Opinion
Case No. 17–cv–3609
2017-12-14
HARLEM AMBASSADORS PRODUCTIONS, INC. Plaintiff, v. ULTD ENTERTAINMENT LLC d/b/a Flight Basketball, et al., Defendants.
Mariangela M. Seale, Riley Safer Holmes & Cancila LLP, Chicago, IL, for Plaintiff. Jeffrey Michael Cisowski, The Collins Law Firm, Robert L. Dawidiuk, Collins Law Firm P.C., Naperville, IL, for Defendant.
Mariangela M. Seale, Riley Safer Holmes & Cancila LLP, Chicago, IL, for Plaintiff.
Jeffrey Michael Cisowski, The Collins Law Firm, Robert L. Dawidiuk, Collins Law Firm P.C., Naperville, IL, for Defendant.
Order
Elaine E. Bucklo, United States District Judge
In this diversity suit, plaintiff Harlem Ambassadors Productions, Inc., ("Harlem Productions") sues defendants ULTD Entertainment LLC d/b/a Flight Basketball ("Flight Basketball"), Brittany Dorsey, Tim Fjestad, and Doron Lowe, alleging claims for breach of contract, tortious interference with business relations, misappropriation of trade secrets, defamation, and conspiracy. Before me are three separate motions to dismiss for lack of personal jurisdiction, two of which also include motions to dismiss for improper venue, or, in the alternative, to transfer venue. For the reasons set forth below, I grant defendant Fjestad and defendant Flight Basketball's motions to dismiss for lack of personal jurisdiction and deny the other motions. I.
According to the complaint, plaintiff Harlem Productions is an Illinois corporation that stages basketball performances for audiences throughout the United States. Defendant Fjestad is a resident of Colorado who used to work for Harlem Productions as a sales representative and later a sales manager in the company's Colorado office until his resignation in January 2017. Defendant Dorsey is a Michigan resident and former performer and coach for Harlem Productions. Defendant Lowe is a California resident who, in 2016, engaged in discussions with Harlem Productions president Dale Moss about potentially purchasing Harlem Productions. Defendant Flight Basketball is a California corporation with its principal place of business in Los Angeles. Founded in 2017, Flight Basketball, like Harlem Productions, hosts basketball performances for various audiences.
Harlem Productions alleges that in April 2016 it began discussions with defendant Lowe about a potential purchase of the business. In May, Lowe and Harlem Productions signed a confidentiality agreement, and Harlem Productions allegedly shared certain business information with Lowe in connection with that agreement. The business discussions terminated in December 2016 without any purchase of Harlem Productions.
Harlem Productions alleges that Lowe used the confidential information he acquired to start a new competitor company, Flight Basketball, in January 2017 with the help of Dorsey and Fjestad. It further alleges that Lowe worked with Dorsey and Fjestad to take Harlem Productions' business, and that Dorsey and Fjestad reached out to Harlem Productions' customers to tell them that Harlem Productions was going out of business and to encourage them to book with Flight Basketball instead. According to Harlem Productions, this conduct violated Dorsey's performer agreement and Lowe's confidentiality agreement. It also constituted tortious interference and defamation by Dorsey, Fjestad, and Flight Basketball, misappropriation of trade secrets by Fjestad, and civil conspiracy by all four defendants, Harlem Productions alleges. Each defendant now moves to dismiss on jurisdictional or venue grounds, or both.
II.
A. Personal Jurisdiction
Although a complaint does not need to include facts alleging personal jurisdiction, once a defendant moves to dismiss for lack of personal jurisdiction under Rule 12(b)(2), "the plaintiff 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 issue is raised by a motion to dismiss and decided on the basis of written materials rather than an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts." Tamburo v. Dworkin , 601 F.3d 693, 700 (7th Cir. 2010). I therefore "take as true all well-pleaded facts alleged in the complaint and resolve any factual disputes in the affidavits in favor of the plaintiff." Id.
A federal court sitting in diversity may exercise personal jurisdiction over an out-of-state defendant to the extent that a court of the state in which it sits could exercise such jurisdiction. Philos Techs., Inc. v. Philos & D, Inc. , 645 F.3d 851, 855 n.2 (7th Cir. 2011). To determine whether an Illinois court could exercise jurisdiction, I look to the applicable state statute and the federal Constitution. Tamburo , 601 F.3d at 700. Because the Illinois long-arm statute permits the exercise of jurisdiction to the limits set by the Fourteenth Amendment's Due Process Clause, "the state statutory and federal constitutional inquiries merge." Id. (citing 735 ILCS § 5/2–209(c) ); see also Noboa v. Barceló Corporación Empresarial, SA , 812 F.3d 571, 572 (7th Cir. 2016).
