Allstate Insurance Company et al v. Ameriprise Financial Services, Inc.

Filing 77

MEMORANDUM Opinion and Order: Defendant's motion to dismiss for lack of personal jurisdiction and/or in the alternative for improper venue 20 is denied. Defendant's motion to transfer 23 is denied. Plaintiff's motion for leave to file sur-response in opposition to Defendant's motion for jurisdictional discovery 47 is denied as moot. Plaintiff's motion for leave to file documents under seal 48 is denied as moot. Scheduling Conference set for 7/13/2018 at 09:30 A M. Rule 26(f) planning report re MIDP due 7/11/2018. The report must comply with the Mandatory Initial Discovery Pilot program of the district court. The report form can be found on Judge Bucklo's page at www.ilnd.uscourts.gov. - Signed by the Honorable Elaine E. Bucklo on 5/21/2018. Mailed notice (np, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

Allstate Insurance Company, et )
al.,
)
)
Plaintiffs,
)
)
v.
) Case No. 17 C 5826
)
)
Ameriprise Financial Services, )
)
Inc.,
)
Defendant.
)
Memorandum Opinion and Order
The plaintiffs in this dispute are Illinois-based insurance
companies that sell insurance products nationwide. Defendant is a
Delaware

financial

services

corporation

headquartered

in

Minnesota, and it sells insurance products throughout the United
States

that

compete

with

plaintiffs’

products.

Plaintiffs

complain that defendant unlawfully solicited Exclusive Financial
Specialists

(“EFSs”)

relationships,

and

with

that

it

whom

plaintiffs

encouraged

those

have
EFS

(or
to

had)

disclose

plaintiffs’ trade secrets and other confidential information to
defendant,
customers
assert

which
and

claims

defendant

otherwise
for

then

used

compete

with

violation

of

the

to

steal

plaintiffs.

Defend

Trade

plaintiffs’
Plaintiffs
Secrets

Act

(“DTSA”), tortious of interference with business relationships,
and unfair competition.

Defendant has moved to dismiss or transfer the case for want
of personal jurisdiction, or, alternatively, to transfer the case
to the District of Minnesota. I allowed limited jurisdictional
discovery, and the parties have submitted evidence in support of
their

respective

positions.

They

have

not

requested

an

evidentiary hearing.
Defendant

seeks

dismissal

on

the

ground

that

it

lacks

sufficient minimum contacts with Illinois to satisfy due process
and

argues

that

the

jurisdictional

evidence

does

not

support

plaintiffs’ assertion that a substantial portion of the events
giving

rise

to

acknowledges
offices,

a

their

that

it

registered

claims
does

occurred
business

agent,

and

115

in

the

forum.

Defendant

and

has

seven

corporate

franchised

locations

in

Illinois but submits that only a tiny percentage of its employees
and

FINRA-registered

individuals

with

whom

it

works

are

in

Illinois. Moreover, defendant argues, plaintiffs’ evidence does
not suggest that their claims arise out of defendant’s activities
in the state, since it does not reflect unlawful solicitation of
any

Illinois

obtained

EFSs,

nor

plaintiffs’

does
trade

it

show

secrets

that
or

defendant
other

actually

confidential

information from any Illinois EFSs.
As an alternative to dismissal, defendant seeks transfer to
the District of Minnesota either under 28 U.S.C. § 1406(a) on the
ground

that

venue

is

not

proper
2

in

this

district,

or

under

§ 1404(a) on the ground that even if venue is proper in this
district,

it

convenience

of

should

be

parties

transferred

to

witnesses

and

and

Minnesota
in

the

for

interest

the
of

justice. For the reasons that follow, I deny defendant’s motions
to dismiss or transfer.
I.
Personal jurisdiction may be either general or specific; but
because I agree with defendant that the evidence does not suggest
that defendant is “essentially at home” in Illinois, see Goodyear
Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011),
I proceed directly to the issue of specific jurisdiction.

