RUDOLPH T. RANDA, District Judge.
In this action, Plaintiffs Bestway USA and Bestway Inflatables & Materials Corp. (collectively "Bestway") claim that Defendants Shanghai Jilong Plastics Products Co., Ltd. ("Jilong"), Fun-Zone Inflatables Experts North America ("FunZone"), and Zhengren Zhu ("Zhu"), have engaged in unfair competition in violation of the Lanham Act, 15 U.S.C. § 1051 et seq. and Wisconsin common law, and have misappropriated Bestway's style of doing business in violation of Wisconsin common law. (Compl. 1.) (ECF No. 1.) This Decision and Order addresses Zhu's motion to dismiss the claims against him for lack of personal jurisdiction. (Mot. Dismiss.) (ECF No. 10.) Zhu is alleged to be an executive officer of Jilong and to be responsible for directing the actions of Jilong and FunZone. (Compl. ¶ 7.) Zhu avers that "[he] do[es] not directly participate in, authorize, or direct the design, manufacture, sale, marketing, or distribution of Jilong's products or the preparation or distribution of Jilong's marketing and informational materials and [has] never had any contact with Jilong's customers in the United States." (Zhu Decl. ¶ 3.) (ECF No. 12.)
Because Zhu has moved to dismiss for lack of personal jurisdiction, Bestway has the burden of demonstrating a prima facie case of personal jurisdiction. See Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782-83 (7th Cir. 2003). This Court has jurisdiction over the claim if the Wisconsin state courts would have jurisdiction over the claim. See Jennings v. AC Hydraulic A/S, 383 F.3d 546, 548 (7th Cir. 2004). Thus, a determination of personal jurisdiction begins with Wisconsin's long-arm statute, Wis. Stat. § 801.05, which is to be liberally construed in favor of jurisdiction. Seebach v. Beetling Design Corp., No. 13-C-1201, 2014 WL 4365090, at *2 (E.D. Wis. Aug. 29, 2014). The Court must then ensure that personal jurisdiction comports with due process under the Fourteenth Amendment. Jennings, 383 F.3d at 549. Bestway contends that personal jurisdiction is proper under Wis. Stat. §§ 801.05(1)(d) and 801.05(4)(b) and that due process is satisfied because Zhu has minimum contacts with Wisconsin. (Pl.'s Opp'n Mot. Dismiss 2.) (ECF No. 15.)
Under Wis. Stat. § 801.05(1)(d), personal jurisdiction is proper when the defendant "engaged in substantial and not isolated activities within this state, whether such activities are wholly interstate, intrastate, or otherwise." There is no indication that Zhu came to the United States or Wisconsin for business purposes. Since Zhu did not have substantial activities within this state, personal jurisdiction is not proper under § 801.05(1)(d).
Under Wis. Stat. § 801.05(4)(b), personal jurisdiction is proper when the defendant's products "[are] used or consumed within this state in the ordinary course of trade." Jilong owns real estate, production facilities, fixtures, and equipment in China, and has approximately 1,300 employees there. (Zhu Decl. ¶ 4.) While Jilong may have made contact and sold products in Wisconsin, "personal jurisdiction must be measured by the officer or employee's own actions, taken either personally or on behalf of the corporation." Heritage Christian Sch., Inc. v. ING N. Am. Ins. Corp., No. 11-C-1067, 2012 WL 1079440, at *3 (E.D. Wis. Mar. 30, 2012). Zhu does not directly participate in, authorize, or direct the design, manufacture, sale, marketing, or distribution of Jilong's products. Absent facts indicating that Zhu's personal actions created any products to be used or consumed within Wisconsin, personal jurisdiction is not proper under Wis. Stat. § 801.05(4)(b).
The Court could end its analysis here, but further notes that personal jurisdiction over Zhu would not comport with due process as required by the Fourteenth Amendment. Personal jurisdiction can be general or specific. However, because Bestway does not assert there is general jurisdiction over Zhu, only specific jurisdiction remains at issue For specific jurisdiction to exist, "the defendant must have minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Kinslow v. Pullara, 538 F.3d 687, 691 (7th Cir. 2008) (citations omitted). Another important consideration of specific jurisdiction is whether "the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958).
Bestway asserts that because Jilong acknowledged this Court has personal jurisdiction over it, personal jurisdiction over Zhu is also proper. (Pl.'s Opp'n Mot. Dismiss 5.) Zhu cites Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir. 1985) which states, "the general rule is that jurisdiction over an individual cannot be predicated upon jurisdiction over a corporation," and that an exception to the general rule arises when the corporation is the alter ego of the individual.
