quality and nature of the defendant’s acts which occur in Illinois or which affect interests located
in Illinois.” Rollins v. Ellwood, 141 Ill, 2d 244, 275, 565 N.E. 2d 1302, 1316 (1990). The
Seventh Circuit has noted that since Rollins, no Illinois court has ever found federal due process
to allow personal jurisdiction while Illinois due process prohibited it.” Hyatt Int'l Corp. v. Coco,
302 F.3d 707, 725 (7th Cir. 2002). The Hyatt court stated that “there is no operative difference
between the limits imposed by the Illinois Constitution and the federal limitations.” /d.
Consequently, where, as here, the defendant makes no argument that personal jurisdiction would
not be “fair, just, and reasonable” under the Illinois Constitution, the court may bypass the
Illinois due process analysis and conduct only a federal personal jurisdiction analysis. Interlease
Aviation Investors I L.L.C. v. Vanguard Airlines, Inc., 262 F.Supp.2d 898, 906 (N.D.III. 2003).

Under the federal law of personal jurisdiction, a party may waive objections to a court’s
personal jurisdiction by expressly or impliedly consenting to that court’s jurisdiction. Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 472 n. 14 (citing Js. Co. of Ireland v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 703 (1982)). “[PJarticularly in the commercial context, parties
frequently stipulate in advance to submit their controversies for resolution within a particular
jurisdiction,” Jd, Such a forum-selection clause should be given binding effect unless there is a
“strong showing that it should be set aside.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 8-
18 (1972).

Kern explicitly consented to this court’s jurisdiction in the Note. The Amended Note did
not amend the jurisdictional consent provision. The Amended Note states that all terms of the
original Note not explicitly amended by the Amended Note “remain valid and effective.” Thus,

the jurisdictional consent remained “valid and effective.”


breaches of the 2001 Supply Agreement by Texas Health. The 2001 Supply Agreement provided
that it “supercedes and replaces any prior oral or written supply agreement between the parties.”
It also provided that “Illinois law governs this Agreement, regardless of States’ choice or conflict
of law rules.” (/d., Ex. E.)

The Complaint alleges that Daybreak, successor in interest to Texas Health, breached the
2001 Supply Agreement (Count I) and that Kern breached the terms of the Note and Amended
Note (Count II).

DISCUSSION

A federal district court sitting in diversity has personal jurisdiction over a defendant when
acourt of the state in which it sits would have such jurisdiction. RAR, Inc. v. Turner Diesel,
Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997), Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995),
cert. denied, 518 U.S. 1004 (1996). An Illinois state court has personal jurisdiction over a
nonresident defendant if such jurisdiction is permitted by Illinois statutory law, the Illinois
Constitution, and the United States Constitution. RAR, Inc., 71 F.3d at 1276. The Illinois long-
arm statute extends jurisdiction over nonresident defendants who transact business in Illinois,
and those who participate in “[t]he making or performance of any contract or promise
substantially connected with this State.” 735 ILCS 5/2-209(a)(1), (a)(7). The Illinois long-arm
statute also contains a catch-all! provision that permits a court to exercise jurisdiction over a non-
resident defendant to the limit allowed under the Illinois Constitution and the United States
Constitution. 735 ILCS 5/2-209(c).

The Ilinois Constitution allows for personal jurisdiction “when it is fair, just, and

reasonable to require a nonresident defendant to defend un action in Illinois, considering the


Kern argues, however, that the 2001 Supply Agreement rescinded Kern’s consent to
jurisdiction in this court. This argument is without merit. The 2001 Supply Agreement, which
does not contain a jurisdictional consent provision, provided that the Agreement “supercedes and
replaces any prior oral or written supply agreement between the parties.” (Am. Compl., Ex. E.)
(Empnasis added). The only prior supply agreement was the 2000 Supply Agreement. The Note
and Amended Note contain no “supply” obligations of any kind. They are promissory contracts
that merely set forth payment terms for a debt owed by Kern to Medline. The 2001 Supply
Agreement “amends” the payment terms of the Note and Amended Note but contains no
language suggesting that it alters the jurisdictional consent provisions of the Note. Thus, Kern’s
consent to the jurisdiction of this court in the Note is valid, and his motion to dismiss for lack of
personal jurisdiction is denied.

CONCLUSION
For the reasons stated above, the court denies Kern’s motion to dismiss for lack of

personal jurisdiction [#3].

ENTER: bbe eRe ara
AN HUMPHREY LEFKOW

United States District Judge

Dated: February 10, 2005



UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MEDLINE INDUSTRIES, INC.,

Plaintiff,

No. 04 C 6013
Judge Joan H. Lefkow

vs.

