Strabala v. Zhang et al
Filing
76
MEMORANDUM Opinion and Order:For the foregoing reasons, it is hereby ordered that: 1. Defendants' Motion to Vacate, R. 22 , is granted. 2. Plaintiff's Motion to Strike, R. 41 , is granted. 3. Defendants' Motion to Dismiss, R. 30 , is denied in part and granted in part as follows: (1) Defendants' motion to dismiss for lack of subject matter jurisdiction is denied; (2) Defendants' motion to dismiss for lack of personal jurisdiction is denied as to Count 1 (Defamation) , and granted without prejudice as to Count II (Intentional Interference); (3) Defendants' motion to dismiss for lack of service of process is denied; and (4) Defendants' motion to dismiss Count II (Intentional Interference with Business Re lations) for failure to state a legally adequate claim for relief is granted. Further, as to Defendant Zhang, Plaintiff is ordered to file within ten days of entry of this memorandum opinion and order any one of the following: (i) an amended proof of service establishing that the original service was effective, (ii) a new return of service establishing that the defect in the original service has been cured, or (iii) proof of waiver of service. In addition, if Plaintiff intends to seek leave to file an amended complaint, he should file a proposed amended complaint with a brief of no more than five pages explaining why the proposed amended complaint cures the defects in the original complaint identified in this order. The proposed amended c omplaint and brief, or else a motion for an extension of time, must be filed within fourteen days of the date on which this memorandum opinion and order is entered. Defendants may file a response to Plaintiff's brief, also limited to five pages in length, and shall do so on or before seven days after Plaintiff files the proposed amended complaint. No reply brief is to be filed.If Plaintiff does not seek leave to file an amended complaint, Defendants shall file an answer to the complaint on or before thirty days after the date on which this memorandum opinion and order is entered. A status hearing is set for December 22, 2016 at 9:00 a.m. The parties are directed to file a proposed joint discovery plan on or before December 19, 2016. Signed by the Honorable Thomas M. Durkin on 11/18/2016:Mailed notice(srn, )
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
JAY MARSHALL STRABALA,
individually and doing business as
2DEFINE ARCHITECTURE,
Plaintiff,
v.
QIAO ZHANG and ZHOU SHIMIAO,
d/b/a/ PUFINE (SHANGHAI) ARCHITECTS
DESIGN FIRM (GENERAL PARTNERSHIP),
also d/b/a DIFINE (SHANGHAI) ARCHITECTS
DESIGN FIRM (GENERAL PARTNERSHIP),
Defendants.
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No. 15 C 1228
Judge Thomas M. Durkin
MEMORANDUM OPINION AND ORDER
Plaintiff Jay Marshall Strabala brought this action against Defendants Qiao
Zhang and Zhou Shimiao (referred to collectively as “Defendants” and individually
as “Zhang” and “Zhou”) 1 alleging defamation and intentional interference with his
business. The parties are former partners in an architectural services firm called
2DEFINE Architecture (“2DEFINE”). For reasons that are very much in dispute,
the partnership soured and litigation ensued, first in China where the partnership
was centered, and then in Illinois with the current lawsuit. In a minute order
entered on October 31, 2016, the Court ruled on several pending motions as follows:
Strabala contends that Defendants should be referred to as “Qiao” and “Zhou”
because in China the family name comes before the given name. See https://
www.travelchinaguide.com/essential/chinese-name.htm. Defendants respond that
they know their own names and that their respective family names are Zhang and
Zhou. The Court will take Defendants’ word and refer to them as Zhang and Zhou.
1
(1) Plaintiff’s Motion to Strike Exhibits to Defendants’ Reply, R. 41, was granted;
(2) Defendants’ Rule 12(b) Motion to Dismiss, R. 30, was granted in part and denied
in part, with (a) the motion to dismiss for lack of subject matter jurisdiction being
denied, (b) the motion to dismiss for lack of service of process being denied, (c) the
motion to dismiss for lack of personal jurisdiction being denied as to Count 1
(Defamation) and granted as to Count II (Intentional Interference), (d) the motion to
dismiss Count II (Intentional Interference) for failure to state an adequate claim for
relief being granted; and (3) Defendants’ Motion to Vacate Default Judgment, R. 22,
was granted. The Court now sets forth the reasons for these rulings.
BACKGROUND 2
Strabala is an American architect whose practice focuses on the design of
performing arts complexes, convention centers, and high-rise office buildings. See
R. 33-1 (Strabala Decl., ¶ 3); R. 33-9 at 10; www.flickr.com/people/architecturaldesign/?ytcheck=1 (stating that Strabala is an expert in supertall building design,
sustainable design of commercial buildings, and the design of performing arts
venues). In promotional materials for his architectural firm, Strabala is described
as a leader of “the next generation of Super-tall Building Designers,” who designed
the two tallest skyscrapers in the world—the Dubai Burj Khalifa in the United Arab
Emirates (currently the tallest building in the world) and the Shanghai Tower in
China (currently the second tallest building in the world, the tallest building in
The facts in this section are taken from the complaint, Strabala’s deposition
testimony and responses to interrogatories, three sworn declarations by Strabala,
two sworn affidavits each by Zhang and Zhou, an Affidavit of Service by Pamela
Ickes, and various other exhibits submitted by the parties.
2
2
China, and the tallest building in the world with “two skins” 3). Other notable
projects of Strabala’s include the Houston Ballet Center for Dance, the Yingkou
Convention and Exposition Center in China, and the Convention and Exhibition
Center in Hong Kong.
Strabala was born in Seattle and grew up in San Francisco. He went to
undergraduate school at UCLA and then received a Master of Architecture at
Harvard. His first job after graduating from Harvard was with the architectural
firm of Skidmore Owings & Merrill (“SOM”) in Chicago. He lived in a rented
apartment for roughly his first ten years, and then, in or around 1999, he and his
wife purchased a condominium in a well-known high-rise building in Chicago
designed by the famed architect Ludwig Mies van der Rohe (hereinafter “the Lake
Shore Drive Condo”). Strabala worked at SOM until March 2006, at which time he
accepted a position with the Houston office of another architectural design firm,
M. Arthur Gensler Jr. & Associates, Inc. (“Gensler”). From 2006 until 2008,
Strabala made frequent trips to Shanghai as part of Gensler’s team preparing to
offer a design bid for the Shanghai Tower. In 2008, it was announced that Gensler
had won the design competition, and thereafter Strabala began working almost
exclusively from Shanghai while the Tower was being constructed.
In March 2010, before the Tower was completed, Strabala had a falling out
with Gensler and his employment with that firm terminated. A short time later,
The unique design features of the Shanghai Tower, including its double layer
transparent façade or “two skins,” are described in 2DEFINE promotional
materials,
as
well
as
in
an informative
Wikipedia
article,
see
https://en.wikipedia.org/wiki/Shanghai_Tower.
3
3
Strabala formed his own architectural firm called Strabala & Woo Architects, LLC. 4
Strabala is the majority shareholder of S&W and his wife is the Secretary. In June
2010, Strabala and three Chinese partners (Zhang, Zhou, and one other who has
since left the partnership) founded 2DEFINE, with Strabala funding the
partnership’s start-up costs through a transfer of capital from S&W. 5
From 2010 to 2014, 2DEFINE was commissioned to design four super tall
towers in China, with Strabala as the lead designer. Strabala remained in Shanghai
during this time. While working on those projects from China, Strabala also was
being sued in the United States by his two former employers. In a lawsuit filed in
the Northern District of Illinois in June 2011, Gensler alleged that after Strabala
founded his own firm he publicly misrepresented his role in several projects,
including the Shanghai Tower, while minimizing or entirely omitting the nature of
Gensler’s contribution. The day after Gensler filed its lawsuit, SOM made similar
allegations against Strabala (including the allegation that he falsely took design
credit for the Burj Khalifa) in a lawsuit filed in the Southern District of New York.
In February 2012, the district court in Gensler’s lawsuit dismissed the case for
failure to state a claim, while, in June 2012, the district court in SOM’s lawsuit
It appears that the company’s name originally was Strabala & Woo Architects2
LLC, which was later changed to Strabala & Woo Architects, LLC, and then to
Strabala + Architects LLC. See R. 33-8. The Court will refer to the company simply
as “S&W.”
4
The four partners of 2DEFINE also opened a Chinese business entity, DeFan
Architectural Consulting Shanghai Ltd., to facilitate 2DEFINE doing business with
Chinese clients. The Court refers only to 2DEFINE in this opinion without
purporting to distinguish between that entity and its Chinese counterpart.
5
4
transferred the case to the Northern District of Illinois where the court would have
personal jurisdiction over Strabala. About six months after the SOM lawsuit was
transferred to Illinois, that case settled. Meanwhile, Gensler had filed an appeal
from the district court’s dismissal of its lawsuit. Approximately two years after the
district court’s dismissal, the Seventh Circuit issued an opinion vacating and
remanding the case with instructions to the district court to conduct further
proceedings. 6 Approximately six months after the Seventh Circuit’s ruling (which
was shortly after the present lawsuit was filed), Gensler voluntarily dismissed the
case.
The complaint in this case alleges that while all of the above was taking
place, Zhang and Zhou were secretly diverting money from 2DEFINE. Strabala
alleges that, in approximately March 2014, he discovered the existence of two
separate Chinese partnerships with similar-sounding names to 2DEFINE’s Chinese
name (the DeFan entity). Strabala claims Zhang and Zhou secretly formed those
entities to facilitate their embezzlement. Zhang and Zhou, of course, deny any
wrongdoing. Whatever the reason for the partnership’s break-up, litigation in China
between the parties followed Strabala’s alleged discovery. The complaint before this
Although it vacated and remanded, the Seventh Circuit expressed some doubt as
to the validity of Gensler’s claims. See Gensler v. Strabala, 764 F.3d 735, 738 (7th
Cir. 2014) (“Yet if the gist of Gensler’s complaint is that big projects require big
teams—and that Gensler insists on institutional rather than personal credit—
where’s the falsity?”). Strabala continues to take credit for the design of the
Shanghai Tower, although the Wikipedia article does not mention him by name,
noting that the building “was designed by the American architectural firm Gensler,
with Chinese architect Jun Xia leading the design team.” https://en.wikipedia.org
/wiki/Shanghai_Tower.
6
5
Court asserts that, while the Chinese litigation was on-going, 7 Zhang and Zhou sent
e-mails to various business and professional associates of Strabala’s falsely accusing
him of numerous improprieties, including forging signatures on documents,
engaging in “visa fraud,” engaging in the unauthorized use of copyrighted software,
misrepresenting his accomplishments and status as a designer and architect, and
engaging in “money laundry [sic]” and “tax fraud.” R. 1 at 8 (¶ 33). At least some of
the individuals who received the e-mails are located in Chicago, including Strabala’s
accountant, his attorney, several former colleagues at SOM, and the Executive
Director of the Council of Tall Buildings, of which Strabala is a member. Strabala
also alleges that Zhang and Zhou have communicated Strabala’s confidential
business information to Gensler and SOM, stolen property belonging to 2DEFINE,
and interfered with 2DEFINE’s clients and employees.
Strabala filed this complaint on February 9, 2015 and attempted to effect
service on Zhang and Zhou through the Chinese Ministry of Justice pursuant to the
procedures set forth in the Hague Convention on the Service Abroad of Judicial and
Extrajudicial Documents in Civil or Commercial Matters (“Hague Convention”). On
November 10, 2015, Strabala informed the Court that he was having trouble
serving Zhang and Zhou in China, and requested that the Court enter an order
granting him permission to serve by alternative means. On November 17, 2015, the
The Chinese litigation apparently includes three different lawsuits: (1) a lawsuit
brought by Zhou against Strabala; (2) a lawsuit brought by Strabala against Zhang
and Zhou; and (3) a lawsuit brought by Zhou’s Chinese architecture firm, Tufan
Architects Design Firm, against Strabala. Zhou states in his affidavit that the first
two lawsuits have been resolved, while the third was still pending at the time the
affidavit was filed.
7
6
Court entered an order permitting alternative service by e-mail and Federal
Express. On January 12, 2016, believing that the e-mail service had been successful
and with the time for an answer or response to the complaint having expired,
Strabala filed a motion for default judgment. The Court granted Strabala’s motion
on January 14, 2016, and an Order of Default Judgment was entered on the docket
on January 19, 2016. See R. 17. Approximately four weeks later, Zhang and Zhou
appeared in the case and filed the Motion to Vacate and Motion to Dismiss, in which
they argue the Court’s entry of default is void and the case should be dismissed
because the Court lacks subject matter jurisdiction over the complaint and personal
jurisdiction over them and because Strabala’s service of process on them was
invalid. In the alternative, Zhang and Zhou argue in their Motion to Vacate that,
even if the entry of default against them was not void, it should be vacated because
they had good cause for their default, they took quick action to correct it, and a
meritorious defense to the complaint exists. They also argue that Count II of the
complaint should be dismissed because it fails to state a legally adequate claim for
relief.
MOTION TO VACATE DEFAULT JUDGMENT
Federal Rule of Civil Procedure 55(c) provides that the district court may set
aside an entry of default “[f]or good cause shown,” and may set aside a default
judgment “in accordance with Rule 60(b).” Fed. R. Civ. P. 55(c). Regardless of which
standard applies, 8 Defendants would be entitled to an order vacating the default
When a party has failed to plead or otherwise defend a lawsuit, entry of default
under Rule 55(a) must precede grant of a default judgment under Rule 55(b).
8
7
entered against them if the Court lacks subject matter jurisdiction over the case or
personal jurisdiction over them, or if Defendants received insufficient service of
process. See, e.g., Trade Well Int’l v. United Cent. Bank, 825 F.3d 854, 859 (7th Cir.
2016) (a final judgment is void and must be set aside if the court lacked personal
jurisdiction or if the party against whom the judgment was entered was not
adequately served); United States v. Indoor Cultivation Equip. from High Tech
Indoor Garden Supply, 55 F.3d 1311, 1316 (7th Cir. 1995) (“a judgment is void for
purposes of Rule 60(b)(4) if the court that rendered it lacked jurisdiction of the
subject matter, or of the parties, or if it acted in a manner inconsistent with due
process of law”) (internal quotation marks and citation omitted). A district court’s
refusal to vacate a void judgment constitutes a per se abuse of discretion. Trade
Well Int’l, 825 F.3d at 859. But even if the entry of default against Defendants was
not void on jurisdictional grounds, the Court can still vacate it under general “good
cause” principles applicable to Rule 55(c) motions. The Court will begin by assuming
for present purposes only that the entry of default is not void on jurisdictional
grounds, and resolve the easier question first of whether the entry of default should
be vacated for “good cause.” Finding good cause to exist for vacating the entry of
Wright & Miller, 10A FED. PRAC. & PROC. CIV. § 2682 (4th ed.). Here, the January
19, 2016 Order of Default Judgment (R. 17) refers to a “default judgment,” and it is
preceded by the Court’s January 14, 2016 minute order granting “Plaintiff’s motion
for default judgment.” R. 15. Nevertheless, the Order of Default Judgment
contemplated a prove-up hearing to establish the amount of Strabala’s damages.
Therefore, it is clear that a final default judgment had not yet been entered in the
case at the time Defendants filed their Motion to Vacate, see In re Catt, 368 F.3d
789, 793 (7th Cir. 2004), which means that the Court’s January 19, 2016 Order of
Default Judgment constituted an entry of default under Rule 55(a), not a default
judgment under Rule 55(b).
8
default, the Court will then go on in the next sections to address Defendants’
jurisdictional arguments for dismissal of the complaint.
“A party seeking to vacate an entry of default prior to the entry of final
judgment must show: (1) good cause for the default; (2) quick action to correct it;
and (3) a meritorious defense to the complaint.” Cracco v. Vitran Express, Inc., 559
F.3d 625, 630 (7th Cir. 2009) (internal quotation marks and citation omitted)
Strabala argues that Defendants cannot show good cause for failing to respond to
this lawsuit in a timely manner because, among other things, they knew about the
litigation as early as May 2015 when Strabala personally hand-delivered a copy of
the complaint to Zhou at a court proceeding in Shanghai. Moreover, Strabala points
out that both Zhou and Zhang were served with a copy of the complaint and
summons by e-mail and still did not file a timely response. Instead, they waited
until an e-mail was sent notifying them of the motion for entry of default, and only
then did they take action to obtain an attorney in the United States and file the
Motion to Vacate.
