Georgakis Consulting, Inc. v. Cohen et al, No. 1:2017cv03919 - Document 28 (N.D. Ill. 2018)
Court Description: MEMORANDUM Opinion and Order. Signed by the Honorable Harry D. Leinenweber on 1/24/2018. Mailed notice. (kp, )
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Georgakis Consulting, Inc. v. Cohen et al Doc. 28 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION GEORGAKIS CONSULTING, INC., Plaintiff, Case No. 17 C 3919 v. Judge Harry D. Leinenweber SAM E. COHEN, and AMAZON CONSULTING EXPERTS, LLC., Defendants. MEMORANDUM OPINION AND ORDER I. BACKGROUND Defendant, Sam Cohen (“Cohen”), is a resident of New Jersey and as such is a citizen of New Jersey. Defendant Amazon Consulting Experts (“ACE”), is a New Jersey limited liability company with offices in New Jersey and as such is also a citizen of New Jersey. The Plaintiff, Georgakis Consulting Inc., is an Illinois Corporation with its principal place of business in Illinois. According to the Complaint, Cohen and ACE are in the business of offering consultation to clients who are desirous of selling goods on Amazon.com (“Amazon”). The Plaintiff is a client of ACE and engages in the sale of goods on Amazon. The Defendants for their maintain consulting a website business. whereby The they seek clients Defendants also offer their Dockets.Justia.com clients the opportunity to purchase various types of goods to be sold on Amazon. According to the Complaint, in 2015 the Plaintiff purchased an annual consulting and coaching membership from ACE for $5,000. This membership was renewed in 2016 for an additional $5,000. Plaintiff claims that the purchase of such membership created a fiduciary Defendants. that on between Plaintiff and Pursuant to the membership, Defendants recommended Plaintiff resale relationship purchase Amazon. various Most, if types not of all, goods of from the goods ACE for sold by Defendants to their customers are labeled, packaged and sent by Defendants to Amazon distribution centers. not take delivery Defendants. of or According inspect to the the Thus, Plaintiff did goods Complaint, purchased from Defendants sell identical merchandise on the internet at reduced prices, thus undercutting Plaintiff’s ability to compete. Defendant also shipped goods that were defective, counterfeit, non-conforming and/or unsuitable for sale on Amazon. Thus, as a result, Plaintiff suffered damages. Based on the forgoing, Plaintiff Complaint against Defendants alleging: filed a three-count (1) violation of the Consumer Fraud and Deceptive Practices Act (Count I); (2) breach of Fiduciary Duty (Count II); - 2 - and (3) breach of Contract (Count III). personal venue; Defendants jurisdiction dismissing have over Cohen moved both for to dismiss Defendants; failure to for lack plead a lack of of proper basis for piercing the corporate veil; failure to plead a plausible claim for violation of fiduciary duty; and failure to plead a plausible claim for violation of the Illinois Consumer Fraud and Deceptive Practices Act. As an alternative, Defendants have moved to transfer the case to the District of New Jersey for venue purposes. II. DISCUSSION In support of the Motion to Dismiss for Lack of Personal Jurisdiction the Defendants Defendant Sam Cohen. filed a declaration from the According to the declaration, ACE is in the business of providing e-commerce consulting services to new and existing marketplace. third-party These sellers services on are the Amazon limited to digital on-line merchandising, bookkeeping, shipping, pricing, and warehousing with Amazon. ACE also offers its clients purchase opportunities from manufacturers and national retailers from time to time. ACE does not solicit any member to make any purchase but leaves the responsibility to make purchase decisions and to conduct market evaluations to the client. fiduciary services. ACE does not provide any It does not hold, invest or manage assets - 3 - on behalf of nationwide its site members. and not ACE’s expressly website aimed at Plaintiff is an Amazon third-party seller. is a uniform, Illinois. In 2015, Plaintiff purchased a membership in Ace which it renewed in 2016. Cohen’s interactions with Plaintiff The were in his All of role corporate officer of ACE and not as an individual. as None of the officers, directors or employees of ACE resides in Illinois. corporate activities purchased by shipped by Illinois occur Plaintiff ACE and to not an to in as Illinois. identified Amazon All in the distribution Illinois. The locations at Plaintiff’s direction. goods of the center No goods Complaint were a were outside of reshipped to Consulting services were initiated by Plaintiff with ACE in New Jersey through the ACE website, Facebook, or by email. In response to the jurisdiction motion, Plaintiff filed the responses of Defendants to to Plaintiff’s Request Plaintiff’s Interrogatories Plaintiff’s Produce, and on the Request Defendants’ issue Plaintiff did not file any declarations employees and thus did not countermand declaration. that ACE, specific of of any to Admit, Answers to jurisdiction. its officers part of or Cohen’s In these discovery responses, Defendants admitted and not clients Cohen, had including consulting Plaintiff - 4 - contracts who were with 11 Illinois