fraud cases under Fed. R. Civ. P. 9(b), boilerplate or conclusory
allegations are sufficient, so long as they give notice of the
claim. McCormick v. City of Chicago, 230 F.3d 319, 324-25 (7th Cir.
2000). Taking the allegations of the complaint as true and drawing
all reasonable inferences in Quantum’s favor, Quantum has alleged
that Karp was acting in his own interests, so the fiduciary shield
does not bar jurisdiction over him.

It.

The motion to dismiss for failure to state a claim for breach
of contract likewise fails in light of federal notice pleading
standards. The defendants argue that Quantum was required to plead
facts to match up with each legal element of its contract claim,
but that is clearly not the law in this circuit. Bennett v.
Schmidt, 153 F.3d 516, 518 (7th Cir. 1998) (“Complaints need not
plead law or match facts to every element of a legal theory.”).
Here Quantum alleged that the defendants placed printing orders in
1999 and 2000 which formed the basis of a contractual relationship,
which the defendants breached by failing to pay Quantum’s invoices
for orders filled pursuant to the contractual relationship. Compl.
qi 8, 11-13. These allegations are sufficient to give notice of a
breach of contract claim. See Petri v. Gatlin, 997 F. Supp. 956,
965 (N.D. Ill. 1997) (Grady, J.) (holding that, under notice
pleading regime, general allegations of the existence of the

contract, defendant’s breach, and damages from the breach are

13


against multiple defendants where it demonstrates a reasonable
probability that the corporate veil should be pierced. Middle Tenn.
News Co., Inc. v. Charnel of Cincinnati, Inc., 250 F.3d 1077, 1081-

82 (7th Cir. 2001) (Indiana law). In Illinois, corporate “alter
egos” are jointly and severally liable for breach of contract.
See, e.g., Knickman v. Midland Risk Servs.-Ill., Inc., 700 N.E.2d
458, 460-62 (Ill. App. Ct. 1998). In order to pierce the corporate
veil and hold alter egos jointly liable, a plaintiff must be able
to prove “(1) a unity of interest and ownership that causes the
separate personalities of the corporation[s] and the individual to
no longer exist; and (2) the presence of circumstances under which
adherence to the fiction of a separate corporate existence would
sanction a fraud, promote injustice or promote inequitable
consequences.” Jacobson v. Buffalo Rock Shooters Supply, Inc., 664
N.E.2d 328, 331 (Ill. App. Ct. 1996).

Quantum “believes that Karp has utilized the three corporate
defendants interchangeably in an attempt to avoid the amounts due
and owing via a corporate shell game.” Compl. ( 17. Quantum says
as well that Karp is a principal of the three corporate defendants.
Id. 4 5. The defendants do not challenge the underlying facts,
only the legal conclusion that they should be subject to joint
liability, so I must accept the factual allegations as true.
Sapperstein, 188 F.3d at 855-56. Moreover, based on the

correspondence submitted by Quantum in its surreply, which I may


The defendants argue that the complaint should be dismissed
because it fails to distinguish between the defendants for the
purposes of the jurisdictional allegations. However, Quantum has
alleged that the defendants are alter egos of each other. In light
of the claim that they are alter egos that really acted as one
entity, the allegation that they acted collectively is sufficient
to support an inference that each defendant has the same contacts.

Second, the defendants argue that Quantum fails to
specifically allege “purposeful availment” by the defendants.
Federal pleading is notice pleading, and a plaintiff has the burden
of establishing that jurisdiction is proper once the defendant
challenges it under Rule 12(b) (2) by submitting evidence, but “a
complaint need not include facts alleging personal jurisdiction.”
Steel Warehouse of Wisc., Inc. v. Leach, 154 F.3d 712, 715 (7th
Cir. 1998). The question is not the magic words or language of the
complaint, but the substance of the allegations. Here, Quantum
alleges that the defendants submitted multiple purchase orders and
established a contractual relationship. The undisputed evidence
attached to Quantum’s surreply' shows a series of faxes and e-
mails, and that the defendants sent a CD-rom to Quantum for use in
one of the printing jobs. The question is whether these

allegations, if true, are sufficient for personal jurisdiction.

