Sunny Handicraft (H.K.) Ltd. et al v. Beth Ann Edwards et al

Filing 28

MEMORANDUM Opinion and Order Signed by the Honorable John Z. Lee on 3/20/17. Mailed notice(ca, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
SUNNY HANDICRAFT (H.K.) LTD.,
a Hong Kong corporation, and
BIN TEH HANDICRAFT (SHENZHEN)
CO. LTD., a China corporation,
Plaintiffs,
v.
BETH ANN EDWARDS and
ROBERT J. HETZLER,
Defendants.

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16 C 4025
Judge John Z. Lee

MEMORANDUM OPINION AND ORDER
Plaintiffs Sunny Handicraft (H.K.) Ltd. (“Sunny”) and Bin Teh Handicraft
(Shenzhen) Co. Ltd. (“Bin Teh”) have sued Defendants Beth Ann Edwards
(“Edwards”) and Robert J. Hetzler (“Hetzler”), alleging claims for fraud, breach of
fiduciary duty, and defamation. Defendants have moved to dismiss the complaint
for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure (“Rule”)
12(b)(2).

In the alternative, they have moved to dismiss Plaintiffs’ defamation

claims for failure to state a claim to relief pursuant to Rule 12(b)(6).

For the

reasons stated herein, Defendants’ motion to dismiss [6] is granted in part and
denied in part.
Background
Plaintiff Bin Teh is a Chinese corporation that manufactures Christmas
decorations. Compl. ¶ 3, ECF No. 1. Plaintiff Sunny is a Hong Kong corporation
that processes orders from retailers for the purchase of decorations manufactured

by Bin Teh. Id. ¶¶ 2–3. From 2006 to 2013, Plaintiffs worked with a Florida-based
company called Envision This! LLC (“Envision”). Id. ¶¶ 1, 8. Envision served as
Plaintiffs’ sales representative, assisting Plaintiffs in managing their business
relationships with various retailers.

Id. ¶ 8.

Envision’s sole members are

Defendants Edwards and Hetzler, both of whom are Florida residents. Id. ¶ 4.
Beginning in 2007, Walgreen Co. (“Walgreens”), an Illinois corporation with
its principal place of business in Deerfield, Illinois, regularly purchased
merchandise from Plaintiffs. Id. ¶¶ 7, 10–11. From 2007 to 2012, Plaintiffs sold
and shipped merchandise to Walgreens on at least eleven occasions.

Id. ¶ 11.

Envision served as Plaintiffs’ sales representative with respect to these shipments.
Id. ¶ 12. For each shipment, Walgreens paid for Plaintiffs’ merchandise by issuing
letters of credit listing Sunny as the sole beneficiary. Id. ¶¶ 13, 15.
According to Plaintiffs, one of Envision’s responsibilities as Plaintiffs’ sales
representative was to ensure that Walgreens paid Plaintiffs by issuing letters of
credit. Id. ¶ 40. To that end, in coordinating sales of Plaintiffs’ goods, Envision was
responsible for forwarding “Import Buying Confirmation Forms” from Plaintiffs to
Walgreens.

Id. ¶ 41.

The Confirmation Forms included information that

designated Sunny as the entity to be named as the beneficiary for the letters of
credit backing each transaction. Id. ¶¶ 41–42.
In 2013, as in past years, Walgreens placed orders for the purchase of
Plaintiffs’ merchandise in anticipation of the holiday season. Id. ¶ 16. Walgreens
ordered about $3.5 million in merchandise. Id. Plaintiffs’ general manager, Daniel

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Huang, sent Confirmation Forms for these orders to Edwards and Hetzler, with the
understanding that Edwards and Hetzler would then forward the forms to
Walgreens and that Walgreens would pay Plaintiffs accordingly. Id. ¶ 42. In the
meantime, Plaintiffs began manufacturing the ordered merchandise and preparing
its shipment to Walgreens. Id. ¶ 20.
According to Plaintiffs, however, Edwards and Hetzler did not forward the
Confirmation Forms to Walgreens as instructed.

Id. ¶ 43.

