U.S. District Court Dismisses Breach of Contract Case for Lack of Jurisdiction

According to a recent Chicago U.S. District Court decision, a Maine aircraft repair company cannot be brought into a court in Illinois. The decision was based on an argument that because the company’s website can be accessed in Illinois, jurisdiction would lie in U.S. District Court.

In the written opinion issued by Chief U.S. District Court Judge Ruben Castillo, the lawsuit was dismissed.

Clover Technologies LLC, based in Ottawa, Ill., filed a lawsuit against Oxford Aviation Inc. of Oxford, Maine. 

In the judge’s decision, it was held that Oxford Aviation did not have enough contact with Illinois to bring it to the courts in this state. Judge Castillo dismissed the lawsuit without prejudice, allowing Clover to refile the action in another court. 

Clover recycles and remanufactures cell phones, inkjet cartridges, postage meters and other small electronics. According to the lawsuit, after Clover reviewed Oxford Aviations’ website, Clover’s pilot sent an e-mail to Oxford asking about its services.  Oxford’s president and Clover’s pilot then negotiated a contract over the telephone for Oxford Aviation to refurbish Clover’s company airplane.

In line with that contract, Clover brought the plane to Oxford Aviation in Maine for repairs. After completion of the repairs, the aircraft was retrieved. However, Clover later filed a lawsuit against Oxford Aviation in federal court in Chicago asserting diversity jurisdiction contending that the repairs were botched. 

Oxford moved to dismiss the complaint for lack of personal jurisdiction. Judge Castillo granted that motion dismissing the case stating that in order to assert general or specific personal jurisdiction over an out-of-state resident, due process must be complied with. To achieve compliance with due process, the defendant must have enough contacts with the state that required to defend itself in the state that does not run counter to “traditional notions of fair play and substantial justice.”  Milliken v. Meyer, 311 U.S. 457 (1940). In addition, Judge Castillo quoted from Helicopteros Nacionales de Colombia S.A. v. Hall, 466 U.S. 408 (1984). In that case, the proposition was that general personal jurisdiction is established if the defendant has “continuous and systematic general business contacts” with the state. Oxford Aviation did not have such contacts, the judge held here.

Judge Castillo also wrote, citing Tamburo v. Dworkin, 601 F.3d 693 (7th Cir. 2010),  that simply maintaining a website that is accessible in another state is not enough to establish jurisdiction. The Tamburo case also held that “even interactive websites that allow for sporadic sales of materials to Illinois residents are not sufficient to establish general, personal jurisdiction.”  Further, it was held that Oxford Aviation’s other contacts with Illinois were not sufficient to require itself to defend in Illinois in this lawsuit. Oxford Aviation had at least two other customers who resided in Illinois. Even still, it did not establish jurisdiction.  These were isolated transactions. Judge Castillo also rejected the argument that the courts in Illinois had specific personal jurisdiction over Oxford Aviation based on its contract with Clover. Clover had initiated the transaction, and Oxford’s president remained in Maine while the deal was being worked out. The refurbishing of the Clover aircraft was a one-time transaction, which occurred in Maine, not in Illinois.

This case is important in the sense that it sends a message as to what contacts in modern times are sufficient to form the basis for personal jurisdiction over an out-of-state defendant. In another decision, the Illinois Supreme Court was split 5-1 in holding that a French company that manufactured a part for a helicopter that crashed in Illinois had sufficient business dealings in Illinois to face a lawsuit in the Circuit Court of Cook County.  Russell v. S and FA, No. 2013 IL 113909 (Illinois Supreme Court) (April 18, 2013).

Clover Technologies Group, LLC v. Oxford Aviation, Inc., et al., No. 13 C 1697.

Kreisman Law Offices has been handling federal litigation matters and business disputes for individuals, families and businesses for more than 37 years in and around Chicago, Cook County and its surrounding areas, including Northlake, Addison, Riverside, Bridgeview, Westmont, Glendale Heights, Bloomingdale, Chicago (Bridgeport, Humboldt Park, Rogers Park), Long Grove, Buffalo Grove and North Chicago, Ill.

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