* The surreply was proper because only in their reply did the
defendants submit any evidence in support of their jurisdictional
challenge.


two constitutional inquiries--state and federal. 107 F.3d at 1276.

I must attempt to avoid reaching federal constitutional
questions where the case can be disposed of on state law grounds,
so I address the Illinois constitutional question first. Id. The
Illinois Supreme Court has held that Illinois due process is not
necessarily co-extensive with federal due process, though federal
law may inform the state inquiry. Rollins v. Ellwood, 565 N.E.2d
1302, 1316 (Til. 1990). Illinois courts have given little guidance
on how Illinois due process varies from federal concerns, RAR,
Inc., 107 F.2d at 1276-77, but they “have upheld (under the state
constitution) personal jurisdiction ‘over a non-resident corporate
purchaser engaged in a commercial relationship with an Illinois
corporation through the placing of purchase orders to the plaintiff
in Illinois for products manufactured in Illinois.’” Id. at 1276
(citing Autotech Controls Corp. v. K.J. Elec. Corp., 628 N.5&.2d
990, 995-96 (Tll. App. Ct. 1993); G.M. Signs, Inc. v. Kirn Signs,
Inc., 596 N.B.2d 212, 214-15 (Ill. App. Ct. 1992)). These are the
same operative facts on which Quantum relies to establish personal
jurisdiction, so RAR might be read to mean that Illinois due
process would not be offended by the exercise of personal
jurisdiction in this case.

In G.M. Signs, “the affidavits and pleading establish[ed] that
defendant actively initiated and negotiated an ongoing commercial

relationship with plaintiff, an Illinois seller,” and on that


consider in ascertaining whether I have subject matter
jurisdiction, id., it appears that Karp identified himself with all
three corporate defendants and that orders were submitted by GmbH
but billed to USA LLC. I may reasonably infer for the purposes of
this motion that Quantum could prove a unity of interest that
destroys the separate personalities of the defendants, and if Karp
has abused the corporate form to avoid obligations to Quantum, that
would certainly “promote injustice.” If Quantum can establish
alter ego liability, the defendants may be held jointly liable, so
the claims against each defendant could be aggregated for
jurisdictional purposes. Quantum has sufficiently alleged the
required amount in controversy for alienage jurisdiction.
B.

Both GmbH and Karp move to dismiss for lack of personal
jurisdiction under Fed. R. Civ. P. 12(b) (2). I have personal
jurisdiction over a defendant “only if a court of the state in
which [I] sit[{] would have such jurisdiction.” Klump v. Duffus, 71
F.3d 1368, 1371 (7th Cir. 1995). The plaintiff has the burden of
showing that jurisdiction is proper under (1) the Illinois long-arm
statute, 735 ILCS 5/2-209, (2) Illinois constitutional law, and (3)
federal constitutional law. RAR, Inc. v. Turner Diesel, Ltd., 107
F.3d 1272, 1276 (7th Cir. 1997). The Illinois long-arm statute
authorizes personal jurisdiction to the limits of the Illinois and