There

are two basic flaws in defendant’s argument. The first is its
erroneous

contention

jurisdictional

facts

that
it

plaintiffs

asserts

by

a

must

prove

preponderance

of

the
the

evidence. The Seventh Circuit instructs that when a dispute over
personal

jurisdiction

is

“decided

on

the

basis

of

written

materials rather than an evidentiary hearing, the plaintiff need
only make a prima facie showing of jurisdictional facts.” Tamburo
v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). It is true that
courts in this district have applied the preponderance standard
when the parties have engaged in jurisdictional discovery but
have not requested an evidentiary hearing and jurisdiction turns
on the resolution of disputed facts. Johnson v. Barrier, 15 C
3928, 2017 WL 36442, at *2 (N.D. Ill. Jan 4, 2017) (St. Eve, J.);
3

IPOX Schuster, LLC v. Nikko Asset Management Co., Ltd., 191 F.
Supp. 3d. 790, 798 (N.D. Ill. 2016); Linkepic Inc. v. Vyasil,
LLC, 146 F. Supp. 3d 943, 948 (N.D. Ill. 2015). But even assuming
that is the standard the Seventh Circuit would apply in those
circumstances, 1

it

does

not

apply

1

here

because

the

parties’

I am aware of no Seventh Circuit case that so holds. Johnson
cited only Linkepic for the application of this standard, and
Linkepic, in turn, relied on Purdue Research Foundation v.
Sanofi–Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003), and
Hyatt Intern. Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002).
IPOX Schuster, LLC also cited Purdue as well as Durukan America,
LLC v. Rain Trading, Inc., 787 F.3d 1161, 1163-64 (7th Cir.
2015). But none of Purdue, Hyatt, or Durukan held that the
preponderance
of
the
evidence
standard
applies
to
a
jurisdictional dispute at the motion to dismiss stage when the
parties forgo an evidentiary hearing. See Purdue, 338 F.3d at 782
(“[t]he precise nature of the plaintiff’s burden depends upon
whether an evidentiary hearing has been held. When the district
court holds an evidentiary hearing to determine jurisdiction, the
plaintiff must establish jurisdiction by a preponderance of the
evidence. See Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 713 (7th
Cir. 2002).... However when the district court rules on a
defendant’s motion to dismiss based on the submission of written
materials, without the benefit of an evidentiary hearing...the
plaintiff ‘need only make out a prima facie case of personal
jurisdiction.’”) (quoting Hyatt, 302 F.3d at 713) (additional
citations omitted). Hyatt, for its part, directs district courts
to hold an evidentiary hearing where personal jurisdiction turns
on material factual disputes but confirms that “[u]ntil such a
hearing takes place, the party asserting personal jurisdiction
need only make out a prima facie case of personal jurisdiction.”
302 F.3d at 713. And Durukan involved a narrow dispute over
service of process and was brought on a motion to vacate a
default judgment under Fed. R. Civ. P. 60(b). The defendant
disputed jurisdiction on the ground that it had not been served
with process and offered evidence “flatly contradicting” the
plaintiff’s evidence of service. The Seventh Circuit vacated the
district court’s denial of the motion on the written record,
reasoning that because the dispute turned on the credibility of
the witnesses, it “could not be resolved without an evidentiary
hearing.” 787 F.3d at 1164. In short, Purdue and Hyatt are in
line with Tamburo and numerous other Seventh Circuit cases
4

jurisdictional dispute is not really over what the facts are but
instead over the legal significance the facts should be given.
For

as

contacts,

Illinois

example,

evidence

plaintiffs

of

defendant’s

proffer

the

claim-related

affidavit

of

Henry

Schmidt, an Illinois-based EFS affiliated with plaintiffs. Mr.
Schmidt

states

that

telephone,

email,

defendant’s

National

defendant

and

recruited

in-person

Director

of

him

in

conversations
Insurance

multiple
and

Recruiting,

that
Sean

George asked him to provide “confidential production reports.”
See DN 29-3. Defendant does not dispute that it had multiple
contacts with Mr. Schmidt, but it disputes that it asked him to
provide confidential information. Defendant points to a ten-page
form

it

business,

sent

include
numbers,

the
any

Mr.

