Price v. Schlee & Stillman, LLC

Filing 31

MEMORANDUM Opinion and Order Signed by the Honorable Thomas M. Durkin on 6/29/2017. Mailed notice (ew, )

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UNrrno Smrss Drsrnrcr Counr
FoR THE NontHpnN Dlstucr op Ir,r,tNoIs
EasrpnN DrvrsroN

Boullp Pntcp,
PlatNtttr'tr',

No. 16 C 8020
v.
Judge Thomas M. Durkin

ScHlnn & Stu,LuaN,LLC,

DpprNrnNr.
Mpnnonaxoulvr OprNroN AND Ononn

Bonnie Price,

a

Kentucky resident, brought this Fair Debt Collection

Practices Act ("FDCPA") suit against the MaryIand-based debt collection firm of
Schlee

& Stillman LLC.

See

R.

I (Compl.). On November 15, 2016, the defendant

moved to dismiss pursuant to Rule 12G)(2) for lack of personal jurisdiction. R. 17.

The defendant's potion was granted on ll'.[.ay 26, 2017, and the case was dismissed

without prejudice for want of personal jurisdiction.

See R. 25.

On June 9, 20L6, the plaintiff asked this Court to reconsider its ruling, both
as to the finding that personal jurisdiction was lacking and also that dismissal,

rather than transfer to the Eastern District of Kentucky, was the proper disposition
of thl case. R. 28. In its motion, the plaintiff informed the Court that due to the
statute of limitations on the plaintifPs claims, the May 26th order dismissing the
case would

17.

likely prejudice her ability to re-file the case in another forum. /d. t|'l]

In an oral ruling given in open court on June 22,

plaintiffs motion to reconsider whether

it

16-

2017, the Court denied the

has personal jurisdiction over the

defendant, but granted the plaintiffs request for transfer to the Eastern District of

xenlcrv

'L see

R' 2e' rhe reaso-

are set forth in tuIL below'

:::"_r-Xr
The facts relevant to this motion are as follows. Plaintiff, a senior citizen,
resides

in Kentucky. R. 1 1[ 3. The defendant is a Maryland limited liability

company and debt collector.

Id. n 4. Its headquarters are in MaryIand, and it

satellite offices in Massachusetts and Michigan.
no offices in lllinois, but

it

See

has

R. 20, Ex. A. The defendant has

does collect debts here, and

corporation with the Illinois Secretary of State.2 R. 1

is registered as a foreign

1T

business in lllinois, the defendant has a registered agent

5, Ex. A. Further to its

in Springfield, the state's

capital, which sits in the federal jurisdiction of the Central District of Illinois. Id.

In the fall of 2015, Plaintiff received two letters from the defendant
attempting to collect a debt she allegedly owed to Citizen's Bank. R. 1 fl 6, Ex. B.

Plaintiff sought assistance responding to the letters from the Legal Advocates for
Seniors and People with Disabilities (LASPD), a Chicago-based not-for-profit tegal

1

In its response to Plaintiffs motion for reconsideration, the defendant opposed
a transfer of the case and sought sanctions against Plaintiff for filing in this district
despite warnings.from this Court and other courts in this district that the location
of the plaintiffs counsel is, as a general rule, irrelevant to whether there is personal
jurisdiction over the defendant. See R. 28 at 6. As stated in open court on June 22,
2017, this Court will not punish the plaintiff for counsel's errors, and will not
prevent her from having her case heard in an appropriate forum. If the defendant
wishes to raise these arguments with the court in the Eastern District of Kentucky
upon transfer, it is free to do so.

z

The defendant has also registered as a foreign corporation in New
Hampshire, Virginia, Connecticut, Texas, Florida, New Jersey and Washington. See
R. 2d, Ex. A.

aid providet. Id, On November 19, 20L5, an attorney from LASPD informed the
defendant by letter (via facsimile) that Plaintiff was represented by counsel, that
she refused to pay any unsecured debts on account of her financial circumstances,

and that the defendant should cease all communications with Plaintiff.

Id.

I

7,

Ex. C. Several months later, however, the defendant sent another collection letter to

Plaintiffs home in Kentucky from its office in Massachusetts. Id.n 8, Ex. D. This
letter, which Plaintiff alleges caused her confusion and distress, is the basis of her
two-count lawsuit under the FDCPA.Id. tl 11.