In response, Defendants admit that, in May 2015, Strabala “threw a copy of
the Complaint at Defendant Zhou” at a court proceeding in Shanghai and that Zhou
immediately showed it to Zhang. But Defendants contend “they did not appreciate
that they had been sued in Illinois” at this time because they “are Chinese
architects with no legal training or familiarity with the U.S. legal system.” R. 22 at
5. Further, because Strabala already had filed a lawsuit against them in Shanghai,
they argue they reasonably assumed that if he intended to sue them again “he
9
would do so in China.” Id. They also contend that receipt of e-mail service did not
adequately notify them of the lawsuit because it was their belief, based on Chinese
law, “that service could only be properly made on them through formal government
service, as opposed to an e-mail to one of them from a secretary at counsel’s office.”
Id.
Before the break-up of 2DEFINE, Defendants were involved in Strabala’s
defense of the SOM and Gensler litigation. Therefore, the Court takes Defendants’
assertion that they have no “familiarity with the U.S. legal system” with a grain of
salt. While they may not be familiar with the specifics of American civil procedure,
they are business professionals with past experience working for American
companies (in Zhang’s case, living and working in the United States). Even without
this business background, a reasonably diligent person would have made inquiries
or sought expert advice as to how to respond, not simply ignore something which
they both claim they did not understand. The Court also is skeptical of Defendants’
assertion that they did not realize Strabala was intending to sue them in the United
States. Both Zhang and Zhou have represented to the Court that they are fluent in
English, and the case caption on the complaint clearly informed them that the
lawsuit was in the United States. Finally, the Court does not accept as “good cause”
Defendants’ explanation that they did not respond to the complaint because they
questioned whether service by e-mail was legally sufficient. “[S]ervice of process
laws are designed to ensure defendants receive notice in accordance with concepts of
due process.” United States v. Jiles, 102 F.3d 278, 282 (7th Cir. 1996). For this
10
reason, the plaintiff must effect proper service pursuant to Rule 4, even if the
defendant has actual notice of the lawsuit. See McMasters v. United States, 260 F.3d
814, 817 (7th Cir. 2001). Nevertheless, the requirement of formal service is not
intended to provide a defendant who has actual knowledge that a lawsuit was filed
against him with an excuse for ignoring service. To be sure, a defendant who
receives actual notice of a lawsuit has the right to insist on strict adherence to
procedural formalities. But the issue here is not whether Defendants’ actual
knowledge of the litigation conferred jurisdiction when process was not properly
served. Rather, the issue is, assuming valid service of process, whether Defendants’
belief that there were defects in the service of process constituted good cause for
their default. Defendants are free to do exactly as they did, which is, to simply
ignore the lawsuit. But by doing so, they assumed the risk they might be wrong
about whether the form of service was legally sufficient. Defendants were not forced
to take that risk because, knowing about the lawsuit, they could have immediately
obtained legal representation and filed a motion to quash service. Being wrong
about what is legally sufficient service, however, is not good cause to excuse their
default. See O’Brien v. R.J. O’Brien & Assocs., Inc., 998 F.2d 1394, 1402-04 (7th Cir.
1993) (where defendant was aware of the lawsuit but believed, erroneously, that
service of process was defective, court would not overturn district court’s denial of
motion to vacate default judgment, even if, as defendant argued, a party has no
duty “to challenge service of process before proper service of process has been
11
obtained”; “[t]he district court was not compelled to relieve [defendant] of the
consequences of its improvident tactical decision”).
Looking at the record as a whole, the Court suspects that Defendants might
have been trying to evade service. 9 But the Court will give Defendants the benefit of
the doubt and assume instead that they did not respond to the complaint out of
confusion caused by the rather complicated situation with multiple lawsuits in
different countries and service effected through an atypical and thus unexpected
method. Nevertheless, the Court need not decide whether Defendants’ confusion
rises to the level of good cause for their default. Rule 55(c)’s “good cause” standard is
a lenient one that does not depend on there being a good excuse for the defendant’s
failure to appear in a timely manner. Instead, “Rule 55(c) requires ‘good cause’ for
the judicial action, not ‘good cause’ for the defendant’s error.” Sims v. EGA Prods.,
Inc., 475 F.3d 865, 868 (7th Cir. 2007). Thus, “[d]amages disproportionate to the
wrong afford good cause for judicial action, even though there is no good excuse for
the defendant’s inattention to the case.” Id. (emphasis in original). Here, the Court’s
Strabala cites to other facts that support that suspicion. For instance, on February
27, 2016, after this Court’s entry of default, written notice from the Chinese
Ministry of Justice was received stating that Zhou had “refused to accept the
documents” that the Ministry had attempted to serve on him. R. 33-17 (¶ 3).
Moreover, after the first e-mail was sent to Zhang at the e-mail address he
previously used in sending the allegedly defamatory e-mails about Strabala, a
second e-mail was sent to the same address notifying Zhang that the motion for
default judgment had been filed. Although the first e-mail did not “bounce back,”
the second e-mail did, suggesting the possibility that Zhang might have changed his
e-mail address after being served with the complaint. The Seventh Circuit has held
that “effort[s] to avoid service of process and frustrate the efficient administration of
justice” are valid reasons to refuse to vacate a default entered against a party.
Swaim v. Moltan Co., 73 F.3d 711, 721 (7th Cir. 1996).
9
12
refusal to vacate the default would result in “damages disproportionate to the
wrong” for a number of reasons.
First and foremost, the delay occasioned by Defendants’ default did not
prejudice Strabala by impinging upon his ability to pursue the litigation. “[D]elay
that imposes slight injury does not call for multi-million-dollar awards.” Id. at 869;
see, e.g., Fed. Trade Comm’n v. Construct Data Publishers, 2014 WL 7004999, at *6
(N.D. Ill. Dec. 11, 2014) (“the disproportionate size of the default judgment—$9.1
million—in comparison with the minimal prejudice suffered by the FTC represents
good cause to vacate the default judgment”). In addition, “this Circuit has a well
established policy favoring a trial on the merits over a default judgment.” Sun v.
Bd. of Trustees of Univ. of Ill., 473 F.3d 799, 811 (7th Cir. 2007) (citing C.K.S.
Eng’rs, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1205 (7th Cir. 1984)
(collecting cases)). “For that reason, a default judgment should be used only in
extreme situations, or when other less drastic sanctions have proven unavailing.”
Id. Defendants moved to set aside the default approximately four weeks after entry
of default was made. It appears that they only acted when they learned that the
Court had set a date for Strabala to prove-up his damages, and, in that sense, they
did not act as expeditiously as they could have. But once having decided to act, the
Court is willing to assume that it takes longer for a defendant located in a foreign
country to find legal representation in the United States than a defendant in
another state. For that reason, the cases cited by Strabala holding that an out-ofstate litigant’s difficulty in obtaining counsel does not constitute good cause to set
13
aside default, see R. 38 at 3, are distinguishable. Defendants acted relatively quickly
upon learning of the entry of default and responded to the litigation before the
prove-up hearing took place. At least in this respect, they were diligent.
Defendants also have shown a meritorious defense as to Count II of the
complaint, as discussed later in this opinion, and have raised non-frivolous
arguments regarding the Court’s assertion of personal jurisdiction over them as to
Count I. While the Court ultimately rejects Defendants’ arguments as to Count I (as
discussed later in this opinion), that rejection only reaches the issue of whether
Strabala has made out a prima facie showing of personal jurisdiction. The Court
therefore concludes that Defendants have shown a possible meritorious defense as
to both counts in the complaint. Since Defendants entered an appearance, they have
participated in the litigation by filing a motion to dismiss on jurisdictional grounds,
followed by jurisdictional discovery and extensive briefing on the jurisdictional
issues. Thus, Defendants have now shown that they are committed to actively
defending themselves. Given the Seventh Circuit’s preference for deciding cases on
the merits and the lack of prejudice to Strabala, the Court concludes that it has
good cause to overlook Defendants’ initial failure to respond, and accordingly grants
the Motion to Set Aside the Default Judgment.
MOTION TO DISMISS FOR LACK OF
SUBJECT MATTER JURISDICTION
Defendants have moved to dismiss the complaint for lack of subject matter
jurisdiction. Before addressing the parties’ substantive arguments on that motion,
however, the Court must address Strabala’s Motion to Strike.
14
A.
MOTION TO STRIKE
1.
BACKGROUND
The documents at issue in Strabala’s Motion to Strike are Exhibits F and G 10
to Defendants’ reply brief in support of their Motion to Dismiss. See R. 39-6; R. 39-7.
Exhibit F appears to be a letter from Strabala to his wife, delivered by Strabala via
e-mail. Exhibit G appears to be an e-mail to Strabala from someone named “Ding
Qing” from the “Shanghai Institute of American Studies,” who purportedly
interviewed Strabala for a book called “Americans in Shanghai.” Defendants also
have included as part of Exhibit G a document they identify as the English
translation of the article about Strabala purportedly written by Ding Qing, which is
referenced in the e-mail from her as being attached. Strabala suggests that both the
e-mail to his wife with the attached letter, and the e-mail from Ding Qing with the
attached article, may be fake or else doctored from documents found on his personal
laptop, which he alleges Zhang and Zhou stole from him. Zhang and Zhou admit
that the e-mails came from Strabala’s laptop, but assert that the laptop in question
was a company laptop and therefore that Strabala had no privacy interest in its
contents.
As a preliminary matter, the Court notes that, for reasons that will be made
clear in the next section, Exhibits F and G, even if considered by the Court, would
not change the Court’s ruling on whether subject matter jurisdiction exists over this
lawsuit. Indeed, Defendants themselves refer to these documents as “a relatively
The motion erroneously states that the exhibits in question are G and H. See
R. 41 at 1.
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15
minor point of corroborative evidence.” R. 45 at 6 n.4. With this admission and the
Court’s analysis and conclusions in the next section regarding subject matter
jurisdiction, the Court could simply deny the Motion to Strike without prejudice as
being moot and omit any discussion of the merits of that motion. Nevertheless, the
Court has determined that the Motion to Strike should be addressed on the merits
for two reasons: first, the overlap and potential impact of the issues raised in the
parties’ briefing on the Motion to Strike with the merits issues likely to be in
dispute in the case going forward; and, second, the Court’s concerns about potential
misconduct by the parties to this litigation. 11
2.
LACK OF FOUNDATION
Zhang and Zhou, as the proponents of Exhibits F and G, bear the burden of
establishing a foundation for their admission. See United States v. Cejas, 761 F.3d
717, 723 (7th Cir. 2014) (the admitting party bears the “burden of making a prima
facie showing that the item is genuine”). This is done by submitting evidence
“sufficient to support a finding that the item is what the proponent claims it is.”
On the second point, the Court’s concerns relate not only to Strabala’s accusations
of potential theft and tampering of documents on Strabala’s laptop, but also, as will
be discussed in the next section, to Defendants’ contentions that Strabala was
“evasive” and “impertinent” (R. 56 at 3 n.1) at his deposition, and that he took an
unreasonable position in jurisdictional discovery to avoid producing relevant
information. The Court is not at this time finding in favor of either side on their
allegations of misconduct and/or bad faith against each other, and specifically does
not make any finding that impropriety has occurred. Nevertheless, both Strabala
and Defendants should be aware that the Court takes the other sides’ allegations of
misconduct seriously, having concluded from an examination of the record that
neither side’s accusations are frivolous. The parties are forewarned that, going
forward, the Court will expect full compliance with the rules of civil procedure and
cooperation in discovery, and that gamesmanship will not be tolerated.
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16
Fed. R. Evid. 901(a); see Thanongsinh v. Bd. of Educ. Dist. U-46, 462 F.3d 762, 779
(7th Cir. 2006) (“Rule 901’s requirements are satisfied if evidence has been
introduced from which a reasonable juror could find that the document is
authentic.”). “Only a prima facie showing of genuineness is required; the task of
deciding the evidence’s true authenticity and probative value is left to the jury.”
United States v. Fluker, 698 F.3d 988, 999 (7th Cir. 2012); see also United States v.
Vidacak, 553 F.3d 344, 349 (4th Cir. 2009) (“The district court’s role is to serve as
gatekeeper in assessing whether the proponent has offered a satisfactory foundation
from which the jury could reasonably find that the evidence is authentic.”).
Defendants offer several reasons why Exhibits F and G have an adequate
foundation, each of which are considered and rejected below.
First, the Court rejects Defendants’ argument that the e-mails do not need to
be authenticated because they do not have to be admissible in court to be considered
on a motion to dismiss for lack of subject matter jurisdiction. The cases cited by
Defendants involve preliminary, non-final rulings, such as a jurisdictional ruling at
the pleadings stage concerning the amount in controversy, see Boncher-Wales Mktg.
Grp., Inc. v. GXI Int’l, LLC, 2009 WL 1259354, at *3 (N.D. Ill. May 1, 2009), and a
preliminary injunction decision, see Dexia Credit Local v. Rogan, 602 F.3d 879, 885
(7th Cir. 2010). As the Court will discuss in the next section, Defendants have
presented a factual challenge to the Court’s subject matter jurisdiction. If the Court
were to rule in Defendants’ favor, the ruling would not be preliminary but rather
would result in dismissal of the case. A final decision in Defendants’ favor actually
17
terminating the case must be based on competent evidence. Cf. Whitted v. Gen.
Motors Corp., 58 F.3d 1200, 1204 (7th Cir. 1995) (unauthenticated evidence that
would have been inadmissible at trial may not be considered in ruling on summary
judgment).
Second, the Court also cannot accept Defendants’ contention that Exhibit F
has been authenticated by Strabala himself when, at the direction of this Court
after a hearing was held on his Motion to Strike, he confirmed through his counsel
that the letter to his wife attached to his e-mail was in fact sent by him. Strabala
specifically stated that, although he sent his wife a letter similar to the one included
in Exhibit F, he believes Defendants’ copy of that letter may have been doctored.
Accordingly, Strabala did not authenticate the version of the letter on which
Defendants rely. 12
Third, the Court rejects Defendants’ contention that Exhibits F and G are
self-authenticating under Federal Rule of Evidence 902(7). Rule 902(7) provides
that “[a]n inscription, sign, tag, or label purporting to have been affixed in the
course of business and indicating origin, ownership, or control,” need not be
Strabala could be “deemed” to have verified the e-mails’ authenticity if he was the
party who produced them. See, e.g., In re Homestore.com, Inc. Sec. Litig., 347
F. Supp. 2d 769, 781 (C.D. Cal. 2004) (“Although none of these documents have
affidavits from the actual authors laying the foundation that the emails are what
they purport to be, these documents are deemed authentic because Plaintiff
identified the documents as being produced by parties in discovery.”) (internal
citation omitted); Jimena v. UBS AG Bank, Inc., 2011 WL 2551413, at *5 (E.D. Cal.
June 27, 2011) (e-mails sought to be introduced by the plaintiff were not
authenticated by the discovery process because they were produced in discovery by
the plaintiff, not by the defendants). In this case, the e-mails were not produced in
discovery, and Defendants did not obtain them from Strabala.
12
18
supported by extrinsic evidence of authenticity. According to Defendants,
(1) Strabala’s electronic signature on his e-mail, (2) the 2DEFINE letterhead on
Strabala’s letter to his wife, and (3) the typed name “Ding Qing” on her e-mail,
together with her contact information at the “Shanghai Institute of American
Studies,” constitute “trade inscriptions” within the meaning of Rule 902(7).
Defendants, however, cite no case law that would support finding that either an
electronic signature or a typed name and address in an e-mail constitute trade
inscriptions under Rule 902(7). Moreover, their argument is inconsistent with
Seventh Circuit case law holding that a trade inscription on the cover of an owner’s
manual does not authenticate the contents of the manual. See Whitted, 58 F.3d at
1204 (“The owner’s manual is not a trade inscription and admitting the manual
because it had a trade inscription on its cover does not comport with the rule”). In
any event, even if the letterhead on the letter to Strabala’s wife constitutes a “trade
designation,” it would be one for 2DEFINE not Strabala personally. And, even if the
e-mail from Ding Qing is authenticated by her typed name and address, the article
submitted as part of Exhibit G is not authenticated by the e-mail because
Defendants have not submitted an affidavit or other evidence establishing that the
article they include in Exhibit G is a true and correct copy of the attachment
referenced by Ding Qing in the e-mail.
Aside from the above, Rule 902(7) only provides for “presumptive
authenticity,” and “does not preclude the opponent from challenging the
authenticity of the offered writing, such as with proof that the document is a phony
19
or bears a forged signature. Nor does it resolve questions as to the source or
accuracy of information that is reported in self-authenticated documents. Objections
can still be made that inadmissible hearsay statements or expert opinions are
included in, for example, newspapers or periodicals.” 2 MCCORMICK ON EVID. §
229.1 (7th ed.). Strabala has presented evidence through his declaration rebutting
the presumptive authenticity that might be conferred by Rule 902(7). For instance,
he states that his signature is an electronic one which could have been placed there
without his permission because Zhang and Zhou had access to it through
2DEFINE’s computers. He also states that these e-mails were located on the hard
drive of his personal laptop, which was stolen from him by Zhang and Zhou.