Schmidt

introductory

portion

client-specific

Social

Security

requesting
of

information

numbers,

information
which

states:

(i.e.

etc.).”

about

DN

“Do

names,
59.

his
not

account

But

this

evidence does not establish a genuine factual dispute, since both

holding that in the absence of an evidentiary hearing, a
plaintiff must make only a prima facie showing of personal
jurisdiction at the motion to dismiss stage, see, e.g., Felland
v. Clifton, 682 F.3d 665, 672 (7th Cir. 2012); uBID, Inc. v.
GoDaddy Group, Inc., 623 F.3d 421 (7th Cir. 2010); Weidner
Communications, Inc. v. H.R.H. Prince Bandar Al Faisal, 859 F.2d
1302, 1306 n. 7 (7th Cir. 1988); Nelson v. Park Indus., Inc., 717
F.2d 1120, 1123 (7th Cir. 1983), and Durukan is not to the
contrary. Defendant’s citation to Commodity Trend Serv. v.
Commodity Futures Trading Com’n, 149 F.3d 679, 685 (7th Cir.
1998), is inapposite because the issue in that case was 2subject
matter jurisdiction, which the court has an independent duty to
ascertain.
5

things can be true: that defendant sent Mr. Schmidt a document
telling
that

him

Mr.

not

to

George

provide

asked

“client-specific

Mr.

Schmidt

to

information,”

provide

and

“confidential

production reports.”
Similarly, defendant does not dispute that it met or had
“limited

telephone

contact”

with

nine

other

individuals

affiliated with plaintiffs in Illinois. It argues, however, that
these contacts are not “material” to jurisdiction because the
jurisdictional evidence does not show that defendant requested or
received confidential information from them. This brings me to
the

second

conflates

error
the

in

defendant’s

jurisdictional

argument,

inquiry

with

which
the

is

that

merits

it
of

plaintiffs’ claims.
Specific jurisdiction arises out of “the relationship among
the defendant, the forum, and the litigation.” Walden v. Fiore,––U.S.–––, 134 S.Ct. 1115, 1121 (2014) (quoting Keeton v. Hustler
Magazine,

Inc.,

465

U.S.

770,

775

(1984)).

Its

exercise

is

appropriate when “(1) the defendant has purposefully directed his
activities at the forum state or purposefully availed himself of
the privilege of conducting business in that state, and (2) the
alleged

injury

activities.”

arises

Tamburo

out
601

of
F.3d

the
at

defendant's
702.

The

forum-related
fundamental

constitutional question underlying the inquiry is: “is it fair
and reasonable to call the defendant into the state’s courts to
6

answer the plaintiff’s claim?” uBID, Inc. v. GoDaddy Group, Inc.,
623 F.3d 421, 426 (7th Cir. 2010).
Defendant correctly observes that specific jurisdiction must
be determined “by reference to the particular conduct underlying
the claims made in the lawsuit,” Tamburo 601 F.3d at 702. In
suits involving intentional torts such as those at issue here,
the jurisdictional evidence must indeed suggest that “the conduct
underlying the claims was purposely directed at the forum state.”
Id. at 703. But I am aware of no authority—and defendant cites
none—holding that personal jurisdiction is appropriate only where
a plaintiff’s jurisdictional evidence supports each substantive
element of its substantive claims and suggests that each element
is supported by conduct that occurred in the forum.
The

jurisdictional

inquiry

focuses

on

the

relationship

between defendant’s forum contacts and plaintiffs’ claims. See
uBID, 623 F.3d at 429. Plaintiffs allege that in the course of
recruiting plaintiffs’ EFSs in Illinois and elsewhere, defendant
solicited

and

which

then

it

plaintiffs
purposely

must

obtained
used

to

come

directed

plaintiffs’

its

confidential

plaintiffs’

forward

with

conduct

at

information,

detriment.