Standard
When

a

defendant moves

to dismiss a complaint for lack of personal

jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the
burden of demonstrating that jurisdiction exists. See Tile tlnlimited,, Inc. u. Blanhe
Corp., 47 F. Supp. 3d 750, 755 (N.D.

IlI. 2014) (citing Purdue

Res.

Found. u. Sanofi-

Synthelabo, 5.A., 338 F.3d 773, 782 (7th Cir. 2003). While ultimately a plaintiff

must carry that burden by a preponderance of the evidence, at this stage, before
discovery has taken place, she is only required to make a prima facie showing. See

Strabala u. Zhang,318 F.R.D. 81, 108 (N.D. IlI. 2016) (citing Duruhan Am., LLC

u.

.J,

Rain Trading, h c., 787 F.3d 1161, 1163-64 (7th Cir. 2015); Felland u. Clifton, 682
F.3d 665, 672 (7th Ctr. 2012)). To do so, the plaintiff must allege facts supporting

the reasonable inference that an out-of-state defendant has "certain minimum
contacts

with [the forum] such that the maintenance of the suit

does not offend

traditional notions of fair play and substantial justice." Int'l Shoe Co. u. State of

Washington, Office of Unemployment Comp. & Placement,326 U.S. 310, 319 (1945).

Courts have interpreted this standard to mean that "'[t]he defendant's conduct and

connection

with the forum State [must be] such that [it] should

reasonably

anticipate being haled into court there."' Burger King Corp. u. Rudzewicz, 471U.S.
462, 474 (1985) (quoting World-Wide Volkswagen Corp. u. Woodson, 444 U.S. 286,

297 (1980)).As with a Rule 12O)(6) motion, the Court must "accept as true all well-

pleaded factual allegations and draw

all

reasonable inferences

in favor of the

plaintiff' when evaluating personal jurisdiction. Sr. John's United Church of Christ
u. City of Chicago, 502 F.3d 616,625 (7th Cir. 2007).

Discussion

. There are two types of personal jurisdiction-general and specific.

See

Strabala,318 F.R.D. at 108 (citing authority). General personal jurisdiction exists

"[i]f the defendant has 'continuous and systematic' contacts with a state. . . even if
the action is unrelated to those contacts." N. Grain Mktg., LLC u. Greuing,743 F.3d
487, 492 (7th Cir. 20L4) (quoting Helicopteros Nacionales de Colombia, S.A. u. Hall,
466 U.S. 408, 416 (1984). A corporation's contacts with a state are 'continuous and
systematic' if

it is incorporated or headquartered there or if its "affiliations with the

State . . . render it essentially at home." Daimler AG u. Bauman,134 S. Ct.746,761

(2014) (citations and internal punctuation omitted). The Seventh Circuit has
cautioned that general jurisdiction "should not lightly be found." Kipp u. Ski Enter.
Corp: of Wisc.,783 F.3d 695, 698 (7th Cir. 2015). Specific jurisdiction is likewise

narrowly defined. "To support an exercise of specific personal jurisdiction, the

defendant's contacts with the forum state must directly relate to the challenged

conduct or transaction." Daimler, 134 S. Ct.
personal jurisdiction

is

at 761. In other words,

"[s]pecific

appropriate where (1) the defendant has purposefully

directed his activities at the forum state or purposefully availed himself of the
.ta

privilege of conducting business in that state, and (2) the alleged injury arises out of

the defendant's forum-related activities." Id. (citing Burger King,471 U.S. at

472).

Here, neither jurisdictional test is satisfi.ed.

A.

