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FIFTH DIVISION

No. 1-00-1516

Plaintiff Daniel Zazove appeals an order of the circuitcourt of Cook County dismissing his Amended Class ActionComplaint as against defendant Pelikan, Inc. (Pelikan-USA) forlack of personal jurisdiction. Defendant Pelikan InternationalHandelgeshellschaft mbH & Co., KG. (Pelikan-Germany) is not aparty to this appeal.

The record on appeal discloses the following facts. Plaintiff's Amended Class Action Complaint alleged that Pelikan-Germany, a German corporation, was the manufacturer of Pelikanwriting instruments and that Pelikan-USA, a Tennessee corporation, was the sole United States agent-distributor for Pelikan-Germany until some time in 1996. Plaintiff alleged that he was"a well known collector of vintage and limited edition fountainpens ***."

Plaintiff alleged that Pelikan-Germany, through Pelikan-USA,advertised (in Illinois and throughout the United states) its Pelikan Toledo pens as being part of a limited edition of 500pens. This advertising was placed in national and local periodicals, including Chicago Magazine. Plaintiff also alleged thatPelikan-USA disseminated brochures to prospective purchasers andretailers. A copy of one such brochure, showing a suggestedretail price of $1,200, was attached as an exhibit. Plaintifffurther alleged that Pelikan-USA distributed Pelikan Toledo pensto retailers in the United States.

Plaintiff alleged that he purchased a Toledo pen in thebelief that it would eventually become a rare collectible. Plaintiff alleged that his pen cane with a Toledo M900 registration certificate stating in part that "[i]n the entire UnitedStates, there are only five hundred of these rare, exquisitepens." Plaintiff alleged that on September 27, 1997, he was toldby a Pelikan-USA representative in Chicago that the PelikanToledo pens were now available for sale to the general public,though Pelikan-USA had already sold the first 500 pens. InOctober 1997, plaintiff received a copy of "the Fountain PenHospital's October 1997 Price List," which listed new Toledo pensselling for $1,075.

Plaintiff alleged that defendants had violated the IllinoisConsumer Fraud and Deceptive Business Practices Act (815 ILCS505/1 et seq. (West 1998). Plaintiff sought declaratory andmonetary relief for the class of persons who purchased the first500 Toledo pens, as well as attorney fees and costs.

On January 5, 1998, Pelikan-USA filed a special and limitedappearance. On July 30, 1999, Pelikan-USA moved to dismiss thecomplaint against it for lack of personal jurisdiction, pursuantto section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS5/2-619(a)(9) (West 1998)). Pelikan-USA submitted a sworndeclaration by Scott Schumpert, the Treasurer and Secretary ofPelikan-USA. In the declaration, Schumpert states that Pelikan-USA's principal place of business is and has been in Tennessee. Schumpert also declared that Pelikan-USA was not registered to dobusiness in the state of Illinois. Schumpert further declaredthat since 1990, Pelikan-USA had no offices, employees, telephonenumbers, or bank accounts in Illinois. Schumpert added thatPelikan-USA had not owned or leased real estate in Illinois since1990, and had no personal property here, except for files held bycounsel relating to this litigation. Schumpert stated that whilePelikan-USA had been a past distributor for Pelikan-Germany,reselling writing instruments to independent distributors andretailers in the United States, Pelikan-USA ceased operations inMarch 1996, when another company obtained the exclusive distribution rights for Pelikan-Germany; Pelikan-USA no longer has anyoffices or employees.

On February 18, 2000, the trial court granted the motion todismiss. On April 4, 2000, the trial court granted plaintiff'smotion for a finding that there was no just reason to delayenforcement or appeal of the dismissal, pursuant to Supreme CourtRule 304(a) (155 Ill. 2d R. 304(a)). Plaintiff timely filed aNotice of Appeal to this court.