Defendants do not expressly deny Strabala’s accusation that they stole his
personal laptop. Their only argument is that the e-mails were found on Strabala’s
work laptop. If the e-mails came from Strabala’s personal laptop and if Defendants
stole that laptop, the evidence would be inadmissible. See Xyngular Corp. v.
Schenkel, 2016 WL 4126462, at *33 (D. Utah Aug. 2, 2016) (court “may use its
inherent powers to sanction a party who circumvents the discovery process and the
rules of engagement employed by the federal courts by improperly obtaining
evidence before litigation and then attempting to use that evidence in litigation”);
cf. Coal. for an Airline Passengers’ Bill of Rights v. Delta Air Lines, Inc., 693
F. Supp. 2d 667, 675 (S.D. Tex. 2010) (“hacking into a person’s private computer
and stealing personal correspondence would represent an intentional intrusion on
the victim’s private affairs . . . highly offensive to a reasonable person”). But even if,
20
as Defendants contend, the e-mails came from Strabala’s work laptop, Strabala is
the majority shareholder, legal representative, and design partner for 2DEFINE.
Defendants do not explain how or why they are in possession of his work laptop.
Nor do they cite any precedent for the Court to consider on whether their
appropriation of information from Strabala’s work computer was legally permissible
because the computer was owned by the partnership and not Strabala personally
and/or because Defendants had the ability as administrators of the partnership’s
computer system to view the laptop’s contents without breaking into it. The Court is
not prepared to summarily rule in Defendants’ favor on those issues without
development of the legal arguments supporting Defendants’ position. See Valley Air
Serv. v. Southaire, Inc., 2009 WL 1033556, at *18 (N.D. Ill. Apr. 16, 2009) (“[t]he
court is not required to construct arguments for a party”).
While a conclusory foundational challenge made without any “sound reason
to doubt” a document’s authenticity, Cejas, 761 F.3d at 724, may be disregarded,
Strabala’s stated reasons for doubting the authenticity of the e-mails here are
neither conclusory nor lacking in sound reason. This is particularly true given the
nature of e-mails in general.
Both email and electronic chats are faceless means of
communication, with users identified by an email address
or username. The recipient cannot, simply by looking at
the email address or username provided in the document,
readily identify the true identity of a message’s sender.
Even where the email address or username employed by
the sender is an eponym, as likely is the case here, the
sender’s identity is not immediately discernable. In
neither case can the recipient rely on the use of an email
address or username to conclude that a third party has
21
not made surreptitious use of an otherwise familiar
account.
United States v. Shah, 125 F. Supp. 3d 570, 577 (E.D.N.C. 2015); see also Jimena,
2011 WL 2551413, at *6 (“‘[w]hen the recipient of an e-mail attempts to prove that
the message was authored by a particular individual whose name appears in the
header, such self-identification by designated sender is insufficient to establish
authorship.’”) (quoting Paul R. Rice, ELECTRONIC EVIDENCE: LAW & EVIDENCE 348
(2d ed. 2008)); Note, “God Mail”: Authentication And Admissibility of Electronic
Mail In Federal Courts, 34 AM. CRIM. L. REV. 1387, 1388 (1997) (stating that “the
increasing use of electronic mail in the United States, combined with the ease with
which it can be forged, should at least give courts pause”).
Direct proof of authenticity would consist of testimony by Strabala and Ding
Qing, or someone who witnessed those individuals sending the e-mails, attesting
that the documents in question are the actual, un-doctored emails sent by the
authors. See Fluker, 698 F.3d at 999 (citing Mark D. Robins, Evidence at the
Electronic Frontier: Introducing E-Mail at Trial in Commercial Litigation, 29
RUTGERS COMPUTER & TECH. L.J. 219, 226 (2003)). But indirect evidence of
authenticity also may be sufficient. Id. Indirect evidence generally consists of
testimony from “someone who personally retrieved the e-mail from the computer to
which the e-mail was allegedly sent” together with other circumstantial evidence
such as the e-mail address in the header and the substance of the email itself. U.S.
Equal Emp’t Opportunity Comm’n v. Olsten Staffing Servs. Corp., 657 F. Supp. 2d
1029, 1034 (W.D. Wis. 2009). Defendants rely solely on indirect evidence of
22
authenticity consisting of their own affidavits in which they state that the e-mails
were taken by them from what they claim to be Strabala’s work computer. 13
Defendants are interested parties and the persons accused of theft. While
Defendants state in their affidavits that they did not doctor the e-mails, given
Strabala’s theft charges and testimony that the e-mails do not appear the same as
he remembers, 14 the Court finds that Defendants’ testimony is insufficient by itself
to establish an adequate foundation for admission. See, e.g., United States v.
Jackson, 208 F.3d 633, 638 (7th Cir. 2000) (web postings excludable for lack of
foundation because defendant had not shown they “actually were posted by the
groups, as opposed to being slipped onto the groups’ web sites by [defendant]
herself, who was a skilled computer user”); Brown v. Great-W. Healthcare, 2007 WL
4730651, at *4 (N.D. Ga. June 8, 2007) (holding that “[t]here is simply insufficient
evidence of [the e-mails’] authenticity . . . [to] overcome the lack of trustworthiness
caused by the facts that: (1) [the plaintiff] found the questioned e-mails on her
chair; (2) [she] had access to [the alleged sender’s] private e-mail account;
(3) neither party’s expert could find the questioned e-mails on [the defendant’s]
The information Defendants originally provided to the Court about the source of
the e-mails was vague. See R. 39 at 6 n.2 (stating that Defendants were “led to this
new evidence . . . by Plaintiff’s reference to the SOM case in his Opposition and
Defendants’ resulting review of the record in that case”). It was only after Strabala
filed the Motion to Strike that Defendants admitted that the e-mails were retrieved
by them from Strabala’s work laptop.
13
Strabala also states that there is no way he would have received the Ding Qing email with the attached written interview because, by the date on the e-mail, “his
email account was closed when the 2DEFINE website was shut down. The record
does not contain sufficient facts for the Court to evaluate the accuracy of this
statement.
14
23
computer system; and (4) the purported authors and recipients deny that they are
authentic”).
The Court acknowledges counsel’s statement in Defendants’ reply brief that
they take allegations of evidence tampering seriously and that they investigated the
evidence before submitting it to the Court by verifying through metadata that no
tampering took place. See R. 45 at 5. The Court does not question counsel’s
sincerity, although the proper way to submit this information for purposes of laying
an evidentiary foundation would have been with a sworn declaration or affidavit
rather than in statements made in a footnote of the reply brief. In any event,
counsel also are not neutral third parties, nor have they shown that they are
computer experts qualified to attest to the e-mails’ authenticity. Moreover, it would
be unfair to accept their word in a footnote in a brief without, at the very least,
allowing Strabala the opportunity to conduct his own investigation of the laptop on
which Defendants claim to have found the e-mails and to which Strabala states he
has not had access. This is particularly true given, as Strabala points out in his
supplemental declaration (R. 46 at 3, ¶ 12), the metadata submitted to “prove”
counsel’s representations (attached as an exhibit to Defendants’ response to the
Motion to Strike, R. 45-4) is not attested to, does not reference any particular
document, shows a date for “last printed” which is three months prior to the date of
creation, and lists Defendant “Qiao Zhang” as the “author.” For these reasons, the
24
Court concludes that Exhibits F and G have not been properly authenticated, and
grants Strabala’s Motion to Strike. 15
B.
SUBJECT MATTER JURISDICTION
1.
STANDARD OF PROOF
A challenge to a district court’s subject matter jurisdiction is made under
Federal Rule of Civil Procedure 12(b)(1). Rule 12(b)(1) motions come in two
varieties: (1) facial attacks and (2) factual attacks. See Apex Digital, Inc. v. Sears,
Roebuck & Co., 572 F.3d 440, 443-44 (7th Cir. 2009). Where a facial attack is made,
the district court takes the allegations in the complaint as true, and merely
questions the sufficiency of the pleading. Id. at 443. “In contrast, a factual challenge
Even if the Court were to find that Defendants have provided a proper foundation
for Exhibits F and G, the admissibility of those exhibits to prove the matters
asserted by Defendants is questionable. The letter from Strabala to his wife is a
privileged communication between husband and wife. See 735 Ill. Stat. Ann. 5/8801. Defendants contend that Strabala waived the marital privilege by sending the
letter via e-mail from his work computer. See R. 45 at 2-3 (citing, inter alia, United
States v. Hamilton, 701 F.3d 404 (4th Cir. 2012)). Even if the computer was
Strabala’s work laptop as opposed to his personal laptop (a fact in contention), the
evidence Defendants submit as proof of Strabala’s waiver is a supplemental
declaration by Zhang with an attached sample employment contract containing a
written policy regarding the permitted use of company computers and
confidentiality. See R. 45-1. Strabala denies that he ever signed such a contract, and
there is no evidence to the contrary. Indeed, one would not expect that Strabala
would have signed the employee contract because he is an owner of 2DEFINE
through his partnership interest, not an employee. The article written about
Strabala and attached to the Ding Qing e-mail presents a different evidentiary
problem. Defendants offer the article as proof that Strabala actually said what the
article claims he said, in other words, for the truth of the matters asserted.
Defendants do not explain the basis for admission of this hearsay. At the very least,
Defendants would have had to show that Strabala reviewed the article and did not
make any corrections to it, in which case they might have been able to argue that he
“adopted” the statements in the article that are attributed to him. But they have not
done so. Therefore, at least at this juncture, the Court finds that the article also is
inadmissible on substantive grounds.
15
25
lies where the complaint is formally sufficient but the contention is that there is in
fact no subject matter jurisdiction.” Id. at 444 (internal quotation marks and
citation omitted) (emphasis in original). Zhang and Zhou submitted affidavits
calling this Court’s subject matter jurisdiction into question. Thus, they presented a
factual challenge to the Court’s subject matter jurisdiction.
“The presumption of correctness that we accord to a complaint’s allegations
falls away on the jurisdictional issue once a defendant proffers evidence that calls
the court’s jurisdiction into question. At that point, a court need not close its eyes to
demonstrated jurisdictional deficiencies in a plaintiff’s case and accord a plaintiff’s
unproven allegations greater weight than substantive evidence to the contrary.”
Commodity Trend Serv., Inc. v. Commodity Futures Trading Comm’n, 149 F.3d 679,
685 (7th Cir. 1998). Responding to the affidavits filed by Zhang and Zhou, Strabala
submitted his own declaration. The competing affidavits/declarations demonstrated
to the Court that the relevant jurisdictional facts were in dispute. For this reason,
the Court directed the parties to conduct jurisdictional discovery and then file
supplemental briefs. The Court has now had the opportunity to consider all of the
evidence submitted by the parties, as well as the initial and supplemental briefs.
Strabala, as the litigant claiming the right to the federal forum, bears the burden of
proving subject matter jurisdiction. Craig v. Ontario Corp., 543 F.3d 872, 876 (7th
Cir. 2008). The standard is proof by preponderance of the evidence. See Meridian
Sec. Ins. v. Sadowski, 441 F.3d 536, 543 (7th Cir. 2006) (“banish[ing] from our
26
lexicon” the oft-repeated standard “[r]easonable probability that jurisdiction
exists”).
2.
ANALYSIS
Strabala alleges that this Court has jurisdiction over the complaint pursuant
to 28 U.S.C. § 1332(a)(2), which provides for original jurisdiction in the federal
district court over claims between “citizens of a State and citizens or subjects of a
foreign state.” The status of Zhang and Zhou as citizens of China, a foreign state, is
undisputed. Therefore, the only issue is Strabala’s status as a “citizen of a State.”
Strabala alleges that he is a citizen of Illinois. But Zhang and Zhou argue that,
because Strabala lives in China, he is a citizen of the United States without being a
citizen of any State. If Strabala is indeed “stateless,” he may not invoke this Court’s
diversity jurisdiction under 28 U.S.C. 1332(a)(2). See Sadat v. Mertes, 615 F.2d
1176, 1180 (7th Cir. 1980) (“settled precedent establishes that a citizen of the
United States who is not also a citizen of one of the United States may not maintain
suit under [the diversity statute]”).
a.
RULES FOR DETERMINING A PARTY’S
CITIZENSHIP
“In federal law citizenship means domicile, not residence.” Am.’s Best Inns,
Inc. v. Best Inns of Abilene, L.P., 980 F.2d 1072, 1074 (7th Cir. 1992) (citing Gilbert
v. David, 235 U.S. 561 (1915)). Residence is where a person lives. An individual’s
domicile, on the other hand, “is the place where that individual has a true, fixed
home and principal establishment, and to which, whenever that person is absent
from the jurisdiction, he or she has the intention of returning.” Wright & Miller,
27
13E FED. PRAC. & PROC. JURIS., § 3612 (3d ed.); see Texas v. Florida, 306 U.S. 398,
424 (1939) (“Residence in fact, coupled with the purpose to make the place of
residence one’s home, are the essential elements of domicile.”). “Domicile, therefore,
has both a physical and a mental dimension.” Wright & Miller, supra, § 3612; see
generally Midwest Transit, Inc. v. Hicks, 79 Fed. App’x 205, 208 (7th Cir. 2003)
(unpublished) (reversing district court’s determination of citizenship because court
failed to consider defendant’s contacts with State in relation to his statements of
intent regarding his citizenship). And, it “is more than an individual’s residence,
although the two typically coincide.” Wright & Miller, supra, § 3612. Yet, a person
can have multiple residences but only one domicile. “The very meaning of domicil is
the technically pre-eminent headquarters that every person is compelled to have in
order that certain rights and duties that have been attached to it by the law may be
determined. In its nature it is one[.]” Williamson v. Osenton, 232 U.S. 619 (1914).
The Seventh Circuit has said that the test for domicile works well for cases in
which residence coincides with intent, but is “becoming increasingly outdated as
more people buy second or even third residences in different states.” Midwest
Transit, Inc., 79 Fed. App’x at 208. In the latter situation, “the test can turn into a
complex, even arbitrary, inquiry into an individual’s intent.” Id. (citing Galva
Foundry Co. v. Heiden, 924 F.2d 729, 730 (7th Cir. 1991)). As a result of the
difficulties inherent in the domicile inquiry, courts primarily look at intent through
objective factors. See Sadat, 615 F.2d at 1181 (“[i]ntent is a state of mind which
must be evaluated through the circumstantial evidence of a person’s manifested
28
conduct”) (internal quotation marks and citations omitted). Some of the objective
factors relevant to a person’s intent include “current residence, voting registration
and voting practices, location of personal and real property, location of financial
accounts, membership in unions and other associations, place of employment,
driver’s license and automobile registration, and tax payments.” Midwest Transit,
Inc., 79 Fed. App’x at 208. “The existence of one or more of these factors may weigh
in favor of a finding of citizenship, but no single factor is conclusive.” Id. For this
reason, each case necessarily turns on its own unique combination of facts.
Before examining the evidence in the record relevant to Strabala’s domicile,
the Court notes that it finds extremely troubling Strabala’s refusal to provide
Defendants with any pre-2014 discovery on the ground that jurisdiction is
determined as of the date on which the lawsuit is filed. See Denlinger v. Brennan,
87 F.3d 214, 216 (7th Cir. 1996) (“Jurisdiction depends on citizenship at the time a
case begins.”). While the issue for the Court is Strabala’s domicile on February 9,
2015, which is the date Strabala filed this lawsuit, the facts relevant to determining
his domicile on that date relate back to Strabala’s intent when he moved to Houston
in 2006 and then to Shanghai in 2008. Thus, jurisdictional discovery should have
encompassed the entire time period between 2006 and 2015, and Strabala’s position
to the contrary was frivolous. See, e.g., Perry v. Pogemiller, 16 F.3d 138, 140 (7th
Cir. 1993) (“Perry’s hyper-technical interpretation of assessing domicile [in which he
argued that the inquiry is restricted to information about that party’s activities on
the date suit is filed] is totally lacking in support and in substance and thus, an
29
appeal based on this argument was destined to fail. . . . Therefore, we conclude that
sanctions are appropriate[.]”).
