John J. Tharp, Jr., United States District Judge.
Plaintiff WAV, Inc., doing business as APRIZ, sued Walpole Island First Nation (WIFN), a native Canadian tribe, alleging that WIFN has failed to pay APRIZ under a contract for wireless internet services and equipment maintenance. WIFN moves to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. For the reasons set out below, the Court denies the motion.
Plaintiff APRIZ is an Illinois corporation with its principal place of business in Warrenville, Ill., and operates as a distributor in the wireless broadband market. Compl. ¶ 2-3. WIFN is a native Canadian tribe located on several islands in Ontario, Canada. Def.'s Mot. Dismiss 1.
Before entering into the 2012 contract that is the subject of this dispute, the parties first collaborated on the procurement and installation of a broadband wireless internet system on Walpole Island, Ontario. Following discussions in early 2010, WIFN entered an agreement with Advanced Technology Group LLC (ATG), a business consulting service, for assistance in procuring the wireless system that WIFN would own. Kewayosh Decl. ¶ 3-5. Edward Hudson of ATG introduced WIFN to APRIZ as a potential source for providing the necessary bandwith for the system that ATG had proposed to WIFN. Id. ¶ 6. In 2010, Allen Deleary, WIFN's Director of Operations at the time, and Hudson contacted APRIZ about providing equipment for the planned wireless network on Walpole Island.
The parties conducted negotiations mainly by telephone and email, Id. ¶ 15, and APRIZ does not allege that any WIFN representative ever physically entered Illinois. Service installation on Walpole Island presented some "unique challenges" because of the island's physical characteristics, Linnartz Decl. ¶ 11, and APRIZ prepared a proposal for setting up the network at WIFN's request. Id. ¶ 17. This work, evidently, was done without a written contract between WIFN and APRIZ (neither party mentions one, in any event). Ultimately, APRIZ entered into a contract on or about February 18, 2011, with Carousel Industries, which leased most of the equipment for the wireless network project to WIFN, for equipment delivery and installation on the island. Linnartz Decl. ¶ 20.
After APRIZ completed the initial installation of the wireless network, WIFN approached it in August 2011 regarding its interest in improving the network's connectivity. Id. ¶ 21-22. "Heavy" negotiations followed, and APRIZ agreed to nearly-wholesale prices based on the hope of "performing similar work for other First Nation bands in the future." Id. ¶ 24. The parties entered into the Wireless Internet Backhaul Agreement (Agreement) at issue in this litigation in April 2012. Id. ¶ 25. Deleary signed the agreement on WIFN's behalf, Kewayosh Decl. ¶ 7, and APRIZ Director of Services George Linnartz signed it in Illinois the next day. Linnartz Decl. ¶ 25. In exchange for monthly service fees plus late fees, APRIZ was required to provide a service connection and to maintain related equipment. The Agreement was to be in effect for five years, followed by an automatic one-year renewal unless either party terminated it. The Agreement contains an Illinois choice-of-law provision, but no forum selection clause.
APRIZ and WIFN engaged in eighty-three phone calls from about July 2011 through October 2012, and twenty-eight of those were from Canada to Illinois — i.e., from WIFN to APRIZ. Linnartz Decl. ¶ 28. Linnartz's cell phone records indicate another 135 calls with Ontario phone numbers from March 23, 2011 through May 23, 2012, and most of these calls were with WIFN representatives. Id. ¶ 29. These calls are a fraction of the total calls between the parties, as APRIZ's phone records date back only three years. Id. ¶ 30. APRIZ representatives traveled to Walpole Island at WIFN's request at least ten times between October 2011 and June 2012. Id. ¶ 31-32. In connection both with the initial project and the Agreement, APRIZ performed work in its Illinois offices including "(1) reviewing and analyzing the information provided by WIFN regarding Walpole Island's topography, infrastructure, and technological capabilities; (2) preparing all proposals for the work performed; (3) ordering equipment needed for the projects; and (4) generating reports on the projects." Linnartz Decl. ¶ 35.