The sole issue on appeal is whether the trial court erred indismissing the complaint against Pelikan-USA for lack of personaljurisdiction. A plaintiff has the burden of establishing a primafacie basis for exercising in personam jurisdiction over a non-resident defendant. Kalata v. Healy, 312 Ill. App. 3d 761, 765,728 N.E.2d 648, 651-52 (2000); International Business MachinesCorp. v. Martin Property & Casualty Insurance Agency, Inc., 281Ill. App. 3d 854, 857-58, 666 N.E.2d 866, 868 (1996). Statementsin plaintiff's pleadings which defendant does not controvert byaffidavit are taken as true. Kutner v. DeMassa, 96 Ill. App. 3d243, 248, 421 N.E.2d 231, 235 (1981). A plaintiff's prima faciecase may be overcome by a defendant's uncontradicted evidencethat defeats jurisdiction. Gaidar v. Tippecanoe DistributionService, Inc., 299 Ill. App. 3d 1034, 1041, 702 N.E.2d 316, 320(1998). However, conflicts between the parties' affidavits willbe resolved in favor of the plaintiff for purposes of determiningwhether a prima facie case for in personam jurisdiction has beenmade. International Business Machines Corp., 281 Ill. App. 3d at858, 666 N.E.2d at 868. When the trial court hears no courtroomtestimony and determines jurisdiction solely on the basis ofdocumentary evidence, the standard of review is de novo. Steinv. Rio Parismina Lodge, 296 Ill. App. 3d 520, 523, 695 N.E.2d518, 521 (1998); E.A. Cox Co. v. Road Savers International Corp.,271 Ill. App. 3d 144, 148, 648 N.E.2d 271, 275 (1995).

Plaintiff claims that Illinois courts have personal jurisdiction over Pelikan-USA under section 2-209 of the Code, whichstates in pertinent part:

"(a) Any person, whether or not a citizen orresident of this State, who in person orthrough an agent does any of the acts hereinafter enumerated, thereby submits suchperson, and, if an individual, his or herpersonal representative, to the jurisdictionof the courts of this State as to any causeof action arising from the doing of any ofsuch acts:

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

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(7) The making or performance of anycontract or promise substantiallyconnected with this State;

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(c) A court may also exercise jurisdiction onany other basis now or hereafter permitted bythe Illinois Constitution and theConstitution of the United States.

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(f) Only causes of action arising from actsenumerated herein may be asserted against adefendant in an action in which jurisdictionover him or her is based upon subsection(a)." 735 ILCS 5/2-209 (West 1998).

For jurisdictional purposes, allegedly tortious acts need not fitwithin the technical definition of a tort as long as there is abreach of duty giving rise to liability. Nelson v. Miller, 11Ill. 2d 378, 393-94, 143 N.E.2d 673, 681 (1957). However,following the enactment of subsection (c), which became effectivein 1989, if the contacts between the defendant and Illinois aresufficient to satisfy the requirements of due process, then therequirements of the Illinois long-arm statute also have been met,and no other inquiry is necessary. See W.R. Grace & Co. v. CSRLtd., 279 Ill. App. 3d 1043, 1047, 666 N.E.2d 8, 10 (1996).

Personal jurisdiction over an out-of-state defendant mayonly be exercised if the defendant has certain "minimum contacts"with the forum state so that requiring the defendant to defend inthe forum does not offend "traditional notions of fair play andsubstantial justice." International Shoe Co. v. Washington, 326U.S. 310, 316, 90 L. Ed. 95, 102, 66 S. Ct. 154, 158 (1945);Wiles v. Morita Iron Works Co., 125 Ill. 2d 144, 150, 530 N.E.2d1382, 1385 (1988). Thus, this court turns to consider thedefendant's contacts with Illinois and the fairness or reasonableness of exercising personal jurisdiction over the defendant.