Zhang and Zhou could have moved to compel pre-2014 discovery, but they did
not. Even so, the Court will infer from Strabala’s failure to provide pre-2014
discovery that any documents from this time period, had they been produced, would
have pointed to Strabala’s domicile being somewhere other than Illinois. In
addition, the Court will accord little to no weight to documents submitted by
Strabala that concern a time period after the date on which the complaint was filed,
finding that such documents are more likely to show a post-filing attempt by
Strabala to create jurisdiction rather than a bona fide pre-existing intent regarding
his domicile. 16
Like his refusal to provide pre-2014 discovery, Strabala’s behavior at his
deposition also is troubling to the Court. For example, Strabala was asked “what
brings you to Chicago this week,” to which he replied “I think it was a 747.” R. 65-2
at 5 (Strabala Dep. 11-12). When asked “[w]hen did you arrive in Chicago,” he
responded “37 hours after I left Shanghai.” Id. Even if intended as mere quips,
these responses were not appropriate for a deposition. Strabala also responded
inappropriately to questions by defense counsel seeking to determine the last time
he had been in Chicago. Indeed, the transcript on this point reads like an Abbott
and Costello routine, as the following illustrates:
16
Q. And before the trip to Chicago that you are on right
now, when was the last time you were in Chicago? A. At
this time I can’t remember. Q. Was it more than a year
ago? A. At this time I can’t remember. Q. Was it more
than two years ago? A. At this time I can’t remember.
Q. You can’t remember whether before this week or the
last two weeks you’ve been in Chicago? A. I think that’s
what I said. Q. Okay. So it’s not the case that you come to
Chicago at least once a year? A. No, I try to come to
Chicago as much as I can. Q. I didn’t ask you that. I asked
you whether it is the case that you don’t always come to
Chicago at least once a year? A. I don’t understand the
30
Notwithstanding the negative inference and discounting the post-February 9,
2015 evidence submitted by Strabala, the Court concludes that the preponderance
of the evidence still supports subject matter jurisdiction in this case. In reaching
this conclusion, the Court has relied on the undisputed facts in the record, 17
evaluating those facts in light of the well established principle that “[a] domicile
question. It’s too confusing. Could you simplify it? Q. I
will try. Before the trip that you were engaged in here in
Chicago presently and we are in Chicago during this
deposition, your testimony is that you can’t recall the last
time you were in Chicago, correct? A. No. Q. Please tell
me what’s wrong with my question. A. I said at this time I
can’t remember. Q. Do you draw a distinction between
remember and recall? A. Not really. . . . Q. Right. Well, I
also asked you whether it was in the last year, within the
last two years—A. And I said I can’t remember. . . .
Q. And are you on any pharmaceuticals or other
substances that would affect your ability to remember the
last time you were in Chicago that you are aware of?
A. No, and I didn’t say I can’t remember the last time I
was in Chicago. I can’t remember the last couple years the
exact dates I was in Chicago.
Id. at 5-6 (Strabala Dep. 13-15). After this initial exchange, defense counsel for the
most part was able to pin Strabala down regarding his previous trips to Illinois. It
appears that those trips have been infrequent over the last five years with no visits
at all in 2015.
Had the facts on which the Court relies herein for finding subject matter
jurisdiction been disputed, an evidentiary hearing would have been required,
particularly given that concerns have been raised by both sides as to the other side’s
credibility. Although the record contains some factual disputes—most notably as to
the frequency and dates of Strabala’s visits to Chicago and where he files taxes—
those disputes are more superficial than real, and the Court’s ruling in any event
does not depend on any of those matters. In addition, Defendants have not
challenged Strabala’s declaration testimony or his written discovery responses, nor
have they requested the Court to conduct an evidentiary hearing. Therefore, in the
interest of avoiding further delay, the Court has chosen to decide the current
motions on the basis of the submitted record.
17
31
once existing continues until another is acquired.” Desmare v. United States, 93 U.S.
605, 610 (1876); see Sadat, 615 F.2d at 1181 (quoting RESTATEMENT (SECOND)
CONFLICT
OF
OF
LAWS, § 19 (1971)); Wright & Miller, supra, § 3612 (the rule that an
established domicile continues until a new one is acquired “represents the conflicts
of law solution to the problem of locating the domicile of an individual” who “pulled
up stakes” from his former domicile “but either has not arrived physically at a new
one or has arrived but has not yet formulated an intention to remain there for the
indefinite future”). 18
It is undisputed that Strabala was domiciled in Illinois from roughly 1987 or
1988 until at least March 2006. Therefore, for Illinois to no longer be Strabala’s
domicile, there must be evidence not only that Strabala physically resides at a new
location but that he does so with the “intention to remain there indefinitely, or, as
some federal courts articulate it, the absence of any intention to go elsewhere.”
Wright & Miller, supra, § 3613. Zhang and Zhou argue that the evidence
overwhelming shows that Strabala is now domiciled in China. But the Court
concludes otherwise, finding that the objective evidence of Strabala’s intent to
maintain his previously established domicile in Illinois as against his residential
status, combined with Strabala’s declaration regarding his domiciliary intent, show
The rule regarding the continuation of an established domicile is more than just
an evidentiary presumption in favor of an individual’s old, established domicile. It is
a substantive rule premised on “a judicial policy determination that in ascertaining
diversity jurisdiction in a highly mobile society there is a need to fix domicile with
some reasonable certainty at the threshold of litigation.” Gutierrez v. Fox, 141 F.3d
425, 428 (2d Cir. 1998).
18
32
that Strabala did not relinquish his domicile in Illinois despite his subsequent
moves to Houston and then Shanghai.
b.
STRABALA’S MOVE TO HOUSTON
The following facts about Strabala’s move to Houston are essentially
undisputed. 19 In 2006 when Strabala and his wife left Chicago for Houston, they did
not sell the Lake Shore Drive Condo or move any of their furniture out of it. For the
first six to eight months, they lived in an apartment provided to them by Gensler.
Although they later moved into a condominium they purchased in downtown
Houston, they never brought their belongings from Chicago. Instead, they
purchased all new furnishings in Houston. In addition, Strabala’s wife spent about
half her time in Chicago and half in Houston, while Strabala spent about fifty
percent of his time in Shanghai, forty percent of his time in Houston, and ten
percent of his time in Chicago. After Gensler was awarded the Shanghai Tower
design contract, Strabala needed to spend most of his time in Shanghai. Strabala
dislikes air travel, so he began living in Shanghai. At that point, which was before
his employment with Gensler terminated, Strabala and his wife moved all of their
newly purchased furnishings out of the Houston condominium and sent them to the
Even if Strabala did acquire a new domicile in Texas when he moved to Houston
in 2006, alien diversity jurisdiction still would exist in this case so long as Strabala
did not later give up his Texas domicile when he moved to Shanghai. Therefore, it
may seem unnecessary to analyze whether Strabala gave up his Illinois domicile in
favor of Texas. In fact, however, such an analysis must be conducted, both because
Strabala expressly disavows relying on Texas as his state of domicile, see R. 65-2 at
4 (Strabala Dep. 9), and because the evidence regarding Strabala’s intent when he
moved from Houston to China cannot adequately be evaluated without also
considering Strabala’s previous intent when he moved from Chicago to Houston.
19
33
Lake Shore Drive Condo in Chicago. They then rented out their Houston
condominium. Since 2008, Strabala has been back to Houston on only one occasion,
which was in 2011, after his employment with Gensler terminated, when he
attended the opening of the Houston ballet. He stayed at a hotel for that trip
because his condominium was leased. While Strabala and his wife still own the
Houston condominium, it has been leased since 2008 and for sale since November
2014. The Lake Shore Drive Condo, on the other hand, has never been leased for
more than a few days or weeks at a time, nor has it ever been listed for sale.
Strabala states that he has no intention of ever selling it.
These facts are similar to those in Ziskind v. Fox, 2010 WL 3516117 (N.D. Ill.
Sept. 1, 2010). The plaintiff in that case was born and primarily lived in
Pennsylvania. Id. at *2. She moved to Chicago in November 2003 to organize a
series of conferences for a Pennsylvania corporation she helped found. Her intent in
going to Chicago was to expand the company and to then either return to Pittsburgh
or relocate to Washington, D.C. While living in Chicago, she operated the company
out of either an office or her apartment. Her apartment was a rental with a lease
term of no more than one year at a time. She testified that, since moving to Chicago,
she had visited Pennsylvania only once or twice a year for three to four days at a
time, and that, when she visited Pennsylvania, she stayed in hotels. Although she
opened a bank account in Chicago, her primary bank accounts remained with banks
in Pennsylvania. Id. The defendants contended that Ziskind was an Illinois citizen,
based on her residence in that state for close to seven years, her interviewing for
34
employment in and operating her business from Chicago, her joining a synagogue
and a chamber music organization there, and her opening of a bank account there.
Id. at *3. The district court rejected these contentions, however, holding that the
facts cited by the defendants were “not sufficient to undermine Ziskind’s contention,
supported by her affidavit and attachments, that she remains, for purposes of
diversity jurisdiction, a Pennsylvania citizen.” Id. 20
To be sure, the facts in Ziskind are not identical to the facts here. For
instance, the plaintiff in Ziskind had a valid Pennsylvania driver’s license, her car
was titled, registered, located, and insured in Pennsylvania, and she was registered
to vote in Pennsylvania and in fact had voted there while living in Chicago. Id.
Strabala, on the other hand, has a Texas driver’s license, his car is or was titled and
registered in Texas (although it is apparently now located in Chicago), 21 and his
See also Gutierrez, 141 F.3d at 428-29 (holding that the plaintiff’s domicile
remained in New Jersey for purposes of a lawsuit filed in 1996, even though as of
the filing he “worked in New York, banked in New York, and had a girl friend who
lived in New York with whom he stayed from time to time,” because he did not form
the intent to stay in New York until sometime in 1997); Scoggins v. Pollock, 727
F.2d 1025, 1028 (11th Cir. 1984) (although the plaintiff left Georgia not intending to
return there, “she was undecided about her future plans” and ended up residing in
South Carolina solely to pursue her graduate studies; she therefore lacked the
intent to acquire a new domicile in South Carolina, which meant that “Georgia
remained [her] domicile for diversity purposes”); Spanos v. Skouras Theatres Corp.,
235 F. Supp. 1 (S.D.N.Y. 1964), aff’d in relevant part and rev’d in part on other
grounds, 364 F.2d 161, 164 (3d Cir. 1966) (plaintiff did not give up California
domicile despite having sold his residence there and moved to New York where he
worked as an attorney for close to ten years because his intent to maintain his
California domicile was shown by the facts that he always kept a law office there
and never applied to become a member of the New York bar).
20
Strabala states that his car was originally located in Illinois, driven to Texas
when Strabala moved there, and then shipped back to Illinois when Strabala moved
to Shanghai. But his testimony about the car originally being located in Illinois
21
35
voter registration status is unclear on the current record. 22 While relevant, the
Court does not view these facts as dispositive in this case. See, e.g., Webb v.
Banquer, 19 F. Supp. 2d 649, 654 (S.D. Miss. 1998) (fact that decedent obtained a
Mississippi driver’s license and paid Mississippi taxes does not contradict his stated
intention of being domiciled elsewhere because he had no choice but to do those
things); Herzog v. Herzog, 333 F. Supp. 477, 478 (W.D. Pa. 1971) (“little weight can
be given to the fact that plaintiff acquired an operator’s license and car registration
in New York, since non-residents undertaking extensive stays in New York are
obliged by law to obtain those licenses”); Messick v. S. Pa. Bus Co., 59 F. Supp. 799,
801 (E.D. Pa. 1945) (“Plaintiff’s registration of his automobile in Pennsylvania is
inconclusive in establishing his domicile.”). 23
Defendants argue that Strabala’s purchase of a condominium in Houston and
taking of a homeowner’s exemption on it support a finding that he intended to make
Texas his home after moving there. In addition, Defendants cite to the facts that,
seems inconsistent with his other testimony that the car has never been registered
in Illinois.
Strabala states in his declaration that he has always been registered to vote in
Illinois as well as active in the voting process. Courts have found that “voting in a
state raises a presumption of citizenship in that state.” Wright & Miller, supra,
§ 3612. The Court declines to rely on this fact here, however, because Strabala has
only submitted evidence of his 2016 voter registration card and has declined to
provide discovery regarding any dates prior to 2014.
22
Zhang and Zhou point out that Strabala has maintained his Texas driver’s license
to this day, despite having moved from Texas and despite denying an intent to
make Texas his domicile. Strabala testified it was convenient to keep that license
while living in Shanghai because it was renewable by internet, and the Court finds
that explanation credible.
23
36
when his employment with Gensler terminated, Strabala applied for unemployment
benefits in Texas and that he also claimed his Texas address as his residence on
various tax forms. The Court does not view any of these facts as conclusive of
Strabala’s domiciliary intent either. Strabala contends that he purchased the
Houston condominium for convenience, and that his wife made a mistake when she
claimed a homeowner’s exemption on it. He claims that he filed for unemployment
benefits in Texas because that is where his most recent job at the time he became
unemployed was located. These are reasonable explanations unrelated to an intent
to make Texas his home. Strabala does appear to have acted inconsistently with
regard to taking a homeowner’s exemption on his two condominiums, 24 and he
likely used his Houston address in his tax filings. 25 But again the Court finds these
facts are not dispositive. The Court takes note that Texas does not have a state
income tax while Illinois does. The Court concludes that Strabala’s conduct in
taking a homeowner’s exemption on his Texas condominium and his probable use of
his Texas address on tax documents may be indicative of an intent to avoid taxes
but do not establish an intent to make Texas his home in light of other evidence in
Strabala states in his declaration that he “regularly complete[s] a ‘homeowners
exemption’ form for his Chicago co-op,” R. 33-1, (¶ 15), but he attaches as proof only
his 2016 Illinois homeowner’s exemption form. The record shows that he likely took
a homeowner’s exemption on his Houston condominium in the years 2006 through
2008.
24
The record shows that Strabala used the Houston address on a tax form for S&W.
See R. 41-2 at 35. The Court is unable to determine for certain whether Strabala did
the same for any tax documents for years prior to 2014 because Strabala refused to
produce that information in discovery, and the Court therefore presumes that he did
so.
25
37
the record regarding domicile. See, e.g., Galva Foundry Co., 924 F.2d at 730 (while
the plaintiff’s representations regarding his residency status made on Florida tax
forms had an “aura of fraud” about them, they did not effect a change of his domicile
from Illinois to Florida because their purpose, i.e., to avoid Illinois taxes, was
unrelated to domicile); Al-Turki v. Klopp, 2013 WL 752931, at *5 (S.D. Ind. Feb. 27,
2013) (the fact that the defendant stated in tax forms and loan documents that her
primary residence was in Indiana suggests that she “misrepresented herself . . . in
order to obtain a tax benefit,” not that she was domiciled in Indiana); see also DTC
Telecom, L.L.C. v. ISP Techs., Inc., 2002 WL 31553932, at *3 n.4 (N.D. Tex. Nov. 15,
2002) (“citizenship is a matter of federal common law and does not require specific
compliance with the laws of a specific state”).
Defendants also cite to statements by Strabala purportedly made to a
Houston reporter who wrote an article about Strabala, as well as the response
Strabala gave in 2012 at his deposition in the SOM litigation when he was asked
where he lived (he first gave his address in Shanghai, then, when asked for an
address in the United States, gave his Houston address, and then, after further
pressing by opposing counsel, gave his Chicago address). These statements,
however, are not necessarily indicative of his intent regarding his domicile because
they were made in an unrelated context. See Wright & Miller, supra, § 3612
(“declarations made for purposes other than the pending lawsuit are not conclusive”
and are “open to a party to impeach . . . on such grounds as that they were
mistaken, misinformed, or made for entirely different purposes or on the basis of an
38
erroneous understanding of the controlling legal principles”). In particular, it is no
surprise that Strabala would emphasize his ties to the Houston community in
comments he made to a Houston reporter for an article in a Houston newspaper. It
also is likely that Strabala gave his Houston address when asked in the SOM
litigation where he lived because of his continuing desire to avoid Illinois taxes by
claiming residency in Texas instead. In any event, Strabala was asked at the
deposition where he lived, not where he was domiciled, and it is an admitted fact
that Strabala currently lives in Shanghai and, immediately before that, lived in
Houston.
The Court finds other facts more significant on the question of domicile than
those cited by Defendants. In particular, when he moved to Houston, Strabala
maintained his personal residence in Chicago and did not rent it out other than for
a few days or weeks at a time. See Bangaly v. Baggiani, 2009 WL 2475116, at *2
(N.D. Ill. Aug. 11, 2009) (holding that the defendant was still domiciled in Illinois
despite moving two years earlier to Indiana “to live until he retires with a woman
named Sophie who he claims will be his future wife,” because, among other things,
he continued to own a home in Illinois and to list his Illinois address on various
forms); Tanon v. Muniz, 312 F. Supp. 2d 143, 149 (D.P.R. 2004) (holding that
plaintiff’s domicile remained in Puerto Rico despite her spending most of her time in
Florida because “[s]he never sold her residence in Puerto Rico nor rented it”).
