Aspen American Insurance Company v. Interstate Warehouseing, Inc. , 2017 Ill. LEXIS 668 ( 2017 )

2017 IL 121281IN THE
SUPREME COURT
OF
THE STATE OF ILLINOIS
(Docket No. 121281)
ASPEN AMERICAN INSURANCE COMPANY, Appellee, v. INTERSTATE
WAREHOUSING, INC., Appellant.
Opinion filed September 21, 2017.
JUSTICE BURKE delivered the judgment of the court, with opinion.
Chief Justice Karmeier and Justices Freeman, Thomas, Kilbride, Garman, and
Theis concurred in the judgment and opinion.
OPINION
¶1 The plaintiff, Aspen American Insurance Company, filed a complaint in the
circuit court of Cook County in which it alleged that the roof of a Michigan
warehouse owned by the defendant, Interstate Warehousing, Inc., had collapsed,
causing the destruction of goods owned by plaintiff’s insured, Eastern Fish
Company. Defendant, an Indiana corporation, moved to dismiss the complaint for
lack of personal jurisdiction pursuant to Daimler AG v. Bauman, 571 U.S. ___, 134
S. Ct. 746 (2014). The circuit court denied the motion, and a divided appellate court
affirmed. 2016 IL App (1st) 151876. For the reasons that follow, we reverse the
judgments of the lower courts.
¶2 Background
¶3 Plaintiff’s complaint alleges the following. Eastern Fish Company (Eastern) is
a New Jersey-based corporation that sources and imports fish products. In 2013,
Eastern contracted with defendant to store some of its fish products in a refrigerated
warehouse near Grand Rapids, Michigan. On March 8, 2014, part of the
warehouse’s roof collapsed, causing ruptured gas lines and an ammonia leak. The
leak contaminated the fish products that were stored in the warehouse, rendering
them unfit for human consumption. Plaintiff, which insures Eastern, paid Eastern’s
claim for the loss and, in exchange, received subrogation rights.
¶4 On July 14, 2014, plaintiff filed this subrogation action against defendant in the
circuit court of Cook County. Plaintiff’s complaint sets forth various causes of
action, including breach of contract and negligence, and asserts that defendant is
responsible for the loss of Eastern’s fish products. The complaint also alleges that
defendant “maintain[s] a facility in or near Chicago.”
¶5 Attached to plaintiff’s complaint are several documents: a series of letters
between defendant and Eastern’s attorneys in which the roof collapse is discussed,
a copy of the warehousing contract between defendant and Eastern, and a printout
of the masthead from defendant’s website. The letterhead of defendant’s
correspondence and the warehousing contract both state that defendant’s corporate
office is located in Fort Wayne, Indiana. In addition, the letterhead, contract, and
website masthead all contain a list of eight warehouses operated by defendant
throughout the country. These include the Michigan warehouse that is at issue in
this case; a warehouse in Joliet, Illinois; two warehouses in Indiana; and other
warehouses in Colorado, Ohio, Tennessee, and Virginia.
¶6 Defendant filed a motion to quash service and dismiss plaintiff’s complaint for
lack of personal jurisdiction pursuant to section 2-301 of the Code of Civil
Procedure (735 ILCS 5/2-301 (West 2012)). In the motion, defendant did not
dispute that it was doing business in Illinois through the warehouse located in
-2-
Joliet. However, defendant asserted that this was insufficient to subject it to general
personal jurisdiction in Illinois. Rather, according to defendant, under the United
States Supreme Court’s decision in Daimler AG v. Bauman, 571 U.S. ___, 134 S.
Ct. 746 (2014), plaintiff was required to show that defendant is domiciled or “at
home” in Illinois in order to establish jurisdiction. Defendant maintained that
plaintiff had not met this standard.
¶7 Attached to defendant’s motion to dismiss were an affidavit from Jeff Hastings,
defendant’s chief financial officer, and Ryan Shaffer, the general manager of the
Joliet warehouse. In his affidavit, Hastings states that defendant is an Indiana
corporation with its principal place of business in Fort Wayne, Indiana. Hastings
further states that defendant is “a 75% member of” Interstate Warehousing of
Illinois, LLC, a limited liability company organized under Indiana law, which also
maintains its principal place of business in Fort Wayne, Indiana. According to
Hastings’s affidavit, Interstate Warehousing of Illinois “operates” the Joliet
warehouse, while Ryan Shaffer, an employee of defendant, is the general manager.