Plaintiff argues that defendant established the requisiteminimum contacts under the "stream of commerce" theory. Thetheory takes its name from World-Wide Volkswagen v. Woodson, 444U.S. 286, 297-98, 62 L. Ed. 2d 490, 502, 100 S. Ct. 559, 567(1980), in which the Supreme Court stated that "[t]he forum Statedoes not exceed its powers under the Due Process Clause if itasserts personal jurisdiction over a corporation that deliversits products into the stream of commerce with the expectationthat they will be purchased in the forum State." The World-Widecourt also stated that "if the sale of a product of amanufacturer or distributor *** is not simply an isolated occurrence, but arises from the efforts of the manufacturer or distributor to serve, directly or indirectly, the market for itsproduct in other States, it is not unreasonable to subject it tosuit in one of those States." World-Wide, 444 U.S. at 297, 62 L.Ed. 2d at 501, 100 S. Ct. at 567.

The Supreme Court subsequently split over the scope of the"stream of commerce" theory. In Asahi Metal Industry Co. v.Superior Court, 480 U.S. 102, 94 L. Ed. 2d 92, 107 S. Ct. 1026(1987), the plaintiff, a California resident, was injured whileriding a motorcycle on a California highway. Thereafter, alleging in part that a defective tire tube had caused his accident,the plaintiff sued the Taiwanese manufacturer of the tire tube,Cheng Shin Rubber Industrial Company, in a California court. Seeking indemnification, Cheng Shin filed a cross-complaintagainst the manufacturer of the tube's valve assembly, AsahiMetal Industry Company, Ltd. (Asahi), a Japanese corporation. Eventually all claims were settled except for the cross-claimbetween the two manufacturers. Asahi argued that it should notbe subject to suit in California and moved to quash Cheng Shin'sservice of summons on the ground that the due process clause ofthe fourteenth amendment prohibited California from exercisingjurisdiction over Asahi.

The United States Supreme Court unanimously agreed thatjurisdiction must fail due to facts of the case which renderedthe exercise of personal jurisdiction unfair and unreasonable. However, the Justices were split on the minimum contacts issue.

Justice O'Connor, who delivered the opinion of the Court,along with three other Justices, concluded that minimum contactshad not been established. Under the O'Connor view of minimumcontacts, "a defendant's awareness that the stream of commercemay or will sweep the product into the forum State does notconvert the mere act of placing the product into the stream intoan act purposefully directed toward the forum State." Asahi, 480U.S. at 112, 94 L. Ed. 2d at 104, 107 S. Ct. at 1033 (pluralityop.). This view requires "[a]dditional conduct [which] mayindicate an intent or purpose to serve the market in the forumState." Asahi, 480 U.S. at 112, 94 L. Ed. 2d at 104, 107 S. Ct.at 1032 (plurality op.). Justice O'Connor included as examplesof such "additional conduct" such things as designing the productfor the forum state, advertising in the forum state, providingadvice to customers in the forum state, and marketing the productthrough a distributor in the forum state. Asahi, 480 U.S. at112, 94 L. Ed. 2d at 104, 107 S. Ct. at 1032 (plurality op.).

Justice Brennan, also joined by three other Justices,concluded that minimum contacts had been established. Under theBrennan view, personal jurisdiction based on the placement of aproduct in the stream of commerce comports with due process,without showing additional conduct by the defendant. Asahi, 480U.S. at 117, 94 L. Ed. 2d at 108, 107 S. Ct. at 1034-35 (Brennan,J., concurring in part). Under this view, so long as thedefendant participates in the "regular and anticipated flow ofproducts from manufacture to distribution to retail sale" in theforum State, and so long as the defendant is "aware that thefinal product is being marketed in the forum State," minimumcontacts between the defendant and the forum State have beenestablished. Asahi, 480 U.S. at 117, 94 L. Ed. 2d at 107, 107 S.Ct. at 1035 (Brennan, J., concurring in part).⁽¹⁾

As the Illinois Supreme Court has noted, it is not possibleto determine from Asahi whether the broad or the narrow versionof the stream of commerce theory is correct. Wiles v. MoritaIron Works Co., Ltd., 125 Ill. 2d 144, 159-60, 530 N.E.2d 1382,1389 (1988). This court has generally followed the viewexpressed in Justice O'Connor's opinion. E.g., Loos v. AmericanEnergy Savers, Inc., 168 Ill. App. 3d 558, 562, 522 N.E.2d 841,844 (1988). But see Lichon v. Aceto Chemical Co., Ltd., 182 Ill.App. 3d 672, 538 N.E.2d 613 (1989)(applying broader version ofthe theory in the exceptional context of introducing inherentlydangerous or toxic products into the stream of commerce).

