Naschem Company, LTD et al v. Sports Line Distributors, Inc. et al

Filing 35

ORDER granting 12 Motion to Sever the claims against defendants Sports Line Distributors, Inc., Martin Bruce Faierstain, John Haynes and George Combs and transfer them to the Northern District of Illinois. The new case number is 09-cv-281-slc, and the case is transferred to the Northern District of Illinois. Signed by Magistrate Judge Stephen L. Crocker on 5/6/09. (rep) [Transferred from Wisconsin Western on 5/11/2009.]

IN THE UNITED STATES DISTRICT COURT F O R THE WESTERN DISTRICT OF W I S C O N S I N

NASCHEM COMPANY, LTD. and D A E UP SOHN, P la in t if f s , v. B L A C K S W A M P TRADING CO., LAMPS, INC., d/b/a E N V I R O N M E N T A L RECYCLING, INC., SPORTS L I N E DISTRIBUTORS, INC., ERIC W. URBAN, M I C H E L L E URBAN, PAUL COTTRELL, M I K E DOLKOWSKI, MATT ZACHARY, MARTIN B R U C E FAIERSTAIN, JOHN HAYNES and G E O R G E COMBS, D e fe n d a n t s.

O P I N I O N and ORDER 0 8 -cv -7 3 0 -slc

Plaintiffs Naschem Company, Ltd. and Dae Up Sohn are suing each of the defendants for a lle g e d l y infringing three patents related to a cap light: U.S. Patent Nos. 7,118,241, 7,163,309 and D 5 0 7 , 0 6 5 . Defendant Sports Line Distributors, Inc., along with its employees defendants Martin B ru c e Faierstain (president), George Combs (fishing manager) and John Haynes (sales associate), h a v e a filed a two-part motion. Dkt. 12. First, they argue that the court lacks personal jurisdiction o v e r defendants Faierstain and Haynes and that venue is improper here with respect to those two d e f e n d a n ts . Second, they argue that plaintiffs' claims against them should be severed under Fed. R . Civ. P. 20 and either dismissed or transferred to the Northern District of Illinois, where an e x e rc is e of jurisdiction over Faierstain and Haynes would be proper and which is more convenient f o r Sports Line and Combs. (In their opening brief, these defendants asked that the entire case b e dismissed or transferred, but they narrowed their request in their reply brief when the other d e f en d a n t s declined to join their motion and plaintiffs pointed out in their brief in opposition that t h e record contained no evidence that jurisdiction or venue would be proper in Illinois with respect

t o those other defendants.) For the reasons stated below, I agree with defendants that the case s h o u l d be severed and that the claims against Sports Line and its employees should be transferred t o the Northern District of Illinois. P la in t if f s have the burden to make out a prima facie case that an exercise of personal ju ris d ic ti o n is proper. Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 n .1 1 (7th Cir. 2003); Hyatt International Corp. v. Coco, 302 F.3d 707, 713 (7 th Cir. 2002). Under t h e due process clause, a defendant may not be sued in a particular state unless that defendant c o u ld reasonably anticipate being haled into court as a result of contacts the defendant has e s ta b lis h e d there. International Medical Group, Inc. v. American Arbitration Association, Inc., 312 F.3d 8 3 3 , 846 (7 th Cir. 2002).1 I n this case, it is undisputed that neither Faierstain nor Haynes has ever lived or worked in Wisconsin, is personally involved in the sale or solicitation of cap lights in Wisconsin or has e n g a ge d in any other business in Wisconsin. Despite these undisputed facts, plaintiffs say that

F a i e rs t a i n and Haynes may be sued in Wisconsin because "[d]efendants have admitted that Sports L i n e has sold cap lights to three customers that may have places of business in the W e s t e r n D is tr ic t of W is co n s in ." Dkt. 28, at 5. Plaintiffs' allegation fails to show that this court may exercise jurisdiction over defendants F a i e rs t a i n and Haynes. Plaintiffs do not explain what they mean that customers "may" have places o f business of Wisconsin and they fail to specify whether the cap lights sold to those customers a re related to this case. Even more important, the statement relates to defendant Sports Line's

Plaintiffs must show that W i s c o n s i n ' s long arm statute is satisfied as well, Giotis v. Apollo of the O z a r k s, Inc., 800 F.2d 660, 664 (7 th Cir. 1986), but I need not reach that issue.