In his affidavit, Ryan Shaffer confirms that he is the general manager of the Joliet
warehouse, is responsible for its day-to-day operations, and is employed by
defendant.
¶8 Plaintiff filed a response to defendant’s motion to dismiss in which it argued
that, because defendant was doing business in Illinois through the Joliet warehouse,
it was subject to general personal jurisdiction in this state. According to plaintiff,
defendant could, therefore, be sued on causes of action unrelated to its activities in
Illinois. Included with plaintiff’s response was a printout of a “corporation file
detail report” from the Illinois Secretary of State’s website. The report indicates
that defendant is an Indiana corporation that has been registered to do business in
Illinois since 1988. Plaintiff submitted no further filings in the circuit court and
made no discovery requests. 1
¶9 Following a hearing at which no testimony was taken, the circuit court denied
defendant’s motion to dismiss. The appellate court affirmed. 2016 IL App (1st)
1
Under Illinois Supreme Court Rule 201(l) (eff. July 1, 2014), the parties have the right
to discovery on the issue of personal jurisdiction. Jurisdictional discovery is warranted
only when it is shown that the requested discovery is “relevant to the subject matter” (Ill. S.
Ct. R. 201(b)(1) (eff. July 1, 2014)) of personal jurisdiction.
-3-
151876. The appellate court concluded that plaintiff had made a prima facie
showing of general personal jurisdiction and that defendant had failed to overcome
this showing with contrary evidence. Justice Lampkin dissented, finding that, in
light of Daimler, plaintiff had failed to make a prima facie showing of jurisdiction.
Id. at ¶¶ 64-72 (Lampkin, J., dissenting).
¶ 10 We allowed defendant’s petition for leave to appeal. Ill. S. Ct. R. 315(a) (eff.
Mar. 5, 2016). In addition, we allowed the Illinois Trial Lawyers Association and
the American Association for Justice to file a joint amicus curiae brief in support of
plaintiff, and we allowed Certainteed Corporation, Honeywell International, Inc.,
and Union Carbide Corporation to file a joint amicus curiae brief in support of
defendant. Ill. S. Ct. R. 345 (eff. Sep. 20, 2010).
¶ 11 Analysis
¶ 12 The plaintiff has the burden of establishing a prima facie basis to exercise
personal jurisdiction over a nonresident defendant. Russell v. SNFA, 2013 IL
113909, ¶ 28 (citing Wiggen v. Wiggen, 2011 IL App (2d) 100982, ¶ 20). Where, as
here, the circuit court has determined that the plaintiff has met its burden based
solely on documentary evidence, our review is de novo. Id. On review, any
conflicts in the pleadings and supporting affidavits will be resolved in the
plaintiff’s favor but uncontradicted evidence offered by the defendant may defeat
jurisdiction. Id.¶ 13 In Illinois, the exercise of personal jurisdiction over nonresident defendants is
authorized under the “long-arm” statute found in section 2-209 of the Code of Civil
Procedure (735 ILCS 5/2-209 (West 2012)). Plaintiff contends that subsection (c)
of the statute supports a finding of jurisdiction here. That provision states that a
court may exercise jurisdiction on any “basis now or hereafter permitted by the
Illinois Constitution and the Constitution of the United States.” 735 ILCS
5/2-209(c) (West 2012). Thus, to determine whether jurisdiction is appropriate
under subsection (c), we must consider the constitutional limits placed on a state’s
authority to exercise jurisdiction over a nonresident defendant. Because defendant
in this case does not argue that the Illinois Constitution imposes any greater
restraints on the exercise of jurisdiction than the federal constitution, we consider
only federal constitutional principles. Russell, 2013 IL 113909, ¶ 33.
-4-
¶ 14 The United States Supreme Court has held that the federal due process clause
permits a state court to exercise personal jurisdiction over a nonresident defendant
only when the defendant has “certain minimum contacts with [the state] such that
the maintenance of the suit does not offend ‘traditional notions of fair play and
substantial justice.’ ” International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Two types of
personal jurisdiction are subject to the due process analysis: specific and general.