General Jurisdiction

There is no general jurisdiction because the defendant is not incorporated or
headquartered in Illinois, and

it does not have any other operations within the state

that are so substantial as to render it essentially at home here.3

3

See

Kipp,783 F.3d

All of the authority Plaintiff cites in support of her argument for general
jurisdiction pre-date the Daimler decision. See Lefler u. Razor Capital, LLC, LB C
2242, R. 34 (N.D. Ill. June 3, 2013); Brennon u. Nationwide Credit, IrLc., 11 C 4309,
R. 22 (N.D. I1l. Oct. 5, 20Ll); Barksdale u. GC Seruices Ltd. P'ship, 09 C 7309, R. 24
(I.t.D, Ill. May 6, 2010); Garrigan, u. Midland Credit Mgmt., Inc., 09 C 3110, R. 39
OI.D. I11. Mar. 9, 2010). The Seventh Circuit has recognized that Daimler "raised
the bar for this type of jurisdiction," explaining that since Daimler, "more than the
'substantial, continuous, and systematic course of business' that was once thought
to suffrce" is required. Kipp,783 F.3d at 698 (citing Daimler, 134 S.Ct. at 760-61).
Now, courts may "exercise general jurisdiction only when 'the continuous corporate
operations within a state [are] so substantial and of such a nature as to justifu suit
... on causes of action arising from dealings entirely distinct from those activities."'
.Id. (quoting Daimler, 134 S.Ct. at 761) (emphasis omitted). Because the cases on
which Plaintiff relies do not apply this standard, and also because they are
distinguishable on their facts, they are not persuasive support for Plaintiffs
argument that general jurisdiction exists. See Lefler, 13 C 2242, R. 34 (the
defendants had been named in nearly 20 earlier-filed lawsuits in this district for
their debt collection practices); Brennon, 11 C 4309 , R. 22 (at the time the suit was
filed the defendant was attempting to collect debts from hundreds of thousands of
Illinois consumers, including consumers residing this district); Barksdale, 09 C
7309, R.24 (the defendant had an office in this district); Garrigan,0g C 3110, R. 39

at 698. That the

defendant

designated registered agent
defendant on notice that

it

is registered as a foreign corporation and has a

in the state is, without more, insufficient to put the

could be haled into court here. See Perez u. Air & Liquid

Sys. Corp.,2016 WL 7049153, at *6-7 (S.D.

IlI. Dec. 2,2016) (collecting post-Daimler

circuit authority for the proposition that "registering to do business or maintaining

a registered agent is not

enough

to confer general jurisdiction over a

foreign

corporatiod'). Indeed, after a search of the federal docketing system, the Court was
unable to find a single case in the Northern District of Illinois other than this one
where the defendant has been named as a party.a While
defendant transacts some business in Illinois,

it

may be true that the

it has no offices or employees here,

and Plaintiff, whose debt the defendant is attempting to collect in Kentucky, has
not alleged any other systematic or continuous affi.liation with the state such that
the exercise of jurisdiction would comport with traditional notions of fair play and
substantial justice. See Daimler, 134 S. Ct.

at 761-62;

see also Perez, 2016 WL

7049153, at *8 ("it is inconsistent with principles of due process for a corporation to

be subject to general jurisdiction in every place

it does business"

(quoting Genuine

(the defendant had been named in approximately 45 earlier-filed lawsuits in this
district).

a

In deciding whether a plaintiff has met the prima facie standard for
estatilishing personal jurisdiction, courts are not limited to the pleadings and may
consider affrdavits and other outside materials. Purdue Research Found. u. SanofiSynthelabo, 5.A.,338 F.3d 773, 782 (7th Cir. 2003); see also White u. Keely,814 F.Sd
883, 885 n. 2 (7th Cir. 2016) (noting that on a motion to dismiss, courts may
consider public court documents, among other materials, if they are within the
public record and subject to judicial notice under the Federal Rules).

Parts Co. u. Cepec, 137 A.3d L23, 137 (Del. 2016))). Accordingly, there is no general
personal jurisdiction over the defendant.

In her motion for reconsideration, the Plaintiff

directs the Court to the

following language from In re Limitnone, LLC,551 F.3d 572 (7th Cir. 2008):
Google is licensed to do business in the State of Illinois and does
business in the Northern District of Illinois. We have no doubt that the
federal court sitting in that district had personal jurisdiction over
Google.

Id. at 575. Plaintiff plucks this dictum from a decision that is not about personal
jurisdiction, but rather venue and contractual forum-selection clauses. She does

so

to argue that being registered in the State of Illinois and conducting some amount
of business in this district is sufficient to confer personal jurisdiction on the Court.