The Illinois jurisdictional statute reads: "A court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." 735 ILCS § 5/2–209(c). Although the statute refers to both the Illinois and U.S. Constitutions, the Seventh Circuit has repeatedly noted that there is "no operative difference" between the state and federal constitutional limits on personal jurisdiction. Mobile Anesthesiologists Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A. , 623 F.3d 440, 443 (7th Cir. 2010).
The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over an out-of-state defendant where "the defendant has certain minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice," Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 754, 187 L.Ed.2d 624 (2014) (internal quotation marks omitted), or where the defendant has waived objections to personal jurisdiction and venue by signing a forum selection clause. See IFC Credit Corp. v. Aliano Bros. Gen. Contractors , 437 F.3d 606, 610 (7th Cir. 2006). "It is unconstitutional to force a defendant to appear in a distant court unless it has done something that should make it ‘reasonably anticipate being haled into court there.’ " Mobile Anesthesiologists Chicago, LLC v. Anesthesia Assocs. of Houston Metroplex, P.A. , 623 F.3d 440, 444 (7th Cir. 2010) (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ).
"Personal jurisdiction can be general or specific, depending on the extent of [each] defendant's contacts." Mobile Anesthesiologists , 623 F.3d at 444. Because plaintiff Harlem Productions does not assert that any of the defendants here are subject to general jurisdiction in Illinois, it must demonstrate that specific jurisdiction exists. For a court to exercise specific jurisdiction over a matter, "three essential requirements" must be met:
(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 v. Clifton , 682 F.3d 665, 673 (7th Cir. 2012) (internal citations omitted). The defendant's purposeful contacts with the forum state—not just persons who reside there—are the focus of the inquiry. Walden v. Fiore , ––– U.S. ––––, 134 S. Ct. 1115, 1122, 188 L.Ed.2d 12 (2014). "Only intentional contacts by the defendant with the forum jurisdiction can support specific jurisdiction." Noboa , 812 F.3d at 572 ; see also Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc. , 751 F.3d 796, 801 (7th Cir. 2014) ("[T]he relation between the defendant and the forum must arise out of contacts that the defendant himself creates with the forum." (internal quotation marks omitted)).
1. Dorsey
Defendant Dorsey argues that she is not subject to this court's jurisdiction because she has not conducted business in Illinois, she has not purposefully directed her activities toward Illinois, and she did not sign the contract that she allegedly breached in Illinois. It does appear that Dorsey's alleged interactions with Illinois are limited—she signed a performer agreement with an Illinois business, allegedly committed torts against that business, and once attended a training camp in the state. But Dorsey ignores one crucial detail: the performer agreement that Dorsey is accused of breaching, and whose validity she does not contest, contains a forum selection clause, requiring that "[a]ll legal proceedings arising out of or relating in any manner to this Agreement must be brought in Illinois." Compl., Exh A., ¶ 24 [ECF No. 5–1 at 5]. Because the parties agreed to bring any disputes "in any manner" relating to Dorsey's performer agreement in Illinois, Dorsey has clearly given her consent to jurisdiction here for the matters at issue in this suit. See Abbott Labs. v. Takeda Pharm. Co. , 476 F.3d 421, 423 (7th Cir. 2007) (recognizing that, under both Illinois and federal law, "the parties' contractual choice of forum should be overridden only if that choice would impose significant costs on third parties or on the judicial system"); Aliano Bros. , 437 F.3d at 610. Even if Dorsey were to prevail on her other arguments, jurisdiction in this court would still be proper due to the forum selection clause. Dorsey's motion to dismiss for lack of personal jurisdiction is therefore denied. She does not bring any other motions.
In a declaration filed with the court, Dorsey states that the performer agreement was for the 2015–16 season, and that she did not sign a contract for the 2016–17 season, apparently to suggest that the performer agreement did not control at the time of her alleged breach. However, Dorsey ignores the email correspondence also attached to the complaint (Exhibit B) allegedly extending the contract to the 2016–17 season. She also ignores the language extending the non-compete clause two years beyond the term of the agreement. In any event, this inquiry gets into the substance of the breach-of-contract claim when the question here is only whether Dorsey has consented to jurisdiction in Illinois. Because she does not contest the validity of the forum selection clause, the answer is that she clearly has consented to jurisdiction here.
Again, the claims against Dorsey are that she breached her performer contract (Count VI) by her involvement with Harlem Productions' competitors, Compl. ¶ 73, and that she committed tortious interference (Count I), defamation (Count V), and civil conspiracy (Count VI) for the same or related conduct. These claims certainly in some manner arise out of or relate to the performer agreement, thus the clause embraces Harlem Productions' suit. See Abbott Labs. , 476 F.3d at 423.