Accordingly,

evidence
Illinois,

that
and

defendant

the

conduct

targeting Illinois bears a sufficiently “intimate” relationship
with plaintiffs’ claims to make an Illinois court’s exercise of
jurisdiction

“reasonably

foreseeable.”
7

Id.

(citation

omitted).

Defendant

does

not

deny

that

it

has

attempted

to

recruit

plaintiffs’ EFS in Illinois and elsewhere. Defendant denies that
it

has

actually

plaintiffs
offered

in

any

hired

Illinois

evidence

any
and

EFS

previously

asserts

suggesting

that

that

affiliated

plaintiffs

its

with

have

recruitment

not

efforts

targeting Illinois EFSs were unlawful. But plaintiffs’ theories
of liability do not depend on whether defendant ultimately hired
any of its EFS, and, as noted above, the jurisdictional evidence
need not establish that defendant’s conduct was in fact unlawful.
The

evidence

recruitment

supports
efforts

the
at

conclusion
Illinois

that

EFSs

defendant
that

directed

included

the

solicitation of confidential information, and plaintiffs’ claims
“directly relate” to that conduct. Tamburo, 601 F.3d at 702. That
is sufficient for specific jurisdiction.
II.
On

the

question

of

transfer,

defendant

raises

several

arguments, none of which warrants extensive discussion. Venue is
proper

in

a

judicial

district

where

a

“substantial

part

of

events” giving rise to the asserted claims occurred. 28 U.S.C.
§ 1391(b)(2).

Defendant

argues

that

its

“wholly

lawful

interactions” with Illinois-based EFSs cannot support venue under
on this basis, but this argument repeats the error of resting on
a merits issue not appropriate at this stage. Transfer is not
appropriate under § 1406(a).
8

Defendant also argues that even if venue is proper in this
district, it should be transferred to the District of Minnesota
for

the

convenience

of

the

parties

and

witnesses

and

in

the

interests of justice under § 1404(a). Five factors bear on the
“convenience” prong of the analysis: (1) the plaintiffs’ choice
of forum; (2) the situs of the material events; (3) the relative
ease of access to sources of proof; (4) the convenience of the
witnesses; and (5) the convenience to the parties of litigating
in the respective forums. Republic Technologies (NA), LLC v. BBK
Tobacco & Foods, LLC, 240 F. Supp. 3d 848, 851 (N.D. Ill. 2016).
The plaintiff’s choice of forum is generally given “substantial
deference,”
connection
plaintiffs’

except
to

the

when

the

forum

underlying

claims

allege

lacks

claim.”

conduct

in

“any

While

it

multiple

significant
may

be

forums,

that
the

jurisdictional evidence shows that this forum has some connection
to plaintiffs’ claims. Accordingly, plaintiffs’ choice of forum
is entitled to deference. See id.
As for the remaining factors, defendant has not carried its
burden of showing that they militate in its favor. For example,
defendant insists that its witnesses are located primarily in
Minnesota,

but

its

motion

and

supporting

memorandum

do

not

identify a single Minnesota witness it expects to call or the
topics

on

which

they

will

be

examined.

See

College

Craft

Companies, Ltd. v. Perry, 889 F. Supp. 1053 (N.D. Ill. 1995)
9

(“[a] party seeking transfer under Section 1404(a) should specify
the key witnesses it intends to call and make a general statement
of

their

expected

testimony.”).

Meanwhile,

plaintiffs

identify

ten Illinois-based EFS as well as eight Illinois-based employees
of

defendant

as

witnesses

who

may

be

asked

about

defendant’s

recruitment related conduct.
The remaining factors—such as the location of “sources of
proof,” which the parties agree is of little significance in the
age of electronic discovery—are either neutral, or, if they point
in either direction, do so negligibly. That is the case, for
example,

with

respect

to

the

public’s

interest

in

speedy

resolution of disputes, which the evidence suggests is unlikely
to differ meaningfully between the two judicial districts.
III.
For the foregoing reasons, defendant’s motion to dismiss or
transfer is denied in its entirety.
ENTER ORDER:

_____________________________
Elaine E. Bucklo
United States District Judge
Dated: May 21, 2018

10