Stuart is referring to the fiduciary shield doctrine. Many courts, including Wisconsin's, have not adopted the doctrine. See Heritage Christian Sch., Inc., 2012 WL 1079440, at *3 (citing Druschel v. Cloeren, 295 Wis.2d 858, 868 (Wis. Ct. App. 2006); Hardin Roller Corp. v. Universal Printing Mach., Inc., 236 F.3d 839, 842 (7th Cir. 2001)). Still, "the contacts of the corporation do not automatically count as contacts of the officer or employee," id., and no facts have been presented regarding business contacts by Zhu.
To demonstrate that this Court has specific jurisdiction over Zhu, Bestway analogizes to Leong v. SAP Am., 901 F.Supp.2d 1058 (N.D. Ill. 2012). (Id. at 5, 6.) In Leong, a gender discrimination action, the Illinois district court held there was personal jurisdiction over the defendant, the former chief human resources officer of a defendant company who resided in Germany, because the defendant had discretion over her actions and knew they would affect an Illinois resident. 901 F. Supp. 2d at 1063-64. Bestway analogizes to Leong by providing a declaration from Jack Zhang ("Zhang") speculating as to Zhu's "likely" job responsibilities. (Zhang Decl. ¶ 3.) (ECF No. 16.) Zhang also asserts that Zhu had discretion over his actions and knew that his actions would affect Wisconsin residents. (Pl.'s Opp'n Mot. Dismiss 5-7.)
Unlike the plaintiff in Leong, the plaintiffs here are not residents of the forum state; and unlike the defendant in Leong, Zhu has never set foot in the forum state and no facts have been proffered indicating that Zhu took any actions that would affect Wisconsin residents. (Zhu Decl. ¶¶ 2, 7, 8.) Neither the Companies Law of the People's Republic of China (ECF No. 20-1) nor Zhang's declaration refute Zhu's averment that "[he] do[es] not directly participate in, authorize, or direct the design, manufacture, sale, marketing, or distribution of Jilong's products or the preparation or distribution of Jilong's marketing and informational materials and [has] never had any contact with Jilong's customers in the United States." (Zhu Decl. ¶ 3.) Thus, Zhu lacks minimum contacts with Wisconsin and has not availed himself so as to invoke the benefits and protections of Wisconsin's laws.
Bestway's request for an evidentiary hearing and jurisdictional discovery is denied because it fails to make a prima facie showing of personal jurisdiction, and "[f]oreign nationals usually should not be subjected to extensive discovery in order to determine whether personal jurisdiction over them exists." Central States, S.E. and S.W. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000). Based on the foregoing, Zhu's motion is granted and Zhu is dismissed from this action.
Furthermore, pursuant to Federal Rule of Civil Procedure 16(b), telephonic scheduling conference is scheduled for January 21, 2015 at 11:00 a.m. (Central Time). Counsel are expected to be available at that time. The Court will initiate the call.
The purpose of the conference call is to establish a scheduling order which will limit the time:
1. to join other parties and to amend the pleadings;
2. to file motions; and
3. to complete discovery; The scheduling order may also:
4. modify the timing for disclosure under Rules 26(a) and 26(e)(1) and of the extent of discovery to be permitted;
5. provide for the disclosure or discovery of electronically stored information;
6. include any agreements the parties reach for asserting claims of privilege or protection as trial preparation material after information is produced;
7. include the date or dates for conferences before trial, a final pretrial conference, and trial; and
8. address any other matters appropriate in the circumstances of the case.
The time limitations set forth in the scheduling order may only be modified for good cause and with the Court's consent. Fed. R. Civ. P. 16(b)(4).
The parties should be prepared to discuss the matters listed in Civil Local Rule 16(a)(1). (See Attach. A.) Special attention should also be given to Rule 26(f)(1), which requires the parties to conduct a settlement/discovery conference at least 21 days prior to the initial scheduling conference described above. The Rule 26(f) conference may be conducted by telephone. Rules 26(f)(2) and (3) mandate that the parties, within 14 days of their conference: (1) file a written report outlining the proposed discovery plan they have developed at their Rule 26(f) conference; and (2) make the required initial disclosures under Rule 26(a) regarding witnesses and documents. In addition to the matters specified in Rules 26(f)(2) and (3), the Court requests that the proposed discovery plan submitted by the parties include one or two sentences stating the nature of the case.
The written report must include the telephone numbers where the parties can be reached for this call.
