First Classics, Inc. v. Jack Lake Productions, Inc. et al

Filing 43

MEMORANDUM AND ORDER: Plaintiff, First Classics, Inc, ("First Classics") brought this action against Defendants, Jack Lake Productions, Inc. ("JLP") and Jaak Jarve ("Jarve") for trademark infringement, trademark dilution , a preliminary injunction under federal law, and breach of contract under Illinois law. Defendants moved to dismiss Plaintiff's Complaint for failure to comply with the Illinois Business Corporation Act, and pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). Defendants' Motion to Dismiss 31 is granted, in part, and denied, in part. Signed by the Honorable Sharon Johnson Coleman on 3/22/2018. Mailed notice.(ym, )

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
FIRST CLASSICS, INC.,
a Delaware corporation,
Plaintiffs,
v.
JACK LAKE PRODUCTIONS, INC.,
a Canadian corporation, and
JAAK JARVE, an individual,
Defendants.

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Case No. 17-cv-01996
Judge Sharon Johnson Coleman

MEMORANDUM AND ORDER
Plaintiff, First Classics, Inc, (“First Classics”) brought this action against Defendants, Jack
Lake Productions, Inc. (“JLP”) and Jaak Jarve (“Jarve”) for trademark infringement, trademark
dilution, a preliminary injunction under federal law, and breach of contract under Illinois law.
Defendants moved to dismiss Plaintiff’s Complaint for failure to comply with the Illinois Business
Corporation Act, and pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(6). For the
following reasons, Defendants’ Motion to Dismiss is granted, in part, and denied, in part.
Background
First Classics is a Delaware corporation that produces, prints, distributes, and sells comic
books and graphic novels out of Chicago, Illinois. First Classics owns the trademark for “Classics
Illustrated” and “Classics Illustrated Junior” (collectively, “Trademarks”), which includes the design
and style of the words, letters, and numbers associated with the names. Although Plaintiff’s right to
transact business in Illinois lapsed in 1992, First Classics filed an application to reinstate its
authorization on August 22, 2017.
JLP is a Canadian corporation operating in Toronto, Canada. Jarve, President of JLP, is a
Canadian Citizen. Plaintiff contends that this Court has personal jurisdiction over Defendant Jarve
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because he conducted extensive communications, negotiated, and transacted business in Illinois that
resulted in the execution of the Limited License Agreement (the “License Agreement”) as well as
other contracts between the Parties. They also allege that there is jurisdiction because Defendants
actively marketed and sold the infringing products to Illinois residents and the entire United States
via its interactive website.
On November 25, 2002, the Parties entered into the Licensing Agreement, where
Defendants paid Plaintiffs in order to reprint, distribute, and sell certain comic books and graphic
novel titles containing the Trademarks for a ten year period. The Licensing Agreement contained a
forum selection clause that restricted venue for any litigation “touching upon the subject matter of
this agreement” to any court in Chicago, Illinois. Jarve signed the Licensing Agreement on behalf of
JLP, notating his role as President beneath his signature. After the licensing period expired in
September of 2013, Defendants continued to reproduce, market, and sell comic books and graphic
novels with marks similar or identical to Plaintiff’s Trademarks without First Classic’s authorization
through the point that Plaintiffs filed suit against Defendants on March 16, 2017.
Discussion
Defendants move to dismiss Plaintiff’s four Count Complaint alleging various trademark
violations pursuant to 805 ILCS 5/13.70(a), as well as Federal Rules of Civil Procedure 12(b)(2) and
12(b)(6). For the following reasons, Defendants’ Motion is granted, in part, and denied, in part.
Lack of Standing
As a threshold issue, Defendants move to dismiss First Classics’ Complaint because they
allege that Plaintiff’s lack the capacity to sue in an Illinois court since they were not in compliance
with the Illinois Business Corporation Act (“IBCA”) at the time of filing. See 805 ILCS 5/13.70(a).
The IBCA restricts a foreign corporation that does business in Illinois without authorization
from being able to maintain civil actions in the State’s courts. 805 ILCS 5/13/70(a). Upon filling an
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application to reinstate authorization, however, “the corporate existence for all purposes shall be
deemed to have continued without interruption from the date of the issuance of the certificate of
dissolution, and the corporation shall stand revived with such powers, duties and obligations as if it
had not been dissolved.” 805 ILCS 5/12.45. Further, “all acts and proceedings of its shareholders,
directors, officers, employees, and agents, acting or purporting to act in that capacity, and which
would have been legal and valid but for such dissolution, shall stand ratified and confirmed.” Id.
Although it is true that when Plaintiff filed its Complaint it was not authorized to transact
business in Illinois, a fact which could have prohibited this suit, Plaintiff’s subsequent application for
authorization in August of 2017 cured any impediment to bring suit under IBCA. Accordingly, the
Court rejects this basis for dismissal.
Personal Jurisdiction against Jarve
Jarve moves to dismiss all claims against him individually based on a lack of personal
jurisdiction. Once a defendant moves to dismiss a complaint under Federal Rule of Civil Procedure
12(b)(2), the plaintiff must set forth a prima facie case of personal jurisdiction. Purdue Research Found.
v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). In determining whether Plaintiff has met
its burden, all pleadings and affidavits are construed in the light most favorable to the plaintiff. Id.
It is well-established that personal jurisdiction is contingent upon the defendant having the
requisite “minimum contacts” with the district to subject a defendant to legal proceedings in Illinois.
See Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945). The requirement of
personal jurisdiction is waivable if the parties contract to proceeding in a particular forum. TruServ
Corp. v. Flegles, Inc., 419 F.3d 584, 589 (7th Cir. 2005)(citing RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d
1272, 1275 (7th Cir. 1997)).
A forum selection clause, like any other contractual provision, is presumed valid “‘unless it is
subject to any of the sorts of infirmity, such as fraud and mistake, that justify a court’s refusing to
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enforce a contract.’” Playboy Enters. Int'l, Inc. v. Smartitan (Singapore) Pte. Ltd., 804 F. Supp. 2d 730, 734
(N.D. Ill. 2011)(Aspen, J.)(citing Nw. Nat'l Ins. Co. v. Donovan, 916 F.2d 372, 375 (7th Cir. 1990)).
Under Illinois law, “‘when an officer [of the entity] signs a document and indicates next to his
signature his corporate affiliation then absent evidence of contrary intent in the document, the
officer is not personally bound.’” G2 Enters., LLC v. Nee, No. 05 C 5803, 2006 U.S. Dist. LEXIS
41761, at *8 (N.D. Ill. June 7, 2006)(Darrah, J.)(citing White & Brewer Trucking, Inc. v. Donley, 952
F.Supp. 1306, 1315 (C.D. Ill. 1997))(emphasis added). An exception to this rule can occur when the
corporate veil has been pierced and there is “such unity of interest and ownership that the separate
personalities of the corporation and the individual no longer exist.” Id. Conversely, the Fiduciary
Shield Doctrine can protect a signor from being hauled into Court in his individual capacity for
actions he assumed while acting as an officer of the company. In re Teknek, LLC, 512 F.3d 342, 345
(7th Cir. 2007) (finding that an appearance as an agent does not make a person a party in an
individual capacity that is subject to suit in a personal capacity or personally liable in contract).
Here, the parties entered into a Licensing agreement that contained a mandatory forum
selection clause. Jarve, in signing the document above his title as President of JLP, argues that he
took this action under the auspices of his official corporate position, which does not bind him
individually. Plaintiff maintains that Jarve’s status as a shareholder placed him in a position to act in
However, Plaintiff offers no evidence beyond mere speculation to demonstrate that Jarve had
ulterior motives when he signed the Licensing Agreement. See Smith v. Dart, 803 F.3d 304, 309 (7th
Cir. 2015) (finding that a plaintiff “must lead some facts that suggest a right to relief that is beyond
the speculative level.” (citing Atkins v. City of Chicago, 631 F.3d 823, 832 (7th Cir. 2011 p)). The Court
is not convinced that Jarve was acting outside of his capacity as president when he transacted with
First Classics and thus, it finds that he should not be bound by the forum selection clause personally.