Further, Strabala and his wife left virtually all of their personal belongings in
Chicago when they moved to Houston, and, when Strabala needed to be in Shanghai
39
full time, they sent all of their belongings in Houston to their Chicago residence and
rented out the Houston condominium. The Court finds these last facts particularly
compelling of an intent to maintain Chicago as the place of domicile. See Texas, 306
U.S. at 425-26 (“all the circumstances of his life indicated that his real attitude and
intention with respect to his residence there were to make it his principal home or
abiding place to the exclusion of others,” as “clearly indicated by the fact that it was
the place most associated with his family history . . . by his assembling there the
furnishings and objects closely associated with his earlier homes and with his
family life”); Webb, 19 F. Supp. 2d at 654 (“Most of the personal property
(‘belongings’) of the Webb family were stored in Texas, and the Webbs brought very
few personal belongings with them from Texas to Mississippi.”).
These objective facts support Strabala’s explanation that, when he was hired
by Gensler to work in Houston, he was uncertain about how his new job would work
out and therefore he did not move there with the intention of making it his
permanent home. Defendants are incorrect when they argue that Strabala’s
statement of intent for purposes of this litigation should be disregarded completely.
While Strabala’s testimony is self-serving, it nonetheless is “evidence of the
intention requisite to establish domicile.” Texas, 306 U.S. at 425. Statements of
intent are entitled to little weight only if they conflict with the objective facts in the
record. Id. Otherwise, the court may choose to give them some or even “heavy . . .
weight.” Goode v. STS Loan & Mgmt., Inc., 2005 WL 106492, at *7 (D. Md. Jan. 14,
2005) (internal quotation marks and citation omitted). Strabala’s statement of
40
intent with regard to his move to Houston is buttressed, not contradicted, by his
course of conduct after moving to Houston. Therefore, the Court may rely on it to tip
the balance in his favor where, as here, there are objective facts pointing the Court
in both directions. See DTC Telecom, L.L.C., 2002 WL 31553932, at *3 n.5 (“where
the evidence is relatively balanced, expressed intent can be taken into
consideration”); see also Washington v. Hovensa LLC, 652 F.3d 340, 346-47 (3d Cir.
2011) (remanding for further findings because, among other things, the district
court improperly disregarded the plaintiff’s affidavit stating that, although she was
living and working in the Virgin Islands, she intended to return to Texas); Ziskind,
2010 WL 3516117 (relying on the plaintiff’s stated intent to maintain her
Pennsylvania domicile where, although there was evidence on both sides, the
plaintiff could point to objective conduct supporting that intent); Webb, 19 F. Supp.
2d at 654 (“the evidence confirms Darren Webb’s statement that neither he nor his
wife ever formed the necessary intent to establish a legal domicile in Mississippi”).
Finally, the Court rejects Defendants’ argument, based on the Sadat case,
that Strabala moved to Houston and now is trying to reassert an Illinois domicile
without having re-established residency there. In Sadat, the plaintiff sold his
residence in Pennsylvania, took all his belongings with him when he moved, and
notified the U.S. Embassy that Beirut was his permanent overseas residence. These
objective facts demonstrated that the plaintiff had given up his domicile in
Pennsylvania when he moved to Beirut, so that, when he later was evacuated to
Egypt, his stated intention of moving back to Pennsylvania without having ever re-
41
established residency there was insufficient to establish that he was domiciled in
Pennsylvania. Here, Strabala maintained his Chicago domicile by, among other
things, keeping his Chicago residence. In other words, he never abandoned his
Illinois domicile when he moved to Texas and therefore did not need to re-establish
residency there in order to be considered an Illinois citizen.
c.
STRABALA’S MOVE TO SHANGHAI
Zhang and Zhou argue that, because Strabala has lived and worked in
Shanghai continuously since at least 2008, his intent must be to make Shanghai his
permanent home. But, as already noted, physical presence alone does not determine
one’s domicile, and in fact it is well recognized that there are “certain classes of
litigants who do not reside where they are domiciled but nonetheless maintain their
domiciles despite protracted periods of residence elsewhere,” including, for example,
military
personnel,
prisoners,
out-of-state
students,
and
governmental
or
organizational officials. Wright & Miller, supra, § 3612. Strabala seeks to fit himself
within this category of people who do not reside where they are domiciled when he
argues the following:
The only reason I spend much of my time in China is
because China is a significant market for the kinds of
architecturally important buildings that I have the
reputation and expertise to design. Clients want frequent
access to their chief architect for their jobs. As a result, I
had a choice as to how to conduct my business: I could
travel every 2-3 weeks to Asia and spend more time in
Chicago, which would increase costs and force me to live
in a permanent state of jet lag, or engage in less traveling
and spend more time in China servicing the clients for my
work. I have chosen the latter as the most sensible way of
running my architectural business.
42
R. 65-3 at 9-10 (¶ 42); see also id. at 64 (¶ 17) (“It is only because my principal
clients are located in Asia and China that I am spending a good deal of time in
China.”). Strabala further states with regard to his current residence in Shanghai
that he has “every intention of retaining [his] primary residence and permanent
home in Chicago.” Id. at 10 (¶ 43).
Courts have held that a person who resides elsewhere because of his job may
nevertheless maintain his previous domicile. See, e.g., Washington, 652 F.3d at 34647 (where district court found that the plaintiff had acquired a new domicile in the
Virgin Islands because she moved there to work, was physically present there most
of the time, and centered her “business and social life” there; reversed and
remanded on appeal because, although those facts cited by the district court pointed
towards a new domicile in the Virgin Islands, the district court failed to evaluate
them in light of the presumption in favor of the plaintiff’s previously established
domicile in Texas); Persinger v. Extendicare Health Servs., Inc., 539 F. Supp. 2d 995,
996 (S.D. Ohio 2008) (concluding that “the decedent’s actions while in Ohio are more
consistent with a person who is on an extended or protracted absence from his
domicile” than one who intends to change his domicile); Jardine v. Intehar, 213
F. Supp. 598, 600 (S.D.W. Va. 1963) (“A change in residence for the purpose of
seeking employment or for convenience in working conditions does not, without
more, dictate a change in domicile.”) (internal quotation marks and citation
omitted); Harton v. Howley, 155 F. 491, 493 (W.D. Pa. 1907) (plaintiff did not give
up former domicile by residing in place where his “work lies”).
43
Defendants make several arguments for why the Court should find that
Strabala is domiciled in China, but none of them are persuasive. First, Defendants
contend that when a person moves overseas, he gives up his previous domicile in the
United States. In fact, however, “[m]ore evidence is required . . . to establish a
change of domicile from one nation to another than from one state to another.”
Maple Island Farm v. Bitterling, 196 F.2d 55, 59 (8th Cir. 1952) (quoting 28 C.J.S.,
Domicile, § 16); see also Wright & Miller, supra, § 3612 (courts apply “th[e
continuing domicile] rule” to “assure[ ] that a United States citizen will not be
denied access to the federal courts on the ground that she has no domestic domicile
and, hence, no state citizenship for subject matter jurisdiction purposes”); id.,
§ 3613 (“a United States citizen may acquire a domicile in a foreign country under
the principles discussed above,” but the rules regarding domicile are intended to
prevent that from happening “except in very limited circumstances”).
For example, in Kaiser v. Loomis, 391 F.2d 1007 (6th Cir. 1968), the plaintiff
lived in Ethiopia as a missionary doctor on a basis that the court said was obviously
temporary given his living situation there. Prior to that he had lived on a temporary
basis in various other states. The Sixth Circuit rejected the argument that the
plaintiff was stateless for purposes of diversity jurisdiction, holding that he became
an Illinois citizen when he was born to parents who were domiciled there and that
he continued to have that citizenship despite having moved from Illinois because he
had yet to acquire any new domicile. Id. at 1009. And, in Coury v. Prot, 85 F.3d 244
(5th Cir. 1996), the Fifth Circuit affirmed the district court’s finding that, although
44
the defendant had physically moved himself and his family from Texas to France,
he did so “to avoid transatlantic commuting” and “the evidence failed to show an
essential requisite of change in domicile, viz., that he formed an intention . . . to
remain in France indefinitely.” Id. at 252. The Fifth Circuit concluded that, “[i]n
view of [the defendant’s] repeated statements that he and his wife did not intend to
stay in France indefinitely and that they always intended to return to Texas, . . . the
district court’s findings were not clearly erroneous.” Id. 26
The cases cited by Defendants, on the other hand, turn on the unique facts in
each rather than any broad-based rule regarding moving overseas. For example, in
Sadat, 615 F.2d 1176, the court held that the plaintiff was domiciled in Egypt
where he lived because, among other things, he had dual American and Egyptian
citizenship, his mother lived there, he owned a house there where he kept his
furniture, books, records and valuables, he paid real estate taxes there, his children
went to school there, he had an Egyptian driver’s license, he
maintained an
Egyptian checking account, and his affidavit stated that he considered himself a
resident of Egypt where he was born and raised. Id. at 1181. These facts are starkly
different from those here, where Strabala has no family ties to China, his wife
spends half her time in Chicago, he has virtually no personal belongings in China,
See also United States v. Knight, 299 F. 571, 573-74 (9th Cir. 1924) (“An American
citizen does not become a permanent resident of a foreign country by simply taking
employment there with an American firm, however long his employment may
continue.”); Liakakos v. CIGNA Corp., 704 F. Supp. 583, 586-87 (E.D. Pa. 1988)
(plaintiff did not give up his domicile in California when he was transferred to
Greece by his employer, because, even though he has not yet returned to California,
he continues to own and maintain his home, his bank account, his voter
registration, and his driver’s license there).
26
45
he has lived at all times while in China in either a furnished efficiency apartment or
hotel room, he owns no car or real property in China, and, in addition to his Chinese
bank accounts and credit cards, he also maintains bank accounts in Illinois.
Defendants also cite Newell v. O & K Steel Corp., 42 Fed. App’x 830 (7th Cir.
2002) (unpublished) (per curiam), in which the plaintiff contended “that Louisiana
[was] his domicile because he had previously resided there, his mother currently
resides there, he ‘stores goods’ there, and he intends to return there at some time in
the future.” Id. at 833. These contentions were held to be rebutted by the facts that
the plaintiff (1) resided in Japan; and (2) asserted in his complaint that his
hometown was not Louisiana but Chicago (where there would not be diversity
jurisdiction). The superficial similarities between Newell and this case to which
Defendants cite—(a) that the plaintiff remained in Japan “despite his employment
terminating [ ] and his visa expiring [ ]”; (b) that he “could not be present in Chicago
to pursue his lawsuit because of visa concerns that he would not be able to return to
Japan”; and (c) that he “filed this lawsuit only after first pursuing relief
unsuccessfully in Japan’s court system,” id.—are neither controlling of, nor
necessarily even relevant to, the domicile inquiry. Moreover, the court in Newell did
not consider or apply the continuing domicile rule, and Strabala’s ties to Illinois are
much more significant than the meager ties the plaintiff in Newell had to Louisiana.
The district court cases Defendants cite are similarly distinguishable. In
Novel v. Zapor, 2013 WL 1183331 (S.D. Ohio Mar. 21, 2013), the court based its
decision that the plaintiff was not domiciled anywhere in the United States on the
46
facts that he had resided in Thailand for approximately ten years where he worked
as an immigration attorney, he owned a company in Thailand, he had a sister living
there, he was married to a Thai citizen, and most of his personal belongings were
there. Id. at *3. His only connections to New York and California (the two places
where he argued he was domiciled), were that his father and another sister lived in
California, he stored “some personal items” in California, and he claimed to have a
residence in New York. Id. Unlike Strabala, the plaintiff in Novel never lived in one
of his claimed domiciles (California), and the court doubted he really owned a
residence in the other (New York) even though he said he did. Id. at *8; see also
Segen v. Buchanan Gen. Hosp., Inc., 552 F. Supp. 2d 579, 583-84 (W.D. Va. 2007)
(where the plaintiff had been living and working in England continuously for
approximately nine months, court rejects argument that he was domiciled in either
New York or Florida; plaintiff offered no evidence whatsoever to support his alleged
connection to Florida and his only connection to New York was that he used to live
and work there, had paid spousal and child support there, and once voted there over
ten years ago). 27
Two other cases cited by Defendants actually support Strabala’s position here
because, in the face of conflicting evidence regarding domicile, the courts in those
cases credited the statements of intent of the party whose citizenship was at issue
(the defendant in both). See Al-Turki, 2013 WL 752931, at *4-5 (where the plaintiffs
were foreign citizens attempting to sue the defendant in federal district court in
Indiana based on her alleged domicile there, court holds that, notwithstanding she
had a home in Indiana where her husband lived and she visited frequently, the
defendant was domiciled in Kuwait where she maintained permanent residency
status and dual citizenship with the United States and where she testified she
intended to remain living for the foreseeable future); Filter Specialists, Inc. v. Xin Li,
2008 WL 2783266, at *3-6 (N.D. Ind. July 16, 2008) (holding that the defendant was
27
47
Second, the Court also rejects Defendants’ argument that Strabala has
extensive connections to China which evince his intention to remain there. Aside
from the fact that Strabala currently lives and conducts business in China, the only
evidence of Strabala’s extensive connections to China to which Defendants cite is
the facts that Strabala is a well-known figure in the Chinese architectural
community and uses a Chinese name for business in China, and statements about
his residency in Shanghai attributed to him in local newspaper and/or magazine
articles. The Court does not think Strabala’s prominence in China or his use of a
Chinese name for business in China are indicative of anything other than his
business purpose for being there. And even if the Court can consider the newspaper
and/or magazine articles as proof that Strabala made the statements attributed to
him in them, 28 like Strabala’s statements to the Houston reporter, they easily could
have been motivated by Strabala’s desire to please the local audience to whom he
was speaking. The Court therefore does not view those statements as particularly
strong evidence of Strabala’s intent regarding his residency in China, and certainly
not as strong as Strabala’s actual living situation in China. The Court finds it
especially indicative of Strabala’s intent not to reside permanently in Shanghai the
domiciled in China, where he originally was from, where he currently lived, where
he had a Chinese bank account, a Chinese driver’s license, and a long-term Chinese
work visa, and where he stated he intended to remain indefinitely to be near his
parents in order to care for them in their old age).
Zhang and Zhou both state that they personally heard Strabala make some of the
statements in the articles or interviews. That fact, however, lays a foundation only
for Zhang and Zhou to testify about what they heard; it does not necessarily
overcome an independent hearsay objection to the articles themselves.
28
48
facts that (1) he lives in a furnished hotel with a lease of one year or less and owns
no real property, automobile, other means of transportation, and very few items of
personal property
(a desk and a computer)
in China, see, e.g., Persinger, 539
F. Supp. 2d at 998 (“The temporary nature of the housing . . . further undermines
any positive determination that the decedent intended to remain in Ohio.”); (2) he is
in China on a work permit that must be renewed annually; and (3) his wife spends
six months out of the year in Chicago, see, e.g., Kenosha Unified Sch. Dist. v. Stifel
Nicolaus & Co., 607 F. Supp. 2d 967, 975 (E.D. Wis. 2009) (finding domicile to be
established by the presence of the plaintiff’s wife and children in a home built to be
their primary residence). 29
Third, Defendants point to the fact that Strabala has no definite date of
return from Shanghai. The contention that a definite return date is required is not
supported in the law. See Wright & Miller, supra, § 3613 (“even with a showing that
a person is maintaining a new residence and will do so for an indefinite period, he
may not be held to have changed domicile when he is away from the former home
for a limited purpose—for example, to obtain medical care, to pursue employment, or
to serve in an elective or appointive office”) (emphasis added). For example, in
Washington, 652 F.3d at 342, the court held that the plaintiff’s testimony that her
The only evidence in the record on where Strabala’s wife spends her time is
Strabala’s testimony that she lives six months in Shanghai with him and six
months in Chicago. Defendants’ affidavits state that Strabala’s wife lives with him
in Shanghai, but the Court concludes that those statements are not inconsistent
with Strabala’s more specific statement that she splits her time between Shanghai
and Chicago. In any event, if there is an inconsistency, the Court credits Strabala’s
testimony, who obviously would have more particularized knowledge of the exact
location of his wife at any given time than either of Defendants.
29
49
work assignment in the Virgin Islands “was for an indefinite period of time” was not
dispositive of whether she had established a new domicile in the Virgin Islands.