Instead, after they

received the forms from Huang, Edwards and Hetzler altered them so as to
designate Envision—not Sunny—as the beneficiary of Walgreens’s letters of credit.
Id. Plaintiffs allege that these alterations were made without Plaintiffs’ approval or
knowledge. Id. After making the alterations, Hetzler e-mailed the Confirmation
Forms to Walgreens representatives in Illinois, flagging in the body of his e-mail
that Walgreens should “note the change of beneficiary.” Id. ¶ 44.
From May to August 2013, Huang repeatedly asked Edwards and Hetzler
when letters of credit would issue from Walgreens, explaining that Plaintiffs needed
the letters of credit in order to obtain a loan to finance the manufacture of the
merchandise Walgreens had ordered.

Id. ¶¶ 47–48.

In response, Edwards and

Hetzler represented to Huang that a letter of credit naming Sunny as the
beneficiary was forthcoming.

Id. ¶ 49.

According to Plaintiffs, however, these

representations were false, and Edwards and Hetzler knew all along that no such
letters of credit would be issued. Id.

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On July 18, 2013, Walgreens issued an irrevocable, transferable letter of
credit naming Envision as the sole beneficiary.

Id. ¶ 22.

Several days later,

Walgreens employee Karl Waldschmidt, while in Illinois, e-mailed Hetzler to inform
him that this letter of credit had been issued.

Id. ¶ 52.

On August 1, 2013,

Walgreens issued a second letter of credit, again naming Envision as the sole
beneficiary. Id. ¶ 23. Around this time, Hetzler instructed Huang not to discuss
the letters of credit with any of Walgreens’s representatives. Id. ¶ 53. Plaintiffs
allege that Hetzler gave Huang this instruction in order to conceal the fact that
Edwards and Hetzler had surreptitiously altered the Confirmation Forms to name
Envision as the beneficiary for the letters of credit. Id.
On August 8, 2013, Hetzler informed Plaintiffs for the first time that
Walgreens had issued letters of credit naming Envision, rather than Sunny, as the
beneficiary. Id. ¶ 24. Plaintiffs asked Edwards and Hetzler to transfer these letters
of credit to Sunny, but they refused to do so, falsely telling Plaintiffs that the letters
of credit were nontransferable. Id. ¶¶ 25, 59–60.
Without a letter of credit to guarantee payment, Plaintiffs had difficulty
financing the manufacturing and shipment of the merchandise that Walgreens had
ordered. Id. ¶ 27. Edwards and Hetzler promised to assist Plaintiffs in arranging
financing by obtaining a $1.5 million letter of credit for Plaintiffs, but they never
delivered on this promise. Id. ¶ 28. According to Plaintiffs, Edwards and Hetzler
promised to provide this letter of credit in order to induce Plaintiffs to continue
manufacturing and shipping the merchandise for Walgreens. Id. ¶¶ 61–62.

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On September 16, 2013, Walgreens issued a third and final letter of credit
listing Envision as the beneficiary.

Id. ¶ 29.

According to Plaintiffs, Envision

pocketed approximately $3 million by drawing down on the three letters of credit,
and neither Envision nor Walgreens has ever paid Plaintiffs anything for
manufacturing and shipping the merchandise that Walgreens ordered for the 2013
holiday season. Id. ¶¶ 34, 36, 39.
On October 11, 2013, Edwards sent an e-mail to various Walgreens
employees. See id. ¶ 79; id., Ex. F. At least one of these employees was located in
Illinois. 1 Id. ¶ 75; id., Ex. F. Edwards’s e-mail was a response to an inquiry from
Walgreens employee Teresa Chu about the status of certain shipments of
merchandise from Plaintiffs.

See id., Ex. F.

In responding to Chu’s inquiry,

Edwards wrote:
[T]he bookings were done by the factory. They changed our passwords
[on the freight forwarding system] and . . . we are blind with the facts,
hence the reason we were working on trying to gather the information
collectively to help put a stop to the nonsense. . . . Again, all our facts
were all documents were submitted.
So there is a litany of
misrepresentations by Sunny Handicraft. Such to the fact that legal
action has transpired.
Id. at 2.
Two days later, on October 13, 2013, Edwards sent a separate e-mail to
Hadieh Hasan, a Walgreens employee also located in Illinois. Id. ¶ 75. In this
e-mail, Edwards wrote:

