Innovative Garage Door Company v. High Ranking Domains, LLC , 367 Ill. Dec. 163 ( 2012 )

ILLINOIS OFFICIAL REPORTS
Appellate Court
Innovative Garage Door Co. v. High Ranking Domains, LLC, 2012 IL App (2d) 120117Appellate Court INNOVATIVE GARAGE DOOR COMPANY, Plaintiff-Appellant, v.
Caption HIGH RANKING DOMAINS, LLC, Defendant-Appellee.
District & No. Second District
Docket No. 2-12-0117
Filed December 3, 2012
Held A Colorado Internet business that contracted to sell leads for garage-door
(Note: This syllabus services to providers of such services, including plaintiff, an Illinois
constitutes no part of business engaged in installing and repairing garage doors, was subject to
the opinion of the court personal jurisdiction in the breach of contract action plaintiff filed when
but has been prepared defendant terminated its contract to supply leads to plaintiff and started
by the Reporter of selling leads to another company, since defendant had sufficient
Decisions for the minimum contacts with Illinois and requiring defendant to litigate the
convenience of the matter in Illinois would not offend traditional notions of fairness and
reader.)
substantial justice.
Decision Under Appeal from the Circuit Court of Du Page County, No. 11-L-225; the
Review Hon. Kenneth L. Popejoy, Judge, presiding.
Judgment Reversed and remanded.
Counsel on Michael A. Cotteleer, of Young & Cotteleer, of Wheaton, for appellant.
Appeal
Timothy A. Armstrong and Kenneth M. Mastny, both of Berglund,
Armstrong & Mastny, P.C., of Oak Brook, for appellee.
Panel JUSTICE HUDSON delivered the judgment of the court, with opinion.
Justices Zenoff and Burke concurred in the judgment and opinion.
OPINION
¶1 In this breach-of-contract case, plaintiff, Innovative Garage Door Company (Innovative),
appeals the trial court’s order dismissing its complaint against defendant, High Ranking
Domains, LLC (HRD), for lack of personal jurisdiction. At issue is whether HRD’s activities
are sufficient to establish jurisdiction over it. We conclude that they are. Accordingly, we
reverse and remand for further proceedings.
¶2 I. BACKGROUND
¶3 Innovative is an Illinois corporation that repairs and installs garage doors. HRD is an
Arizona limited liability company with its principal place of business in Colorado. HRD
owns at least three websites, including garagedoorsofamerica.com, designed to solicit
inquiries from people seeking handyman, plumbing, or garage-door services. HRD then sells
these leads to companies throughout the United States.
¶4 When the website garagedoorsofamerica.com is viewed,1 a form allows users to seek
services in specific states and cities. Illinois is listed in various locations as a supported state.
Separate text links allow users to seek services in specific states, including Illinois. A person
using the website can use pull-down menus to choose a specific city in Illinois and select a
desired service in order to seek an estimate. The website then identifies a company that
serves the area, provides a local telephone number to call for a free estimate, and lists coupon
codes. HRD does not have offices in Illinois, and its employees do not regularly travel to
Illinois or physically conduct business in this state.
1
Information about the content of HRD’s websites was not included in the pleadings.
However, the domain locations were included. We determine that it is appropriate to take judicial
notice of the material that appears on those sites. See Publications International, Ltd. v.
Burke/Triolo, Inc., 121 F. Supp. 2d 1178, 1182 n.2 (N.D. Ill. 2000). Regardless, while the content
of the websites bolsters our decision in this case, we would reach the same determination in this
matter had we not taken judicial notice, as the pleadings sufficiently detail that HRD uses
commercial websites to obtain leads from Illinois residents.
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¶5 In 2007, the president of Innovative saw an advertisement placed by HRD in International
Door and Opener Magazine that invited garage-door installers across the country to enter into
a contract to obtain installation and repair leads. Innovative became one of HRD’s customers
by downloading a written service agreement from HRD’s website at
highrankingdomains.com, which it submitted to HRD by mail or fax. HRD accepted the
contract in Arizona. The highrankingdomains.com website states that HRD is an Internet
lead-generation company that specializes in search-engine marketing. All indications from
the website are that HRD does most, if not all, of its business online.