Specific jurisdiction is case-specific. That is, specific jurisdiction exists when the
plaintiff’s cause of action arises out of or relates to the defendant’s contacts with
the forum state. Russell, 2013 IL 113909, ¶ 40 (citing Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985)). In contrast, general jurisdiction is
all-purpose. Where general jurisdiction exists, the plaintiff may pursue a claim
against the defendant even if the conduct of the defendant that is being challenged
occurred entirely outside the forum state. Id. ¶ 36 (citing Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011)). In this case, plaintiff does
not complain of any conduct committed by defendant in Illinois. Thus, only general
jurisdiction is at issue here.
¶ 15 Plaintiff maintains that, “consistent with U.S. Supreme Court decisions”
interpreting the federal due process clause, a state may exercise general jurisdiction
over a defendant “where the defendant has continuous and systematic general
business contacts with the forum state.” Therefore, according to plaintiff, to
establish a prima facie case of general jurisdiction under subsection (c) of the
long-arm statute, a plaintiff need only “show a defendant’s continuous and
substantial business activity in Illinois.” Plaintiff emphasizes that, in this case,
defendant’s “Illinois contacts are not tenuous or random, but have been continuous
and systematic for over twenty-five years.” For this reason, plaintiff asserts that
defendant may be subjected to general personal jurisdiction in this state. We
disagree.
¶ 16 In Daimler AG v. Bauman, 571 U.S. ___, 134 S. Ct. 746 (2014), the United
States Supreme Court held that the due process analysis for general personal
jurisdiction does not rest simply on “whether a foreign corporation’s in-forum
contacts can be said to be in some sense ‘continuous and systematic.’ ” Id. at ___,
134 S. Ct. at 761 (quoting Goodyear, 564 U.S. at 919). Such a standard, the Court
explained, is “unacceptably grasping.” Id. at ___, 134 S. Ct. at 760. Instead, the
-5-
Court held that, under the federal due process clause, “ ‘[a] court may assert general
jurisdiction over [a] foreign *** corporation[ ] to hear any and all claims against
[it] when [its] affiliations with the State are so “continuous and systematic” as to
render [it] essentially at home in the forum State.’ ” (Emphasis added.) Id. at ___,
134 S. Ct. at 754 (quoting Goodyear, 564 U.S. at 919); see also, e.g., BNSF Ry. Co.
v. Tyrrell, 581 U.S. ___, ___ 137 S. Ct. 1549, 1558 (2017); Brown v. Lockheed
Martin Corp., 814 F.3d 619, 626-27 (2d Cir. 2016); Kipp v. Ski Enterprise Corp. of
Wisconsin, Inc., 783 F.3d 695, 698 (7th Cir. 2015) (Daimler “raised the bar” for
general jurisdiction); Sonera Holding B.V. v. Çukurova Holding A.Ş., 750 F.3d 221,
226 (2d Cir. 2014) (Daimler makes “clear that even a company’s ‘engage[ment] in
a substantial, continuous, and systematic course of business’ is alone insufficient to
render it at home in a forum” (quoting Daimler, 571 U.S. at ___, 134 S. Ct. at 761));
State ex rel. Norfolk Southern Ry. Co. v. Dolan, 512 S.W.3d 41, 51 n.6 (Mo. 2017)
(noting Daimler’s “rejection of doing business as a basis for jurisdiction”); Barrett
v. Union Pacific R.R. Co., 390 P.3d 1031, 1040 (Or. 2017) (same); ClearOne, Inc.
v. Revolabs, Inc., 2016 UT 16, ¶ 42, 369 P.3d 1269 (same).
