No. 3--04--0056

IN THE

APPELLATE COURT OF ILLINOIS

THIRD DISTRICT

A.D., 2005

JUSTICE McDADE delivered the opinion of the court:

Plaintiffs' complaint alleges that both they and theCornelsens are breeders of Tibetan mastiffs. Plaintiffs'business in Knox County, Illinois, is known as "Kesang CampTibetan Mastiffs," and defendants' business in Wellston,Oklahoma, is called "Makalu Tibetan Mastiffs." Plaintiffsalleged that defendants advertised or sold dogs in Illinois viathe telephone, United States mail and the Internet.

In December 2001, Anne telephoned plaintiffs and informedthem that she had two litters of Tibetan mastiff puppies. Ronsaid he was interested in purchasing two females of breedingquality, and Anne offered to sell plaintiffs two pick-of-the-litter females for $2,000.

Plaintiffs allege that the dam of one of the litters, DrakyiMulan, was co-owned by Richard Eichhorn of Simi Valley,California. Eichhorn had provided a written guarantee that Mulanwas free of genetic defects that would prevent breeding. Pursuant to his agreement with the Cornelsens, he was entitled toodd-numbered pups from Mulan's first two litters by a sire ofEichhorn's choice. However, in the event a genetic defect arose,Eichhorn would not take any puppies. The complaint alleges thatAnne was angry with Eichhorn, because he had delivered Mulan todefendants infected with roundworms and ticks. Anne toldplaintiffs that she wanted to prevent Eichhorn from getting anyof Mulan's pups.

On January 9, 2002, plaintiffs traveled to Oklahoma to seethe puppies. During their visit, they observed that Mulan andsome of her pups appeared sick and worm-infested. They urgedAnne to get the sick puppies to the veterinarian immediately. They selected one healthy female from each litter and paid theagreed price with the understanding that the Cornelsens wouldguarantee the puppies as breeding stock, free from geneticdiseases or defects, for up to three years. According to thecomplaint, Anne waited until January 24, 2002, to take one of thesick pups to the veterinarian, and at that time it was confirmedthat the pup had pneumonia.

In March 2002, Anne posted a message in a Tibetan mastiffchat room on the Internet seeking advice as to why one of thethree-month-old pups from Mulan's litter was critically ill, eventhough it had been wormed. She subsequently posted messagesstating that she believed the puppy suffered from a geneticdisease and that all of the puppies from that litter should bespayed or neutered and none should be bred. Nevertheless, inApril, Anne completed American Kennel Club (AKC) registrationpapers for Mohanna, one of the sick puppy's littermates that hadbeen sold to plaintiffs in January, indicating that the puppy was"for breeding." She forwarded the papers by United States mailto plaintiffs' home in Illinois.

Plaintiffs further alleged that, after learning of Anne'schat room postings in July 2002, they did blood tests on Mohannain July 2002 and June 2003. The tests indicated that Mohanna mayhave suffered from environmental abuse, but the condition hadcleared up, and she did not have any genetic disorders. Plaintiffs claimed that defendants knowingly published falsestatements about Mohanna's genetic line to retaliate againstEichhorn, and that, as a consequence, negotiations with severalpotential puppy customers had fallen through. Plaintiffs alsoclaimed that they were denied membership in Internet discussiongroups, and that defendants' comments impeached their integrityand impaired their good reputations.

Defendants specially appeared and moved to quash service ofprocess and dismiss the complaint for lack of personaljurisdiction. In support of the motion, they filed an affidavitstating that they maintained an interactive website that allowedpotential customers in foreign jurisdictions to communicate withthem regarding the sale of pups, but all sales took place inOklahoma. They further averred that none of the chat roomsmentioned in plaintiffs' complaint was set up or operated inIllinois.

Plaintiffs objected and filed an affidavit stating thatdefendants had used YAHOO! chat rooms and discussion groupsaccessible worldwide to spread unfounded rumors of a geneticdefect in Mohanna. They further stated that defendants hadtelephoned them and used the United States postal service and e-mail to communicate directly with them at plaintiffs' residencein Illinois.

The trial court determined that plaintiffs failed to showthat defendants' acts were sufficient to establish personaljurisdiction under this state's long-arm statute (735 ILCS 5/2--209 (West 2002)). Plaintiffs appeal.