¶6 Under the agreement, HRD sold approximately 150 leads per year to Innovative for $15
each. The leads were compiled by HRD, concerned garage-door services in Illinois, and were
for cities in Illinois that Innovative chose from an online selection. HRD transmitted the
leads from Arizona to Innovative in Illinois, and Innovative paid for the leads using its
Illinois credit-card account. How the leads were transmitted is unknown. The contract
allowed for transmittal by telephone or e-mail, and the copy in the record does not indicate
how leads were actually transmitted. Billing took place from Arizona and charges were made
based on a credit-card authorization form that was sent to HRD in Arizona when the
agreement was sent.
¶7 In November 2010, HRD terminated the agreement in order to sell the leads to another
company. Innovative then filed a complaint seeking damages for breach of contract,
contending that a clause in the contract required HRD to continue services indefinitely, with
Innovative being the only party who could cancel the contract. HRD moved to dismiss the
complaint, contending that the trial court lacked personal jurisdiction over it.
¶8 The trial court determined that, because there were no HRD offices in Illinois, no travel
to Illinois, and no maintenance of business activities in Illinois, it lacked personal jurisdiction
over HRD. The court found HRD’s Internet activity akin to an advertisement and concluded
that HRD was merely a conduit for connecting consumers with service providers. The court
stated that HRD’s activities were not sufficient to subject it to jurisdiction in every state
where it brought together two in-state parties. Thus, the court dismissed the complaint.
Innovative now appeals.
¶9 II. ANALYSIS
¶ 10 Innovative contends that the trial court erred in dismissing the case, arguing that HRD
was subject to the lawsuit in Illinois because it collected information from Illinois residents
via its Internet business and sold that information to Innovative in Illinois. HRD contends
that subjecting it to suit in Illinois would violate due process (HRD mentions the Illinois
long-arm statute (735 ILCS 5/2-209 (West 2010)) in its brief; however, the parties’
arguments largely focus on federal due process principles).
¶ 11 “ ‘The plaintiff has the burden of proving a prima facie case for jurisdiction when
seeking jurisdiction over a nonresident defendant.’ ” Wiggen v. Wiggen, 2011 IL App (2d)
100982, ¶ 20 (quoting Bolger v. Nautica International, Inc., 369 Ill. App. 3d 947, 949
(2007)). “When the trial court decides the issue of personal jurisdiction based solely on
documentary evidence, our review is de novo.” Id. “ ‘In reviewing affidavits and pleadings,
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we resolve conflicts between the documents in the plaintiff’s favor for purposes of
determining whether a prima facie case for jurisdiction has been shown.’ ” Id. (quoting
Bolger, 369 Ill. App. 3d at 950). “ ‘A plaintiff’s prima facie case for jurisdiction can be
overcome by a defendant’s uncontradicted evidence that defeats jurisdiction.’ ” Id. (quoting
Bolger, 369 Ill. App. 3d at 950).
¶ 12 Section 2-209(c) of the Code of Civil Procedure (the long-arm statute) allows an Illinois
court to exercise personal jurisdiction on any basis permitted by the Illinois Constitution and
the Constitution of the United States. 735 ILCS 5/2-209(c) (West 2010). “ ‘Thus, the long-
arm statute has been held to be coextensive with the due process requirements of the Illinois
and United States Constitutions.’ ” Wiggen, 2011 IL App (2d) 100982, ¶ 21 (quoting Bolger,
369 Ill. App. 3d at 950). Accordingly, the issue is addressed according to due-process
requirements. Id.
¶ 13 “Under state due process guarantees, it must be fair, just, and reasonable to require a
nonresident to defend an action in Illinois, considering the quality and nature of the
defendant’s acts that occur in Illinois or that affect interests located in Illinois.” Id. ¶ 22. The
federal due process analysis considers whether “ ‘(1) the nonresident defendant had
“minimum contacts” with the forum state such that there was “fair warning” that the
nonresident defendant may be haled into court there; (2) the action arose out of or related to
the defendant’s contacts with the forum state; and (3) it is reasonable to require the defendant
to litigate in the forum state.’ ” Bolger, 369 Ill. App. 3d at 950 (quoting Keller v. Henderson,
359 Ill. App. 3d 605, 613 (2005))2; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462,
471-77 (1985). Moreover, personal jurisdiction is not a contest between two states, with the
winner being able to assert jurisdiction. Viktron Ltd. Partnership v. Program Data Inc., 326
Ill. App. 3d 111, 118-19 (2001). Thus, conduct by a party that might allow another state to
exercise jurisdiction is not relevant to assessing whether Illinois may assert it as well. Id. at
119.