2. Fjestad
Defendant Fjestad contends that personal jurisdiction may not be exercised over him in Illinois because his only interactions with this forum are unrelated to this suit. According to his affidavit, Fjestad, at all relevant times, lived and worked in Colorado and only interacted with Illinois when he sent payroll and financial information to plaintiff's Illinois office and when he once, in 2013, drove plaintiff's tour bus to Illinois. Fjestad Aff. ¶¶ 4, 9–10 [ECF No. 16–1 at 1–2]. Harlem Productions counters that Fjestad breached a verbal confidentiality agreement he had with Harlem Productions, causing harm to the Illinois corporation, and that Fjestad specifically targeted Harlem Productions' Illinois customers to interfere with and defame Harlem Productions' business. In support, Harlem Productions offers the declaration of its president and founder Dale Moss, who states that he "personally spoke[ ] to a Harlem Ambassadors client that is based in Illinois who advised [him] that she ha[d] been contacted by Flight Basketball and specifically Tim Fjestad." Moss Decl. ¶ 11.
I agree with defendant Fjestad that this is not enough to meet plaintiff's burden to demonstrate that personal jurisdiction exists. As Fjestad argues, the only part of the Moss declaration linking Fjestad to Illinois involves a hearsay statement that would not be admissible at trial. See Fed. R. Evid. 802. Moss declares only that an unidentified Illinois customer at an unspecified time told him that Fjestad contacted her. Moss Decl. ¶ 11. Because this statement is not competent evidence, and because plaintiff does not offer any other evidence of defendant Fjestad purposefully directing his suit-related conduct at the state of Illinois, plaintiff has not met its burden of making a prima facie showing of jurisdictional facts. See Tamburo , 601 F.3d at 700 ; Walden , 134 S.Ct. at 1122.
3. Flight Basketball
Plaintiff has similarly failed to meet its burden with respect to defendant Flight Basketball. Flight Basketball argues that it has not purposefully directed its activities at Illinois because, since forming in January 2017, it has not booked a single event in Illinois, nor does it have any pending contracts, offers, or inquiries in the state. See Lowe Decl. ¶¶ 7–11. In response, plaintiff offers only the single hearsay statement discussed above. See Moss Decl. ¶ 11 ("I have personally spoken to a Harlem Ambassadors client that is based in Illinois who advised me that she has been contacted by Flight Basketball and specifically Tim Fjestad."). This statement is not enough to satisfy plaintiff's burden of making a prima facie showing that Flight Basketball deliberately directed its activities at the state of Illinois. See Tamburo , 601 F.3d at 700 ; Walden , 134 S.Ct. at 1122.
4. Lowe
With respect to defendant Lowe, however, plaintiff has met his prima facie burden. Plaintiff asserts two causes of action against Lowe–one for breach of the confidentiality agreement between the parties and another for civil conspiracy. Lowe contends that jurisdiction is not proper in this court because he never purposefully availed himself of the privilege of doing business in Illinois or purposefully directed his activities toward Illinois. According to Lowe, his suit-related conduct, like signing the confidentiality agreement with Harlem Productions and receiving Harlem Productions' confidential information, occurred while Lowe was in California. Lowe 1st Decl. ¶¶ 16–17. He argues that neither his business communications with plaintiff, nor his travel to Illinois, which he says was "for personal reasons," are enough to establish minimum contacts with this forum. Id. ¶¶ 14, 19–20, 22.
If these were the only facts offered in support of jurisdiction, Lowe might be entitled to dismissal. The Moss declaration, however, provides additional jurisdictional facts linking Lowe's suit-related conduct to Illinois. In his declaration, Moss states that Lowe approached him about purchasing Harlem Productions in or around April 2016. Moss Decl. ¶ 5. Moss further avers that Lowe contacted him about meeting in Illinois to discuss the sale of the company. Id. ¶ 8. He asserts that the two met in Skokie, Illinois, where they discussed the possible purchase, and where Moss shared confidential information regarding Harlem Productions. Id. ¶ 9. According to Moss, he and Lowe also met with another business consultant in Park Ridge, Illinois, that same day, and Moss and Lowe met in Illinois again the following month to discuss Harlem Productions and related confidential information and to travel to Indiana together to watch a performance. Id. ¶ 10. Lowe does not dispute that these meetings in Illinois occurred, but he does dispute the degree to which confidential information was discussed in Illinois.
Lowe disputes this and instead asserts that it was Moss who made the first contact about purchasing Harlem Productions. Lowe 2d Decl. ¶ 7. In support, he offers a screenshot of a text message Moss allegedly sent to him about discussing the business. Id. At this stage in the proceedings, however, I resolve "any factual disputes in the affidavits in favor of the plaintiff." Tamburo , 601 F.3d at 700. Because defendant's evidence does not conclusively establish that Moss approached Lowe first, I resolve this factual dispute in plaintiff's favor for present purposes.
