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
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