¶ 14 At issue in this appeal is whether HRD had sufficient minimum contacts with Illinois so
that Illinois courts can assert personal jurisdiction over it. “The minimum contacts required
for the exercise of personal jurisdiction differ depending on whether general jurisdiction or
specific jurisdiction is being sought.” Wiggen, 2011 IL App (2d) 100982, ¶ 24 (citing Bolger,
369 Ill. App. 3d at 951). The present case arises out of HRD’s relationship with Innovative;
hence, we limit our inquiry to the question of specific jurisdiction and express no opinion on
the subject of general jurisdiction. “ ‘A court has specific jurisdiction over a defendant if the
suit arises out of or relates to the defendant’s contacts with the forum state.’ ” Wiggen, 2011
IL App (2d) 100982, ¶ 29 (quoting Bolger, 369 Ill. App. 3d at 952). “For specific
jurisdiction, the suit must arise directly out of the contacts between the defendant and the
2
In Keller, 359 Ill. App. 3d at 620, we noted that “in almost all cases, when federal due
process concerns regarding personal jurisdiction are satisfied, so are Illinois due process concerns.”
Thus, as there was no contention that the analyses diverged, we held that “because federal due
process concerns have been satisfied in this case, so have Illinois due process concerns.” Id.
Similarly, neither party in this case asserts that the analyses diverge. Thus, we address only the
federal due process standard.
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forum.” Id.
¶ 15 A. Minimum Contacts
¶ 16 “ ‘In order for personal jurisdiction to comport with federal due process requirements,
the defendant must have certain minimum contacts with the forum state such that
maintaining the suit there does not offend traditional notions of fair play and substantial
justice.’ ” Wiggen, 2011 IL App (2d) 100982, ¶ 24 (quoting Bolger, 369 Ill. App. 3d at 951).
“At a minimum, the court must find an act by which the defendant purposefully avails him
or herself of the privilege of conducting activities within the forum state, thus invoking the
benefits and protections of its laws.” Id. ¶ 29. “The focus is on the defendant’s activities
within the forum State, not on those of the plaintiff.” (Internal quotation marks omitted.) Id.
“The purposeful-availment requirement exists so that an out-of-state defendant will not be
forced to litigate in a distant or inconvenient forum solely as a result of random, fortuitous,
or attenuated contacts or the unilateral act of a consumer or some other third person.” Id.
¶ 24. This connection does not require physical contacts with the forum state. Rather, “[s]o
long as a commercial actor’s efforts are ‘purposefully directed’ toward residents of another
State,” that state may exercise personal jurisdiction over a nonresident defendant. Burger
King, 471 U.S. at 476 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774-75
(1984)). Once a plaintiff has established a defendant’s minimum contacts with Illinois, we
must then consider those contacts in light of certain other factors to determine whether the
exercise of personal jurisdiction comports with “ ‘fair play and substantial justice.’ ” Id.(quoting International Shoe Co. v. State of Washington, Office of Unemployment
Compensation & Placement, 326 U.S. 310, 320 (1945)).
¶ 17 B. Implications of the Internet
¶ 18 An additional consideration is relevant to our analysis, namely, HRD’s website. “The
type of Internet activity sufficient to establish personal jurisdiction is a developing area of
jurisprudence ***.” Larochelle v. Allamian, 361 Ill. App. 3d 217, 225 (2005). Two major
lines of jurisprudence grapple with the phenomenon that is the Internet. An early attempt to
deal with this subject occurred in Zippo Manufacturing Co. v. Zippo Dot Com, Inc., 952 F.
Supp. 1119 (W.D. Pa. 1997). There, the federal district court from the Western District of
Pennsylvania crafted a “sliding scale” test based upon the relative interactivity and the
commercial nature of a website. Zippo, 952 F. Supp. at 1123-24. A second line of cases
concerns the degree to which a foreign party has “targeted” the forum state. See, e.g., ALS
Scan, Inc. v. Digital Service Consultants, Inc., 293 F.3d 707, 714 (4th Cir. 2002) (“This
standard for reconciling contacts through electronic media with standard due process
principles is not dissimilar to that applied by the Supreme Court in Calder v. Jones, [465
U.S. 783 (1984)]. In Calder, the Court held that a California court could constitutionally
exercise personal jurisdiction over a Florida citizen whose only material contact with
California was to write a libelous story in Florida, directed at a California citizen, for a
publication circulated in California, knowing that the ‘injury would be felt by [the
Californian] in the State in which she lives and works.’ Id. at 789-90. Analogously, under
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the standard we adopt and apply today, specific jurisdiction in the Internet context may be
based only on an out-of-state person’s Internet activity directed at Maryland and causing
injury that gives rise to a potential claim cognizable in Maryland.”). These cases give us
additional tools to apply when confronted with a jurisdictional question involving the
Internet.
