United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER.
VIRGINIA M. KENDALL UNITED STATES DISTRICT JUDGE.
Tai Matlin and James Waring sued Defendants Spin Master
Corp., Spin Master Ltd., and Swimways Corporation alleging
fraud and breach of contract against Swimways (Counts I and
II), and unjust enrichment against all Defendants (Count
III). See (Dkt. No. 19). In response, the Defendants
filed a Motion to Dismiss for lack of personal jurisdiction
and venue pursuant to Fed.R.Civ.P. 12(b)(2), (3).
See (Dkt. No. 26). For the following reasons the
Court grants the Defendants Motion. [26.]
center of this litigation are two Illinois residents - Matlin
and Waring - who invented two patents, and who founded a
company known as Gray Matter Holdings (now known as 180s
LLC). See (Dkt. No. 19, ¶¶ 7-8, 15, 18,
22). The Spin Master defendants are Canadian companies with
their principal places of business and incorporation in
Toronto, Ontario, while Swimways is incorporated in and has
its principal place of business in Virginia Beach, Virginia.
Id. ¶¶ 9-11.
1999, the Plaintiffs entered into a Withdrawal Agreement
(“Agreement”) with Gray Matter Holdings that
included forfeiture of their salaries and the sale of their
partnership shares in the company. Id. ¶¶
22-24. Another clause within the Agreement assigned some of
their intellectual property and patent rights for “Key
Products” to Gray Matter Holdings in exchange for the
retention of rights to royalties from any revenue generated
from the sale of the Key Products. Id. ¶ 25.
After agreeing to the Withdrawal Agreement, the Plaintiffs
routinely pursued Gray Matter Holdings in arbitration to
enforce unpaid royalties they agreed to receive in exchange
for leaving the company. Id. ¶¶ 29-30. In
2002, Gray Matter Holding filed an assignment of the Key
Products intellectual property rights with the United States
Patent and Trademark Office (“USPTO”) that
allegedly contained Waring's forged signature and without
either of the Plaintiffs' knowledge. Id. ¶
40-42. Then in 2003 Gray Matter Holdings entered into an
asset sale agreement with Swimways that included rights to
the Key Products patents originally held by the Plaintiffs.
Id. ¶ 33. Since the sale of the Key Products
and the related patents, Swimways has not paid the Plaintiffs
any royalties from sales involving the Key Products.
Id. ¶ 63.
in 2016 Spin Master acquired Swimways and the Key Product
intellectual property rights originally owned by the
Plaintiffs. Id. ¶¶ 64-66. The Plaintiffs
subsequently filed suit against Swimways and Spin Master
alleging three counts - fraud, breach of contract, and unjust
enrichment. Id. The pending motion by Defendants
seeks dismissal for lack of personal jurisdiction and venue.
See (Dkt. No. 26).
reviewing a motion to dismiss, the Court must accept
“all of the factual allegations contained in the
complaint.” Erikson v. Pardus, 551 U.S. 89, 94
(7th Cir. 2007). While a complaint need not allege facts that
establish personal jurisdiction, the plaintiff bears the
burden of establishing the existence of personal jurisdiction
where a defendant moves to dismiss a complaint pursuant to
Fed.R.Civ.P. 12(b)(2). Purdue Research Found. v.
Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir.
2003). In the absence of an evidentiary hearing, the
plaintiff need only make out a prima facie case of personal
jurisdiction. Hyatt Int'l Corp. v. Coco, 302
F.3d 707, 713 (7th Cir. 2002). In ruling on a motion to
dismiss for lack of personal jurisdiction a Court may
consider written materials submitted by the parties and
should resolve all factual disputes in the plaintiff's
favor. Nelson v. Park Indus., Inc., 717 F.2d 1120,
1123 (7th Cir. 1983).
the Due Process Clause of the Fourteenth Amendment limits
when courts in a particular state may exercise personal
jurisdiction over nonresident defendants. Asahi Metal
Indus. Co. v. Superior Court of California, 480 U.S.
102, 108 (1987), World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 291 (1980). In Illinois, personal
jurisdiction extends “to the limits allowed by the
United States Constitution, so the state and federal
standards are congruent [in Illinois].” Philos
Techs., Inc. v. Phils & D., Inc., 645 F.3d 851, 855
n.2 (7th Cir. 2011). Additionally, the Illinois long-arm
statute permits the exercise of personal jurisdiction over
defendants who commit a tortious act in Illinois. 735 ILCS 5
§§ 2-209(a)(2), (c).
the Court may dismiss an action based on improper venue. 28
U.S.C. § 1391(b); Fed.R.Civ.P. 12(b)(3). Where venue is
improper the court “shall dismiss, or if it be in the
interest of justice, transfer such a case to any district 
in which it could have been brought. 28 U.S.C. §1406(a).
no federal statute authorizes nationwide service of process,
personal jurisdiction is governed by the law of the forum
state.” Tamburo v. Dworkin, 601 F.3d 693, 700
(7th Cir. 2010) (citing Fed.R.Civ.P. 4(k)(1)(A)). As this
matter arises out of common law claims for breach of
contract, fraud, and unjust enrichment, there is no federal
statute that authorizes “nationwide service of
process” and so the Illinois long-arm statute applies.
See 735 ILCS 5 § 2-209. As such, personal
jurisdiction turns on whether the defendants have sufficient
“minimum contacts” with Illinois such that the
maintenance of the suit “does not offend traditional
notions of fair play and substantial justice.”
Tamburo, 601 F.3d at 700-01 (citing Int'l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945));
Nat'l Gun Victims Action Council v. Schecter, 68
N.E.3d 448, 453 (Ill. Ct. App. 2016). Personal jurisdiction
over a defendant is based upon the type of contact a party
has with the forum state and can be either general or
specific. See Nacionales de. Colubmia, S.A. v. Hall,
466 U.S. 408, 414 (1984). Here, the Court reviews for general
and specific personal jurisdiction because it is unclear in
their First Amended Complaint whether the Plaintiffs are
alleging general or specific jurisdiction, stating only that
“[t]his Court has personal jurisdiction over the
Defendants because each Defendant has substantial contacts
with this forum as a result of business conducted within the
state of Illinois and within this District and the fraud
alleged herein occurred in part in this district.”
See (Dkt. No. 19, at ¶ 13).