And, in Coury, 85 F.3d at 251, the court also held that the fact that the defendant
did not know when he would be able to return to the United States from France did
not preclude a finding that he never changed his domicile to France. See also Maple
Island Farm, 196 F.2d at 58 (Domicile “‘does not follow from mere indefiniteness of
the period of one’s stay. While the intention to return must be fixed, the date need
not be; while the intention to return must be unconditional, the time may be, and in
most cases of necessity is, contingent.’”) (quoting District of Columbia v. Murphy,
314 U.S. 441, 455 (1941)); Jardine, 213 F. Supp. at 600 (“A change of domicile does
not depend so much upon the intention to remain in the new place for a definite o[r]
indefinite period, as upon its being without an intention to return.”) (internal
quotation marks and citation omitted). 30
Zhang and Zhou argue that “a floating intention to return at some future period”
is insufficient for purposes of maintaining a previously established domicile. R. 64
at 5 (quoting Gilbert, 235 U.S. at 569-70). The Supreme Court made the “floating
intention” comment in Gilbert, however, only after finding that the facts showed
that the plaintiff had indeed relinquished his domicile in Michigan when he moved
his family to Connecticut and bought a house there where he had lived for the past
twenty years. A floating desire to return to Michigan someday could not by itself
preserve a domicile in that state when the facts showed the domicile had been
previously abandoned. See also Foroughi v. Am. Airlines, Inc., 2011 WL 5979716
(S.D.N.Y. 2011) (also cited by Defendants) (where the plaintiff moved to Canada
three years before the complaint was filed, and, notwithstanding her stated
intention to return to New York someday, did not offer any facts to suggest that she
did not give up her New York domicile when she moved). Nothing in Gilbert
suggests that the “floating desire” language was intended to impose a separate,
independent requirement of a definite return date.
30
50
Finally, Defendants contend that Strabala’s “remaining ties to Illinois are
almost non-existent.” R. 56 at 8. The Court rejects this characterization of the
evidence, however, for reasons that have already been explained, namely that
Strabala has owned the Lake Shore Drive Condo continuously since 1999, he has
never sought to lease it out other than for days or a few weeks at a time, and his
wife spends six months of the year there. In addition, Defendants ignore other
contacts Strabala has maintained with Illinois, such as the fact that Strabala
incorporated his company, S&W, as an Illinois limited liability company and uses
the Lake Shore Drive Condo as the address for its principal office. R. 33-8. S&W has
a City of Chicago license for a home business issued in May 2010. R. 33-1 (¶ 34);
R. 33-10. Strabala funded the initial start-up costs of 2DEFINE through a transfer
of funds from S&W, and then continued to use S&W as the business entity that
would receive payments from and pay bills for 2DEFINE even while he worked out
of Shanghai. R. 33-1 (Strabala Decl. ¶ 22); see R. 33-1 (¶ 37); R. 33-13
(documentation showing money transfers from 2DEFINE’s Shanghai office, via the
Bank of China, to S&W in Chicago). Through S&W, Strabala has hired contract
employees in Chicago to work on Strabala’s design projects overseas, paying them a
substantial amount of money in 2012. R. 41-1 at 4 (Strabala Dec. ¶ 12); R. 41-2 at
35.
In addition to the above, Strabala’s 2015 Membership Application to The
American Institute of Architects, signed by Strabala in November 2014, lists the
Lake Shore Drive Condo as Strabala’s address. R. 33-1 (¶ 35); R. 33-11. And
51
Strabala opened a bank account in Illinois in 2010 also using the Lake Shore Drive
Condo address. R. 33-1 (¶ 36); R. 33-12. The fact that Strabala also maintains or has
maintained bank accounts in either Texas or China and used those while in those
places does not weigh against a conclusion that Illinois is his domicile, as one would
expect him to have banking connections in the place where he is residing. But one
would also expect, if Strabala had no intent to ever return to Illinois, that he would
not maintain accounts in Illinois. Therefore, the salient fact is not that Strabala has
bank accounts in China or that he had one in Houston, but that he has bank
accounts in Illinois, which he never gave up and still uses today.
Strabala also advertises himself in his “LinkedIn” page as an American
architect employed and located in Shanghai, Seoul and Chicago, with promotional
materials for 2DEFINE also indicating the existence of offices in Chicago, Seoul,
and Shanghai. Zhang and Zhou dispute whether 2DEFINE has or ever had an office
in Chicago, but they cannot dispute the evidence in the record showing that
2DEFINE advertised itself as having one. The relevant point is that Strabala sought
to maintain his ties with Chicago by advertising an office there rather than that an
actual or official “Chicago office” exists. Finally, Strabala testified that he has had a
landline telephone number with a Chicago area code for the last twenty to thirty
years. One would not expect a person who intends to abandon his domicile in
Illinois to maintain a landline telephone number in that state for more than two
decades.
52
Ignoring all of the above, Defendants’ contention regarding Strabala’s current
ties to Illinois being practically non-existent appears to be a reference solely to the
fact that Strabala has not visited Chicago very often over the last several years. He
testified that he tries to come to Chicago for about one month every fall, but that he
did not do so in 2015 because his mother was gravely ill that year and he visited her
in Arizona instead. While Strabala’s infrequent visits to Illinois are relevant, the
Court finds they are not dispositive of his intent in this case. Rather, Strabala’s
contacts to Shanghai evince an intent to do business there, while his contacts to
Chicago evince an intent to both do business and more importantly to maintain a
home here, and the latter is more significant for purposes of domicile. See DTC
Telecom, L.L.C., 2002 WL 31553932, at *3 (holding that the plaintiff was domiciled
in the state where his contacts showed “a conscious effort to create home base and
a life,” as opposed to the state where they showed “a business relationship within”
the state). Further, Strabala’s living situation in Shanghai does not demonstrate an
intent to “maintain [his] residency [there] indefinitely” and thereby “turn residence
in fact into a domicile in law.” Perry, 16 F.3d at 140. The Court thus concludes that
the preponderance of the evidence supports Strabala’s declared intent to not
abandon his domicile in Chicago, notwithstanding the time he has been away by
moving first to Houston and then Shanghai. Accordingly, Strabala continues to be
domiciled in Illinois, and thus subject matter jurisdiction exists.
53
PERSONAL JURISDICTION
A challenge to a court’s exercise of personal jurisdiction over a defendant is
made under Federal Rule of Civil Procedure 12(b)(2). Strabala bears the ultimate
burden of demonstrating by a preponderance of the evidence that the Court may
exercise personal jurisdiction over Zhang and Zhou. See Durukan Am., LLC v. Rain
Trading, Inc., 787 F.3d 1161, 1163-64 (7th Cir. 2015). But he need only make a
prima facie showing at this time. Felland v. Clifton, 682 F.3d 665, 672 (7th Cir.
2012). For purposes of that prima facie showing, the Court will accept as true all
well-pleaded facts alleged in the complaint and resolve any factual disputes in the
affidavits in favor of Strabala. See Swanson v. City of Hammond, 411 Fed. App’x
913, 915 (7th Cir. 2011) (unpublished). “If the existence of jurisdiction turns on
disputed factual questions the court . . . may defer ruling pending receipt at trial of
evidence relevant to the jurisdictional question.” Combs v. Bakker, 886 F.2d 673,
676 (4th Cir. 1989).
The Court looks to Illinois’s long-arm statute to determine whether it may
exercise personal jurisdiction over Defendants. See Philos Techs., Inc. v. Philos & D,
Inc., 802 F.3d 905, 912 (7th Cir. 2015) (“District courts exercising diversity
jurisdiction apply the personal jurisdiction rules of the state in which they are
located.”). That statute provides that the outer boundary of the personal jurisdiction
of an Illinois court is set by the Due Process Clause of the Fourteenth Amendment.
See 735 Ill. Stat. Ann. 5/2–209(c). Under the Due Process Clause, a court may
exercise personal jurisdiction over an out-of-state defendant when that defendant
54
has “minimum contacts with [the forum state] such that the maintenance of the suit
does not offend traditional notions of fair play and substantial justice.” Int’l Shoe
Co. v. State of Wash., Office of Unemployment Compensation & Placement, 326 U.S.
310, 316 (1945) (internal quotation marks and citation omitted). “‘The defendant’s
conduct and connection with the forum State [must be] such that he should
reasonably anticipate being haled into court there.’” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474 (1985) (quoting World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)). While there are two branches of personal
jurisdiction theory—general and specific—only the latter is relevant here. For a
court to exercise specific jurisdiction, the lawsuit must “result[ ] from alleged
injuries that ‘arise out of or relate to’” the defendant’s contacts with the forum.
Burger King, 471 U.S. at 472-73 (quoting Helicopteros Nacionales de Colombia, S.A.
v. Hall, 466 U.S. 408, 414 (1984)). Defendants do not contest that if minimum
contacts exist here, Strabala’s injuries arise out of or relate to those contacts and
thus specific jurisdiction would be established.
The Seventh Circuit has noted that the nature of the constitutional minimum
contacts inquiry of purposeful-direction/purposeful-availment differs depending on
whether the plaintiff’s claims are for breach of contract or lie in tort. Felland, 682
F.3d at 674. Strabala alleges two tort claims in the complaint—Count I for
defamation, and Count II for “intentional interference.” The specific personal
jurisdiction inquiry must be conducted separately for each of these counts. See In re
Testosterone Replacement Therapy Prods. Liab. Litig. Coordinated Pretrial
55
Proceedings, 164 F. Supp. 3d 1040, 1047 (N.D. Ill. 2016). Where, as here, the
plaintiff has alleged tort claims, the Seventh Circuit looks to the Supreme Court’s
decision in Calder v. Jones, 465 U.S. 783 (1984), for guidance. See Felland, 682 F.3d
at 674. The Supreme Court held in Calder that a California court could exercise
personal jurisdiction over Florida residents who had written and edited an allegedly
libelous article concerning an actress who was a California resident. 465 U.S. at
785-86. The Court rejected the defendants’ arguments that they were not
responsible for the distribution of their article in California and had no stake in its
publication there, holding instead that the defendants’ intentional and allegedly
tortious actions were expressly aimed at California. Id. at 789. The Seventh Circuit
has “distilled three requirements from Calder for determining whether conduct was
‘purposefully directed’ at the forum state: ‘(1) intentional conduct (or “intentional
and allegedly tortious” conduct); (2) expressly aimed at the forum state; (3) with the
defendant’s knowledge that the effects would be felt—that is, the plaintiff would be
injured—in the forum state.’” Felland, 682 F.3d at 674-75 (quoting Tamburo v.
Dworkin, 601 F.3d 693, 703 (7th Cir. 2010)). Defendants’ challenge the Court’s
assertion of personal jurisdiction over them based only on the second requirement of
the Calder test.
A.
COUNT I--DEFAMATION
Strabala’s defamation claim in Count I is based on e-mails allegedly sent by
Defendants to persons in Chicago. Initially, Zhou contends that the e-mails were
authored and sent by Zhang, and that he is only copied on them. Therefore, he
56
claims, the e-mails may justify the Court’s assertion of personal jurisdiction over
Zhang, but not him. Strabala alleges, however, that Zhou assisted Zhang in
authoring the defamatory e-mails. There is no evidence in the record to contest that
allegation, and, even if there were, the Court must resolve disputed facts in
Strabala’s favor. Moreover, Zhou admits he co-authored the allegedly defamatory
letter to Anthony Wood and participated in Zhang’s sending of the letter to Wood by
e-mail with the intent that Wood would receive and read the letter. Therefore,
Strabala has alleged sufficient facts against Zhou to warrant the Court’s assertion
of personal jurisdiction over him if personal jurisdiction based on the defamatory emails is warranted.
Next, Defendants both argue, based on Advanced Tactical Ordnance Systems,
LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014), that the sending of
e-mails does not amount to conduct expressly aimed at Illinois. But that case is
distinguishable. The Seventh Circuit held in Advanced Tactical Ordnance Systems
that “the sending of two allegedly misleading emails to a list of subscribers that
included Indiana residents,” id. at 802, did not establish constitutionally sufficient
minimum contacts with Indiana. Defendants rely on the following explanation the
court gave for its holding:
The fact that Real Action maintains an email list to allow
it to shower past customers and other subscribers with
company-related emails does not show a relation between
the company and Indiana. Such a relation would be
entirely fortuitous, depending wholly on activities out of
the defendant’s control. As a practical matter, email does
not exist in any location at all; it bounces from one server
to another, it starts wherever the account-holder is sitting
57
when she clicks the “send” button, and it winds up
wherever the recipient happens to be at that instant. The
connection between the place where an email is opened
and a lawsuit is entirely fortuitous. We note as well that
it is exceedingly common in today’s world for a company
to allow consumers to sign up for an email list. We are not
prepared to hold that this alone demonstrates that a
defendant made a substantial connection to each state (or
country) associated with those persons’ “snail mail”
addresses.
Id. Defendants ignore, however, that immediately following the above explanation
the Seventh Circuit distinguished the situation where there is “evidence that a
defendant in some way targeted residents of a specific state, perhaps through
geographically-restricted online ads.” Id. That situation, the court explained, “may
be different” because “the focus would not be on the users who signed up, but
instead on the deliberate actions by the defendant to target or direct itself toward
the forum state.” Id.
Here, Strabala does not allege that Defendants sent out blast e-mails to
anyone who happened to put their name on a list of subscribers. Instead, Strabala
alleges that Defendants targeted specific individuals who they knew had a business
relationship to Strabala, and they did so with the intent, purpose and effect of
defaming him to those individuals. “Concluding that intentionally tortious emails
cannot give rise to personal jurisdiction would insulate from liability a ubiquitous
form of communication and entirely negate the otherwise permissible exercise of
jurisdiction over defendants who purposefully directed their activities at a forum
state without entering the state.” Leibman v. Prupes, 2015 WL 898454, at *10 (C.D.
Cal. Mar. 2, 2015) ) (internal quotation marks and citations omitted) (distinguishing
58
Advanced Tactical Ordnance Systems in holding that the defendant’s alleged
actions in that case of sending extortionate e-mails to a targeted California resident
created minimum contacts with California). Defendants purposefully aimed their
conduct at Illinois by seeking to damage Strabala’s reputation in Illinois where the
e-mail recipients were located. See Walden v. Fiore, 134 S. Ct. 1115, 1124 (2014)
(“because publication to third persons is a necessary element of libel, the
defendants’ intentional tort [in Calder] actually occurred in California”) (emphasis
in original; internal citation omitted); Vizant Techs., LLC v. Whitchurch, 97
F. Supp. 3d 618, 632 (E.D. Pa. 2015) (“When a district court’s personal jurisdiction
over a defendant for a defamation claim is in dispute, where defendants aimed their
defamatory statements is jurisdictionally significant.” (internal quotation marks
and citation omitted)). Thus, Defendants’ relationship to Illinois cannot be said to be
“entirely fortuitous” and “dependent wholly on activities out of [their] control.”
Advanced Tactical Ordnance Sys., LLC, 751 F.3d at 803.
Defendants also contend that the “expressly aimed” requirement is not met
here because they “had no idea where the email recipients (or their computer
servers) were located.” R. 31 at 11. The Court is skeptical that knowledge of the email recipients’ location is required in the context of a defamation claim.
Defendants cite to the Supreme Court’s recent decision in Walden, but that case
does not speak to the issue except to the extent that it specifically distinguishes
reputation-based torts from other torts for purposes of an analysis of the “express
aiming” requirement. Walden involved airplane passengers who were detained by
59
the defendant police officers at an airport in Georgia. The plaintiffs sued the officers
in Nevada for fraud and another intentional tort, alleging the defendants had seized
and kept the plaintiffs’ cash without probable cause and later lied about it in false
affidavits. 134 S. Ct. at 1119-20. The Supreme Court held that the defendants’
knowledge that the plaintiffs resided in Nevada and that they were headed to
Nevada to gamble with the monies seized by the defendants was insufficient for a
Nevada court’s assertion of personal jurisdiction over the defendants. Id. at 1124.
Due process, the Court said, requires more than just knowledge of the plaintiffs’
strong forum connections or that the plaintiffs would suffer foreseeable harm in the
forum from the defendants’ acts. Id. at 1125. It requires that the defendants
themselves have some contact with the forum state. Id. at 1126. Because the
defendants’ relevant conduct in that case occurred entirely in Georgia, due process
barred the Nevada court from exercising specific personal jurisdiction over them. Id.
In emphasizing the place where the defendants’ relevant conduct occurred,
the Walden Court explained that it had reached a different result in Calder because
the defendants’ conduct in that case could be said to have “occurred” in the forum
state because of “the nature of the libel tort.” Id. at 1124. As the Court explained,
“[h]owever scandalous a newspaper article might be, it can lead to a loss of
reputation only if communicated to (and read and understood by) third persons.” Id.
Accordingly, “the reputation-based ‘effects’ of the alleged libel [in Calder] connected
the defendants to California, not just to the plaintiff.” Id. at 1123-24. Applying this
reasoning here, the injury occasioned in a defamation case, like a libel case, occurs
60
in the state where the e-mail recipients are located. But the Court in Walden
specifically declined to discuss “the very different questions whether and how a
defendant’s virtual ‘presence’ and conduct translate into ‘contacts’ with a particular
State,” leaving those questions “for another day.” Id. at 1125 n.9.