Although Defendants assert in their opening brief that this e-mail was not sent to
any employees located in Illinois, see Defs.’ Mem. Supp. at 8, ECF No. 8, they concede in
their reply brief that this e-mail was indeed sent to Illinois. Reply at 4–5, ECF No. 15.
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As for Daniel [Huang] at this point this is just pure Chinese thievery,
gangsters. We have written confirmation all docs were submitted. It
is one continual lie upon lie on their end. Their actions are completely
unethical and our lawyers are handling.
Id., Ex. E. Plaintiffs allege that Edwards’s e-mails contain false statements that
harmed their reputations, and that Edwards knew of or recklessly disregarded the
statements’ falsity. Id. ¶¶ 78, 80–81.
On March 4, 2014, Plaintiffs filed a lawsuit against Envision and Walgreens
before this Court. See Sunny Handicraft (H.K.) Ltd. v. Envision This! LLC, No. 14cv-1512 (N.D. Ill. filed Mar. 4, 2014). In that lawsuit, Plaintiffs have brought claims
for breach of contract, unjust enrichment, fraud, breach of fiduciary duty, and
defamation. 2 See generally 3d Am. Compl., No. 14-cv-1512, ECF No. 124. On April
5, 2016, Plaintiffs filed the present lawsuit against Edwards and Hetzler, alleging
claims for fraud, breach of fiduciary duty, and defamation. Edwards and Hetzler
now move to dismiss Plaintiffs’ complaint.
Analysis
I.

Motion to Dismiss for Lack of Personal Jurisdiction
First, Defendants have moved to dismiss Plaintiffs’ complaint for lack of

personal jurisdiction under Rule 12(b)(2). When a defendant challenges personal
jurisdiction under Rule 12(b)(2), the Court first must decide whether there is a
dispute over any material facts. Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 713 (7th
Cir. 2002). If such a dispute exists, the Court must hold a hearing at which the

As of the time of this writing, Plaintiffs’ suit against Envision and Walgreens
remains pending and has reached the summary judgment stage.
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plaintiff must establish personal jurisdiction by a preponderance of the evidence.
See id.; Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th
Cir. 2003). Where, as here, there are no disputes of material fact, the plaintiff “need
only make out a prima facie case of personal jurisdiction.” Hyatt, 302 F.3d at 713.
In determining whether a plaintiff has established a prima facie case of personal
jurisdiction, the Court must “accept as true all well-pleaded facts alleged in the
complaint and resolve any factual disputes in the affidavits in favor of the plaintiff.”
Felland v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012); accord Purdue, 338 F.3d
at 782.
“A federal district court sitting in diversity must apply the personal
jurisdiction rules of the state in which it sits.” Kipp v. Ski Enter. Corp. of Wis., 783
F.3d 695, 697 (7th Cir. 2015).

Illinois law permits courts to exercise personal

jurisdiction to the full extent permitted by the Due Process Clause of the
Fourteenth Amendment. See 735 Ill. Comp. Stat. 5/2-209(c); Tamburo v. Dworkin,
601 F.3d 693, 700 (7th Cir. 2010).

As such, “[t]he key question” in reviewing

Defendants’ motion to dismiss for lack of personal jurisdiction is whether
Defendants “have sufficient ‘minimum contacts’ with Illinois such that the
maintenance of the suit ‘does not offend traditional notions of fair play and
substantial justice.’”

Tamburo, 601 F.3d at 700–01 (quoting Int’l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945)). “Stated differently, each defendant must
have purposely established minimum contacts with the forum state such that he or
she ‘should reasonably anticipate being haled into court’ there.” Id. at 701 (quoting

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Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).

In conducting the

“minimum contacts” analysis, the Court must focus on “contacts that the defendant
himself creates with the forum State,” not the contacts between the forum and the
plaintiff. Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014) (internal quotation marks
omitted).
The extent to which the Court may exercise personal jurisdiction over a
defendant depends upon the nature of the defendant’s contacts with the forum
state. See Tamburo, 601 F.3d at 701. If the defendant’s contacts with the forum
state are “continuous and systematic,” then the defendant is subject to general
personal jurisdiction, meaning that he can be sued in the forum state for any cause
of action. Id.; uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010).
By contrast, “[m]ore limited contacts may subject the defendant only to specific
personal jurisdiction, in which case the plaintiff must show that its claims against
the defendant arise out of the defendant’s constitutionally sufficient contacts with
the state.” uBID, 623 F.3d at 425.
In responding to Defendants’ motion to dismiss, Plaintiffs do not argue that
Defendants are subject to general personal jurisdiction in Illinois. Instead, they
contend solely that Defendants are subject to specific personal jurisdiction. The
Court may exercise specific personal jurisdiction over a defendant when (1) the
defendant “purposefully availed himself of the privilege of conducting business in
the forum state or purposefully directed his activities at the state,” (2) “the alleged
injury . . . arise[s] from the defendant’s forum-related activities,” and (3) “the