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c o n ta ct s with Wisconsin, not the contacts of defendants Faeirstain and Haynes. Although acting a s a corporate agent does not shield individuals from an exercise of personal jurisdiction, Hardin R o l l e r Corp. v. Universal Printing Machinery, Inc., 236 F.3d 839, 842 (7 th Cir. 2001), it is well e s ta b lis h e d that the contacts of a corporation with a state may not be imputed to the corporation's e m p lo y e e s . Calder v. Jones, 465 U.S. 783, 790 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S. 7 7 0 , 781 n.13 (1984). Rather, a court must conduct an individualized analysis as to each

d e fe n d a n t to determine whether that defendant has sufficient contacts with the state. Keeton, 465 U .S . at 781 n.13 W i t h respect to Faierstain and Haynes individually, plaintiffs say only that Faierstain is S p o r t s Line's president and that Haynes sent an email to one of plaintiff Naschem's distributors a n d later spoke to the distributor's owner, informing him that Sports Line "had stock of the cap l ig h t s and could ship them whenever [the distributor] was ready to place an order." Pearson Aff. ¶ ¶ 5 -6 , dkt. 30. However, relying on Faierstain's status as the president rather than any actions he t o o k is simply another way of arguing that Sports Line's contacts should be imputed to Faierstain. H a y n e s ' alleged contact with the distributor is even less helpful to plaintiffs; it provides no reason t o believe that Haynes has had any contacts with Wisconsin. A c c o r d i n g l y , I agree with defendants that plaintiffs have failed to make a prima facie s h o w in g that this court may exercise personal jurisdiction over defendants Faierstain and Haynes. T h is makes it unnecessary to consider whether venue is proper with respect to these two d e f e n d a n ts . Normally, when a court lacks jurisdiction over a defendant, the complaint must be d i s m i s s e d as to that defendant. However, in this case, dismissal is not required because I agree w i th defendants' other argument, which is that the claims against Sports Line, Faierstain, Haynes

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a n d Combs should be severed under Fed. R. Civ. P. 20 and transferred to the Northern District o f Illinois. Cote v. Wadel, 796 F.2d 981, 985 (7 th Cir. 1986) (courts may deny motion to dismiss f o r lack of personal jurisdiction and instead transfer case to another venue where jurisdiction is p ro p e r) . Rule 20 prohibits a plaintiff from asserting unrelated claims against different defendants o r sets of defendants in the same lawsuit. Multiple defendants may not be joined in a single action u n le s s the plaintiff asserts at least one claim to relief against each defendant that arises out of the s a m e transaction or occurrence or series of transactions or occurrences and presents questions of l a w or fact common to all. George v. Smith, 507 F.3d 605, 607 (7 th Cir. 2007); 3A Moore's Federal P r a c t ic e § 20.06, at 2036-45 (2d ed.1978). P l a in t if f s cannot satisfy Rule 20 simply by alleging that each defendant engaged in acts of in fri n g e m e n t. Cf. Thompson v. Boggs, 33 F.3d 847, 858 (7 th Cir. 1994) (proper for district court to re fu s e to join claims for excessive force by different plaintiffs against same police officer because e a ch involved "separate occurrence[s]"). Plaintiffs may satisfy the requirement for a "common q u e s t i o n of law," but they have failed to make a showing that their claims against defendants S p o r t s Line, Faierstain, Haynes and Combs arise out of the same transaction or series of t ra n s a c t io n s as the other defendants. Combs avers that Sports Lines does not sell the same cap l i g h t s that the other defendants sell. Combs Second Decl. ¶9, dkt. 33. Further, he avers that " S p o rt s Line has absolutely no relationship, contractual or otherwise, with Blackswamp Trading C o ., Lamps, Inc. d/b/a Environmental Recycling, Inc., Eric. W. Urban, Michelle Urban, Paul C o tt re ll, Mike Dolkwoski, or Matt Zachary." Combs Decl. ¶23, dkt. 24.

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P l a in t if f s ' only response to these averments is that there must be "some connection" b e t w e e n defendant Blackswamp and defendant Sports Line because one of plaintiffs' distributors " r e c e iv e d an email from John Haynes at Sports Line in response to [a] call to

B la ck s w a m p /E n v iro n m e n t a l Recycling."

Plt.'s Br. at 23, dkt. 28; Pearson Aff. ¶5, dkt. 30.

