February 6, 2019
from the United States District Court for the Northern
District of Illinois, Eastern Division. No. 17 C 07706 -
Virginia M. Kendall, Judge.
Kanne, Sykes, and Hamilton, Circuit Judges.
Matlin and James Waring appeal the district court's
dismissal of their suit against Spin Master Corporation, Spin
Master Ltd., and Swimways Corporation for lack of personal
jurisdiction and improper venue. Because the defendants have
insufficient contacts with Illinois to establish specific
personal jurisdiction, we affirm.
with other business partners, two Illinois residents, Tai
Matlin and James Waring, co-founded a company called Gray
Matter Holdings, LLC, in 1997. Matlin and Waring developed
certain products for Gray Matter, including an inflatable
beach mat known as the "Snap-2-It" and a
radio-controlled hang glider called the
1999, after learning that the company faced failure, Matlin
and Waring entered into a Withdrawal Agreement with Gray
Matter wherein they sold their partnership shares of the
company and forfeited their salaries. The Withdrawal
Agreement also included a provision that assigned Matlin and
Waring's intellectual property and patent rights to Gray
Matter, but entitled them to royalties on the sale of the
products. In the years following the Withdrawal Agreement,
Matlin and Waring frequently brought Gray Matter to
arbitration to enforce their royalty rights.
2002, Gray Matter filed an assignment of the products'
intellectual property rights with the United States Patent
and Trademark Office. Matlin and Waring allege that Gray
Matter filed the assignment without their knowledge and that
the company forged Waring's signature on the paperwork.
The following year, Gray Matter sold assets to Swimways,
including the patent rights to Matlin and Waring's
products. A 2014 binding arbitration between Gray Matter and
the plaintiffs determined that Gray Matter did not assign the
Withdrawal Agreement to Swimways upon sale of the products
and that the plaintiffs were owed no further royalties.
Accordingly, Swimways never paid royalties to Matlin or
Waring. Then in 2016, Spin Master acquired Swimways and the
intellectual property rights at issue here.
2017, Matlin and Waring filed this suit against Swimways,
Spin Master Corp., and Spin Master Ltd. in the Northern
District of Illinois. They argued they were still entitled to
royalties for the products and brought claims of fraud and
breach of contract against Swimways, and unjust enrichment
against all defendants. Swimways is a Virginia corporation
with its principal place of business in Virginia Beach. The
Spin Master defendants are Canadian companies with their
principal places of business in Toronto. None of the
defendants are registered to conduct business in, have
employees in, or have registered agents for service of
process in Illinois.
defendants moved to dismiss Matlin and Waring's complaint
under Federal Rule of Civil Procedure 12(b)(2) for lack of
personal jurisdiction and Rule 12(b)(3) for improper venue.
The defendants submitted declarations from their respective
corporate officers in support of their motion, outlining how
the companies lacked sufficient contact with Illinois to
establish personal jurisdiction. In response to
defendants' motion to dismiss, plaintiffs' counsel
submitted an online purchase receipt from Swimways'
website and a declaration stating that he purchased and
received a single patented product in Illinois. Matlin and
Waring believed that, along with the complaint's
allegations, this purchase of a royalty-generating product
sufficiently established personal jurisdiction over the
district court rejected Matlin and Waring's argument and
granted the defendants' Motion to Dismiss. The court
determined that because Matlin and Waring asserted only
common law claims against the defendants, Illinois law
governed whether it had personal jurisdiction over the
defendants. The court then turned to the Illinois Long Arm
Statute and the state's case law to determine whether
asserting personal jurisdiction over the defendants would
violate their right to due process. Accordingly, it held that
the defendants had insufficient contacts with Illinois to
establish either general or specific personal jurisdiction in
that state. The defendants subsequently filed a Motion for
Sanctions against plaintiffs under Federal Rule of Civil
and Waring appealed the court's dismissal. We note that
defendants' Motion for Sanctions against Matlin and
Waring, pending before the district court, has no impact on
our jurisdiction over Matlin and ...