But Limitnorle reaches no such conclusion, and the more recent decision in Kipp,
which postdates and explicitly follows Daimler, renders that proposition untenable.
As previously noted, Kipp holds that courts may "exercise general jurisdiction only

when'the continuous corporate operations within a state [are] so substantial and of
such a nature as to justifu suit."' Id. (quoting Daimler, 134 S.Ct. at 761) (emphasis

in original). For the reasons set forth

above, no such contacts exist between the

defendant and the State of Illinois. Moreover, the dictum from Limitnone is not
inconsistent with Kipp; Google is not only registered in this state, but is also well-

known to have

a major office complex, numerous

employees and substantial

business in this district. The Seventh Circuit's dictum must be read in that context,

and thus cannot support the outcome Plaintiff seeks here. Plaintiffs attempt to

parse dictum fuom Limitnone to compel reconsideration of the Court's holding on
general jurisdiction is without merit.
The Plaintiff argues that even if she has failed to make a prima facie showing

that general personal jurisdiction exists in this district, she is entitled to conduct
discovery as to the scope of Defendant's business

in Illinois. R. 26 tT 5. She is

incorrect. The Seventh Circuit has held that "[a]t a minimum, the plaintiff must
establish a colorable or prima facie showing of personal jurisdiction before discovery
should be permitted." Cent. States, Se. & Sw. Areas Pension, Fund u. Reimer Express

World Corp.,230 F.3d 934, 946 (7th Cir. 2000); accord Meyer u. Haruft Fride, 2012

WL 105296, at * 4 (N.D. Il1. Mar. 28, 2012) ("The plaintiffs have not made even

a

colorable showing that [the defendant] is subject to general jurisdiction in Illinois.

Any discovery related to that issue would just be a fishing expedition."). Having
failed to meet this burden, Plaintiff is not entitled to dig further.

B.

Specific Jurisdiction

Nor has the plaintiff made a prima facie showing that there is specific
jurisdiction in this case. As the defendant correctly states, "[t]hat Plaintiff sought

the assistance of legal aid attorneys located in
connection to the chosen forum." R. 17

Chicago is the only alleged

at 1. Plaintiff argues that this connection is

enough to establish specific jurisdiction because, "for the purposes of this lawsuit,

Ms. Price effectively moved-telling Defendant that she could only be contacted
through the Chicago Legal Clinic's LASPD program." R. 20 at 11. This fiction will
not suffice to permit the case to proceed in this district. As previously noted, specific

jurisdiction exists when the defendant has purposefully directed its activities
toward the forum state and the alleged injury arises from those activities. Daimler,
134 S. Ct. at 761. Thus, the operative facts for determining specific jurisdiction in

an FDCPA case like this one are the states to and from which the allegedly
offending debt collection letter was sent. The letter

in this case was sent to

Kentuclry from Massachusetts. Plaintiffs attorney's office

in Illinois is entirely

irrelevant to where the alleged statutory violation took place and where the alleged

injury was suffered. Other courts considering precisely analogous facts

have

reached the same conclusion. See, e.9., Stewart u. Brachfeld Law Group, 2010 WL
4683530, at *1 (N.D.

Ill. Nov.

16, 2010) (finding

in an FDCPA case involving out-of-

state parties that where the only connection to this district was the location of
I"ASBD, "no part of the acts and transactions occurred here

in any real-world

sense"); Randolph u. North Star Capital Acquisition, LLC,2010 WL 54t8923, at

*I

(N.D. IIl. Dec. 2010) (also on similar facts fi.nding that the location of counsel was a

"venue irrelevant fact" and refusing

to permit jurisdiction "created by such

artificiality"). Because the cause of action,

in actuality, arises from activities

entirely outside the state of Illinois, the Court holds that specifrc jurisdiction in this
district is also lacking.
Seeking reconsideration of that holding, Plaintiff cites to Serrano u. Van Ru

Credit Corporation, 126 F. Supp. 3d 1005 (N.D.

Ill.

2015). The opinion

in

Serrano

does not mention the word jurisdiction once. Presumably, Plaintiff cites
Senano case because

it

to the

involved an out-of-state plaintiff represented in an FDCPA

case by the LASPD clinic

in this district.