¶ 19 We emphasize, however, that they are just tools that may be useful in analyzing certain
fact patterns. Neither line of cases should be regarded as providing a dispositive test to be
applied in cases involving jurisdiction and the Internet. Indeed, doing so would be
inconsistent with the Supreme Court’s rejection in Burger King, 471 U.S. at 478 (quoting
International Shoe Co., 326 U.S. at 316), of “the notion that personal jurisdiction might turn
on ‘mechanical’ tests.” Essentially, the analyses contained in these cases are relevant only
to the extent that they shed light upon a jurisdictional issue.
¶ 20 Notably, though the Zippo test has been widely applied by federal trial courts, including
those in the Seventh Circuit (see, e.g., Berthold Types Ltd. v. European Mikrograf Corp., 102
F. Supp. 2d 928, 932-33 (N.D. Ill. 2000)), the Seventh Circuit expressly declined to fashion
a special jurisdictional test for Internet cases (Illinois v. Hemi Group LLC, 622 F.3d 754,
758-59 (7th Cir. 2010) (citing Tamburo v. Dworkin, 601 F.3d 693, 703 n.7 (7th Cir. 2010))).
That court explained:
“Zippo’s sliding scale was always just short-hand for determining whether a defendant
had established sufficient minimum contacts with a forum to justify exercising personal
jurisdiction over him in the forum state. But we think that the traditional due process
inquiry described earlier is not so difficult to apply to cases involving Internet contacts
that courts need some sort of easier-to-apply categorical test.” Id. at 759.
We agree that a specific test for Internet cases is unwarranted. Instead, we view the Zippo test
as a guiding factor. Hence, though we have previously approved of the Zippo test, we now
clarify that it is not to be treated as the ultimate test for determining jurisdiction in Internet
cases. Instead, the ultimate analysis is what it has always been–whether the quality and nature
of the defendant’s contacts with the forum are such that it is fair and reasonable to assert
personal jurisdiction. In light of the Supreme Court’s demand that jurisdiction be analyzed
in a “ ‘highly realistic’ ” manner, courts must be cautious in applying any seemingly
categorical tests to questions of jurisdiction, whether Internet-related or not. Burger King,
471 U.S. at 478 (quoting International Shoe Co., 326 U.S. at 316).
¶ 21 Having placed these tests in a proper context, we now turn to their substance. Under the
Zippo analysis, at the top of the scale, “jurisdiction attaches to a nonresident defendant where
it transacts business in foreign jurisdictions via an interactive website where contracts are
completed online and the defendant derives profit directly from web-related activity.”
Larochelle, 361 Ill. App. 3d at 225 (citing Bombliss v. Cornelsen, 355 Ill. App. 3d 1107,
1114 (2005)). Generally, the mere maintenance of an interactive website is not enough.
Rather, at the top end of the scale, jurisdiction is proper over “businesses which conduct a
significant portion of their business though ongoing Internet relationships; for example, by
entering ‘into contracts with residents of a foreign jurisdiction that involve the knowing and
repeated transmission of computer files over the Internet.’ ” Millennium Enterprises, Inc. v.
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Millennium Music, LP, 33 F. Supp. 2d 907, 920 (D. Or. 1999) (quoting Zippo, 952 F. Supp.
at 1124). Conversely, at the bottom of the scale, “jurisdiction does not attach where the
nonresident maintains a passive website that merely provides information about the
defendant’s products or services.” Larochelle, 361 Ill. App. 3d at 225. “In between lies a
third type of website that is interactive in that it allows customers in foreign jurisdictions to
communicate regarding the defendant’s products and services; such a website may or may
not be sufficient to assert personal jurisdiction, depending on the level of interactivity and
the commercial nature of the information exchanged.” Id. “Ultimately, whether a state may
exercise personal jurisdiction is determined by ‘examining the level of interactivity and
commercial nature of the exchange of information that occurs on the Web site.’ ” Berthold,
102 F. Supp. 2d at 932 (quoting Zippo, 952 F. Supp. at 1124). The quality and nature of
commercial activity that an entity conducts over the Internet is a key consideration. See id.We note, however, that cases where the maintenance of a website is asserted as the sole basis
for personal jurisdiction are probably rare and more often, additional considerations
independent of the Internet (such as a contract and the parties’ obligations under it) will bear
upon the issue as well. E.g., Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446, 453 (3d Cir.