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exercise of jurisdiction [ ] comport[s] with traditional notions of fair play and
substantial justice.” Felland, 682 F.3d at 673; accord Tamburo, 601 F.3d at 702.
The first inquiry of this three-part test “depends in large part on the type of
claim at issue.” Felland, 682 F.3d at 674. In particular, when the plaintiff brings a
tort action, this inquiry focuses on whether the defendant “purposefully directed”
his activities at the forum state.

Id.

To demonstrate that the defendant

purposefully directed conduct at the forum state, the plaintiff must show
“(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.”
Id. at 674–75 (quoting Tamburo, 601 F.3d at 703) (internal quotation marks
omitted).
Finally, in determining whether it may exercise specific personal jurisdiction
over a defendant, the Court must consider the scope of personal jurisdiction with
respect to each of the claims alleged in the plaintiff’s complaint. See, e.g., In re
Testosterone Replacement Therapy Prod. Liab. Litig., 164 F. Supp. 3d 1040, 1047–49
(N.D. Ill. 2016); see also Montel Aetnastak, Inc. v. Miessen, 998 F. Supp. 2d 694,
708–13 (N.D. Ill. 2014). This is because “[p]ermitting the legitimate exercise of
specific jurisdiction over one claim to justify the exercise of specific jurisdiction over
a different claim that does not arise out of or relate to the defendant’s forum
contacts would violate the Due Process Clause.” Seiferth v. Helicopteros Atuneros,
Inc., 472 F.3d 266, 275 (5th Cir. 2006); accord Remick v. Manfredy, 238 F.3d 248,

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255 (3d Cir. 2001); Phillips Exeter Acad. v. Howard Phillips Fund, 196 F.3d 284,
289 (1st Cir. 1999); see also Charles Alan Wright & Arthur R. Miller, 5B Fed. Prac.
& Proc. Civ. § 1351 (3d ed. 2004) (“There is no such thing as supplemental specific
personal jurisdiction; if separate claims are pled, specific personal jurisdiction must
independently exist for each claim and the existence of personal jurisdiction for one
claim will not provide the basis for another claim.”). As such, the Court turns to
assess whether it has specific personal jurisdiction over Defendants with respect to
each of Plaintiffs’ claims.
A.

Counts I and II: Fraud and Breach of Fiduciary Duty

In Count I, Plaintiffs bring a claim for fraud against both Edwards and
Hetzler. As the basis for this claim, Plaintiffs assert that Edwards and Hetzler
engaged in a fraudulent scheme to divert over $3 million to Envision by altering the
Confirmation Forms to designate Envision as the beneficiary for Walgreens’s letters
of credit. In addition, Plaintiffs allege that Edwards and Hetzler made numerous
misrepresentations to Plaintiffs to intentionally conceal this scheme, and that they
falsely promised to provide Plaintiffs with a $1.5 million letter of credit in order to
induce Plaintiffs to ship merchandise to Walgreens. In Count II, Plaintiffs bring a
claim for breach of fiduciary duty against Edwards and Hetzler based upon the
same facts underlying Count I.
Because claims for fraud and breach of fiduciary duty sound in tort, the key
question in conducting the specific personal jurisdiction analysis as to these claims
is whether “the conduct underlying the claims was purposely directed at the forum
state.” Tamburo, 601 F.3d at 702; accord Felland, 682 F.3d at 674. As noted above,
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conduct is “purposely directed” at the forum state if Defendants engaged in
intentional conduct expressly aimed at Illinois with the knowledge that Plaintiffs
would be injured in Illinois as a result. Felland, 682 F.3d at 674–75.
In arguing that Defendants’ conduct meets the purposeful-direction
requirement, Plaintiffs make much of the fact that Defendants “made hundreds of
contacts—via e-mail, phone, and in person—with Walgreens in Illinois” in effecting
their scheme to divert Walgreens’s payment for Plaintiffs’ merchandise to Envision.
Pls.’ Resp. at 8, ECF No. 14.