According to Burton Kewayosh, Chief of WIFN, ATG was not able to produce a functioning wireless internet program, and the project was considered a failure. Kewayosh Decl. ¶ 8. This lawsuit ensued.
WIFN argues that the Court lacks personal jurisdiction because the Agreement contained an Illinois choice-of-law provision but did not stipulate to Illinois jurisdiction; the parties agreed that performance of the Agreement would occur, and did partly occur, in Ontario and nowhere else; the Agreement was negotiated by the parties in Ontario and nowhere else;
After a defendant moves to dismiss a complaint for lack of personal jurisdiction under Rule 12(b)(2), the plaintiff bears the burden of showing that such jurisdiction exists. Purdue Research Found. v. Sanofi-Synthelabo, 338 F.3d 773, 782 (7th Cir.2003). To defeat a motion to dismiss without an evidentiary hearing, the plaintiff must only establish "a prima facie case of personal jurisdiction." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.2002). The Court must accept all well-pleaded facts in the complaint as true, and resolve any factual disputes in the declarations in the plaintiff's favor. Felland v. Clifton, 682 F.3d 665, 672 (7th Cir.2012). While the parties in this case disagree over how to characterize certain aspects of their relationship, there are no meaningful factual contradictions between the parties' affidavits.
A federal court sitting in diversity has personal jurisdiction if a state court in that forum state would have personal jurisdiction. Citadel Grp. Ltd. v. Washington Regional Medical Center, 536 F.3d 757, 760 (7th Cir.2008). APRIZ asserts in its complaint that this Court can exercise specific personal jurisdiction over WIFN pursuant to 735 ILCS 5/2-209(a)(7), the section of the Illinois long-arm statute applicable to causes of action arising from "[t]he making or performance of any contract or promise substantially connected with this state." The long-arm statute also contains a "catch-all" provision which "permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United States Constitutions." Hyatt Int'l Corp., 302 F.3d at 714 (internal quotation marks omitted) (citing 735 ILCS 5/2-209(c)).
The Illinois long-arm statute is "coextensive with the due process requirements of the Illinois and United States Constitutions," and so the analysis focuses on the single issue of whether exercising personal jurisdiction satisfies constitutional due process. Graver v. Pinecrest Volunteer Fire Dept., 6 N.E.3d 251, 257, 379 Ill.Dec. 174 (Ill.App.Ct.2014). To exercise specific personal jurisdiction,
The requirements for establishing specific personal jurisdiction are: "(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, 682 F.3d at 673 (internal citations omitted). Although WIFN's contacts with Illinois were not extensive, they suffice to meet these minimum standards.
WIFN correctly points out flaws in some of APRIZ's arguments for exercising personal jurisdiction. For example, APRIZ argues that the Agreement was "largely negotiated and performed in Illinois."