federal constitutions, § 2~209(c), so the inquiry collapses into


such that the maintenance of the suit does not offend “traditional
notions of fair play and substantial justice.”’” RAR, Inc., 107
F.3d at 1277 (citing International Shoe Co. v. Washington, 326 U.S.
310, 316 (1945)). What that standard means depends on whether the
state asserts “general” or “specific” jurisdiction. Id. Here the
parties agree that only specific jurisdiction is appropriate.
Specific jurisdiction exists in cases where the suit arises out of
or is related to the defendants’ contacts with the state.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 n.8 (1984). The defendant must have “purposefully established
minimum contacts within the forum State” and so “should reasonably
anticipate being haled into court” in the forum state because it
“purposefully availed itself of the privilege of conducting
activities” there. RAR, Inc., 107 F.3d at 1277 (citations omitted).
The “‘purposeful availment’ requirement ensures that a defendant
will not be haled into a jurisdiction solely as a result of
‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts, or of the
‘unilateral activity of another party or a third person.’” Mid-
America Tablewares, Inc. v. Mogi Trading Co, Ltd., 100 F.3d 1353,
1360 (7th Cir. 1996) (citing Burger King Corp. v. Rudzewicz, 471
U.S. 462, 475 (1985)). Quantum cites only state cases (G.M. Signs
and Autotech) to support the exercise of personal jurisdiction over
the defendants, but I am not bound by state interpretations of

federal law. RAR, Inc., 107 F.3d at 1276.


iE

Minuyg Order Form (06/97)

United States District Court, Northern District of Illinois

Namie of Assigned Judge Elaine E. Bucklo Sitting Judge if Other
or Magistrate Judge than Assigned Judge
CASE NUMBER 01 C 862 DATE 1/23/2002
CASE Quantum Color Graphics vs. The Fan Association, et al.
TITLE

MOTION:

{In the following box (a) indicate the party filing the motion, c.g, plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.)

DOCKET ENTRY:

(1) Oo Filed motion of [ use listing in “Motion” box above.]

(2) i) Brief in support of motion due.

3) Oo Answer brief to motion due . Reply to answer brief due

(4) a Ruling/Hearing on set for at

(5) im) Status hearing{heid/continued to] [set for/re-set for] on set for at

(6) a Pretrial conference[held/continued to] [set for/re-set for] on set for at .

(7) Oo Trial[set for/re-set for] on at

(8) oO {Bench/Jury trial] [Hearing] held/continued to at

(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]

CIFRCP4(m) ClGeneral Rule21 CIFRCP4I(a\(1) Oi FRCPA1(a)(2).

(io) «xi [Other docket entry} Enter Memorandum Opinion and Order denying motions to dismiss by
defendants Karp and the Fan Association Event Photo GmbH. Plaintiff is ordered to show cause within
two weeks why the complaint should not be dismissed as to Fans United AG. Status hearing is set for
2/15/02 at 10:00 a.m. Parties shall submit their proposed discovery schedule by 2/12/02. Any motion for
summary judgment must be filed within 14 days after the discovery is closed. Any extension of discovery
will not extend the deadline for the filing of a dispositive motion.

al ff [For further detail see order attached to the original minute order.]

No notices required, advised in open court. Document
j , 2 Numi
No notices required. sumer otroies ae
| Notices mailed by judge's staff.

JAN 2 4 2uy2

Notificd counsel by telephone. date docketod

Docketing to mail notices. | S

Mail AO 450 form. :
; : t Nog LOM docketing deputy invals
Copy to judge/magistrate judge, sn 395 SID “sq vpnon
45 3

courtroom Osh J cy date mailed pote
MPs deputy’s hd OZ Nun y
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Ve)



at 1277 (citing Burger King, 471 U.S. at 478)). “Rather, ‘prior
negotiations and contemplated future consequences, along with the
terms of the contract and the parties’ actual course of dealing’
must indicate the purposeful availment that makes litigation in the
forum state foreseeable to the defendant.” Id.

