United States District Court, N.D. Illinois, Eastern Division
AFI HOLDINGS OF ILLINOIS, INC., d/b/a HAPPY LEAVES, INC., Plaintiff,
NATIONAL BROADCASTING COMPANY, and WATERMAN BROADCASTING, Defendants.
MEMORANDUM OPINION AND ORDER
D. Leinenweber, Judge
Waterman Broadcasting's (“Waterman”) Motion
to Dismiss the Complaint pursuant to Rule 12(b)(2) [ECF No.
19] is granted. The case against Waterman is dismissed for
lack of personal jurisdiction. Plaintiff Happy Leaves
(“Happy Leaves”) is directed to serve the
remaining Defendant, National Broadcasting Company
(“NBC”), immediately if it has not done so and if
a viable case remains against NBC given the dismissal of
Waterman. See, Fed. R. Civ. P. 4(m).
case is before the Court on diversity jurisdiction. Happy
Leaves, an Illinois company, brings a defamation lawsuit
against Waterman Broadcasting, a Florida corporation. ECF No.
16 (Am. Compl.) ¶¶ 2, 4. (The Court refers to
Plaintiff as Happy Leaves, its doing-business-as name,
because this is the name Plaintiff uses in its submissions to
the Court.) Happy Leaves names NBC, a Delaware corporation
headquartered in New York, as a second Defendant in the case,
but it is unclear whether Happy Leaves has served NBC in the
five months since the suit was instituted. Id.
¶ 2. In any event, NBC has not filed an appearance, and
this Motion strictly concerns Waterman, not NBC.
Leaves alleges that on July 1, 2016, Waterman aired on its
television station a segment about a product called
Charlotte's Web. Am. Compl. ¶ 19. Charlotte's
Web is a hemp oil extract manufactured by CW Hemp, Inc., a
company located in Colorado that is not a party to this
lawsuit. Id. ¶¶ 7-8. CW Hemp uses Happy
Leaves as a distributor for its hemp oil extract.
Id. ¶ 16. Happy Leaves alleges that before
Waterman aired its broadcast, Happy Leaves was the only
distributor of Charlotte's Web that sold the product via
the website Groupon. Id. As it so happens, Groupon
is headquartered in Illinois. Id.
allegedly defamatory news segment called Charlotte's Web
“pot” and “medical marijuana.” Am.
Compl. ¶ 21. It mentioned that the product can be
purchased on Groupon, and “on numerous occasions, the
newscast cuts to a screenshot of Groupon's Happy Leaves
web page, which shows a picture of Charlotte's Web with
text saying, ‘Charlotte's Web CBD Oil from Happy
Leaves.'” Id. ¶¶ 21-22.
segment was investigated and reported on by a reporter by the
name of Graham Hunter (“Hunter”). Before Waterman
aired the piece, Hunter had sent an email to Happy Leaves and
“reached out” to Groupon. Am. Compl. ¶¶
25-26. The email to Happy Leaves consisted of two sentences:
“What is in your product?” and “How is this
legal to dispense in the U.S.?” Id. ¶ 27.
There is no allegation as to how Hunter “reached
out” to Groupon or what he communicated to the company,
although the affidavit submitted by Happy Leaves' owner
suggests that Waterman contacted Groupon just once. ECF No.
27-1 (Fligg's Decl.) ¶ 4 (attesting that Hunter
contacted both Happy Leaves and Groupon on the date of the
affidavit, Hunter states that he did not connect with anyone
at either Happy Leaves or Groupon before the segment aired.
ECF No. 19-2 (Hunter's Decl.) ¶¶ 4, 6. He also
attests that he did not know that either company is located
in Illinois. Id. ¶¶ 3, 6. Hunter declares
that he “did not rely on Illinois sources, ”
something that Happy Leaves disputes. Id. ¶ 5;
Fligg's Decl. ¶ 3. Finally, Hunter declares that he
did not “have any reason to believe the impact of the
report would be felt in Illinois.” Hunter's Decl.
¶ 5. This last statement presumably is because
Waterman's broadcast is restricted to the area of Fort
Myers/Naples, Florida and 100% of its viewership is in this
area. ECF No. 19-2 (Pontius's Decl.) ¶¶ 3, 5.
Not surprisingly then, Waterman has no offices or employees
in Illinois. Id. ¶ 6.