In particular, Plaintiffs point to the fact that

Defendants e-mailed the altered Confirmation Forms to Walgreens, which is located
in Illinois, see Compl. ¶¶ 7, 44, as well as to the fact that Defendants had numerous
communications with Walgreens representatives in Illinois to discuss Walgreens’s
forthcoming letters of credit. 3 In response, Defendants emphasize that the crux of
Plaintiffs’ claims concern misrepresentations that were made from Florida (where
Defendants reside) to China and Hong Kong (where Plaintiffs reside), not from or to
Illinois. Defs.’ Mem. Supp. at 7–8.
This aspect of the parties’ dispute highlights an issue that the Seventh
Circuit has yet to resolve: whether a plaintiff seeking to satisfy the first prong of the
purposeful-direction requirement may do so merely by showing intentional conduct
aimed at the forum state, or whether the plaintiff must instead point to intentional

As evidence of these communications, Plaintiffs have attached exhibits containing
affidavits and deposition testimony to their brief in opposition to Defendants’ motion to
dismiss. The Court may consider these exhibits in determining whether to dismiss
Plaintiffs’ claims for lack of personal jurisdiction. See Purdue, 338 F.3d at 782; LKQ Corp.
v. Thrasher, 785 F. Supp. 2d 737, 741 (N.D. Ill. 2011).
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and allegedly tortious conduct aimed at the forum state. See Felland, 682 F.3d at
675 n.2 (noting the circuit split on this question and declining to take a side).
Here, Plaintiffs have clearly demonstrated that Defendants aimed some
intentional conduct at Illinois. For example, after altering the Confirmation Forms,
Defendants e-mailed the forms to Walgreens representatives in Illinois. Id. ¶ 44.
They also maintained frequent contact with Walgreens representatives in Illinois
throughout the summer and fall of 2013. See Pls.’ Resp. at 3–4. But Plaintiffs have
not shown that Defendants aimed conduct at Illinois that was both intentional and
allegedly tortious. The central tortious acts giving rise to Plaintiffs’ fraud claim are
Defendants’ misrepresentations to Plaintiffs regarding the letters of credit.

See

Houben v. Telular Corp., 231 F.3d 1066, 1074 (7th Cir. 2000) (holding that a
plaintiff seeking to prevail on a fraud claim under Illinois law must prove that
defendant made a false statement of material fact with intent to induce plaintiff’s
action). 4 As Defendants point out (and Plaintiffs do not dispute), “[n]owhere in the
Complaint [do] Plaintiffs allege that [ ] Defendants made such misrepresentations
to, from, or in Illinois.” Defs.’ Mem. Supp. at 7. These misrepresentations are also
key to Plaintiffs’ breach of fiduciary duty claim, as is Defendants’ alteration of the

Although Defendants do not explicitly take the position that Florida law rather than
Illinois law governs Plaintiffs’ fraud claim, they imply as much by citing Florida law in the
course of discussing the elements of fraud in their reply brief. See Reply at 4. With respect
to the elements of fraud, however, Illinois law and Florida law do not conflict. Compare
Houben, 231 F.3d at 1074, with Lance v. Wade, 457 So. 2d 1008, 1011 (Fla. 1984). As such,
the Court considers Illinois law with regard to this issue. See Jean v. Dugan, 20 F.3d 255,
260 (7th Cir. 1994) (“Where there is no disagreement among the contact states, the law of
the forum state applies.”).
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Confirmation Forms—another act that Plaintiffs do not allege took place in Illinois.
See Compl. ¶ 43.
In any event, however, the Court need not resolve the question whether
Defendants’ intentional, nontortious conduct directed at Illinois satisfies the first
prong of the purposeful-direction requirement. This is because Plaintiffs have failed
to satisfy the third prong of this requirement, as they have not established
Defendants’ “knowledge that . . . [Plaintiffs] would be injured [ ] in the forum state.”
Felland, 682 F.3d at 675.

