2); Central States v. Phencorp. Reins. Co., 440 F.3d 870, 875 (7th Cir. 2006). In analyzing a Rule 12(b)(2) motion, courts may consider matters outside of the pleadings. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Where, as here, the Court previously allowed jurisdictional discovery, and neither party requested an evidentiary hearing, the burden falls on Johnson to prove the existence of personal jurisdiction by a preponderance of the evidence. See Linkepic Inc v. Vyasil, LLC, 146 F.Supp.3d 943, 948 (N.D. Ill. 2015).


         I. Applicable Legal Principles

         In this diversity action, personal jurisdiction is governed by the law of the forum state. See N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014); Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012). A “court's exercise of jurisdiction over the defendant must be authorized by the terms of the forum state's long arm statute and also must comport with the requirements of the Fourteenth Amendment's Due Process Clause.” Felland, 682 F.3d at 672 (citing Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010)); see also N. Grain Mktg., 743 F.3d at 491-92.

         In the Third Amended Complaint, Johnson invokes two provisions of the Illinois long-arm statute - specifically, 735 ILCS 5/2-209(a)(2) and 735 ILCS 5/2-209(c). (R.120, Third Am. Compl. ¶¶ 10, 15-19, 20-24). The first provision permits Illinois courts to exercise jurisdiction over a person “as to any cause of action arising from . . . [t]he commission of a tortious act within [the] State.” See 735 ILCS 5/2-209(a)(2). In other words, Illinois courts “may exercise personal jurisdiction over defendants in tort suits if the defendant performs an act or omission that causes an injury in Illinois and the plaintiff alleges the act was tortious in nature.” See Philos Techs., Inc. v. Philos & D, Inc., 802 F.3d 905, 915 (7th Cir. 2015) (citation and quotation omitted). “This analysis, however, accounts for only the statutory authorization to exercise personal jurisdiction; any such exercise still must comport with federal due-process principles.” Id. at 915-16 (emphasis in original). The second provision, meanwhile, permits a court to exercise personal jurisdiction “on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States.” See 735 ILCS 5/2-209(c). Because the Seventh Circuit has recognized that “there is no operative difference between these two constitutional limits, ” the key question is “whether the exercise of personal jurisdiction would violate federal due process.” Mobile Anesthesiologists Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d 440, 443 ...

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