2003) (“In deciding whether to exercise jurisdiction over a cause of action arising from a
defendant’s operation of a web site, a court may consider the defendant’s related non-Internet
activities as part of the ‘purposeful availment’ calculus.”).
¶ 22 Here, we are not presented with a situation where jurisdiction is entirely dependent on
the existence of a website. In deciding that Illinois may assert jurisdiction over HRD, we are
guided by considerations beyond the interactivity of the website. Generally, regardless of the
interactivity of the website,”something more” than just the presence of a website is required.
See Millennium Enterprises, Inc., 33 F. Supp. 2d at 919 (citing Cybersell, Inc. v. Cybersell,
Inc., 130 F.3d 414, 418 (9th Cir. 1997)). Thus, we have held that the sale of a product over
an Internet auction site to a buyer in Illinois, when the seller has no control over who
purchases the item, does not subject the seller to jurisdiction in Illinois without further ties
to the state. MacNeil v. Trambert, 401 Ill. App. 3d 1077, 1082-83 (2010). We also agree that
the quality and nature of commercial activity that an entity conducts over the Internet is a key
consideration. See Berthold, 102 F. Supp. 2d at 932. But, while a highly interactive website
might indicate the quality of commercial contacts with the forum, it is the contacts
themselves that would allow us to exercise jurisdiction rather than the mere fact that the
website is interactive.
¶ 23 Moreover, when assessing Internet-based contacts, it is also important to consider the
extent to which an entity outside the forum directed its activities at the forum state. In Burger
King, 471 U.S. at 472, the Supreme Court held that specific personal jurisdiction exists
where a defendant has “purposefully directed” his or her activities at the forum state and the
claimed injuries arise out of those activities. The Seventh Circuit, discussing Calder, 465
U.S. 783, explained that conduct is purposefully directed at a state where (1) the conduct at
issue is intentional; (2) it is expressly aimed at the forum state; and (3) the defendant is aware
that its effects will be felt in the forum state. Tamburo, 601 F.3d at 702-03. We note that
Calder has generally been applied only in tort cases. See, e.g., Revell v. Lidov, 317 F.3d 467(5th Cir. 2002). However, drawing distinctions between tort and contract cases for the
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purpose of assessing personal jurisdiction is of questionable utility. Planning Group of
Scottsdale, L.L.C. v. Lake Mathews Mineral Properties, Ltd., 246 P.3d 343, 349 (Ariz. 2011)
(en banc) (“Moreover, we do not believe that if purposeful direction is established with
respect to a tort claim, a contract claim arising out of precisely the same set of facts is
somehow placed beyond the constitutional purview of Arizona courts. The issue, after all,
is whether the aggregate of the defendants’ contacts with this state makes it fair and
reasonable to hale them into court here with respect to claims arising out of those contacts.”);
see also Sasha Meschkow, Unifying Personal Jurisdiction In The Ninth Circuit, 43 Ariz. St.
L.J. 1345, 1361 (2011) (“[T]here is nothing in the Calder opinion to suggest the effects
analysis could not be applied in non-tort cases where the actions are intentional, expressly
aimed towards the forum, and cause harm to the plaintiff in the forum.”). In fact, the
Supreme Court itself has relied on Calder in a contract case. Burger King, 471 U.S. at 469
n.11, 476. Thus, to the extent that the Calder framework is helpful in analyzing any given
case, we will apply it.
¶ 24 C. Specific Personal Jurisdiction
¶ 25 Having set forth the applicable law, we will now turn to the question of whether specific
personal jurisdiction exists with respect to HRD. We conclude that it does. Initially, we note
that we are not called upon to consider whether HRD’s website alone provides a basis for
Illinois to exercise jurisdiction in this matter. Quite simply, this is not a case in which a
defendant’s only tie to the forum state is its website. The most significant contact HRD has
with this state is the nature of its business relationship with Innovative. HRD entered into a
contract that established a long-term–indeed, as alleged, open-ended–relationship with an
Illinois business. Pursuant to that relationship, HRD arranged business transactions between
the Illinois business and what were primarily Illinois consumers (we recognize that some of
the contacts may have been to residents of other states–for example, nonresidents who own
property in Illinois–however, given the location-oriented nature of HRD’s website, the vast
majority of contacts were surely with residents of Illinois). In Burger King, 471 U.S. at 478-
79, the Supreme Court explained:
“The Court long ago rejected the notion that personal jurisdiction might turn on
‘mechanical’ tests, [citation], or on ‘conceptualistic . . . theories of the place of
contracting or of performance,’ [citation]. Instead, we have emphasized the need for a
‘highly realistic’ approach that recognizes that a ‘contract’ is ‘ordinarily but an
intermediate step serving to tie up prior business negotiations with future consequences
which themselves are the real object of the business transaction.’ [Citation.] It is these
factors–prior negotiations and contemplated future consequences, along with the terms
of the contract and the parties’ actual course of dealing–that must be evaluated in
determining whether the defendant purposefully established minimum contacts within
the forum.”