Plaintiffs’ alleged injury stems from the costs they

incurred in manufacturing and shipping goods for which they never received
payment as a result of Defendants’ misrepresentations and breach of fiduciary duty.
See Compl. ¶¶ 65, 69–71. These injuries were felt in Hong Kong and China, where
Sunny and Bin Teh respectively reside. See Felland, 682 F.3d at 675 (holding in
intentional misrepresentation action that plaintiffs’ injury was felt in Wisconsin
when defendant directed some of its misrepresentations to plaintiffs’ Wisconsin
residence). Nowhere in Plaintiffs’ filings do they claim that they felt these injuries
in Illinois, much less that Defendants had knowledge that Plaintiffs would be
injured in Illinois as a result of Defendants’ conduct.
Because they have not established Defendants’ knowledge that Plaintiffs
would be injured in Illinois, Plaintiffs have not satisfied the purposeful-direction
requirement under the three-part test for specific personal jurisdiction.

See

Tamburo, 601 F.3d at 702. As such, they cannot make a prima facie showing of
personal jurisdiction over Defendants with respect to their claims for fraud and

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breach of fiduciary duty. Counts I and II are accordingly dismissed under Rule
12(b)(2). 5
B.

Counts III and IV: Defamation

In Counts III and IV, Plaintiffs bring claims for defamation per se and
defamation per quod against Edwards. These claims are based upon the statements
Edwards made in her e-mails to Walgreens employees on October 11 and October
13, 2013. According to Plaintiffs, Edwards is subject to specific personal jurisdiction
with respect to these claims because, by sending these e-mails to Walgreens
employees located in Illinois, she purposefully directed her defamatory conduct at
Illinois. For the reasons explained below, the Court agrees with Plaintiffs and finds
that it may exercise personal jurisdiction over Edwards with respect to Plaintiffs’
defamation claims.
1.

“Purposefully Directed” Conduct and Injury “Arising
from” Forum-Related Contacts

As noted above, Plaintiffs bear the burden of establishing personal
jurisdiction by showing that Edwards “purposefully directed [her] activities” at
Illinois and that their “alleged injury . . . arise[s] from” Edwards’s Illinois-related
activities. Felland, 682 F.3d at 673. To show that Edwards “purposefully directed”
In a one-sentence footnote in their response brief, Plaintiffs request leave to conduct
discovery on the issue of personal jurisdiction in the event that the Court “consider[s]
granting” Defendants’ motion. Pls.’ Resp. at 14 n.6. The Court declines to construe this
footnote as a motion, and the Court therefore need not address this request. Even if
Plaintiffs had properly moved for leave to conduct discovery, however, Plaintiffs would not
be entitled to take discovery on this issue because, for the reasons discussed supra, they
have not made a prima facie showing of personal jurisdiction. See Cent. States, Se. & Sw.
Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000) (“At a
minimum, the plaintiff must establish a colorable or prima facie showing of personal
jurisdiction before discovery should be permitted.”).

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her activities at Illinois, Plaintiffs must show that Edwards engaged in
(1) intentional (or intentional and allegedly tortious) conduct (2) expressly aimed at
Illinois (3) with the knowledge that Plaintiffs would be injured in Illinois. Id. at
674–75.
Plaintiffs have successfully made a prima facie showing of these
requirements.

First, by sending the allegedly defamatory e-mails, Edwards

engaged in intentional and allegedly tortious conduct.

Moreover, because these

e-mails were sent to Walgreens representatives in Illinois for the alleged purpose of
harming Plaintiffs’ reputation, see Compl. ¶¶ 75–84, the e-mails were “expressly
aimed” at Illinois. See Tamburo, 601 F.3d at 707 (“Tortious acts aimed at a target
in the forum state and undertaken for the express purpose of causing injury there
are sufficient to satisfy [the] express-aiming requirement.”). This conduct harmed
Plaintiffs in Illinois, even though Plaintiffs are not Illinois residents, because a
defamation injury occurs in any state where the allegedly defamatory statement
was published. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 777 (1984) (“The
tort of libel is generally held to occur wherever the offending material is
circulated.”); Faigin v. Doubleday Dell Pub. Grp., Inc., 98 F.3d 268, 270 (7th Cir.
1996). Further, Plaintiffs allege that Edwards intended the effects of these e-mails
to be felt in Illinois. See Compl. ¶¶ 80–84. As such, Plaintiffs have made a prima
facie showing that Edwards “purposefully directed” her allegedly defamatory
conduct at Illinois. See Felland, 682 F.3d at 674–76; Tamburo, 601 F.3d at 703–08.
Plaintiffs have also established that their defamation claims “arise from” Edwards’s