residents. ACE (but Illinois residents can sign up for membership with not Cohen) by communicating with the ACE website. Cohen admitted to having a brief social visit with Plaintiff in connection with a speech Cohen made at the “eCom” Chicago 2015 Conference which membership. occurred Plaintiff had purchased its Neither ACE nor Cohen has ever shipped any goods to Illinois residents. and after Illinois There were two communications between ACE residents via the “contact portion of the ACE website.” The position of the Defendants is that neither of them has submitted to Illinois jurisdiction either general or specific. There are two types of personal (sometimes known as (sometimes called case-linked) Squibb (2017). Co. all-purpose v. Superior Court The Paradigm forum jurisdiction: jurisdiction jurisdiction. of for California, the general and specific Bristol-Meyers 137 exercise S.Ct. of 1773 general jurisdiction is an individual’s domicile and for a corporation the place that can fairly be regarded as home, i.e., where the corporation maintains its place of business. On the other hand, for specific jurisdiction, the suit must arise out of or relate to a defendant’s contacts with the forum, i.e., an activity that takes place in the forum state and is therefore subject to state regulation. Id. at 1779. When there is no such connection, - 5 - specific jurisdiction is lacking regardless of the extent of the defendant’s unconnected activities in the state. Id., citing Goodyear Dunlop Tires v. Brown, 131 S.Ct. 2846 (2011). The jurisdiction requirements must be met for each defendant over whom a state court seeks to exercise jurisdiction. Rush v. Savchuk, 100 S.Ct. 571 (1980). While Plaintiff here does not specifically state whether it claims general or specific jurisdiction, the residence and domicile of the Defendants is clearly New Jersey which would be the only place where general jurisdiction could be exercised. Plaintiff instead suggests that jurisdiction is proper under the Illinois long-arm statute as it has pled causes of action for fraud, breach of fiduciary duty, and breach of contract in this state. However, RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272 (7th Cir. 1997), shows that this is not necessarily the case for these types of claims. The RAR court noted that only the dealings between the parties in regard to the disputed contract are relevant for specific jurisdiction analysis. The specific contract in question in RAR involved the plaintiff agreeing to buy four diesel engines in Scotland, contracting with Turner to locate the engines in Scotland, to dismantle and purchase various parts from the engines, and to pack the engines for transport to Detroit. Some of the parts were damaged during - 6 - shipment and plaintiff sued Turner in Illinois for breach of contract due to improper packing. there was contacts no with specific jurisdiction Illinois dispute in question. The Seventh Circuit held that had nothing because to do Turner’s with the prior contract Turner’s contractual obligation was to obtain parts in Scotland and to ship them to Detroit. Even though the parts would eventually end up in Illinois was deemed to be insufficient to establish specific jurisdiction. Here the specific complaints that led to Plaintiff’s suit were shipping alleged non-conforming goods from a source outside of Illinois to an Amazon distribution center for shipment to Plaintiff’s customers and the undercutting Plaintiff’s pricing. These specific complaints are set forth in paragraphs 14 through 18 in the Plaintiff’s Complaint. According to Cohen’s uncontradicted Declaration, ACE made these items available for purchase by Plaintiff to which Plaintiff availed itself. products other were than not to the sent to Plaintiff Amazon presumably, the products Plaintiff’s customers. in Distribution were then Thus the Illinois or Centers from reshipped gravamen by of The anywhere where, Amazon to Plaintiff’s Complaint is not related to the client consulting agreement but instead to the making of products available to Plaintiff for purchase and to then be sold by Plaintiff on Amazon. - 7 - Plaintiff also argues that Defendants by actively soliciting clients in Illinois (11 clients in 2015 and currently 5 clients in Illinois) indicates that they are submitting to jurisdiction “based on contractual relationships transaction of business in Illinois.” establishing However this is directly contrary to the Supreme Court’s statement in Bristol-Myers that “a defendant’ relationship with a . . . third party, standing alone, is an insufficient basis for jurisdiction.” Bristol- Myers, p. 1779 citing Waldon v. Fiore, 134 S.Ct. 1115, 1123 (2014). The Court finds therefore that this court lacks personal jurisdiction over the Defendants, either general or specific. The Motion to Dismiss based on Federal Rule of Civil Procedure 12(b)(2) is granted. III. For the reasons CONCLUSION stated herein, Defendants’ Motion to Dismiss for Lack of Jurisdiction is granted. Since the case has no jurisdiction the remaining bases for Defendants’ Motion to Dismiss are denied as moot. IT IS SO ORDERED. Harry D. Leinenweber, Judge United States District Court Dated: 1/24/2018 - 8 -
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