Here, the substance of the agreement clearly establishes a significant relationship between
HRD and Illinois. HRD’s contacts with Illinois are in no way “random, fortuitous, or
attenuated” (Wiggen, 2011 IL App (2d) 100982, ¶ 24); rather, they arise from substantial
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obligations in this state to which HRD voluntarily subjected itself by entering into a contract
with an Illinois resident.
¶ 26 In order to provide garage-door customer contacts to Innovative, HRD maintained a
website. While the website is commercial, it is only minimally interactive. It merely allows
a user to select a state and city, to which the website responds by identifying a local
contractor. Cf. Larochelle, 361 Ill. App. 3d at 225 (holding that a website whose only
interactive feature was to allow users to retrieve stock quotes was “barely more than
passive”). However, the website was unquestionably directed (in relevant part) at Illinois. In
Hemi Group, 622 F.3d at 758, the Seventh Circuit observed that a website that specifically
identified a state–indicating a willingness to do business with the state’s residents–would
provide an indication that the operator of the website was purposefully availing itself of the
protection of the state’s laws. In this case, HRD did expressly identify Illinois on its website
and also listed a number of cities within this state. HRD bills itself as an Internet company
that specializes in search marketing, and its website specifically invites Illinois residents to
fill out forms seeking information. Without the Internet, and without users in Illinois
accessing HRD’s website from Illinois, performance of the contract would be impossible
under HRD’s business model. Hence, HRD’s website was expressly directed toward Illinois
residents. Again, there is nothing “random, fortuitous, or attenuated” (Wiggen, 2011 IL App
(2d) 100982, ¶ 24) about this contact, in that it reflects HRD’s deliberate decision to include
Illinois on its website. Thus, though the website is not particularly interactive, that it is
commercial and directed toward Illinois militate in favor of finding personal jurisdiction over
HRD for the purpose of this action.
¶ 27 We need not decide whether HRD’s website would, in itself, be a sufficient basis to
assert personal jurisdiction in this case. Instead, we consider the website in aggregate with
the contractual relationship into which HRD entered. The substantial and ongoing nature of
this relationship is also noteworthy–HRD provided Innovative with approximately 150 leads
per year for about 3½ years. We hold that HRD’s maintenance of a commercial website
directed at this state, which is related to the subject matter of this litigation, in addition to its
entering into a contract to provide an Illinois business with leads to predominantly Illinois
customers, is a sufficient basis for specific personal jurisdiction in this case.
¶ 28 HRD counters that Innovative can meet none of the following factors, which it asserts
are pertinent here: (1) who initiated the transaction; (2) where the contract was formed; and
(3) where performance was to take place. See Bolger, 369 Ill. App. 3d at 952. We note that
the first two factors seem inconsistent with the Supreme Court’s admonishment that it had
“long ago rejected the notion that personal jurisdiction might turn on ‘mechanical’ tests,
[citation], or on ‘conceptualistic . . . theories of the place of contracting or of performance,
[citation].’ ” Burger King, 471 U.S. at 478-79. This apparent conflict between Illinois and
Supreme Court precedent is entirely explicable. These factors are taken from Viktron, 326
Ill. App. 3d at 117, and Ideal Insurance Agency, Inc. v. Shipyard Marine, Inc., 213 Ill. App.
3d 675, 680 (1991), both of which apply them in analyzing jurisdiction under the Illinois
long-arm statute (735 ILCS 5/2-209 (West 2010)). They are therefore not applicable to a due
process analysis. See Madison Miracle Productions, LLC v. MGM Distribution Co., 2012
IL App (1st) 112334, ¶¶ 59-62. Furthermore, we note that these factors have been applied to
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subsections 2-209(a)(1) and 2-209(a)(7) of the long-arm statute (735 ILCS 5/2-209(a)(1),
(a)(7) (West 2010)). Subsection 2-209(c) allows an Illinois court to exercise jurisdiction on
any basis permitted by the federal constitution. 735 ILCS 5/2-209(c) (West 2010). Thus, so
long as federal due process requirements are met, there is no need to consider whether the
application of the factors upon which HRD relies would allow an assertion of jurisdiction
under an additional portion of the long-arm statute.