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contacts with Illinois, because Edwards’s e-mails to Walgreens employees in Illinois
are “central to the [defamatory] course of contact alleged in the complaint.”
Felland, 682 F.3d at 677.
In seeking to dismiss Plaintiffs’ defamation claims, Defendants do not dispute
that the claims arise from the e-mails that Edwards purposefully directed toward
Illinois. Rather, they assert that the sending of two e-mails is insufficient as a
matter of law to establish minimum contacts giving rise to specific personal
jurisdiction. In support, they cite Advanced Tactical Ordnance Systems, LLC v.
Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014). But Defendants’ reliance
on Advanced Tactical is unpersuasive. In that case, the Seventh Circuit considered
whether “the sending of two allegedly misleading emails to a list of subscribers that
included Indiana residents” was sufficient to give rise to specific personal
jurisdiction in a trademark infringement action brought in Indiana. Id. at 802. The
court answered this question in the negative, finding that it was entirely
“fortuitous” whether individuals who had signed up to be e-mail subscribers
happened to be located in Indiana. Id. at 803. The court noted, however, that the
outcome of the case might have been different if the defendant’s contacts with
Indiana were based on “deliberate actions by the defendant to target or direct itself
toward the forum state.” Id.
The facts of the present case illustrate the precise counterfactual that the
Seventh Circuit considered in Advanced Tactical. It is not merely fortuitous that
the recipients of Edwards’s e-mails were located in Illinois; rather, Edwards

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directed her e-mails deliberately and specifically at Illinois by sending personal
messages to her Illinois-based business contacts at Walgreens.

These personal

e-mails are thus distinguishable from the generic subscriber e-mails at issue in
Advanced Tactical.

For these reasons, the Court finds that Edwards could

“reasonably anticipate being haled into court” in Illinois in connection with the
October 11 and October 13 e-mails. Tamburo, 601 F.3d at 701 (internal quotation
marks omitted).
2.

Traditional Notions of Fair Play and Substantial Justice

In addition, the Court concludes that the exercise of specific personal
jurisdiction over Edwards with regard to Plaintiffs’ defamation claims “does not
offend traditional notions of fair play and substantial justice.”
(quoting Int’l Shoe, 326 U.S. at 316).

Id. at 700–01

In considering whether the exercise of

personal jurisdiction comports with traditional notions of fair play and substantial
justice, courts consider “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.”
King, 471 U.S. at 477).

Id. at 709 (quoting Burger

Once the plaintiff has established that the defendant

purposefully directed its conduct at the forum state, the defendant may avoid
jurisdiction only if it “present[s] a compelling case that the presence of some other

17

considerations would render jurisdiction unreasonable.”

Burger King, 471 U.S.

at 477.
In arguing that the relevant factors weigh against a finding of personal
jurisdiction, Defendants assert that litigating in Illinois as out-of-state defendants
would be burdensome to them and that Illinois has no interest in adjudicating a
dispute between nonresidents.

Reply at 5.

In response, Plaintiffs claim that

litigating this case in Illinois furthers their interest in obtaining convenient relief,
as well as the interstate interest in efficient resolution of controversies, given that
Plaintiffs’ earlier-filed lawsuit against Envision is already pending before this
Court. Resp. at 11–12. Having considered these arguments, the Court agrees with
Plaintiffs that the interstate interest in efficient resolution of controversies weighs
in favor of a finding of personal jurisdiction in this case.

Plaintiffs’ interest in

obtaining convenient relief and the burden on Defendants are factors that weigh
equally for and against personal jurisdiction, and the remaining factors are neutral.
Thus, on balance, the relevant factors weigh in favor of a finding of personal
jurisdiction, and Defendants have not met their burden of “present[ing] a
compelling case” otherwise. Burger King, 471 U.S. at 477. The Court therefore
concludes that the exercise of personal jurisdiction would comport with traditional
notions of fair play and substantial justice, and Defendants’ motion to dismiss
Counts III and IV for lack of personal jurisdiction is denied.
II.