Taking plaintiff's well-pleaded allegations as true and resolving factual disputes in the affidavits in plaintiff's favor, see Tamburo , 601 F.3d at 700, I find that Lowe's contacts with Illinois are sufficient to support the exercise of specific personal jurisdiction. By reaching out to Harlem Productions, an Illinois corporation, to discuss a possible purchase of the business, by entering into a confidentiality agreement with that business, and by arranging and attending meetings related to that agreement in Illinois with the owner of the business, defendant Lowe purposefully availed himself of the benefits of doing business in Illinois and could have foreseen being haled into court here. See Olson v. Jenkens & Gilchrist , 461 F.Supp.2d 710, 724 (N.D. Ill. 2006) (exercising personal jurisdiction over a defendant who only physically visited Illinois once in connection with the disputed transaction but who also communicated repeatedly with an Illinois defendant about the transaction); U.S. Gypsum Co. v. All Tank Sales & Supply Co. , 977 F.Supp. 1340, 1343 (N.D. Ill. 1997) (determining that a "visit to Illinois during the course of performance [of a contract] is a significant contact with the state"). Plaintiff's alleged injury—the harm caused by the use and disclosure of plaintiff's confidential information in breach of the agreement—arises, at least in part, from Lowe's activities in Illinois. Unlike the nonresident defendant in Baker Dental Corp. v. Aurex Dental Inc. , whose single business trip to Illinois more than a decade prior to the lawsuit did not involve the "particular conduct underlying the [plaintiff's] claims," Lowe's business meetings with Moss in Illinois concerned the very information he is now allegedly using and disclosing in violation of the confidentiality agreement. See No. 13 CV 8181, 2014 WL 4414520, at *4 (N.D. Ill. Sept. 5, 2014) (internal quotations marks omitted). The exercise of jurisdiction over Lowe does not offend traditional notions of fair play and substantial justice. Accordingly, Lowe's motion to dismiss for lack of personal jurisdiction is denied.
B. Venue as to defendant Lowe
Defendant Lowe also seeks dismissal or transfer for improper venue pursuant to Rule 12(b)(3) and 28 U.S.C. § 1406(a). Once venue is challenged, it is the plaintiff's burden to establish that venue is proper in the district in which he or she filed. Judge v. Unigroup, Inc. , No. 16 CV 6884, 2017 WL 345561, at *1 (N.D. Ill. Jan. 24, 2017) ; Hanyuan Dong v. Garcia , 553 F.Supp.2d 962, 964 (N.D. Ill. 2008). When considering a motion to dismiss for improper venue, I take "all the allegations in the complaint as true and draw[ ] all reasonable inferences in favor of the plaintiff." Genocide Victims of Krajina v. L–3 Servs., Inc. , 804 F.Supp.2d 814, 819 (N.D. Ill. 2011).
The federal venue statute provides that a civil action may be brought in either:
(1) a judicial district in which any defendant resides, if all defendants are residents of the State in which the district is located; (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) if there is no district in which
an action may otherwise be brought as provided in this section, any judicial district in which any defendant is subject to the court's personal jurisdiction with respect to such action.
Plaintiff alleges that venue is proper in the Northern District of Illinois because a substantial part of the events occurred here. Section 1391(b)(2)"does not require the court to determine the best venue for an action." ForteCEO Servs., Inc. v. Terra Contracting, LLC , No. 11 C 5179, 2012 WL 2597888, at *3 (N.D. Ill. July 3, 2012). "Venue may be proper in more than one district, and the fact that a substantial part of the events also may have occurred elsewhere does not prevent venue from being proper" in this district. NDX Advisors, Inc. v. Advisory Fin. Consultants, Inc. , No. 11 C 517, 2011 WL 2200623, at *2 (N.D. Ill. June 6, 2011).
Lowe argues that venue is not proper in the Northern District of Illinois because the alleged breach of the confidentiality agreement occurred in California, where Lowe created Flight Basketball. While venue might indeed exist in a California judicial district, this does not mean that venue is improper here. As discussed above, Lowe initiated and attended meetings with plaintiff's representative Moss here in the Northern District of Illinois, where, plaintiff alleges, they discussed confidential information covered by the relevant agreement and at the center of the alleged breach. These events, which gave rise to plaintiff's contract and conspiracy claims, are sufficient to make venue proper in this district.
Because I conclude that venue is proper in this district, I also deny Lowe's alternative motion to transfer for improper venue pursuant to 28 U.S.C. § 1406(a).
III.
For the foregoing reasons, defendant Dorsey's motion to dismiss for lack of personal jurisdiction is denied, defendant Fjestad's motion to dismiss for lack of personal jurisdiction is granted, and defendants Lowe and Flight Basketball's joint motion to dismiss for lack of jurisdiction and improper venue is granted as to Flight Basketball and denied as to Lowe. Defendants Fjestad and Flight Basketball are dismissed from this case, but the other defendants will remain.