264 F. Supp. 3d 909
N.D. Ill.2017Background
- Guaranteed Rate, Inc. (GRI), HQ in Chicago, alleges senior Eastern Division employees (Fedele, Conn, Romano, Stelzer, Baker) conspired with Crosscountry Mortgage, Inc. (CCMI) to leave GRI, solicit GRI employees, and share confidential information to build CCMI's East Coast operations.
- The individual employees had post-employment non-solicitation/confidentiality provisions in their compensation agreements; most agreements contained Illinois choice-of-law and forum-selection clauses (Baker’s did not).
- GRI amended its complaint to add claims: breach of fiduciary duty (against Fedele, Conn, Romano), conspiracy to breach fiduciary duties (against all defendants), and breach of the in-term non‑solicitation covenants (against Fedele, Conn, Romano). GRI sought injunctive and equitable relief.
- CCMI and Baker moved to dismiss for lack of personal jurisdiction; CCMI also sought a protective order. Stelzer moved under Rule 12(b)(6) arguing the conspiracy claim lacks specific factual allegations against him.
- The court dismissed CCMI and Baker without prejudice for lack of personal jurisdiction, denied Stelzer’s motion to dismiss, and granted CCMI’s protective order (staying further discovery directed at CCMI).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction over CCMI | CCMI purposefully directed tortious conduct at Illinois by recruiting GRI employees, knowing of their Illinois-based contracts and that harm would be felt in GRI’s Illinois HQ | CCMI’s contacts are in Ohio and other states; no conduct was purposefully directed at Illinois; general jurisdiction also lacking | Dismissed for lack of personal jurisdiction (no general or specific jurisdiction) |
| Personal jurisdiction over Baker | GRI says Baker had contacts with Illinois (visits, conference calls, access to Illinois servers) and thus can be sued in Illinois for conspiracy | Baker had negligible Illinois contacts related to the tort; his agreement lacks forum clause; alleged misconduct occurred outside Illinois | Dismissed for lack of personal jurisdiction |
| Enforceability of forum-selection clauses against nonparties (CCMI/Baker) | Forum clauses in other defendants’ contracts make it foreseeable nonparties would be haled into Illinois; Adams/closely-related doctrine supports binding nonparties | Foreseeability/‘closely related’ cannot satisfy due process to bind nonparties to personal-jurisdiction waivers absent formal legal relationships or voluntary consent | Court rejects binding nonparties by foreseeability/closely-related theory for personal jurisdiction; clauses did not waive jurisdictional objections by CCMI or Baker |
| Sufficiency of conspiracy claim against Stelzer (12(b)(6)) | GRI alleges group conduct, parallel resignations, and coordinated actions; Stelzer joined scheme to injure GRI | Stelzer contends allegations are conclusory, lump defendants, and fail to show he knowingly joined the conspiracy | Denied. Complaint plausibly alleges Stelzer knowingly joined/benefitted from a scheme (facts thin but sufficient at pleading stage) |
Key Cases Cited
- Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (general jurisdiction appropriate only where forum is the corporation’s place of incorporation or principal place of business)
- BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549 (2017) (reinforces narrow scope of general jurisdiction)
- Walden v. Fiore, 134 S. Ct. 1115 (2014) (specific jurisdiction requires defendant’s own forum-directed contacts; plaintiff cannot be the only link)
- Calder v. Jones, 465 U.S. 783 (1984) (effects test for torts: intentional conduct expressly aimed at the forum with foreseeable effects)
- Goodyear Dunlop Tires Ops., S.A. v. Brown, 564 U.S. 915 (2011) (continuous and systematic contacts required for general jurisdiction)
- Purdue Research Found. v. Sanofi-Synthelabo, 338 F.3d 773 (7th Cir. 2003) (plaintiff bears burden to establish prima facie personal jurisdiction once challenged)
- Tamburo v. Dworkin, 601 F.3d 693 (7th Cir. 2010) (Calder test articulated in Seventh Circuit)
- Advanced Tactical Ordnance Sys., LLC v. Real Action Paintball, Inc., 751 F.3d 796 (7th Cir. 2014) (Walden limits foreseeability-based jurisdiction theories)