In this case, Pelikan-USA distributed the Toledo M900 intoIllinois. Plaintiff alleged that Pelikan-USA was the sole UnitedStates agent-distributor for Pelikan-Germany, which distributedand sold Pelikan brand writing instruments to retailers in theUnited States, including Illinois, until some time in 1996. TheSchumpert affidavit does not contradict this allegation; indeed,it tends to support the allegation. Pelikan-USA, in response toan interrogatory, stated that there were approximately 27authorized Pelikan retailers in Illinois in 1990. Although theparties disagree as to whether Pelikan-USA "transacted business"in Illinois⁽²⁾, the Schumpert affidavit does not contradictplaintiff's allegation that Pelikan-USA sold tens of thousands ofPelikan brand writing instruments in Illinois annually.

Moreover, plaintiff alleged that Pelikan-USA advertisedPelikan pens in national and local periodicals. Plaintiff alsoalleged that Pelikan-USA disseminated brochures to prospectivepurchasers (by direct mailing) and retailers. Again, the Schumpert affidavit does not contradict this allegation. Instead, TheSchumpert affidavit takes the position that the "transmission" ofany such advertising occurred outside Illinois.

Regardless of the point of "transmission," it remainsundisputed that the advertising was transmitted to Illinois andIllinois residents. Moreover, the advertising at issue isallegedly false and forms part of the core of plaintiff's claimunder section 2 of the Illinois Consumer Fraud and DeceptiveBusiness Practices Act. This factor renders this case distinguishable from cases such as Pilipauskas v. Yakel, 258 Ill. App.3d 47, 58, 629 N.E.2d 733, 741 (1994), where the nonresidentdefendant's marketing was not directly related to the personalinjury action brought by the plaintiff.

A review of the case law involving other types of allegedlyfalse communications is instructive. In Keeton v. HustlerMagazine, 465 U.S. 770, 773, 79 L. Ed. 2d 790, 797, 104 S. Ct.1473, 1478 (1984), a unanimous Supreme Court ruled in a libelcase that New Hampshire could exercise personal jurisdiction overa nonresident magazine publisher that regularly circulated hispublication in New Hampshire. In Calder v. Jones, 465 U.S. 783,789-90, 79 L. Ed. 2d 804, 812-13, 104 S. Ct. 1482, 1487 (1984), aunanimous Supreme Court determined in a libel case that aCalifornia court could exercise personal jurisdiction overFlorida journalists, despite the fact that they did not directlycirculate the allegedly defamatory article in California,reasoning that by participating in an allegedly tortious actintentionally directed at California and a California resident,the author and editor of the article must reasonably anticipatebeing haled into court in California, based on the effects oftheir conduct in Florida. Similarly, in cases of fraudulentmisrepresentation, reaching out to Illinois residents, whether bymail, telephone, telex or facsimile, with an intent to affectIllinois interests, can be a sufficient basis for exercisingpersonal jurisdiction over a nonresident defendant. See, e.g.,FMC Corp. v. Varonos, 892 F.2d 1308, 1312-14 (7^th Cir. 1990);Club Assistance Program, Inc. v. Zukerman, 594 F. Supp. 341, 346-47 & nn. 9-11 (N.D. Ill. 1984)(and multiple citations of Illinoiscase law therein).