The question left open by the Walden Court of virtual contacts and their
implications for purposes of the express aiming requirement was discussed in
Facebook, Inc. v. ConnectU LLC, 2007 WL 2326090 (N.D. Cal. Aug. 13, 2007), where
the court cogently began by explaining that, in traditional, i.e., non-internet based,
intentional tort cases, a defendant “indisputably kn[o]w[s] at the time of [his]
conduct that the targeted persons or entities [are] located in the particular forum
that subsequently assert[s] jurisdiction” because “the act of targeting a forum [in
that kind of case] automatically carrie[s] with it knowledge of the geographical
location, e.g., the sending of an actionable letter to plaintiff at a mailing address.”
Id. at *1. But where the internet is concerned, a person’s conduct may be “expressly
aimed at a specific person or entity in another forum that causes harm in that
forum without having express knowledge as to the geographic location of the person
or entity being affected.” Id. The court concluded that “the mere fact that the
Internet provided [defendants] a tool by which they could carry out their conduct
against [the plaintiff] without first making efforts to learn its geographic location is
not a reason to excuse them from jurisdiction to which they would otherwise be
subject.” Id. at 5. Therefore, the court held, notwithstanding language in traditional
intentional tort cases that might be read to suggest otherwise, “a defendant need
61
not have knowledge as to which geographic forum” the target of the tortious
internet-based conduct “resides in, so long as the conduct was aimed at and likely to
cause harm in that forum.” Id. at *1 (emphasis in original).
The Court agrees with this analysis. Strabala alleges that Defendants
targeted specific individuals who they knew had a business connection to him. That
Defendants were able to do so while remaining ignorant of those individuals’ precise
location “may render this case factually distinct from prior precedents finding
jurisdiction for acts of express aiming, but not in a manner that warrants a different
result.” Id. at *6; see also Cont’l Appliances, Inc. v. Thomas, 2012 WL 3646887, at *7
(N.D. Cal. Aug. 23, 2012) (“The fact that [the defendant] may not have known in
advance that IAS is located in California is not necessarily dispositive.”); cf. Aitken
v. Commc’ns Workers of Am., 496 F. Supp. 2d 653, 660 (E.D. Va. 2007) (holding that
“a spammer may not avoid personal jurisdiction by simply pleading ignorance of
where the[ ] servers were physically located, nor by pleading ignorance of the email
recipient’s location,” explaining that “[a] contrary result would permit spammer and
other tortfeasors to escape jurisdiction simply by turning a blind eye to the natural
consequences of their actions”) (internal quotation marks and citation omitted).
Indeed, if lack of knowledge were an excuse, a defendant could insulate himself
from being sued anywhere except in his home state by choosing to remain ignorant
of the locations of his victims. 31
A number of cases appear to reach a contrary conclusion in holding that the
defendant must have knowledge of where the target of his or her internet-based
conduct is located. But those cases either (1) do not involve a reputation-based tort,
31
62
In any event, even if knowledge of the e-mail recipients’ location is required,
Strabala alleges that the people to whom Defendants addressed the e-mails were
known by them to live in Illinois, and he submits as evidence his declaration stating
that Zhang worked at the San Francisco office of SOM and knew the precise names
of the Chicago staff of SOM whom he “selectively targeted with defamatory emails.” R. 41-1 at 4-5 (Strabala Decl., ¶ 13); see also R. 31-3 at 6 (¶ 26) (Zhou worked
at Gensler’s Shanghai office from 2008 until 2010). Strabala also attaches pages
from the internet showing that the location of at least some of the e-mail recipients
was publicly available. See Premedics, Inc. v. Zoll Med. Corp., 2007 WL 3012968, at
*5 (M.D. Tenn. Oct. 9, 2007) (“Premedics’ physical location and incorporation in the
state of Tennessee are facts plainly stated on the home page of the Premedics
website, obvious to anyone who views the website”). Because, as previously noted,
all factual discrepancies must be resolved in Strabala’s favor, the Court cannot rely
on Defendants’ statements to the contrary to rule in their favor on a motion to
dismiss. See, e.g., Levin v. The Posen Foundation, 62 F. Supp. 3d 733, 740 (N.D. Ill.
2014) (“Since controverted facts are resolved in Levin’s favor for the purpose of this
motion, the court finds that Levin has sufficiently alleged and supported the
where the defendant’s tortious conduct by definition occurred in the place where the
defamatory statements were published, see, e.g., Rice v. Karsch, 154 Fed. App’x 454,
455 (6th Cir. 2005) (unpublished) (breach of contract); Watiti v. Walden Univ., 2008
WL 2280932, at *10-11 (D.N.J. May 30, 2008) (breach of contract and fraud), or else
(2) deal with the Advanced Tactical Ordnance Systems, Inc.-type situation of blast
e-mails, where the geographically targeted online activity is too dispersed to
warrant a finding of express aiming, see, e.g., Shrader v. Biddinger, 633 F.3d 1235,
1247-48 (10th Cir. 2011); United Airlines, Inc. v. Zaman, 152 F. Supp. 3d 1041, 1051
(N.D. Ill. 2015).
63
contention that Young was aware that Levin resided in Illinois.”); Premedics, Inc.,
2007 WL 3012968, at *5 (“Construing the facts and pleadings in the light most
favorable to Plaintiff, the Court concludes that Defendants knew or should have
known that Plaintiff was located in Tennessee when Johnson accessed Premedics’
website.”).
Finally, the Court also does not find convincing Defendants’ argument that
one of the e-mail recipients, Anthony Wood, happened to be in China when the email was sent so that he may have opened the e-mail there rather than at his office
in Illinois. In the first place, Defendants offer only their own speculation as to when
Wood was likely to have opened the e-mail. But in any case, their argument misses
the point. If Defendants sent a defamatory e-mail to an e-mail address of a business
or person located in Illinois, it does not matter, for purposes of deciding whether
Defendants expressly aimed their conduct to and caused injury in the forum state,
where the person who opened the e-mail was at the time he or she opened the email. As the Seventh Circuit explained, “email accounts can generally be accessed in
any state, so it may not make much sense to say that they were ‘sent to’ a Wisconsin
address.” Felland, 682 F.3d at 676 n.3. “Nevertheless,” the court continued, the
defendant “purposefully sent the[ ] emails to [forum] residents knowing that they
would most likely be read and have their effect in [there].” Id. (emphasis added). In
other words, the jurisdictional inquiry does not turn on where the e-mail was
opened—a purely “fortuitous” place by virtue of the nature of e-mails. Instead, the
question for jurisdictional purposes is where the person or entity who is targeted by
64
the e-mail is based. See Cont’l Appliances, Inc., 2012 WL 3646887, at *6-7 (rejecting
defendant’s argument that his alleged tortious conduct in alerting a company based
in California about a defamatory YouTube video did not target California because
he contacted an employee of the company knowing that employee resided in Ohio;
court holds that the employee’s location in Ohio was not relevant because the
defendant’s purpose in contacting him was to injure the plaintiff’s reputation with
the employee’s company, which was located in California). 32
In sum, Strabala has made a prima facie case for the Court to assert personal
jurisdiction over Defendants as to Count I. 33
The Court believes this is the proper rule even if, as Defendants contend, their
intent was that Wood open the e-mail with the letter attached while he was in
China attending a conference. See, e.g., Fletcher v. Doig, 125 F. Supp. 3d 697, 709
(N.D. Ill. 2014) (quoting Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 514 F.3d
1063, 1075 (10th Cir. 2008) (describing the defendant’s intent as “something like a
bank shot in basketball” where the player shoots the ball off the backboard
intending for it to hit the backboard, but, in so intending, his “express aim” is really
to put the ball into the basket)).
32
Normally, before concluding that a prima facie case for personal jurisdiction
exists, the Court would also have to consider whether jurisdiction in Illinois would
violate notions of fair play and substantial justice. See Felland, 682 F.3d at 677
(factors relevant to the fair play and substantial justice inquiry include “the burden
on the defendant, the forum State’s interest in adjudicating the dispute, the
plaintiff’s interest in obtaining convenient and effective relief, the interstate judicial
system’s interest in obtaining the most efficient resolution of controversies, and the
shared interest of the several States in furthering fundamental substantive social
policies”) (quoting Burger King, 471 U.S. at 477) (internal quotation marks
omitted)). But Defendants did not raise the issue in their briefs, and, accordingly,
they have waived any argument on that point. The Court recognizes that litigating
in the United States may impose some burden on Defendants, who are Chinese
nationals residing in China, but notes that is not a reason in itself to decline to
exercise personal jurisdiction over them. See NetApp, Inc. v. Nimble Storage, Inc.,
41 F. Supp. 3d 816, 828 (N.D. Cal. 2014) (“courts have appropriately exercised
jurisdiction over foreign parties”) (citing cases).
33
65
B.
Count II—Intentional Interference
The factual basis for Count II is the tortious conduct allegedly committed by
Defendants other than the allegedly defamatory e-mails, such as interfering with
2DEFINE’s website, clients, employees, contracts, and accounts receivables. 34
According to Defendants, “[a] defendant does not expressly direct his conduct
toward Illinois simply by operating a website and using it to communicate
information to the world at large.” R. 31 at 10. Strabala apparently concedes as
much, but argues that this Court has personal jurisdiction over Defendants
because, “by their defamatory and letter campaign, directed at the forum state of
Illinois, Defendants intentionally interfered with and defamed Strabala.” R. 33 at 7.
This argument attempts to merge the personal jurisdiction analysis for Count II
with the analysis for Count I. The alleged defamatory e-mails do not establish a
factual basis for Count II. Strabala makes no legal argument explaining why the
Court may assert personal jurisdiction over Defendants for a claim based on the
Specifically, the complaint alleges that: (1) Defendants secretly created two
Chinese partnerships with names similar to 2DEFINE and used those partnerships
to misappropriate funds owed to 2DEFINE, R. 1 (¶¶ 20-22); (2) Defendants stole
property belonging to 2DEFINE and to Strabala, stopped paying 2DEFINE
employee salaries and expenses and, in effect “destroyed the Shanghai office of
2DEFINE by diverting company funds to their personal bank accounts, leaving
2DEFINE with no income and only debts,” id. (¶ 24); (3) Zhang falsely advertises
on the Internet to individuals in the United States that he has a valid U.S.
architectural license, id. (¶ 26); (4) Defendants have been doing business with
contracts, equipment and some employees diverted from 2DEFINE, and they have
tortiously interfered with Strabala’s business and future economic prospects by
among other things visiting at least one of Strabala’s clients, demanding
contractual information for a project on which Strabala was hired, and indicating
that payments due Strabala should be diverted to Defendants instead, id. (¶¶ 2628); and (5) Defendants have been providing Strabala’s confidential business
information to Gensler and SOM, id. (¶ 29).
34
66
tortious conduct on which Count II is based, nor does the Court perceive there to be
any. The tortious conduct alleged, if it occurred, would have happened mostly if not
solely in China. A possible exception is the alleged communications with Gensler
and SOM. But Gensler, according to the facts in the record, is located in Texas, and
Strabala does not give any details regarding the alleged communications with SOM
that would allow the Court to conclude it had personal jurisdiction for a claim based
on those communications. Accordingly, Count II of the complaint, as well as any
defamation claim Strabala might be attempting to assert based on e-mails or other
communications with persons located in places outside Illinois (such as employees of
Gensler’s Houston office), are dismissed for lack of personal jurisdiction over
Defendants as to those claims. 35
Count II is dismissed for the additional reason that it fails to state a legally
sufficient claim for relief. To state a claim for tortious interference with contract, a
plaintiff must allege, among other things, a valid contract, a breach of that contract,
and resulting damages. See George A. Fuller Co. v. Chi. Coll. of Osteopathic Med.,
719 F.2d 1326, 1330 (7th Cir. 1983). Strabala’s vague references to unidentified
contracts do not put Defendants on notice of the basis for his claim; he must identify
specific contracts that were breached. Moreover, Strabala does not specifically
allege that any of the contracts with which Defendants supposedly interfered were
actually breached, or explain in what way they were breached and by whom. Nor
does he explain the factual basis for his claim that he suffered damages from the
alleged interference. See, e.g., Peco Pallet, Inc. v. Nw. Pallet Supply Co., 2016 WL
5405107, at *13 (N.D. Ill. Sept. 28, 2016) (“Fatal to its claim, however, Northwest
fails to identify any breach of contract resulting from PECO’s conduct, alleging only
that PECO attempted to induce a breach.”) (citing Miller UK Ltd. v. Caterpillar Inc.,
2015 WL 6407223, at *6 (N.D. Ill. Oct. 21, 2015) (“[A]n element of a tortious
interference with contract claim under Illinois law is an actual breach caused by the
defendant’s conduct, not the mere possibility of breach.”). In short, the allegations
wholly fail to inform Defendants of the factual basis for Strabala’s claim. The same
is true if Strabala is intending to assert a claim for tortious interference with
business expectancy. For that claim, Strabala needs to identify in a non-conclusory
fashion, among other things, the specific business relationships for which he had a
35
67
SERVICE OF PROCESS
A motion to dismiss based on invalid service of process is brought pursuant to
Federal Rule of Civil Procedure 12(b)(5). The burden of proving effective service of
process is on the plaintiff. Cardenas v. City of Chicago, 646 F.3d 1001, 1005 (7th
Cir. 2011). The method of service of process is governed in this case by Federal
Rules of Civil Procedure 4. See Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.
2002) (“Even though the case is governed by state law, the method of service . . . will
be governed by Fed. R. Civ. P. 4”). Rule 4(f) describes the manner for serving an
individual in a foreign country. The Court is concerned here with two sections of
Rule 4(f): (1) Rule 4(f)(1), which provides that service may be accomplished “by any
internationally agreed means of service that is reasonably calculated to give notice,
such as those authorized by the Hague Convention”; and (2) Rule 4(f)(3), which
allows service “by other means not prohibited by international agreement, as the
court orders.”
A.
SERVICE UNDER THE HAGUE CONVENTION
Defendants first contend that service of process was inadequate because
Strabala failed to serve them under Rule 4(f)(1) according to the methods prescribed
by the Hague Convention. The Hague Convention is an international treaty
reasonable expectancy of entering into, as well as the specific conduct of Defendants
that interfered with those business expectancies, how that conduct worked an
interference, and how the interference resulted in injury to Strabala. Simply stating
that Strabala had a business expectancy, which Defendants interfered with thereby
causing Strabala harm, is conclusory and insufficient to put Defendants on notice of
Strabala’s claim. See Am. Audio Visual Co. v. Rouillard, 2010 WL 914970, at *2
(N.D. Ill. Mar. 9, 2010); Peco Pallet, Inc., 2016 WL 5405107, at *13-14.
68
formulated to provide a simpler way to serve process abroad. Volkswagenwerk
Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698 (1988). The primary means of
service under the Hague Convention is through a receiving country’s “central
authority,” which receives requests for service, arranges for service, and returns
proofs of service. Id. at 698-99. Strabala initially attempted service through the
Hague Convention when, after having the summons and complaint translated to
Chinese, he requested service upon Defendants through China’s Ministry of Justice.
R. 10 at 2, 7-20. The request was made on May 14, 2015, and, as of November 10,
2015, Strabala had not yet received a response from the Ministry of Justice. Id.
“The Hague Convention does not specify a time within which a foreign
country’s Central Authority must effect service, but Article 15 does provide that
alternate methods may be used if a Central Authority does not respond within six
months.” Fed. R. Civ. P. 4, Advisory Committee Notes, 1993 amendments. “The
decision whether to allow alternate methods of serving process under Rule 4(f)(3) is
committed to the ‘sound discretion of the district court.’” Brockmeyer v. May, 383
F.3d 798, 805 (9th Cir. 2004) (citations omitted); see also Hinsey v. Better Built Dry
Kilns, Inc., 2009 WL 1766883, *2, (N.D. Ind. June 22, 2009) (“Rule 4(f)(3) provides
the Court with flexibility and discretion empowering courts to fit the manner of
service utilized to the facts and circumstances of the particular case.”) (internal
quotation marks and citation omitted); see, e.g., Stream SICAV v. Wang, 989
F. Supp. 2d 264, 280 (S.D.N.Y. 2013) (authorizing alternative service in China
because significant delay was likely if service was sought through the Chinese
69
Ministry of Justice); In re LDK Solar Secs. Litig., 2008 WL 2415186, *1 (N.D. Cal.
June 12, 2008) (authorizing an alternative means of service on Chinese defendants
without first attempting “potentially fruitless” service through the Hague
Convention’s Chinese Central Authority).