Plaintiffs argue that specific in personam jurisdiction isestablished either because the Cornelsens intentionally directedtortious activities at the Illinois plaintiffs or because theassertion of jurisdiction comports with the due process clausesof the Illinois and United States Constitutions. 735 ILCS 5/2--209(a)(2), (c) (West 2002). The cause comes to this court solelyon the basis of the pleadings and supporting documents;therefore, our review is de novo. Viktron Ltd. Partnership v.Program Data Inc., 326 Ill. App. 3d 111, 759 N.E.2d 186 (2001).

Specific jurisdiction refers to jurisdiction over adefendant in a suit arising out of or related to the defendant'scontacts with the forum. RAR, Inc. v. Turner Diesel, Ltd., 107F.3d 1272 (7th Cir. 1997). Relevant to our inquiry are thefollowing provisions of the Illinois long-arm statute:

"(a) Any person, whether or not a citizen or residentof this State, who in person or through an agent does any ofthe acts hereinafter enumerated, thereby submits suchperson, and, if an individual, his or her personalrepresentative, to the jurisdiction of the courts of thisState as to any cause of action arising from the doing ofany of such acts:

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(2) The commission of a tortious actwithin this State;

(c) A court may also exercise jurisdiction on any otherbasis now or hereafter permitted by the IllinoisConstitution and the Constitution of the United States." 735 ILCS 5/2--209(a)(2),(c) (West 2002).

Subsection (c) has been interpreted to mean that, if contactsbetween the defendant and Illinois are sufficient to satisfy dueprocess under the state and federal constitutions, no furtherinquiry is necessary to satisfy the statute. Zazove v. Pelikan,Inc., 326 Ill. App. 3d 798, 803, 761 N.E.2d 256, 260 (2001),citing W.R. Grace & Co. v. CSR Ltd., 279 Ill. App. 3d 1043, 666N.E.2d 8 (1996). Accordingly, if the constitutional guaranteesof due process are satisfied in this case, we need not determinewhether plaintiffs have established jurisdiction under thealternative "tortious act" provision.

The assertion of specific in personam jurisdictionsatisfies federal due process guarantees so long as the defendanthas sufficient "minimum contacts" with the forum state, such thatmaintaining an action there comports with "traditional notions offair play and substantial justice." International Shoe Co. v.Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 102, 66 S. Ct. 154,158 (1945). "Minimum contacts" must involve acts by which thedefendant purposefully avails himself of the privilege ofconducting activities within the forum state, thereby invokingthe benefits and protection of its laws. Hanson v. Denckla, 357U.S. 235, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958); Asahi MetalIndustry Co. v. Superior Court of California, 480 U.S. 102, 94 L.Ed. 2d 92, 107 S. Ct. 1026 (1987). The defendant's conduct withrespect to the forum state must be such that he would reasonablyanticipate being haled into that state's court. World-WideVolkswagen Corp. v. Woodson, 444 U.S. 286, 62 L. Ed. 2d 490, 100S. Ct. 559 (1980). The factors a court must consider include (1)whether the defendant has sufficient minimum contacts with theforum state, (2) whether the cause of action arises out of thesecontacts, and (3) whether it is reasonable to require thedefendant to litigate in the forum state. Viktron, 326 Ill. App.3d at 121, 759 N.E.2d at 196, (citing Autotech Controls Corp. v.K.J. Electric Corp., 256 Ill. App. 3d 721, 628 N.E.2d 990 (1993),and Burger King Corp. v. Rudzewicz, 471 U.S. 462, 85 L. Ed. 2d528, 105 S. Ct. 2174 (1985). We analyze each factor in turn.

When the parties have a contractual relationship, minimumcontacts may be shown by the parties' negotiations precedingtheir agreement, the course of dealing between the parties, theterms of the agreement and foreseeable future consequencesarising out of the agreement. Viktron, 326 Ill. App. 3d 111, 759N.E.2d 186. Where the defendant is shown to have deliberatelyengaged in significant activities within the forum state orcreated ongoing obligations with a resident of the forum state,the defendant has accepted the privilege of doing business withthe forum state, and it is not unreasonable to require him tolitigate there. Burger King, 471 U.S. 462, 85 L. Ed. 2d 528, 105S. Ct. 2174.

In this case, plaintiffs allege that defendants telephonedplaintiffs at their residence in Illinois and initiatednegotiations for the sale of pick-of-the-litter "breedingquality" puppies. During that conversation, plaintiffs wereinvited to defendants' home in Oklahoma to select two puppies for$2,000. One of the puppies selected, Mohanna, was from Mulan'slitter, which defendants later claimed to be allegedlygenetically defective. After plaintiffs returned to Illinois,defendants forwarded AKC registration papers through the UnitedStates postal service to plaintiffs' Illinois residencedocumenting Mohanna's lineage and that she was sold "for breedingpurposes."