Pelikan-USA cites 2 Illinois cases in which this court heldthat there was no personal jurisdiction over nonresident defendants based on claims brought under the Illinois Consumer Fraudand Deceptive Business Practices Act. In Stein v. Rio ParisminaLodge, 296 Ill. App. 3d 520, 526, 695 N.E.2d 518, 522-23 (1998),this court did not focus on the defendant's alleged misrepresentation by mail, and noted that plaintiff initiated the contactwith that defendant. In Excel Energy Co., Inc. v. Pittman, 239Ill. App. 3d 160, 164, 606 N.E.2d 637, 640 (1992), this courtheld that the defendant did not purposefully direct hisactivities at Illinois residents, noting that:

"[t]he plaintiffs found the advertisement forthe equipment in a magazine, sought out thedefendant and inquired about purchasing theequipment, and took delivery of the equipmentin Oklahoma."

The aforementioned magazine appears to have been one of generalnational circulation. See Excel Energy Co., Inc., 239 Ill. App.3d at 162, 606 N.E.2d at 639.

In this case, Pelikan-USA, unlike the defendant at issue inStein, allegedly sent the advertising brochures at issue toIllinois retailers and residents in order to market the TuxedoM900, rather than in response to a request by the plaintiff. Unlike the defendant in Excel Energy Co., Inc., Pelikan-USAallegedly advertised not only in magazines of nationalcirculation, but those of local circulation, and by direct mailto Illinois residents. In addition, unlike the defendant inExcel Energy Co., Inc., Pelikan-USA allegedly shipped the pensinto Illinois for sale. Accordingly, this case seems distinguishable from Stein and Excel Energy Co., Inc.

Pelikan-USA argues that courts generally do not extend the"stream of commerce" theory beyond the context of productliability actions. Pelikan-USA also contends that the cause ofaction here relates to the alleged relationship between theparties, not to the placement of a defective product in thestream of commerce.

Plaintiff does not allege that his Toledo M900 pen is defective, or that it caused him a physical injury. However, as perthe discussion above, allegedly false communications to Illinoisresidents with an intent to affect Illinois interests is asufficient basis for exercising personal jurisdiction over anonresident defendant, regardless of how such acts are characterized. While the "stream of commerce" theory may be based atleast in part on the forum state's interest in applying itsproduct liability laws and protecting persons from injury, theKeeton court noted New Hampshire's interest in not only protecting persons against libel, but also safeguarding its populacefrom falsehoods. Keeton, 465 U.S. at 777, 79 L. Ed. 2d at 799,104 S. Ct. at 1479. Pelikan-USA does not argue that Illinois hasno interest in protecting its populace from consumer fraud.

Pelikan-USA further contends that the "stream of commerce"theory does not apply in the context of this case because a mereeconomic loss felt in Illinois does not suffice for the exerciseof personal jurisdiction over a nonresident defendant. Pelikan-USA relies upon Yates v. Muir, 112 Ill.2d 205, 209, 492 N.E.2d1267, 1268 (1986), but that case addresses the "last event"doctrine for determining whether a tortious act was committed"within this State" under section 2-209(a)(2). Yates was decidedbefore the amendment of section 2-209 that extends long-armjurisdiction to the full extent allowed by due process of law. See also R.W. Sawant & Co. v. Allied Programs Corp., 111 Ill. 2d304, 312-13, 489 N.E.2d 1360, 1364-65 (1986)(pre-1989 analysisexpressly refusing to consider whether jurisdiction would beconstitutionally permissible). More recently, this court hasheld that Illinois courts could exercise personal jurisdictionconsistent with due process over a nonresident defendant who usedthe telephone and the mails as part of a scheme to defraud anIllinois resident who lost money in Illinois. Kalata, 312 Ill.App. 3d at 761, 728 N.E.2d at 648.

In sum, Pelikan-USA distributed Pelikan pens, including theToledo M900 into the State of Illinois, and purposefully marketedthe M900 to Illinois residents through a variety of media,including advertising in Chicago Magazine and by direct mail. Moreover, Pelikan-USA's marketing was allegedly premised on afalse promise in violation of the Illinois Consumer Fraud andDeceptive Business Practices Act. It might be argued thatpersonal jurisdiction attaches only when the nonresident defendant purposefully directs a false communication at a particularIllinois citizen or regularly advertises in Illinois. However,the minimum contacts analysis is focused on the relationshipbetween the defendant and the forum state. Accordingly, plaintiff has alleged sufficient facts to show that Pelikan-USA hadthe minimum contacts with Illinois necessary to assert personaljurisdiction.