Court-directed service pursuant to Rule 4(f)(3) is appropriate when, for
example, “there is a need for speed that cannot be met by following the Hague
Convention methods, when the Central Authority of the foreign country has refused
to serve a particular complaint (perhaps based on its own public policy or
substantive law limitations), or when a foreign country’s Central Authority fails to
effect service within the six-month period provided by the Hague Convention.” 4B
FED. PRAC. & PROC. CIV. § 1134 (4th ed.) (emphasis added). Strabala waited six
months, and, not having heard from the Ministry regarding his request for service,
he moved the Court for an order pursuant to Rule 4(f)(3) to serve Defendants by
alternate means. Strabala was not out of line in doing so, and the Court’s grant of
that motion was appropriate. See Bazarian Int’l Fin. Assocs., L.L.C. v. Desarrollos
Aerohotelco, C.A., 168 F. Supp. 3d 1, 16 (D.D.C. 2016) (holding that the plaintiff was
“not required to first demonstrate a minimum threshold effort to serve Defendants
via . . . the Hague Convention,” and, even if he was, “this burden would have been
satisfied in this case”); see also Flava Works, Inc. v. Does 1-26, 2013 WL 1751468, at
*6-7 (N.D. Ill. Apr. 19, 2013) (in the absence of any directive from the Seventh
Circuit, “the court finds that Rule 4(f) does not indicate a preference for any method
of service”); Zhang v. Baidu.com Inc., 293 F.R.D. 508, 514 (S.D.N.Y. 2013)
70
(concluding that the court “has discretion to authorize alternative service . . .
pursuant to Rule 4(f)(3) notwithstanding China’s refusal to effect service under the
Hague Convention on the ground that doing so would infringe its sovereignty and
security”). 36
B.
PROOF OF SERVICE
Rule 4(f)(3) permits the court to order service by any means not prohibited by
international agreement, as long as the method of service comports with
constitutional notions of due process. U.S. Commodity Futures Trading Comm’n,
2008 WL 4299771, *4. Defendants do not argue that the method of service ordered
Defendants quote from the Supreme Court’s opinion in Volkswagenwerk
Aktiengesellschaft to the effect that “compliance with the [Hague] Convention is
mandatory in all cases to which it applies.” 486 U.S. at 705. To begin with, because
Strabala apparently did not know Defendants’ correct physical addresses, the
Hague Convention does not apply. See D.Light Design, Inc. v. Boxin Solar Co., 2015
WL 526835, at *2 (N.D. Cal. Feb. 6, 2015) (“[D]espite Plaintiffs’ diligent effort to
locate the addresses of Defendants, the physical addresses of Skone Lighting and
Sailing Motor remain unknown. Because the physical addresses of these Defendants
are unknown, the Hague Convention does not apply.” (citing Art. 1, 20 U.S.T. 361,
658 U.N.T.S. 163, and Liberty Media Holdings, LLC. v. Sheng Gan, 2012 WL
122862, at *3 (D. Colo. 2012) (holding that the Hague Convention does not apply to
defendant who lived in China and whose address was unknown)); see also U.S.
Commodity Futures Trading Comm’n v. Lake Shore Asset Mgmt. Ltd., 2008 WL
4299771, at *4 (N.D. Ill. Sept. 17, 2008) (“Because the German address proved to be
incorrect and the CFTC could not find Mr. Baker, the Hague Convention . . . does
not govern the CFTC’s efforts to serve Mr. Baker.” (citing BP Prods. N. Am., Inc. v.
Dagra, 232 F.R.D. 263, 264 (E.D. Va. 2005), quoting 20 U.S.T. 361 (U.S.T.1969)
(“the Hague Convention contains an explicit exemption where the address of the
foreign party to be served is unknown: ‘This Convention shall not apply where the
address of the person to be served with the document is not known’”)). In any event,
the Court agrees with the analysis in In re GLG Life Tech Corp. Secs. Litig., 287
F.R.D. 262, 266 (S.D.N.Y. 2012), that Volkswagenwerk “does not hold or even
suggest that the Hague Convention must always be complied with before
alternative service is ordered,” and that the quoted language from that case is
“dictum.” Id. at 266 n.7.
36
71
by the Court under Rule 4(f) and on which Strabala relies for having effected
service—that is, service by e-mail 37—was legally insufficient. For instance,
Defendants do not argue that service by e-mail violates any international
agreement, nor do they argue that it does not comport with constitutional notions of
due process. 38 Moreover, service of process by e-mail has been upheld in
circumstances similar to those here. See, e.g., Rio Props., Inc. v. Rio Int’l Interlink,
284 F.3d 1007, 1018 (9th Cir. 2002) (“When faced with an international e-business
scofflaw, playing hide-and-seek with the federal court, e-mail may be the only
means of effecting service of process.”); MacLean-Fogg Co. v. Ningbo Fastlink Equip.
Co., 2008 WL 5100414, at *2 (N.D. Ill. Dec. 1, 2008) (granting leave to serve a
defendant located in China by e-mail and facsimile, and noting that because the
“Hague Convention does not prohibit service by e-mail or facsimile, such means may
be authorized under Rule 4(f)(3).”); see also Phillip Morris USA v. Veles Ltd., 2007
WL 725412, at *3 (S.D.N.Y. Mar. 12, 2007) (authorizing service of process by e-mail
in trademark action where on-line stores did not post any physical address and
The Court also ordered service by Federal Express delivery, but that method
proved unsuccessful. See R. 33-17 (¶ 2) (stating that an “unknown” person advised
the Fed Ex delivery person that Defendants “did not reside where their addresses
showed they did,” and, as a result, “the Fed Ex packages were returned . . . with the
notation regarding why the packages were not accepted”).
37
Defendants do argue that service by e-mail does not comply with Chinese law.
But nothing in Rule 4(f)(3) requires that the alternative service ordered by the court
pursuant to that provision must comply with the law of the foreign state where the
service is to be effected. Defendants fail to provide any case authority to the
contrary, and therefore have waived that argument. See United States v.
Hassebrock, 663 F.3d 906, 914 (7th Cir. 2011) (explaining that “perfunctory and
undeveloped arguments, and arguments that are unsupported by pertinent
authority, are waived”) (internal quotation marks and citation omitted).
38
72
defendant’s “business appear[ed] to be conducted entirely through electronic
communications”). Therefore, the only issue before the Court regarding the service
that was ordered under Rule 4(f)(3) is Zhang’s contention that he never received the
service e-mail with the complaint and summons attached. See R. 31-2 at 4-5 (¶ 15) (I
did not ever receive any e-mail communications from Strabala’s attorney with
documents relating to the Illinois Litigation at my actual e-mail addresses or in any
other way). 39
Proof of service is governed by Rule 4(l), which provides in relevant part that
where, as here, service is made under Rule 4(f)(3), service must by proved “by a
receipt signed by the addressee, or by other evidence satisfying the court that the
summons and complaint were delivered to the addressee.” Fed. R. Civ. P. 4(l)(2)(B).
A receipt signed by the addressee is usually not available when service is made by
e-mail. The “other evidence” alternative typically is a signed “return” from the
server. In this case, Strabala has submitted a return of service signed by someone
named Pamela M. Ickes, which states that, “[p]ursuant to this Court’s Order of
November 17, 2015, I served Defendants Qiao Zhang and Zhou Shimiao on that
same day with the Complaint and Summons via Federal Express and personal
email. I received no ‘bounce back’ or other notice of rejection of those emails to
either Defendant.” R. 33-17.
Ordinarily, “[a] signed return of service constitutes prima facie evidence of
valid service which can be overcome only by strong and convincing evidence.” Homer
39
Zhou admits that he received the e-mail service.
73
v. Jones-Bey, 415 F.3d 748, 752 (7th Cir. 2005) (internal quotation marks omitted)
(quoting O’Brien, 998 F.2d at 1398). “Once such a prima facie showing is made, the
burden shifts to the defendant to demonstrate that service was not received.” Id.
“Furthermore, [a]n uncorroborated defendant’s affidavit merely stating that he
[has] not been personally served with summons is insufficient to overcome the
presumption favoring the affidavit of service.” Fleet Mortg. Corp. v. Wise, 1997 WL
305319, at *2 (N.D. Ill. May 29, 1997) (internal quotation marks and citation
omitted). But the Seventh Circuit has said that “it is questionable whether the
presumption of service and the burden-shifting scheme referenced in O’Brien . . .
applies to returns of service that do not specify the address used or the identity of
the individual who accepted the mailing.” Homer, 415 F.3d at 752. Ms. Ickes does
not give the e-mail addresses to which she sent the summons and complaint. This is
a problem, because Zhang denies that the correct e-mail address was used for him.
See R. 31-2 at 4-5 (¶ 15). 40
But Zhang’s affidavit also is problematic. He states only that he
“understand[s] that Strabala’s attorney has stated that he attempted to e-mail
Illinois Litigation documents to me” at an e-mail address that Zhang says is
As Defendants point out, the form of Ms. Ickes’ return of service leaves much to
be desired in other ways as well. For one, although she represents that she has been
“first duly sworn on oath,” Ms. Ickes’ signature is not notarized. Moreover, Ms. Ickes
does not identify herself, her employer, or her relationship, if any, to the parties in
this case. Nevertheless, Rule 4(l)(2)(B) does not impose any specific requirements on
the form of the return of service other than that it must “satisfy[ ] the court that the
summons and complaint were delivered to the addressee.” Therefore, the Court
focuses here on the primary problem it finds with Ms. Ickes’ return of service, which
is that it does not state the e-mail addresses to which the summons and complaint
were sent.
40
74
incorrect. Id. In other words, Zhang has no personal knowledge of what e-mail
addresses were used by Ms. Ickes for service, and, in fact, indicates by his affidavit
that his testimony concerning Ms. Ickes’ use of an incorrect e-mail address is based
on hearsay upon hearsay (i.e., an unidentified person told Zhang that Strabala’s
attorney told the unidentified person that the incorrect e-mail address was used).
To make matters worse, the information Zhang apparently received informing him
that the wrong e-mail address was used is contradicted by Strabala’s motion to
serve Defendants by alternative means, which specifies two e-mail addresses for
service on Zhang, including one that Zhang admits is correct. See R. 10. 41
It is possible that the source of Zhang’s information about what e-mail
addresses were used is mistaken, and that Ms. Ickes in fact used the correct e-mail
address as shown on the motion to serve by alternative means. If that is the case,
Ms. Ickes’ return of service, which states that she served Zhang by e-mail and
received no “bounce back,” would “carry the day.” Fleet Mortg. Corp., 1997 WL
305319, at *2. But it also is possible that Ms. Ickes made the typographical error
that Zhang says in his affidavit she made, and that she in fact did not send the
summons and complaint to Zhang’s correct e-mail address. There simply is no way
Strabala’s motion to serve by alternative means states that one of the e-mail
addresses Strabala intended to use for service on Zhang was zq.phone@gmail.com.
Zhang states in his affidavit that this e-mail address is correct. But he contends
that the e-mail address actually used by Ickes was zp.phone@gmail.com; that is, he
contends that Ms. Ickes mistakenly substituted a “p” in place of the “q” in the e-mail
address. But, again, he has no personal knowledge of whether Ms. Ickes indeed
made a typographical error, and there is no other evidence in the record from which
the Court can conclude that she did. At the same time, the evidence in the record to
support the conclusion that Ms. Ickes did not make a typographical error in the email address is also very thin.
41
75
for the Court to know on the current record which of these two possibilities
happened.
The Court echoes the sentiments expressed by Judge Evans in his dissent in
United States v. Ligas, 549 F.3d 497, 504 (7th Cir. 2008), that it is “regrettable [ ]
we are squabbling over service of process” in this case; Zhang has notice of the
lawsuit and is represented by able counsel actively litigating on his behalf. If in fact
the e-mail did not reach Zhang when it was sent because of a typo in the e-mail
address, he has not been prejudiced by that error. Zhang learned almost
immediately that formal service had been successful on Zhou, and he admits that he
has known about the contents of the complaint for months already from Strabala’s
hand-delivery at a court proceeding in Shanghai. More fundamentally, if service of
process on Zhang was defective, the case will not be dismissed. Courts routinely
grant extensions of time to cure defects in service of process, even retroactively
when the time limit for service has expired. See Karney v. City of Naperville, 2016
WL 6082354, at *2 (N.D. Ill. Oct. 18, 2016) (“Rule 4(m) preserves the Court’s
discretion to extend the deadline for service of process even without a showing of
good cause.”); Rivera v. Riley Cnty. Law Bd., 2011 WL 4686554, at *3 (D. Kan. Oct.
4, 2011) (“When a court finds service of process insufficient but curable, it should
generally quash the service and give the plaintiff an opportunity to re-serve the
defendant.”). Here, it is not even necessary that the Court grant an extension of
time because service of process on a foreign defendant pursuant to Rule 4(f) is not
subject to any time constraints. See Fed. R. Civ. P. 4(m). Therefore, all Zhang would
76
accomplish by successfully contesting service of process is to force Strabala to
engage in the seemingly pointless exercise of sending the e-mail to him a second
time.
Ultimately, it is Strabala’s burden of proof to establish legally sufficient
service of process, and the Court is constrained to hold that he has not met that
burden here because of the fact that Ickes’ return of service does not state the email address to which she sent the summons and complaint. But Federal Rule of
Civil Procedure 4(l)(3) provides that “[f]ailure to prove service does not affect the
validity of service. The court may permit proof of service to be amended.”
Accordingly, Strabala can file an amended return of service stating, under penalty
of perjury, that the complaint and summons were sent to one of Zhang’s correct email addresses, specifically setting forth the e-mail address that was used. If
Strabala is unable to provide an appropriate amended proof of service—either
because the previous e-mail service was not sent to a correct address or because
information concerning what e-mail addresses Ickes in fact used is no longer
available—Strabala can cure the defect in the previous service attempt by resending the summons and complaint to the correct e-mail address and then filing a
new return of service with the Court proving the new service. Or, Zhang can simply
waive service of process, in which case Strabala should file proof of the waiver. 42
The Court notes that Defendants state in their motion that Strabala could have
sent them a waiver of service form instead of attempting service by e-mail. If
Defendants intended to suggest that they would have waived service, then the
Court is at a loss as to why they do not just do so now, other than, perhaps, their
erroneous belief that the case must be dismissed for ineffective service.
42
77
In sum, the Court finds that (1) service of process on Zhou was effective; and
(2) service of process on Zhang has not yet been shown, but, even if the original
service was defective, the defect does not warrant dismissal of the complaint and
instead the Court will quash the original service and Strabala can attempt to cure
the defect by re-serving Zhang or obtaining a signed waiver of service from him.
Accordingly, Defendants’ motion to dismiss the complaint for ineffective service of
process is denied.
CONCLUSION
For the foregoing reasons, it is hereby ordered that:
1.
Defendants’ Motion to Vacate, R. 22, is granted.
2.
Plaintiff’s Motion to Strike, R. 41, is granted.
3.
Defendants’ Motion to Dismiss, R. 30, is denied in part and granted in
part as follows: (1) Defendants’ motion to dismiss for lack of subject matter
jurisdiction is denied; (2) Defendants’ motion to dismiss for lack of personal
jurisdiction is denied as to Count 1 (Defamation), and granted without prejudice as
to Count II (Intentional Interference); (3) Defendants’ motion to dismiss for lack of
service of process is denied; and (4) Defendants’ motion to dismiss Count II
(Intentional Interference with Business Relations) for failure to state a legally
adequate claim for relief is granted.
Further, as to Defendant Zhang, Plaintiff is ordered to file within ten days of
entry of this memorandum opinion and order any one of the following: (i) an
amended proof of service establishing that the original service was effective, (ii) a
78
new return of service establishing that the defect in the original service has been
cured, or (iii) proof of waiver of service.
In addition, if Plaintiff intends to seek leave to file an amended complaint, he
should file a proposed amended complaint with a brief of no more than five pages
explaining why the proposed amended complaint cures the defects in the original
complaint identified in this order. The proposed amended complaint and brief, or
else a motion for an extension of time, must be filed within fourteen days of the date
on which this memorandum opinion and order is entered. Defendants may file a
response to Plaintiff's brief, also limited to no more than five pages in length, and
shall do so on or before seven days after Plaintiff files the proposed amended
complaint. No reply brief is to be filed.
If Plaintiff does not seek leave to file an amended complaint, Defendants
shall file an answer to the complaint on or before thirty days after the date on which
this memorandum opinion and order is entered. A status hearing is set for
December 22, 2016 at 9:00 a.m. The parties are directed to file a proposed joint
discovery plan on or before December 19, 2016.
ENTERED:
___
Dated: November 18, 2016
79
Honorable Thomas M. Durkin
United States District Judge
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