P la in t if f s did not submit the email and they provide no further details to support a belief that S p o r t s Line is related to Blackswamp. They do not even explain why they believe the email its d i s t ri b u t o r allegedly received from Sports Line was "in response" to a call the distributor made to B la ck s w a m p . Defendant Sports Line expressly denies that it has any "communication mechanism w h e re b y Sports Line employees would or could respond to communications made to Blackswamp o r Environmental Recycling." Combs Second Decl. ¶8, dkt. 33. Defendant Haynes avers that he h a d not even heard of defendant Blackswamp until this lawsuit was filed. Haynes Second Decl. ¶ 9 , dkt.34. Haynes has attached an email to his affidavit that shows he did communicate with the d i s t r i b u t o r in question around the time that plaintiffs allege. However, Haynes states in the email t h a t he is following up a telephone conversation between the distributor and Sports Line, not b e tw e e n the distributor and Blackswamp. In light of the specific facts provided by defendants showing the lack of any connection b e tw e e n defendants Sports Line and Blackswamp, the question is not a close one. Plaintiff's s p a r s e allegation cannot establish or even allow the drawing of a reasonable inference that Sports L i n e and Blackswamp have a common scheme of infringement that would make joinder of their c la i m s proper under Rule 20. Plaintiffs' claims against defendants Sports Line, Faierstain, Haynes a n d Combs must be severed from plaintiffs' claims against the other defendants. The new case w i ll be assigned number 09-cv-281-slc.

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F i n a lly , I agree with defendants that plaintiffs' claims against defendant Sports Line and it s employees should be transferred to the Northern District of Illinois under 28 U.S.C. § 1404, w h i ch allows a district court to transfer a case when the moving party has shown that transfer w o u ld serve the convenience of parties and witnesses and promote the interests of justice. As n o t e d above, the due process clause prohibits this court from exercising jurisdiction over d e f e n d a n t s Faierstain and Haynes. Further, it is undisputed that courts in the Northern District o f Illinois could exercise jurisdiction over Faierstain and Haynes as well as Sports Line and Combs. That district would also be more convenient for those parties because Haynes, Faierstain and C o m b s live there and Sports Line's principal place of business is there. Because plaintiffs are c i t i z e n s of Korea, both W i s c o n s i n and Illinois are inconvenient for them. If anything, Illinois w o u ld be slightly less so because of more direct international access to Chicago. G e n e r a l l y , courts hesitate to disturb a plaintiff's choice of forum, but "the presumption in fa v o r of the plaintiff's choice of forum is diminished when it is not its home forum." U.S.O. Corp. v . Mizuho Holding Co., 547 F.3d 749, 752 (7 th Cir. 2008) ("The more tenuous a party's relation to t h e forum, the weaker its case for litigating there.) The only advantage that plaintiffs identify to l it ig a t i n g the claims against defendant Sports Line here is that cases generally are resolved faster i n this district than they are in the Northern District of Illinois. Although this is often a valid p o in t, it is unpersuasive in the context of this case. To begin with, plaintiffs do not explain why t i m e is of the essence in their case. Further, in light of the multiple transitions that the W e s t e r n D is tric t of Wisconsin is undergoing, there is no guarantee that this court will resolve the parties' d i s p u t e s significantly faster than another district. Finally, even if I assumed a speedier resolution in this district, speed is only one factor to consider. Coffey v. Van Dorn Iron Works, 796 F.2d 217, 2 1 9 -2 0 (7 th Cir. 1986). It would make little sense to have one lawsuit proceeding against

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d e f en d a n t Sports Line in this district and another lawsuit raising the same facts and issues against S p o rt s Line's employees in another district. In light of this fact, the greater convenience of the N o rt h e rn District of Illinois to defendants and the lack of any significant ties that plaintiffs have w i th Wisconsin, I conclude that it is appropriate to transfer the claims against defendant Sports L i n e and its employees to Illinois.

ORD ER I t is ORDERED that: ( 1 ) The motion filed by defendants Sports Line Distributors, Inc., Martin Bruce Faierstain, J o h n Haynes and George Combs to sever the claims against them and to transfer those claims to t h e Northern District of Illinois is GRANTED; ( 2 ) Plaintiffs Naschem Company Ltd.'s and Dae Up Sohn's claims against defendants S p o r t s Line, Faierstain, Haynes and Combs are SEVERED from this case under Fed. R. Civ. P. 20; and ( 3 ) The new case number assigned to these claims is 09-cv-281-slc. Case no. 09-cv-281-slc i s TRANSFERRED to the United States District Court for the Northern District of Illinois under 2 8 U.S.C. § 1404.

E n t e re d this 6 th day of May, 2009. B Y THE COURT: /s / S T E P H E N L. CROCKER M a g is tra t e Judge

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