In addition, the Court is participating in the Seventh Circuit Electronic Discovery Pilot Program and has adopted the Principles Relating to the Discovery of Electronically Stored Information. Counsel should be fully prepared to discuss methods and techniques to accomplish cooperative fact-finding in their case at the initial status conference. Before the initial status conference, counsel must also meet and discuss the Principles Relating to the Discovery of Electronically Stored Information. At the initial status conference, counsel must be prepared to discuss what agreements they have reached regarding discovery of Electronically Stored Information ("ESI") and what area of disagreement they have with regard to discovery of ESI. After discussing the matter with counsel, the Court will determine whether to enter the Standing Order Relating to the Discovery of Electronically Stored Information in their particular case. (See Attach. B & C.)
Zhu's motion to dismiss the claims against him for lack of personal jurisdiction (ECF No. 10) is
The parties must participate in a Rule 16(b) telephonic scheduling conference on
Experience teaches that unless conducted with careful planning and a spirit of cooperation, discovery of ESI can result in an unnecessarily high level of conflict, expense and delay in resolving cases on the merits. That is why the Court has endorsed The Sedona Conference® Cooperation Proclamation dated July 2008.
To further advance the goal of having parties conduct discovery of ESI in a cooperative and cost-effective manner, this Court has adopted the Standing Order Relating to the Discovery of Electronically Stored Information. At the Rule 26(f) planning conference, the parties shall address the issues discussed in the Standing Order, including but not limited to those set forth in Section 2.01(a)(1)-(5). In the report of the planning conference, the parties shall set forth:
(a) Whether they anticipate discovery of ESI in the case;
(b) What agreements they have reached regarding discovery of ESI; and
(c) What areas of disagreement they have with regard to discovery of ESI.
After reviewing the report of the planning conference and discussing the matter with the parties, the Court will determine whether the Standing Order should apply in this case.
This Court is participating in the Pilot Program initiated by the Seventh Circuit Electronic Discovery Committee. Parties and counsel in the Pilot Program with civil cases pending in this Court shall familiarize themselves with, and comport themselves consistent with, that committee's Principles Relating to the Discovery of Electronically Stored Information. For more information about the Pilot Program please see the web site of The Seventh Circuit Bar Association, www.7thcircuitbar.org. If any party believes that there is good cause why a particular case should be exempted, in whole or in part, from the Principles Relating to the Discovery of Electronically Stored Information, then that party may raise such reason with the Court.
The purpose of these Principles is to assist courts in the administration of Federal Rule of Civil Procedure 1, to secure the just, speedy, and inexpensive determination of every civil case, and to promote, whenever possible, the early resolution of disputes regarding the discovery of electronically stored information ("ESI") without Court intervention. Understanding of the feasibility, reasonableness, costs, and benefits of various aspects of electronic discovery will inevitably evolve as judges, attorneys and parties to litigation gain more experience with ESI and as technology advances.
An attorney's zealous representation of a client is not compromised by conducting discovery in a cooperative manner. The failure of counsel or the parties to litigation to cooperate in facilitating and reasonably limiting discovery requests and responses raises litigation costs and contributes to the risk of sanctions.
The proportionality standard set forth in Fed. R. Civ. P. 26(b)(2)(C) should be applied in each case when formulating a discovery plan. To further the application of the proportionality standard in discovery, requests for production of ESI and related responses should be reasonably targeted, clear, and as specific as practicable.
(a) Prior to the initial status conference with the Court, counsel shall meet and discuss the application of the discovery process set forth in the Federal Rules of Civil Procedure and these Principles to their specific case. Among the issues to be discussed are:
(b) Disputes regarding ESI that counsel for the parties are unable to resolve shall be presented to the Court at the initial status conference, Fed. R. Civ. P. Rule 16(b) Scheduling Conference, or as soon as possible thereafter.
(c) The attorneys for each party shall review and understand how their client's data is stored and retrieved before the meet and confer discussions in order to determine what issues must be addressed during the meet and confer discussions.
(d) If the Court determines that any counsel or party in a case has failed to cooperate and participate in good faith in the meet and confer process or is impeding the purpose of these Principles, the Court may require additional discussions prior to the commencement of discovery, and may impose sanctions, if appropriate.
In most cases, the meet and confer process will be aided by participation of an e-discovery liaison(s) as defined in this Principle. In the event of a dispute concerning the preservation or production of ESI, each party shall designate an individual(s) to act as e-discovery liaison(s) for purposes of meeting, conferring, and attending court hearings on the subject. Regardless of whether the e-discovery liaison(s) is an attorney (in-house or outside counsel), a third party consultant, or an employee of the party, the e-discovery liaison(s) must:
(a) be prepared to participate in e-discovery dispute resolution;
(b) be knowledgeable about the party's e-discovery efforts;
(c) be, or have reasonable access to those who are, familiar with the party's electronic systems and capabilities in order to explain those systems and answer relevant questions; and
(d) be, or have reasonable access to those who are, knowledgeable about the technical aspects of e-discovery, including electronic document storage, organization, and format issues, and relevant information retrieval technology, including search methodology.
