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Personnel Staffing Group, LLC v. Fleet Staff Inc.

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

October 30, 2017

PERSONNEL STAFFING GROUP, LLC, a Florida limited liability company, Plaintiff,
v.
FLEET STAFF INC., a Michigan corporation, and RON HEINEMAN, an individual, Defendants.

          MEMORANDUM OPINION AND ORDER

          Thomas M. Durkin United States District Judge.

         Plaintiff Personnel Staffing Group, LLC ("PSG") has filed this diversity action against Defendants Fleet Staff Inc. ("Fleet Staff) and Ron Heineman. Heineman is the President, CEO, and sole Director of Fleet Staff.[1] Presently before the Court is a motion to dismiss for lack of personal jurisdiction filed by Heineman. For the reasons that follow, Heineman's motion is denied.

         Standard of Review

         A challenge to a court's exercise of personal jurisdiction over a defendant is made under Federal Rule of Civil Procedure 12(b)(2). PSG, as the party asserting personal jurisdiction over Heineman, "bears the burden of demonstrating the existence of jurisdiction." Purdue Research Found, v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). Where, as here, the Court "rules on a defendant's motion to dismiss based on the submission of written materials, without the benefit of an evidentiary hearing, . . . the plaintiff need only make out a prima facie case of personal jurisdiction." Id. (internal quotation marks and citation omitted). "In evaluating whether the prima facie standard has been satisfied, the plaintiff 'is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record.'" Id. (citations omitted); see also RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997) (stating that the plaintiff "is entitled to have any conflicts in the affidavits resolved in its favor").

         Because this is a diversity case, the Court looks to Illinois's long-arm statute to determine whether it may exercise personal jurisdiction over Heineman. See Philos Techs., Inc. v. Philos & D, Inc., 802 F.3d 905, 912 (7th Cir. 2015) ("District courts exercising diversity jurisdiction apply the personal jurisdiction rules of the state in which they are located."). That statute provides that the outer boundary of the personal jurisdiction of an Illinois court is set by the Illinois Constitution and the Constitution of the United States. See 735 Ill.. Stat. Ann. 5/2-209(c). The Seventh Circuit has found that "there is no operative difference between the limits imposed by the Illinois Constitution and the federal limitations on personal jurisdiction." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 715 (7th Cir. 2002). Accordingly, the personal jurisdiction analysis is reduced to the question of whether the exercise of personal jurisdiction is contrary to the United States Constitution. Id.

         Under the Due Process Clause, a court may exercise personal jurisdiction over an out-of-state defendant when that defendant has "minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. State of Wash., Office of Unemployment Compensation & Placement, 326 U.S. 310, 316 (1945) (internal quotation marks and citation omitted). "'The defendant's conduct and connection with the forum State [must be] such that he should reasonably anticipate being haled into court there.'" Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). While there are two branches of personal jurisdiction theory-general and specific, Daimler AG v. Bauman, 134 S.Ct. 746, 749 (2014)-only the latter is before the Court on the present motion.[2] For a court to exercise specific jurisdiction, the lawsuit must "result[ ] from alleged injuries that 'arise out of or relate to'" the defendant's contacts with the forum. Burger King, 471 U.S. at 472-73 (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)).

         Background

         The Court finds that the following facts are uncontested for purposes of Heineman's motion.

         In Spring 2016, PSG, a Florida limited liability company whose sole member is a citizen of Illinois, was approached by its broker, who stated that the broker for Fleet Staff, a Michigan corporation with its principal place of business in Kentucky, had inquired about potentially entering into a business relationship with PSG. R. 19-1 (¶ 3); R. 1 (¶¶ 1-3). Representatives of PSG offered to travel to Kentucky, where Heineman apparently is located, [3] to discuss potentially developing a business relationship; however, Heineman insisted that he would travel to Chicago and visit PSG's headquarters in Deerfield, Illinois. On June 3, 2016, Heineman attended a meeting at PSG's headquarters, and at this meeting the parties negotiated the essential terms of the Managed Services Agreement ("MSA I") between PSG and Fleet Staff, pursuant to which Fleet Staff was to provide services to PSG in Illinois. The MSA I was signed by Darron Grottolo on behalf of PSG on June 1, 2016, and by Heineman, as CEO for Fleet Staff, on June 16, 2016. R. 24-1 at 21.

         On September 8, 2016, a second meeting took place between Heineman and PSG at PSG's headquarters in Deerfield, Illinois. At some point (unspecified in the record but presumably between June 16, 2016 and September 26, 2016), PSG requested that Heineman execute a personal guaranty of Fleet Staffs contractual payment obligations to PSG. Heineman claims there were no negotiations with respect to the guaranty, and, specifically, that the guaranty was never discussed at any of the meetings in Illinois. Instead, according to Heineman, PSG simply "demanded" he execute the guaranty "in order for [PSG's] relationship with Fleet Staff to continue, " and Heineman agreed. R. 13 at 10 (¶ 10). Neither party provides any information as to when, where, or how this "demand" or Heineman's agreement thereto were communicated. All that is known at this point is that, as a result of PSG's demand, Heineman executed a second version of the Managed Services Agreement ("MSA II"), which contains the following provision not found in the original MSA I:

5.5 Guaranty of Performance of Obligations. Agency agrees and understands that this Agreement is conditioned upon the execution of a Personal Guaranty by an authorized representative of Agency attached to this Agreement as Addendum B.

R. 19-5 at 11.

         The MSA II contains a choice of law provision and forum selection clause designating Illinois as the governing law and the courts located in the City of Chicago, County of Cook, Illinois as the venue for "[a]ny action related to or arising from" the MSA II. Id. at 18. Heineman's guaranty (Addendum B), on the other hand, contains no forum selection provision. It does, however, contain a choice of law provision. That provision states that the guaranty "is and shall be deemed to be a contract entered into and pursuant to the laws of the State of California." Id. at 23. The parties do not address what connection if any there is between any of ...


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