¶ 17 The Supreme Court went on to explain in Daimler that the “paradigm” forums
in which a corporate defendant is “essentially at home” are the corporation’s place
of incorporation and its principal place of business. Daimler, 571 U.S. at ___, 134
S. Ct. at 760. The Court further noted that, in an “exceptional case,” a corporate
defendant’s activities in a forum outside its place of incorporation or principal
place of business “may be so substantial and of such a nature as to render the
corporation at home in that State.” Id. at ___ n.19, 134 S. Ct. at 761 n.19. To
illustrate what it meant by an “exceptional case,” the Supreme Court pointed to
Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952). Daimler, 571
U.S. at ___ n.19, 134 S. Ct. at 761 n. 19. In that case, the defendant corporation was
forced to relocate temporarily from the Philippines to Ohio because of World War
II. Perkins, 342 U.S. at 447-48. Ohio was thus “the center of the corporation’s
wartime activities” and, effectively, a “ ‘surrogate for the place of incorporation or
head office.’ ” Daimler, 571 U.S. at ___ n.8, 134 S. Ct. at 756 n.8 (quoting Arthur
T. von Mehren & Donald T. Trautman, Jurisdiction to Adjudicate: A Suggested
Analysis, 79 Harv. L. Rev. 1121, 1144 (1966)). As such, the defendant corporation
was subject to general jurisdiction in that state. Perkins, 342 U.S. at 448.
-6-
¶ 18 Accordingly, in this case, to comport with the federal due process standards laid
out in Daimler and, in doing so, comply with subsection (c) of the long-arm statute,
plaintiff must make a prima facie showing that defendant is essentially at home in
Illinois. This means that plaintiff must show that defendant is incorporated or has
its principal place of business in Illinois or that defendant’s contacts with Illinois
are so substantial as to render this an exceptional case. Plaintiff has failed to make
this showing.
¶ 19 Plaintiff does not dispute that defendant is incorporated in Indiana and
Hastings’s uncontradicted affidavit establishes that defendant’s principal place of
business is in Indiana. Further, plaintiff’s complaint does not allege, and there is
nothing in the record to suggest, that this is an exceptional case on the order of
Perkins. To be sure, plaintiff has established that defendant does business in Illinois
through the warehouse in Joliet. But this fact falls far short of showing that Illinois
is a surrogate home for defendant. Indeed, if the operation of the warehouse was
sufficient, in itself, to establish general jurisdiction, then defendant would also be at
home in all the other states where its warehouses are located. The Supreme Court
has expressly rejected this reasoning. Daimler, 571 U.S. at ___ n.20, 134 S. Ct. at
762 n.20 (“[a] corporation that operates in many places can scarcely be deemed at
home in all of them”); see also, e.g., Brown, 814 F.3d at 629 (the plaintiff failed to
establish an exceptional case under Daimler where the defendant’s contacts in the
forum state did not establish a “ ‘surrogate principal place of business’ ”); Kipp,
783 F.3d at 698 (noting Daimler’s “stringent criteria” for establishing general
jurisdiction); Martinez v. Aero Caribbean, 764 F.3d 1062, 1070 (9th Cir. 2014)
(“Daimler makes clear the demanding nature of the standard for general personal
jurisdiction over a corporation”); Monkton Insurance Services, Ltd. v. Ritter, 768
F.3d 429, 432 (5th Cir. 2014) (under Daimler, it is “incredibly difficult to establish
general jurisdiction in a forum other than the place of incorporation or principal
place of business”).
¶ 20 Plaintiff has failed to show that defendant’s contacts with Illinois render it at
home in this state. To subject defendant to general personal jurisdiction would
therefore deny it due process of law. Accordingly, jurisdiction is not authorized
under subsection (c) of the long-arm statute.
-7-
¶ 21 Plaintiff also notes, however, that subsection (b)(4) of the long-arm statute
authorizes a court to exercise jurisdiction in any action arising within or without
Illinois against any defendant “doing business within this State.” 735 ILCS
5/2-209(b)(4) (West 2012). Plaintiff asserts that jurisdiction in this case is
authorized under this provision. We reject this contention. In light of Daimler,
subsection (b)(4) cannot constitutionally be applied to establish general jurisdiction
where, as here, there is no evidence that defendant’s contacts with Illinois have
rendered it “essentially at home” in this state.
¶ 22 Finally, plaintiff argues that, because defendant has registered to do business in
Illinois under the Business Corporation Act of 1983 (Act) (805 ILCS 5/1.01 et seq.
(West 2012)), and because defendant has a registered agent in Illinois for service of
process, it has “subjected itself to the jurisdiction and laws of Illinois.” That is,
plaintiff maintains that, by registering to do business in Illinois, defendant has
effectively consented to the exercise of general jurisdiction in this state and thereby
obviated any due process concerns. Again, we disagree.