¶ 29 The third factor–where the parties contemplated that performance would take place–is
consistent with federal due process principles. See Burger King, 471 U.S. at 479 (“It is these
factors–prior negotiations and contemplated future consequences, along with the terms of the
contract and the parties’ actual course of dealing–that must be evaluated in determining
whether the defendant purposefully established minimum contacts within the forum.”). HRD
claims “it is easy to establish that [it] did not perform any part of the contract in Illinois,”
because it “was never in Illinois, and at most merely transmitted information from Arizona
to Innovative via electronic means.” (Emphasis in original.) Initially, we note that it is not
the place where performance occurred that is relevant; it is the place where performance was
contemplated. Viktron, 326 Ill. App. 3d at 119. Furthermore, HRD’s reliance on the fact that
it never entered Illinois is completely misplaced, for the Supreme Court has held that “[s]o
long as a commercial actor’s efforts are ‘purposefully directed’ toward residents of another
State, [it has] consistently rejected the notion that an absence of physical contacts can defeat
personal jurisdiction there.” Burger King, 471 U.S. at 476. Moreover, HRD mischaracterizes
the nature of its business; it was not operating an online telephone book. Illinois consumers
seeking a garage-door contractor were not simply given a list of all contractors in the area.
HRD paired consumers with contractors based on geography, and it (allegedly) had a
contractual commitment to provide those contacts to a particular contractor–in this case,
Innovative–within a geographical area. Put differently, it was not simply disbursing
information to consumers; it was directing them to a particular Illinois company, based on
the company’s willingness to pay a referral fee to HRD, thereby facilitating business
transactions within this state that might not have otherwise occurred. Given such
circumstances, we disagree with HRD that it was simply sending information into the state.
¶ 30 Sound guidance for the resolution of this appeal can be found in Hemi Group, where the
Seventh Circuit, without applying the Zippo test, found that jurisdiction could be asserted
over a defendant who made sales to Illinois through a commercial and interactive website
that had features indicating the defendant’s desire to avail itself of doing business in Illinois.
That website allowed customers to create accounts and calculate shipping based on their
location. The website also specifically excluded New York from its shipping locations
because of ongoing litigation there. The court observed that, “[a]lthough listing all forty-nine
states by name would have made a stronger case for jurisdiction,” by excluding New York
the defendant had expressly elected to do business with residents of the forty-nine other
states. Hemi Group, 622 F.3d at 758. It also showed that the defendant knew that conducting
business with a particular state could subject it to jurisdiction there. Ultimately, the court
concluded that the exercise of jurisdiction was appropriate, finding that, by creating several
commercial, interactive websites through which customers could purchase cigarettes, after
which the defendant physically shipped the products to Illinois, the defendant held itself out
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as open to doing business with Illinois and reached out to residents of Illinois as opposed to
the residents unilaterally reaching back. Id. As in Hemi Group, HRD operated a commercial
website that contained indications of a desire to do business with Illinois residents. While the
defendant in Hemi Group shipped products into the state, HRD transmitted information into
Illinois that served to facilitate business transactions between Illinois residents and Illinois
businesses (more precisely, as we are considering specific jurisdiction, between residents of
this state and Innovative, an Illinois company that is involved in this litigation). We
recognize that the website in Hemi Group was more interactive; however, we find this
insufficient to distinguish that case, particularly in light of the fact that HRD entered into a
long-term agreement with a resident of this state while the defendant in Hemi Group was
engaged in individual sales of goods.
¶ 31 We also find instructive the reasoning in GTE New Media Services Inc. v. Ameritech
Corp., 21 F. Supp. 2d 27, 38-39 (D.D.C. 1998), rev’d, GTE New Media Services Inc. v.
BellSouth Corp., 199 F.3d 1343 (D.C. Cir. 2000). There, the foreign defendants operated an
Internet yellow-pages directory service that actively sought the exchange of information with
users. On the website, users could provide information and then be directed to the service
they were seeking. The trial court determined that the defendants derived profit from
advertisements on the website when users in the forum state viewed the site. In finding that
personal jurisdiction was proper, the court specifically noted that “the non-resident defendant
controls the means by which it seeks to economically benefit from the forum.” Id. at 39.