Waterman has a website, and on this website, it posted the
news segment. Happy Leaves alleges that “as a direct
result of NBC-2 reporter Graham Hunter ‘reaching
out' to Groupon about the story in Illinois,
Groupon's management and legal department in Chicago saw
the segment.” Am. Compl. ¶ 30. Groupon thereafter
“discontinued all sales of Charlotte's Web on its
website” and “Happy Leaves' sales of
Charlotte's Web sales were devastated.”
Id. ¶¶ 31, 36. Although Waterman retracted
the story from its website just two weeks after the original
air date, Happy Leaves claims that harm, calculated to be
“in an amount in excess of $1, 000, 000.00, ” has
been done. Id. ¶¶ 35, 42, 49, 57.
Leaves now sues Waterman and NBC in the Northern District of
Illinois, alleging violations of Illinois law. NBC is in this
lawsuit because Waterman is one of its local affiliates.
Waterman, speaking for itself, asks the Court to dismiss the
case against it for lack of personal jurisdiction. The Court
grants this request and so does not address the alternative
prayer to transfer the case to the Middle District of
Plaintiff, Happy Leaves bears the burden of establishing a
prima facie case for jurisdiction. Citadel Grp.,
Ltd. v. Wash. Reg'l Med. Ctr., 536 F.3d 757, 760
(7th Cir. 2008). Since Waterman has submitted affidavits in
its Rule 12(b)(2) motion to dismiss, Happy Leaves must
“go beyond the pleadings and submit affirmative
evidence supporting the exercise of jurisdiction.”
Purdue Research Found. v. Sanofi-Synthelabo, S.A.,
338 F.3d 773, 782 (7th Cir. 2003).
Court considers the pleadings and the parties'
affirmative evidence in making its ruling. Where these papers
raise a factual dispute, the Court resolves them in Happy
Leaves' favor. Id. However, it accepts as true
“any facts contained in the defendant's affidavits
that remain unrefuted by the plaintiff.”
GCIU-Emp'r Ret. Fund v. Goldfarb Corp., 565 F.3d
1018, 1020 n.1 (7th Cir. 2009).
Waterman urges the Court to disregard any statement not based
on an affiant's personal knowledge, the Court finds doing
so unnecessary in this case. See, Contrak, Inc.
v. Paramount Enters. Int'l Inc., 201 F.Supp.2d 846,
851-52 (N.D. Ill. 2002) (“Several courts have suggested
that affidavits submitted in response to a motion to dismiss
under Rule 12(b)(2) must be based on personal knowledge or
comply with Rule 56(e), . . . but the Seventh Circuit has not
addressed this issue.”). The disposition of
Waterman's Motion does not hinge on whether the Court
strikes some of the statements from Happy Leaves'
Court may deny the Motion and exercise personal jurisdiction
over Waterman only if an Illinois state court can do so.
Citadel, 536 F.3d at 760. Under the Illinois
long-arm statute, a state court may exercise jurisdiction on
any basis allowed by the Illinois and federal constitution.
See, 735 ILCS 5/2-209(c). The Court proceeds under
the federal analysis because the parties have agreed that the
requirements of due process under the U.S. Constitution
control their case and because “no case has yet emerged
where due process was satisfied under the federal
constitution but not under the Illinois constitution”.
Citadel, 536 F.3d at 761.
federal due process requires that, in order to subject a
non-resident like Waterman to personal jurisdiction in
Illinois, Waterman must “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.
Wash., 326 U.S. 310, 316 (1945).
it can engage with the substance of the Motion, the Court
must dispose of Happy Leaves' Complaint that
Waterman's Motion is too long. Happy Leaves claims that
due to the use of “excessive” single spacing and
other horrors, Defendant's 15-page brief actually is 17
pages and so does not conform to a local rule. On this
ground, Happy Leaves asks the Court to strike the Motion. The
Court sees nothing out of the ordinary in the formatting of
Waterman's brief and finds no reason to strike any part
case, Waterman needed no more than the first ten pages of its
brief to argue that the Court does not have personal
jurisdiction over it. Happy Leaves disagrees and asserts two
independent bases for haling Waterman into court: (1)
Waterman is an affiliate of NBC, and (2) Waterman's tort
is aimed at Illinois and caused harm to Happy Leaves in that
Jurisdiction Based on ...