(a) Appropriate preservation requests and preservation orders further the goals of these Principles. Vague and overly broad preservation requests do not further the goals of these Principles and are therefore disfavored. Vague and overly broad preservation orders should not be sought or entered. The information sought to be preserved through the use of a preservation letter request or order should be reasonable in scope and mindful of the factors set forth in Rule 26(b)(2)(C).
(b) To the extent counsel or a party requests preservation of ESI through the use of a preservation letter, such requests should attempt to ensure the preservation of relevant and discoverable information and to facilitate cooperation between requesting and receiving counsel and parties by transmitting specific and useful information. Examples of such specific and useful information include, but are not limited to:
(c) If the recipient of a preservation request chooses to respond, that response should provide the requesting counsel or party with useful information regarding the preservation efforts undertaken by the responding party. Examples of such useful and specific information include, but are not limited to, information that:
(d) Nothing in these Principles shall be construed as requiring the sending of a preservation request or requiring the sending of a response to such a request.
(a) Every party to litigation and its counsel are responsible for taking reasonable and proportionate steps to preserve relevant and discoverable ESI within its possession, custody or control. Determining which steps are reasonable and proportionate in particular litigation is a fact specific inquiry that will vary from case to case. The parties and counsel should address preservation issues at the outset of a case, and should continue to address them as the case progresses and their understanding of the issues and the facts improves.
(b) Discovery concerning the preservation and collection efforts of another party may be appropriate but, if used unadvisedly, can also contribute to the unnecessary expense and delay and may inappropriately implicate work product and attorney-client privileged matter. Accordingly, prior to initiating such discovery a party shall confer with the party from whom the information is sought concerning: (I) the specific need for such discovery, including its relevance to issues likely to arise in the litigation; and (ii) the suitability of alternative means for obtaining the information. Nothing herein exempts deponents on merits issues from answering questions concerning the preservation and collection of their documents, ESI, and tangible things.
(c) The parties and counsel should come to the meet and confer conference prepared to discuss the claims and defenses in the case including specific issues, time frame, potential damages, and targeted discovery that each anticipates requesting. In addition, the parties and counsel should be prepared to discuss reasonably foreseeable preservation issues that relate directly to the information that the other party is seeking. The parties and counsel need not raise every conceivable issue that may arise concerning their preservation efforts; however, the identification of any such preservation issues should be specific.
(d) The following categories of ESI generally are not discoverable in most cases, and if any party intends to request the preservation or production of these categories, then that intention should be discussed at the meet and confer or as soon thereafter as practicable:
(a) At the Rule 26(f) conference or as soon thereafter as possible, counsel or the parties shall discuss potential methodologies for identifying ESI for production.
(b) Topics for discussion may include, but are not limited to, any plans to:
(a) At the Rule 26(f) conference, counsel and the parties should make a good faith effort to agree on the format(s) for production of ESI (whether native or some other reasonably usable form). If counsel or the parties are unable to resolve a production format issue, then the issue should be raised promptly with the Court.
(b) The parties should confer on whether ESI stored in a database or a database management system can be produced by querying the database for discoverable information, resulting in a report or a reasonably usable and exportable electronic file for review by the requesting counsel or party.
(c) ESI and other tangible or hard copy documents that are not text-searchable need not be made text-searchable.
(d) Generally, the requesting party is responsible for the incremental cost of creating its copy of requested information. Counsel or the parties are encouraged to discuss cost sharing for optical character recognition (OCR) or other upgrades of paper documents or non-text-searchable electronic images that may be contemplated by each party.
Because discovery of ESI is being sought more frequently in civil litigation and the production and review of ESI can involve greater expense than discovery of paper documents, it is in the interest of justice that all judges, counsel and parties to litigation become familiar with the fundamentals of discovery of ESI. It is expected by the judges adopting these Principles that all counsel will have done the following in connection with each litigation matter in which they file an appearance:
Judges, attorneys and parties to litigation should continue to educate themselves on electronic discovery by consulting applicable case law, pertinent statutes, the Federal Rules of Civil Procedure, the Federal Rules of Evidence, The Sedona Conference® publications relating to electronic discovery