DAYBREAK PARTNERS, L.L.C.,
DAYBREAK VENTURE, L.L.C.,
DAYBREAK HEALTHCARE, INC.,
and PETER C. KERN,

Defendants.

wwe eee eee ee YH SY

MEMORANDUM OPINION AND ORDER

Plaintiff, Medline Industries, Inc. (“Medline”), has filed a two-count Second Amended
Complaint (‘Complaint’) alleging state law breach of contract claims against defendants.
Defendant Peter C. Kern (“Kern”) has moved under Rule 12(b)(2), Fed. R. Civ. P., to dismiss the
Complaint for lack of personal jurisdiction. For the reasons stated below, the motion is denied.

MOTION TO DISMISS STANDARDS

In deciding a motion to dismiss for lack of personal jurisdiction, the court must take as
true any jurisdictional allegations asserted by the plaintiff in the Complaint. Turnock v. Cope,
816 F.2d 332, 333 (7th Cir. 1987). The court may also consider affidavits submitted in
connection with the motion, Curry v. Vencor Hosp., No. 01 C 4256, 2002 WL 398602, at *!
(N.D. Ill. March 14, 2002); R.R. Donnelly & Sons Co. v. Intera Info. Technologies Corp., No.
91 C 2511, 1991 WL 191588 (N.D. IIL Sept. 18, 1991), but will resolve conflicts of fact in favor

of the plaintiff. John Walker & Sons, Ltd. v. DeMert & Doughtery, Inc. et al., 821 F.2d 399, 402


(7th Cir. 1987), citing Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1215 (7th Cir.
1984). Ultimately, it is the plaintiff's burden to establish personal jurisdiction. Central States,
Southeast and Southwest Areas Pension Fund vy. Reimer Express World Corp., 230 F.3d 934, 939
(7th Cir. 2000).
BACKGROUND

As of March 24, 1999, Texas Health Enterprises, Inc. (“Texas Health”), Daybreak’s!
predecessor in interest, owed Medline $1,402.313.89 as payment for goods received by Texas
Health from Medline. To address this debt, Medline, Texas Health, and Kern, the sole
shareholder and owner of Texas Health, executed a Promissory Note (the “Note”). The Note
contains the following terms, among others:

THIS NOTE SHALL BE DEEMED TO HAVE BEEN EXECUTED, DELIVERED,

ACCEPTED, MADE AND PERFORMED AT MUNDELEIN, ILLINOIS, U.S.A.

AND DEBTOR HEREBY CONSENTS AND AGREES TO THE JURISDICTION

OF ANY LOCAL, STATE, OR FEDERAL COURT WITHIN COOK OR LAKE

COUNTY, ILLINOIS, U.S.A.
(Sec. Am. Compl., Ex. A.)

After Texas Health and Kern failed to pay in full the obligations of the Note, Medline,
Texas Health, and Kern executed an “Amendment to Installment Note.” The Amended Note
delayed payment of the amounts owed under the Note for a period of time to allow Texas Health
to complete a reorganization in 2000. The Amended Note specifically provided, “All other terms

of the First Note not explicitly amended above remain valid and effective.” (/d., Ex. B.) The

Amended Note did not explicitly amend the jurisdictional consent provision quoted above.

"Daybreak Partners, L.L.C., Daybreak Venture, L.L.C., and Daybreak Healthcare, Inc. are referred to herein
collectively as “Daybreak.”


At the time it executed the Amended Note, Texas Health also agreed to the terms of a
Supply Agreement dated February 1, 2000 (the “2000 Supply Agreement”). The 2000 Supply
Agreement required that Texas Health purchase at least 90 % of its requirements for certain
healthcare products from Medline from February 1, 2000 through December 31, 2002. The 2000
Supply Agreement provided, “Any litigation arising out of this Agreement or the subject matter
of this Agreement will be filed in an Illinois court. Both parties consent to personal jurisdiction
in Illinois.” (d., Ex. C.)

Texas Health and Kern allegedly failed to make any payments under the Amended Note.
Texas Health also allegedly began purchasing greater than 10 % of its requirements for
healthcare products from a competitor of Medline, Gulf South Medical Supply Company, in
violation of the 2000 Supply Agreement.

On April 30, 2001, Medline filed suit in the Circuit Court of Cook County, Iilinois,
against Texas Health and Kern for breach of the Amended Note, against Texas Health for breach
of the 2000 Supply Agreement, and against Daybreak, which had negotiated purchase agreements
with Gulf South Medical Supply Company on behalf of Texas Health, for tortious interference
with the 2000 Supply Agreement. In settlement of the suit, Texas Health and Kern agreed to the
terms of a second Supply Agreement dated June 1, 2001 (the “2001 Supply Agreement”). The
2001 Supply Agreement required that Texas Health purchase from Medline all of its
requirements for medical surgical products, textiles, and DME products and 90 % of their other
requirements. In turn, Medline agreed to reduce the debt and guaranty of Kern under the Note
and Amended Note by 20 % of the outstanding obligation and to forbear from enforcing its rights

against Kern under the Note and Amended Note, so long as there were no uncured material