If the only contacts defendants had with Illinois consistedof a single telephone call and one mailing in connection withtheir sale of the two pups to plaintiffs, we might agree with thetrial court that plaintiffs failed to establish sufficientminimum contacts to satisfy due process. But, plaintiffs insist,there was more.

Plaintiffs allege, and defendants agree, that defendants maintain an interactive commercial website advertising their pupsand encouraging visitors to communicate with them about potentialpurchases of puppies via a direct link to defendants' e-mailaddress. Moreover, plaintiffs allege, defendants' publication ofuntrue statements about Mohanna's lineage in Tibetan mastiff chatrooms constitutes activity in Illinois. According to plaintiffs,defendants' statements targeted Mohanna and her littermates andfalsely indicated that no genetically sound puppies would resultfrom breeding Mohanna. As a consequence, they allege, they lostpotential customers for her pups.

The type of Internet activity that is sufficient toestablish personal jurisdiction remains an emerging area ofjurisprudence. Berthold Types Ltd. v. European Mikrograf Corp.,102 F. Supp. 2d 928 (N.D. Ill. 2000); Jennings v. AC HydraulicA/S, 383 F.3d 546 (7th Cir. 2004). For ease of analysis, a"sliding scale" approach has been adopted. Zippo ManufacturingCo. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997). At one end, jurisdiction may be asserted if the defendanttransacts business in foreign jurisdictions via an interactivewebsite where contracts are completed online and the defendantderives profits directly from web-related activity. At theopposite end of the scale, jurisdiction does not attach where thenonresident maintains a passive website that merely providesinformation about the defendant's products. Jennings, 383 F.3d546. Between these types of websites lies a third category thatis interactive, in that it allows customers in foreignjurisdictions to communicate regarding the defendant's servicesor products. Berthold Types, 102 F. Supp. 2d at 932-33, citingZippo, 952 F. Supp. 1119. This third category may or may not besufficient to assert in personam jurisdiction, depending on thelevel of interactivity and the commercial nature of theinformation exchanged. Berthold Types, 102 F. Supp. 2d 928.

It is clear to us that defendants' website falls within thethird category. If defendants' commercial website invitingprospective puppy purchasers to communicate with them by e-mailwere the full extent of their internet activity, we would notfind sufficient purposeful contacts with Illinois to assert longarm jurisdiction. See Jennings, 383 F.3d 546. However, thepleadings at issue establish that defendants' activity in theTibetan mastiff chat rooms also concerned the dog breedingbusiness and should be considered, especially since defendants'messages in the chat rooms pertained to the lineage ofplaintiffs' AKC-registered, "breeding quality" pup in Illinois.

In our opinion, the totality of defendants' activities inIllinois, including (1) the contract negotiations and follow-upAKC registration of Mohanna, (2) maintenance of a commercialinteractive website, and (3) use of Tibetan mastiff chat rooms toreach potential customers of Tibetan mastiff breeders, includingplaintiffs, were of sufficient quantity and quality to constituteminimum contacts in Illinois under federal due process analysis. See Berthold Types, 102 F. Supp. 2d at 933-34, citing DigitalEquipment Corp. v. AltaVista Technology, Inc., 960 F. Supp. 456(D. Mass. 1997).

Next, we must consider whether plaintiffs' cause of actionarose out of defendants' contacts with Illinois. This questionis easily resolved in plaintiffs' favor. Plaintiffs' primarycomplaint is of tortious interference with prospective businessadvantage. According to the complaint, defendants' initialcontact was by telephone, offering to sell "pick-of-the-litter"female pups to plaintiffs. They followed up on the agreementwith a contact by mail, forwarding AKC registration papers toplaintiffs' home showing that Mohanna was "for breeding." Theysubsequently published allegedly false information aboutMohanna's lineage in Internet chat rooms targeting Tibetanmastiff owners and breeders, again reaching into Illinois andadversely affecting plaintiffs' Illinois dog-breeding operation. Accordingly, it is clear that defendants' contacts with Illinoisgave rise to plaintiffs' cause of action.