On the whole, however, APRIZ has the better arguments. First, WIFN initiated the relationship here. In a personal jurisdiction analysis, "[o]ne relevant inquiry is which party initiated the business transaction." Heritage House Restaurants, Inc. v. Continental Funding Grp., Inc., 906 F.2d 276, 283 (7th Cir.1990) (citing Madison Consulting Grp. v. South Carolina, 752 F.2d 1193, 1202 (7th Cir.1985)). Although in this circumstance WIFN was seeking to purchase services rather than to provide them, the fact remains that WIFN
The phone, email, and in-person contacts between the parties over the course of two years also support personal jurisdiction, despite WIFN's argument that many of those contacts involved WIFN's complaints about the system's performance. While the parties' relationship here was not necessarily "naturally based" on phone and mail contacts, as in Heritage House,
APRIZ also argues that WIFN is an "active purchaser" subject to personal jurisdiction because it solicited APRIZ's services and aggressively negotiated to buy customized products and services. Illinois law distinguishes between "active" purchasers, who are deemed to have submitted to jurisdiction in the seller's forum, and "passive" purchasers, who have not: "[a] `passive purchaser' is one who places orders at the seller's price, and an `active purchaser' is one who takes a more aggressive intrusive role in purchasing by going to inspect the seller's production facilities or vigorously negotiating contract terms." Belle-Aire Fragrances, Inc. v. Odorite Int'l, Inc., 898 F.Supp. 621, 624 (N.D.Ill.1995) (citing G.M. Signs, Inc. v. Kirn Signs, Inc., 231 Ill.App.3d 339, 343, 172 Ill.Dec. 933, 596 N.E.2d 212, 215 (2d
WIFN's participation in heavy negotiations for the provision of services specifically tailored for Walpole Island make it an active purchaser. Although WIFN correctly argues that courts have typically applied this distinction in the context of products, as opposed to services, and have also found active purchaser conduct to be more common in transactions "between major business organizations than in transactions in which a consumer or even a small shopkeeper is the purchaser," Chalek v. Klein, 193 Ill.App.3d 767, 773, 140 Ill.Dec. 760, 550 N.E.2d 645, 649 (2d Dist. 1990), the underlying rationale applies in this case, too. WIFN is not akin an "ordinary mail order purchaser" who made a one-off decision to buy the seller's stated terms; instead, it engaged in extensive negotiations for a customized service provided by an Illinois company, one with whom litigation was foreseeable.
The Agreement's Illinois choice-of-law provision also supports personal jurisdiction. Such a clause can support jurisdiction where other contacts with the forum state are present because it tends to show that a party purposefully availed itself of that state's laws. Burger King, 471 U.S. at 482, 105 S.Ct. 2174. Although the Agreement is a form contract drafted by APRIZ, WIFN's active negotiation of other contractual terms suggests that it was able to negotiate with respect to this provision as well, but did not, or did not do so successfully.
There is also no doubt that APRIZ's breach of contract claim "arises out of" WIFN's contacts with Illinois. WIFN's alleged refusal to perform the obligations of a contract it negotiated and entered with APRIZ, an Illinois company, gives rise to the claim. WIFN initiated its relationship with APRIZ in the first instance and in negotiations regarding the Agreement at issue, and the parties' contacts regarding the earlier project are part of their ongoing relationship.
Finally, exercising personal jurisdiction here also comports with notions of fair play and substantial justice. Factors in this analysis may include "the burden on the defendant, the forum state's interest in adjudicating the dispute, the plaintiff's interest
In cases where the defendant is an international citizen, courts weighing the interest of the "several states" in the advancement of policies and efficient judicial resolution should consider "the procedural and substantive policies of other nations whose interests are affected by the assertion of jurisdiction" by a court in the forum state. Asahi Metal Indust. Co. v. Superior Court of Cal., Solano Cnty., 480 U.S. 102, 115, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (emphasis in original). Those interests are best addressed by considering the reasonableness of jurisdiction and "an unwillingness to find the serious burdens on an alien defendant outweighed by minimal interests on the part of the plaintiff or the forum state." Id. WIFN has not argued that there is a "serious burden" in litigating in Illinois, nor has it argued that the procedural or substantive polices of Canada or its own sovereign law are at risk; on the other hand, the plaintiff's interests in litigating in its home country — let alone its home state — are not "minimal."
Taken together, WIFN's actions in initiating a relationship with APRIZ, maintaining continual communications over two years that were necessary to the ongoing services WIFN sought from APRIZ, performing an active role in the transaction, committing to a long-term business relationship with APRIZ through a five-year contract, and agreeing to an Illinois choice-of-law clause in a contract formed in Illinois made it foreseeable that WIFN could be haled into court in Illinois. The breach of contract claim arises out of WIFN's contacts in Illinois, and exercising personal jurisdiction also comports with notions of fair play and substantial justice. Therefore, the motion to dismiss is denied.