Here the defendants’ arguments against jurisdiction consist
only of a litany of allegedly relevant facts that do not appear in
Quantum’s complaint. But unless the allegations in the complaint
are self-defeating or the defendants come forward with factual
evidence to challenge jurisdiction, I must draw all reasonable
inferences consistent with the complaint in favor of the plaintiff.
Sapperstein, 188 F.3d at 855. The complaint provides no information
about the negotiations leading up to the formation of the
“contractual relationship”’--i.e., who solicited business from
whom?. The only evidence offered by the defendants are copies of
the leaflets produced by Quantum,’ which do not show anything about
who solicited whom. I may infer, in the absence of evidence or
allegations to the contrary, that the defendants solicited
Quantum’s business. See Madison Consulting Group v. South Carolina,
752 F.2d 1193, 1203 (7th Cir. 1985) (distinguishing solicitation of

business from merely placing the first purchase order). The

2 The defendants ask me to take judicial notice of the
leaflets pursuant to Fed. R. Evid. 201, but I need not take
judicial notice of matters outside the pleadings to consider them
on a motion to dismiss for lack of personal jurisdiction. See Fed.
R. Civ. P. 12(b) (6).

1


Quantum must rely on the defendants’ contacts with Illinois to
demonstrate that its contractual relationship with the defendants
was tied to Illinois, because federal law is clear that “the
unilateral activity of another party” is not a constitutionally
sufficient basis for personal jurisdiction. Burger King, 471 U.S.
at 475; Mid-America Tablewares, 100 F.3d at 1360. Here, the
defendants’ Illinois contacts alleged in the complaint are that
they “placed multiple orders for printing with [Quantum] at its
facilities in Morton Grove, Illinois,” Compl. @ 8, that those
orders for printing, accepted by Quantum, “constituted the
formation of a contractual relationship” in Illinois, id. § 11, and
that the defendants breached the contract by failing to submit
payments to the plaintiff in Illinois, id. 9 13. One additional
contact that appears in the documents submitted by Quantum, though
not relied on by Quantum, is that the defendants mailed a CD-rom to
Quantum in Illinois with files necessary to complete one of the
printing orders. Surreply Ex. 5.

Faxes containing price, quantity and shipping information, as
well as representations and assurances, are relevant contacts.
Mid-America Tablewares, 100 F.3d at 1360. The faxes and e-mails
attached by Quantum to its surreply are the purchase orders that
form the basis of the “contractual relationship,” but “an out-of-
state party’s contract with an in-state party is alone not enough

to establish the requisite minimum contacts.” RAR, Inc., 107 F.3d

10


basis, the court concluded that the defendant was an “‘active
purchaser’ who deliberately reached out beyond its home state to
avail itself of the benefits of commercial ties with an Illinois
company.” 596 N.E.2d at 214. Here the complaint does not allege
that the defendants actively solicited Quantum or initiated the
negotiations, only that it submitted purchase orders. But Quantum
did not allege any facts inconsistent with active solicitation by
the defendants, and because the defendants did not submit any
evidence on this issue, Quantum is entitled to have reasonable
inferences drawn in its favor.

In Autotech, the court found no violation of Illinois due
process where the non-resident defendant had a distributorship
agreement with an Illinois company under which it submitted orders
by telephone and facsimile, returned some goods to Illinois for
repairs, and breached the contract by failing to pay. 628 N.E.2d at
994-95, The only basis for distinguishing Autotech is the return of
non-conforming goods for repair; however, that is roughly
comparable to the present defendants’ shipment of a CD-rom to
Quantum for use in one printing job, so there is no meaningful
distinction to be made between this case and Autotech. I cannot
dispose of this case on Illinois due process grounds, so I turn to
the federal constitutional question.

To satisfy the Due Process Clause of the Fourteenth Amendment,

“[a] defendant must have ‘certain minimum contacts with [Illinois]


establish jurisdiction by competent proof.” Id. at 855.
A.