Motion to Dismiss Defamation Claims for Failure to State a Claim
In the alternative to their motion to dismiss for lack of personal jurisdiction,

Defendants have moved to dismiss Plaintiffs’ defamation claims for failure to state
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a claim to relief under Rule 12(b)(6). A motion under Rule 12(b)(6) challenges the
sufficiency of the plaintiff’s complaint. Christensen v. Cnty. of Boone, Ill., 483 F.3d
454, 457 (7th Cir. 2007). To survive a motion to dismiss under Rule 12(b)(6), a
complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 570 (2007). The complaint “need only provide a short and
plain statement of the claim showing that the pleader is entitled to relief, sufficient
to provide the defendant with fair notice of the claim and its basis.” Tamayo v.
Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008); see also Fed. R. Civ. P. 8(a)(2). In
reviewing a motion to dismiss under Rule 12(b)(6), the Court must accept as true all
well-pleaded allegations in the complaint and must draw reasonable inferences in
the plaintiff’s favor. See Tamayo, 526 F.3d at 1081.
In moving to dismiss Plaintiffs’ defamation claims under Rule 12(b)(6),
Defendants contend that Edwards’s statements in her October 11 and October 13
e-mails are unactionable as a matter of law. First, as for the October 11 e-mail,
they argue that Edwards’s statement that Plaintiffs “changed [Envision’s]
passwords” is unactionable because it is subject to an innocent construction. They
also

argue

that

Edwards’s

statements

about

Plaintiffs’

“litany

of

misrepresentations” and “continual lie[s] upon lie[s]” are unactionable because they
constitute unverifiable opinions. Finally, Defendants maintain that the “Chinese
thievery” statement in the October 13 e-mail is unactionable because it does not
refer to Plaintiffs and because it constitutes mere rhetorical opinion.

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The Court can dispose of these arguments quickly, because it has already
addressed them in Plaintiffs’ previously filed lawsuit against Envision.

In that

lawsuit, Plaintiffs have brought defamation claims based on the same October 11
and October 13 e-mails at issue in the present case. And in moving to dismiss those
claims, Envision advanced arguments that are identical to the ones that Defendants
have raised here.

The Court was unpersuaded by those arguments and denied

Envision’s motion to dismiss. See Order of 5/12/16 at 3–4, No. 14-cv-1512, ECF
No. 139.
For the same reasons that the Court rejected Envision’s arguments in
Plaintiffs’ earlier-filed case, the Court rejects Defendants’ arguments here. First,
given that Edwards ended her October 11 e-mail “by saying that Sunny’s actions
have been so wrongful that ‘legal action has transpired,’ the Court is unpersuaded
that it would be reasonable to construe the ‘password’ statement innocently.” Id. at
4 (citing Bryson v. News Am. Publ’ns, Inc., 672 N.E.2d 1207, 1215 (Ill. 1996)).
Second, neither the “litany of misrepresentations” statement nor the “continual lie
upon lie” statement constitutes unverifiable opinion, because whether Plaintiffs told
particular falsehoods about the status of their shipping process—as Edwards’s
e-mails accused them of doing—is indeed verifiable.

Id.

Finally, the “Chinese

thievery” statement undoubtedly referred to Plaintiffs, given that the statement
made explicit reference to Daniel Huang, Plaintiffs’ general manager.

Id. at 3

(citing Muzikowski v. Paramount Pictures Corp., 322 F.3d 918, 925–26 (7th Cir.
2003)). And although this statement employed some hyperbole, the statement is

20

actionable because its context within the October 13 e-mail demonstrates that
Edwards intended the statement to communicate an assertion of fact. Id. at 3–4.
In sum, Defendants’ arguments in support of their motion to dismiss
Plaintiffs’ defamation claims in the present case fare no better than the identical
arguments that Envision offered—and the Court already rejected—in support of
Envision’s motion to dismiss the defamation claims in Plaintiffs’ related lawsuit.
Defendants’ motion to dismiss Counts III and IV for failure to state a claim is thus
denied.
Conclusion
For the reasons stated herein, Defendants’ motion to dismiss [6] is granted in
part and denied in part.

Counts I and II are dismissed for lack of personal

jurisdiction under Rule 12(b)(2).

Because Counts I and II are the only counts

brought against Defendant Hetzler, Hetzler is hereby terminated as a defendant in
this case. In all other respects, the motion is denied.
IT IS SO ORDERED.

ENTERED

3/20/17

__________________________________
John Z. Lee
United States District Judge

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