The issue remains as to the fairness or reasonableness ofexercising personal jurisdiction over the defendant. When determining the reasonableness of requiring a defendant to litigate inthe forum State, a court should consider the burden on thedefendant, the forum State's interest in resolving the dispute,the plaintiff's interest in obtaining relief, and the interest ofseveral States, including the forum State, in the efficientjudicial resolution of the dispute and the advancement ofsubstantive social policies. See Asahi, 480 U.S. at 112-15, 94L. Ed. 2d at 104-06, 107 S. Ct. at 1032-34; Pilipauskas, 258 Ill.App. 3d at 56, 629 N.E.2d at 739.

In this regard, Pelikan-USA returns to the argument that the"stream of commerce" theory is based in part on the forum state'sinterest in applying its product liability laws and protectingpersons from injury. As discussed above, a State also has aninterest in safeguarding its populace from falsehoods. Keeton,465 U.S. at 777, 79 L. Ed. 2d at 799, 104 S. Ct. at 1479. TheConsumer Fraud and Deceptive Business Practices Act is intendedto protect consumers, borrowers and business persons againstfraud, unfair methods of competition, and other unfair and deceptive business practices. Cripe v. Leiter, 184 Ill. 2d 185, 190-91, 703 N.E.2d 100, 103 (1998). The nature and object of thestatute are indisputably the protection of the public interest. People ex rel. Hartigan v. Lann, 225 Ill. App. 3d 236, 241, 587N.E.2d 521, 524 (1992). Thus, Pelikan-USA's argument that aviolation of the Consumer Fraud and Deceptive Business PracticesAct does not implicate interests sufficiently significant towarrant the exercise of personal jurisdiction over a nonresidentdefendant is unpersuasive.

Pelikan-USA mentions, but does not focus on, the burden thatwould be placed on it to litigate in Illinois. The Schumpertaffidavit establishes that Pelikan-USA ceased operations in March1996 and has no offices or employees. These factors arguablysuggest that it could be burdensome for Pelikan-USA to litigatein Illinois. However, considering these factors as determinative, particularly in cases of consumer fraud or common lawfraud, could encourage non-resident corporations to commitvarious wrongs against Illinois residents, then dissolve ordeclare bankruptcy as a tactic to avoid personal jurisdiction inIllinois. Accordingly, while this factor weighs in Pelikan-USA'sfavor, it does not, by itself, demonstrate unfairness orunreasonableness sufficient to negate a prima facie showing ofpersonal jurisdiction in this case.

For all of the aforementioned reasons, the order of thecircuit court of Cook County is reversed and remanded for furtherproceedings consistent with this order.

Reversed and remanded.

GREIMAN and REID, JJ., concur.

1. Justice Stevens, joined by two of the justices who hadalso joined Justice Brennan's concurring opinion, expressed noopinion on the question of whether the broad or narrow version ofthe stream of commerce theory was correct, but also stated thatAsahi's regular delivery of a large volume of its products intothe California market constituted minimum contacts even underJustice O'Connor's narrow version of the stream of commercetheory. Justice Stevens concurred in the result because hebelieved that California's exercise of jurisdiction over Asahiwas fundamentally unfair.

2. Pelikan-USA contends that the analysis of whether anonresident is "transacting business" in Illinois under section2-209(a)(1) found in Kadala v. Cunard Lines, Ltd., 226 Ill. App.3d 302, 310, 589 N.E.2d 802, 807 (1992) is controlling, even incases where jurisdiction is analyzed under section 2-209(c). Pelikan-USA's argument fails for the reasons that follow in themain text of this order.