See

id. at 1009. There are at least two

reasons why the similarities between Serrano and

this case are insufficient to

warrant reconsideration. First, as set forth in the opening paragraph of Serrano, the
defendant

in that

registered

in Illinois. Id. at

headquartered

District, and

case was "an Illinois corporation," not

a foreign corporation

1007. Indeed, the defendant

in that

case is

in Des Plaines, Illinois, well within the temitory of the Northern

it conducts

substantial business from that location. See Office of the

Illinois Secretary of State Corporate Search, auailable ot https://www.ilsos.gov/
corporatellc/CoryoratellcController, search by file number 33925522 (last visited

June 2L, 20L7); see also Van Ru Credit Corporation Website, auailable at
http://www.vanru.com/ExistingClients/Locations.htm

(ast visited June 21,

2017).

Van Ru Credit iorporation has also defended well over 50 FDCPA cases in this
district.
Second, even

if the Serrano

defendant were not an Illinois resident subject to

the general jurisdiction of this court, personal jurisdiction is an affirmative defense

that.can be waived, and its waiver in one case does not apply to unrelated
defendants defending other cases with similar facts.
defendant

in Serrano had been an out-of-state

In other words, even if

defendant like Schlee

the

& Stillman,

LLC, the defendant's decision to litigate that case in this district would not also
bind the defendant to do so here.

10

C.

Waiver

'

Finally, Plaintiff suggests that because she and. the defendant engaged in

settlement discussions for several months before the motion to dismiss was filed in

this case, the defendant waived its right to object to personal jurisdiction. See R. 20

at 6 ('[]n its motion to dismiss, Defendant oddly neglects to
inconvenient fact that

it

acknowledge the

litigated this case-including entering into a settlement

agreement-in Illinois, for three months, before

it

decided to move to dismiss for lack

of jurisdiction and/or improper venue."). She cites no authority for this argument,
however, and therefore waives

it.

See United States u. Hassebrock, 663 F.3d 906,

914 (7th Cir. 2011) (explaining that "perfunctory and underdeveloped arguments,
and arguments that are unsupported by pertinent authority, are waived").
Even if the Court were to consider the argument,

it is without merit.

"As long

as defendants comply with the rules by raising their defenses in their first
responsive pleading or consolidate

their defenses in a pre-pleading motion under

Fed. R. Civ. P. 12O), they do not waive their RuIe 12G) defenses." Su)anlson u. City

of

Hammond,

4lL Fed. Appx. 913,

"[p]reliminary litigation
defenses" provided

915-16 (7th Cir. 2011) (finding that

actions . do not waive or forfeit personal-jurisdiction

the defendant does not "create the expectation that [it] will

defend the suit on the merits"); see also Mobile Anesthesiologists Chicago, LLC

u.

Anesthesia Assocs. of Houston Metroplex, P.A.,623 F.3d 440, 443 (7th Cir. 2010)

(finding no waiver after the defendant fiIed a motion to continue a preliminary
injunction hearing and requested expedited discovery to prepare for that hearing

11

when, thirteen days later, the defendant filed

its motion to dismiss for lack of

personal jurisdiction). The defendant raised lack of personal jurisdiction
motion to dismiss as required by the federal rule.

in its

It thus has not waived the timely

brought affirmative defense.

Conclusion

. Where
transfer

personal jurisdiction is lacking, the Court may dismiss the case or

it to another district where personal jurisdiction

is proper. See Cote u.

Wadel,796 F.2d 981, 984-85 (7th Cir. 1986). On first review, the Court dismissed

the case without prejudice to being refiled in the proper district. R. 26. At the time,

the Court was unaware that the statute of limitations had nearly run on the
plaintiffs FDCPA claim. In her motion for reconsideration, the Plaintiff informed
the Court that the earlier-ordered dismissal would likely prejudice her ability to re-

file her case. R. 26 1lfl 16-17. The Seventh Circuit instructs that when a plaintiff
accidentally files suit

in the wrong district and the statute of limitations runs on

her claim, the interests of justice require the district court to transfer the suit to the
righb district rather than dismiss

it. See id. (citing Goldlawr, Inc. u. Heiman,

369

U.S. 463, 467 (1962)). The case is therefore transferred to the Eastern District of
Kentucky, where the plaintiff resides.

SO ORDERED.

t2

E}TIERED:

*ilrr,r* ttl 4,r/fi*L
Honorable Thomas M. Durkin
United States District Judge

June 29,2017

13