Thus, the court found that the quality and nature of the contacts, which secured a significant
commercial benefit from forum users through interaction with the website, resulted in
sufficient contacts to support the exercise of personal jurisdiction. Id.; see also Bombliss, 355
Ill. App. 3d at 1114-15 (maintenance of interactive commercial website with interactive chat
rooms, combined with initiation of contract negotiations by defendant, sufficient to confer
jurisdiction); CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1265 (6th Cir. 1996) (jurisdiction
established, partly in light of ongoing Internet-based relationship); Edvisors Network, Inc.
v. Educational Advisors, Inc., 755 F. Supp. 2d 272, 283 (D. Mass. 2010) (finding specific
jurisdiction in part because the defendant had marketed its services to residents of the state
through the use of an interactive website in an effort to provide services to residents of the
forum). GTE was reversed on appeal, in part because the appellate court took issue with the
trial court’s findings of fact concerning profit derived from advertising. GTE New Media
Services Inc. v. BellSouth Corp., 199 F.3d at 1349. We note that we too might not have found
jurisdiction proper in GTE, given that the profit derived appeared to come from users
viewing advertising rather than more interactive contact. However, we find persuasive the
trial court’s remarks concerning the commercial nature of the website and the defendant’s
ability to control the means by which it profited from the forum. The same can be said here
of HRD–it makes $15 every time an Illinois resident uses its website to locate an Illinois
contractor to perform services in Illinois.
¶ 32 In sum, we find that specific personal jurisdiction over HRD is proper. HRD entered into
an open-ended contract to provide leads from Illinois customers to an Illinois company.
Moreover, the quality and nature of HRD’s contacts with this state through its website also
support an assertion of jurisdiction. Unlike a case where a company operates an informative
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website or where a seller puts an item up for sale on the Internet and does not know where
it will be purchased, HRD’s website caters to residents of specific localities in order to
exchange commercial information. HRD can derive profit only when a consumer in one of
those localities uses its services and HRD then provides the information to a business in the
same location. Thus, its ability to do business is specifically location-oriented. Illinois is one
such location. Although HRD has no physical contacts with Illinois and the contract was not
formed here, the facts that HRD runs an interactive, commercial website designed to generate
leads from Illinois residents and that the website is specifically tied to a long-standing
contract with an Illinois resident constitutes conduct purposefully directed toward this state.
Thus, the quality and nature of those contacts are sufficient to overcome the lack of physical
contacts with the state and are the minimum contacts necessary to allow courts in Illinois to
assert personal jurisdiction over HRD.
¶ 33 D. Fair Play and Substantial Justice
¶ 34 Having determined that HRD established sufficient minimum contacts in Illinois, we
must next decide if requiring it to litigate in Illinois would offend traditional notions of “ ‘fair
play and substantial justice.’ ” Burger King, 471 U.S. at 476 (quoting International Shoe,
326 U.S. at 320). “A court may evaluate the burden on the defendant to litigate in the forum,
the forum’s interest in adjudicating the dispute, the plaintiff’s interest in convenient and
effective relief, and the interstate judicial system’s interest in the most efficient resolution
of a controversy.” Aasonn, LLC v. Delaney, 2011 IL App (2d) 101125, ¶ 25. “A defendant
who purposefully directed his activities at a forum must present a compelling case to defeat
jurisdiction.” Id.¶ 35 Here, although HRD argues that it did not have sufficient minimum contacts with
Illinois, it does not argue that jurisdiction is defeated based on traditional notions of fair play
and substantial justice. Illinois has an interest in providing a means of redress for its injured
resident. See id. ¶ 26. Further, having sought the benefit of a nationwide business model, it
is fair that HRD also expect the legal exposure that comes with it. See Hemi Group, 622 F.3d
at 760. Given that HRD has not provided information to defeat jurisdiction on this basis,
there is no reason to conclude that requiring it to litigate in Illinois would offend traditional
notions of fair play and substantial justice.
¶ 36 III. CONCLUSION
¶ 37 Because of its high level of location-oriented Internet activity that involved the exchange
of commercial information and the ongoing contractual commitment it made to arrange
business transactions between entities in this state, HRD established a substantial connection
with Illinois. Thus, there were sufficient minimum contacts with Illinois for the exercise of
personal jurisdiction. Doing so offends no notions of fairness or substantial justice.
Accordingly, the judgment of the circuit court of Du Page County is reversed and this cause
is remanded for further proceedings.
¶ 38 Reversed and remanded.
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