¶ 23 Section 13.05 of the Act states that “a foreign corporation organized for profit,
before it transacts business in this State, shall procure authority so to do from the
Secretary of State.” 805 ILCS 5/13.05 (West 2012). Section 13.15 of the Act (805
ILCS 5/13.15 (West 2012)) lists the requirements that must be met and information
that must be provided before authorization is approved. The Act also requires,
under section 5.05 (805 ILCS 5/5.05 (West 2012)), that each foreign (and
domestic) corporation having authority to transact business in Illinois maintain a
registered office and registered agent in this state. In addition, section 5.25 of the
Act (805 ILCS 5/5.25 (West 2012)) states that a foreign corporation having
authority to transact business in Illinois may be served with process either upon the
registered agent appointed by the corporation or upon the Secretary of State.
¶ 24 None of the foregoing provisions require foreign corporations to consent to
general jurisdiction as a condition of doing business in Illinois, nor do they indicate
that, by registering in Illinois or appointing a registered agent, a corporation waives
any due process limitations on this state’s exercise of general jurisdiction. Indeed,
the Act makes no mention of personal jurisdiction at all. Accord Surita v. AM
General LLC, No. 15 C 7164, 2015 WL 12826471, at *3 (N.D. Ill. 2015) (the Act
-8-
“does not contain a provision with jurisdictional consent language” (emphasis in
original)).
¶ 25 Further, section 5.25(a) of the Act states that service on the registered agent of a
foreign corporation is for that process, notice or demand that is “required or
permitted by law.” 805 ILCS 5/5.25(a) (West 2012). This phrase indicates “some
limitation in accordance with law.” Brown, 814 F.3d at 636. There is no basis for
excluding constitutional due process limitations from an inquiry into what is
“permitted by law.” Id. at 636-37.
¶ 26 Plaintiff points to section 13.10 of the Act (805 ILCS 5/13.10 (West 2016)).
This provision states that a foreign corporation “shall be subject to the same duties,
restrictions, penalties, and liabilities now or hereafter imposed upon a domestic
corporation of like character.” Id. Plaintiff suggests that this provision supports a
finding of jurisdiction. However, as defendant observes, a duty is a “legal
obligation that is owed or due to another.” Black’s Law Dictionary 615 (10th ed.
2014). Personal jurisdiction is not a duty but, instead, “refers to the court’s power
‘ “to bring a person into its adjudicative process.” ’ ” People v. Castleberry, 2015
IL 116916, ¶ 12 (quoting Belleville Toyota, Inc. v. Toyota Motor Sales, U.S.A., Inc.,
199 Ill. 2d 325, 334 (2002), quoting Black’s Law Dictionary 870 (8th ed. 2004)).
Thus, the fact that a foreign corporation registered to do business in Illinois is
subject to the same duties as a domestic one in no way suggests that the foreign
corporation has consented to general jurisdiction.
¶ 27 Under the Act, a foreign corporation must register with the Secretary of State
and appoint an agent to accept service of process in order to conduct business in
Illinois. We hold, however, that in the absence of any language to the contrary, the
fact that a foreign corporation has registered to do business under the Act does not
mean that the corporation has thereby consented to general jurisdiction over all
causes of action, including those that are completely unrelated to the corporation’s
activities in Illinois. Notably, other courts have reached similar conclusions. See,
e.g., Perez v. Air & Liquid Systems Corp., No. 3:16-CV-00842-NJR-DGW, 2016
WL 7049153, at *6-9 (S.D. Ill. 2016) (interpreting the Act); Brown 814 F.3d at 641
(interpreting Connecticut law); Genuine Parts Co. v. Cepec, 137 A.3d 123 (Del.
2016) (Delaware law).
-9-
¶ 28 Conclusion
¶ 29 For the foregoing reasons, the judgments of the appellate and circuit courts are
reversed. The cause is remanded to the circuit court to enter judgment dismissing
plaintiff’s complaint.
¶ 30 Appellate court judgment reversed.
¶ 31 Circuit court judgment reversed.
¶ 32 Cause remanded with directions.
- 10 -