The first issue concerns whether Quantum can establish that
the amount in controversy exceeds $75,000, as required for alienage
jurisdiction. The defendants argue that by lumping all of the
defendants together, Quantum engaged in artful pleading “to prevent
{the} Court from reaching the inevitable conclusion that if
plead[ed] properly, the Complaint cannot set forth the required
amount in controversy for diversity jurisdiction against any one of
the defendants.” Motion at 5 n.4. In their reply brief, the
defendants argue that Quantum could not aggregate its claims
against the defendants because it did not allege that they were
jointly liable. Ordinarily, claims raised for the first time in
reply are waived, see Kauthar SDN BHD v. Sternberg, 149 F.3d 659,
668 (7th Cir. 1998); United States v. Cherif, 943 F.2d 692, 700
(7th Cir. 1991) (same for footnote), but I have an independent duty
to police subject matter jurisdiction even if the parties raise no
objection, see Amgen, Inc. v. Kidney Center of Delaware County,
Ltd., 95 F.3d 562, 567 (7th Cir. 1996).

Although Quantum contends that the defendants are alter egos,
the defendants argue that, because Quantum failed to state
specifically whether it seeks to hold the defendants jointly or
severally liable, it has failed to properly plead jurisdiction. The

Seventh Circuit has held that a plaintiff may aggregate claims


sufficient). However, the defendants insist that Quantum is
required to attach the purchase orders, or at a minimum to describe
their terms in detail. Although Fed. R. Civ. P. 10(c) permits a
plaintiff to attach a contract to the complaint, nothing in the
federal rules requires a plaintiff to do so, or to plead the
details of a written contract. Rule 8(a) requires only a “short and
plain statement.” Quantum’s complaint, which alleges the formation,
performance and breach of the alleged contract, clearly satisfies
this standard.

Karp also argues that he should not be individually liable
because he was acting as an agent of the other defendants. Under
Illinois law, only “an agent who contracts with a third party on
behalf of undisclosed or partially disclosed principal is
personally liable on the contract.” Kimco Corp. v. Murdoch, Coll &
Lillibridge, Inc., 730 N.E.2d 1143, 1146, (Ill. App. Ct. 2000). “A
principal is partially disclosed when the third party knows that
the agent is contracting on behalf of a principal but does not know
the identity of the principal.” Id. Again, Karp argues that the
allegation that he acted as an agent “and individually” is
insufficient because the complaint does not say that he acted for
his own personal benefit, or that the defendant corporations were
undisclosed or partially disclosed. However, Quantum also alleges
that Karp was using the three corporate defendants interchangeably

to avoid the amounts due under the contract, § 17, and that, when

14


Copies have been mailed to:

Steven P. Gomberg

Rooks, Pitts & Poust

10 S. Wacker Drive, #2300
Chicago, IL 60606

Attorney for Plaintiff

Edward S. Weil

Schwartz, Cooper, Greenberg & Krauss
180 N. LaSalle Street, #2700
Chicago, IL 60601

Attorney for Defendants

16


“provides commercial printing and prepress services to its
customers.” Guido Karp is a principal in GmbH and the other
corporate defendants, which are involved generally in the printing
of leaflets for rock concerts in different venues throughout the
world. Quantum says that the defendants placed orders for several
printing jobs in 1999 and 2000, and that Quantum’s acceptance of
the purchase orders established a “contractual relationship,” which
the defendants have breached by failing to pay multiple invoices
totaling $154,038.30. Quantum also alleges that “Karp has utilized
the three corporate defendants interchangeably in an attempt to
avoid the amounts due and owing via a corporate shell game.”

Karp and GmbH argue that Quantum fails to state a claim for
breach of contract and that Quantum has failed to sufficiently
allege the requisite contacts with Illinois to support the exercise
of personal jurisdiction over them. On a motion to dismiss for
lack of jurisdiction, I read the complaint liberally and accept as
true the well pleaded allegations of the complaint and the
inferences that may be reasonably drawn from those allegations.
Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir. 1999). I may
consider evidence outside of the complaint, and “[t]he presumption
of correctness . . . accord[edj to a complaint’s allegations falls
away on the jurisdictional issue once a defendant proffers evidence
that calls the court’s jurisdiction into question.” Id. at 855-56.