Next, we consider whether it is reasonable to requiredefendants to litigate in Illinois. Again, several factors guidethis inquiry: (1) the burden on the defendant of defending theaction in the forum state; (2) the forum state's interest inadjudicating the dispute; (3) the plaintiff's interest inobtaining effective relief; (4) the interstate judicial system'sinterest in obtaining the most efficient resolution of theaction; and (5) the shared interests of the several states inadvancing fundamental social policies. World-Wide Volkswagen,444 U.S. 286, 62 L. Ed. 2d 490, 100 S. Ct. 559. If the plaintiffhas established that the defendant purposely directed hisactivities at the forum state, it is the defendant's burden toshow that litigating the dispute in that state would beunreasonable. Burger King, 471 U.S. 462, 85 L. Ed. 2d 528, 105S. Ct. 2174.

Here, plaintiffs have shown that defendants purposelydirected their activities at Illinois by initiating negotiationswith regard to the sale of two pups. Defendants also purposelyposted messages in Internet chat rooms impugning the geneticintegrity of Mohanna and her littermates. Even if, as plaintiffsallege, defendants' primary purpose was to cover up a breach oftheir contractual obligation with Eichhorn in California, theyreasonably should have anticipated that messages to other Tibetanmastiff breeders and owners would cause economic damage toplaintiffs' Illinois dog-breeding enterprise. Under thecircumstances, it was defendants' burden to show that litigatingthe cause in Illinois would be unreasonable. This, they have notdone.

First, defendants have not shown that it would be undulyburdensome for them to defend this action in Illinois. It wouldappear that most of the documentary evidence and some of thewitnesses are situated in Illinois. The inconvenience todefendants of litigating here is no more burdensome to them thanthe inconvenience of litigating in Oklahoma would be toplaintiffs.

Turning to the second factor, Illinois has a strong interestin providing its residents with a convenient forum. See Viktron,326 Ill. App. 3d at 124, 759 N.E.2d at 198, citing Burger King,471 U.S. 462, 85 L. Ed. 2d 528, 105 S. Ct. 2174. Third, anydamages sustained by plaintiffs would have affected theirinterests in Illinois. And, finally, defendants have advanced nocompelling argument for finding that litigating the cause inOklahoma would serve the interstate judicial system, or that theshared interests of both states in advancing fundamental socialpolicies would be better served by litigating in Oklahoma.

In sum, we find that plaintiffs have shown that theCornelsens purposely directed their activities at Illinois.Accordingly, it was defendants' burden to show that it would beunreasonable to require them to litigate this action in Illinois,a burden they have not borne. Having found that the Illinoiscourt's assertion of in personam jurisdiction over the Cornelsensdoes not offend federal due process concerns, we turn next tothis state's due process protection.

The Illinois due process guaranty allows the assertion of inpersonam jurisdiction only if it is fair, just and reasonable torequire a nonresident defendant to defend in Illinois,considering the quality and nature of the defendant's acts inIllinois or which affect interests located in Illinois. Viktron,326 Ill. App. 3d at 126, 759 N.E.2d at 200, quoting Rollins v.Ellwood, 141 Ill. 2d 244, 275, 565 N.E.2d 1302 (1990).

For many of the same reasons that in personam jurisdictiondoes not offend the federal constitution's due processprotections, we also find that it is neither unfair nor unjust tohale the Cornelsens into this state to answer plaintiffs'charges. The pleadings show that it was entirely foreseeablethat the injury resulting from defendants' allegedly falseassertions of genetic defects over the Internet would be feltprimarily in Illinois. We therefore conclude that the assertionof in personam jurisdiction comports with this state's dueprocess guaranty.

For the reasons stated, the judgment of the circuit court ofKnox County granting the Cornelsens' motion to quash service ofprocess and dismiss the suit for lack of jurisdiction isreversed, and the cause is hereby remanded for furtherproceedings.

Reversed and remanded.

LYTTON, J., concurs.

HOLDRIDGE, J., dissents.

I agree with the majority's statement of the law governingthis issue. I disagree, however, with the majority's applicationof the law to the instant facts. The factors articulated inViktron Ltd. Partnership v. Program Data Inc., 326 Ill. App. 3d111, 121 (2001), indicate that minimum contacts with Illinois arenot enough to invoke long-arm jurisdiction; those contacts mustalso constitute a basis from which the cause of action arises. The instant cause of action arose out of information placed onthe Internet by Anne (an Oklahoma resident). She provided theinformation in the spirit of mere communication. Her message wasnot limited to any particular state, and she did not use themessage to transact any business in Illinois. I simply disagreewith the majority's decision to nonetheless extend Illinoisjurisdiction based on the "totality" of Anne's actions. Theactions that matter do not warrant Illinois jurisdiction.

For these reasons, I respectfully dissent.