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Since Jarve is not subject to personal jurisdiction for his conduct as President of JLP, all the
claims against him are hereby dismissed.
Failure to State a Claim
Defendants contend that Count III of Plaintiff’s Complaint requesting preliminary
injunction should be dismissed under Rule 12(b)(6) because preliminary injunction is a remedy that
should not be pled as a cause of action. Defendants also argue that Counts I and II should be
dismissed because they fail to state a claim against Jarve pursuant to Rule 12(b)(6). Considering the
discussion on personal jurisdiction above, this Court need not address the sufficiency of Counts I
and II against Jarve as they are now moot.
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal
sufficiency of the complaint, not the merits of the allegations. When ruling on a motion to dismiss,
a court must accept all well-pleaded factual allegations in the complaint as true and draw all
reasonable inferences in a plaintiff’s favor. Park v. Ind. Univ. Sch. of Dentistry, 692 F.3d 828, 830 (7th
Cir. 2012). The allegations must contain sufficient factual material to raise a plausible right to relief.
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 569 n. 14, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
Courts have recognized that a preliminary injunction “is a procedural device, not a cause of
action.” Hanover Ins. Grp. v. Singles Roofing Co., No. 10 C 611, 2012 U.S. Dist. LEXIS 85813, at *26-27
(N.D. Ill. June 21, 2012)(Kendall, J.)(citing Univ. of Texas v. Camenisch, 451 U.S. 390, 395, 101 S. Ct.
1830, 68 L. Ed. 2d 175 (1981); Meridian Mut. Ins. Co. v. Meridian Ins. Co., 128 F.3d 1111, 1119 (7th Cir.
1997)). While it is appropriate to ask for a preliminary injunction as a form of relief, a “request for a
preliminary injunction is not appropriately pled as a substantive cause of action in” a complaint. Id.
at *27.
Count III of Plaintiff’s Complaint merely states the grounds for preliminary injunction relief,
but does not state an underlying, substantive cause of action. Falling in line with Hanover, this Court
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finds that pleading a preliminary injunction is an improper to method for petitioning the Court for
this type of relief. Accordingly, the Court grants Defendants’ motion to dismiss Count III of
Plaintiff’s Complaint.
Conclusion
For the aforementioned reasons, the Court grants Defendants’ Motion to dismiss all claims
alleged against Jarve in his individual capacity for lack of personal jurisdiction and to dismiss Count
III for failure to state a claim. This Motion is denied as to Counts I, II, and IV, which remain
against JLP.
IT IS SO ORDERED.

ENTERED:

SHARON JOHNSON COLEMAN
United States District Court Judge
Dated: 3/22/2018

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