Once challenged with evidence, the “plaintiff has the obligation to


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS -
EASTERN DIVISION necked
eh Baa AER

JAN a4 2002

QUANTUM COLOR GRAPHICS, LLC, a
limited liability company,

Plaintiff,

v.

GmbH, a German corporation; FANS No. 01 C 0862

UNITED AG, a German corporation;
THE FAN ASSOCIATION USA, LLC, a
California limited liability
company; and GUIDO KARP, an
individual,

)

)

)

)

)

)

)

THE FAN ASSOCIATION EVENT PHOTO }
)

)

)

)

)

)

Defendants.

MEMORANDUM OPINION AND ORDER

Quantum Color Graphics, LLC (“Quantum”) sues The Fan
Association Event Photo GmbH (“GmbH”) and Fans United AG, both
German corporations, as well as The Fan Association USA, LLC (“USA
LLC”), a California limited liability corporation, and Guido Karp,
a resident of Germany, for breach of contract. I have subject
matter jurisdiction based on diversity and alienage under 28 U.S.C.
§ 1332. I entered a default judgment against the USA L.L.C., see
Minute Order of June 8, 2001, and the record does not reflect that
service has been made on Fans United AG. Karp and GmbH move to
dismiss the complaint, and I deny the motion.

i.
Quantum is an Illinois limited liability company, whose

principal place of business is in Morton Grove, Illinois, that

20


evidence of course of dealing, in addition to sending the purchase
orders themselves to Illinois, is that the defendants shipped a CD-
rom to Quantum in Illinois for use in producing one of the printing
jobs. This is a relevant contact, and on the record before me,
drawing all reasonable inferences in favor of Quantum, the totality
of the defendants’ contacts evidence purposeful availment of the
kind that make being haled into court in Illinois reasonably
foreseeable.
Cc.

Karp invokes the so-called “fiduciary shield doctrine,” a rule
of Illinois law which renders personal jurisdiction over a
defendant improper if his only acts in Illinois were done in a
representative capacity for his employer. Rollins v. Ellwood, 565
N.£.2d 1302, 1316 (Ill. 1990). However, a defendant may not employ
the fiduciary shield to defeat jurisdiction when he acts in his own
personal interests, as opposed to the interests of his employer or
corporation. Id. at 1318; Plastic Film Corp. of Am., Inc. v.
Unipac, Inc., 128 F. Supp. 2d 1143, 1147 (N.D. Til. 2001). Again,
Karp’s only argument here relates to facts that Quantum does not
allege. The complaint alleges that Karp was acting as an agent of
the other defendants and individually. Compl. @ 17. Karp argues
that this is a conclusory allegation which is insufficient because
Quantum does not plead facts to support it. But under federal

notice pleading, unless heightened pleading is required, as in

12


dealing with Karp and his subordinates, Quantum was never
expressly informed which of the corporate defendants was to receive
the benefit of which orders,” 9 18. This is sufficient to allege
that Karp’s principals were only partially disclosed, and Quantum
therefore states a claim against Karp personally.

IIl.

The defendants’ motion to dismiss is Denrep. Although neither
party raises the issue, I note that no return of service has been
filed for Fans United AG. The complaint in this case was filed on
February 7, 2001. As a foreign corporation, the 120-day time limit
of Fed. R. Civ. P. 4(m) does not apply to service on Fans United
AG, but that does not mean that there is no time limit for service.
See James v. Rutil (S.R.L.), No. IP 95-530-C-B/S, 1997 WL 151174,
at *5 (S.D. Ind. Mar. 14, 1997) (Barker, C.J.) (Service on a
foreign defendant is subject to “‘flexible due diligence’ standard
as measured by the reasonableness of Plaintiff’s effort as well as
the prejudice to the defendant from any delay.”). Quantum is ORbDERED
To SHow CAUSE within two weeks from entry of this order why the

complaint should not be dismissed as to Fans United AG.

Elaine E. Bucklo
United States District Judge

Dated: January 9 3, 2002

15