Kosar v. Columbia Sussex Mgmt.

OPINION AND ORDER

SARA L. ELLIS UNITED STATES DISTRICT JUDGE

After sustaining injuries from a trip and fall at an event at the Renaissance Dallas Addison Hotel (the “Hotel”) in Addison, Texas, Plaintiff Richard Kosar, an Illinois resident, filed suit against the owner and operator of the Hotel (Columbia Sussex Management, LLC (“CSM”) and Marriot International, Inc. (“Marriot”)^[1]) and the organizers of the event (KEE Meeting and Events (“KEE”) and Rodokop Group LLC (“Rodokop”)). In response, CSM and

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Marriot (the “Hotel Defendants”) filed a third-party complaint against Kosar's employer, Circassia Pharmaceuticals, Inc. (“Circassia”), seeking indemnification and/or contribution. Now, the Hotel Defendants move the Court to determine that Texas substantive law applies to the entire lawsuit and Circassia moves to dismiss the third-party complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2). Because the Hotel Defendants have failed to demonstrate conflicts between Illinois and Texas law other than with respect to fault allocation, the Court finds that Texas law applies to fault allocation issues but does not make a choice of law determination with respect to any other issue at this time. And because the Hotel Defendants have not established a prima facie case of personal jurisdiction with respect to Circassia, the Court dismisses the third-party complaint against Circassia.

BACKGROUND

Circassia is a foreign company incorporated in Delaware that “market[s] and sell[s] a pharmaceutical chronic obstructive pulmonary disease (COPD) product, ” Doc. 68-1 ¶ 4, in the United States, Europe, and Asia. The company has offices in at least five countries, including the U.S. In August 2016, Circassia moved its U.S. offices from Chicago, Illinois to Morrisville, North Carolina. Thereafter, Circassia continued to employ four people who worked remotely from their homes in Illinois, including Kosar. These employees hold the titles of Regional Sales Representative, Territory Business Manager, and Territory Business Representative and have “sales and/or sales management responsibilities [for Circassia's products] in multiple states, including, Illinois.” Doc. 95-2 at 6. Starting in June 2017, Circassia sublet the remainder of its lease for the Chicago office to an unaffiliated company. Circassia distributes its “products nationwide and co-ordinate[s] the activities of [its] field-based commercial teams” from its U.S. headquarters in North Carolina. Doc. 101-1 at 7.

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As of the filing of Kosar's complaint, Circassia contracted with a company to utilize four storage facilities in Illinois “for the purposes of storing samples of COPD products and marketing materials for its sales representatives residing in Illinois.” Doc. 95-2 at 8. It also had a relationship with a “third-party logistics warehouse” that “distribut[es] Circassia's COPD products throughout the United States, ” but it is unaware if that company stores any products in Illinois. Id. at 13. Circassia “sends marketing materials via email to a national list, which may include Illinois recipients, ” but does not send physical marketing materials to Illinois. Id. at 19. Circassia also had a business relationship with two Illinois companies for the “marketing, sale or distribution of its products in Illinois.” Id. at 9-11. As of January 6, 2020, Circassia had fifty-two customers in Illinois for its COPD products. However, Circassia is unaware what percentage of total sales revenue these customers represent because it “does not maintain such specific sales revenue information in the ordinary course of business.” Id. at 17.

On or about October 3, 2017, Circassia entered into a Group Sales Contract (the “Contract”) with Hotel representatives that set forth the terms and conditions for the National Sales Meeting that Circassia planned to hold at the Hotel in January 2018. CSM, the manager of the Hotel, is a foreign limited liability company with its principal place of business in Kentucky. Marriot, the franchisor of the Hotel, is a Delaware corporation with its principal place of business in Maryland. Circassia employees negotiated and executed the Contract from Circassia's headquarters in North Carolina. Performance of the Contract was to take place in Texas and/or North Carolina. The Contract had an “Indemnification and Hold Harmless” provision that required Circassia to indemnify the Hotel “for any claim . . . by third parties arising out of the performance of either party's obligations pursuant to this Contract.” Doc. 58 at

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2-3. The Contract also required Circassia to obtain executed releases of liability from each third-party “in charge of providing installation and dismantling services” at the event. Id. at 3.

Circassia hired KEE and Rodokop, two Texas limited liability companies with principal places of business in Texas, to provide decor and games for the event but failed to obtain executed releases of liability from them. KEE and Rodokop provided two light-up cornhole sets that were present during the welcome reception for Circassia's National Sales Meeting on January 8, 2018. Kosar attended this reception, allegedly tripped over one of the cornhole sets, and sustained injuries. Kosar, an Illinois resident, first filed his complaint in the Circuit Court of Cook County on January 6, 2020. On March 11, 2020, CSM removed the case to this Court. On February 3, 2021, the Hotel Defendants filed crossclaims for contribution and/or indemnification against KEE and Rodokop and a third-party complaint for contribution and/or indemnification against Circassia.

ANALYSIS

I. Choice of Law Determination

Pursuant to Erie Railroad Co. v. Tompkins, federal courts with diversity jurisdiction must apply state law with respect to substantive matters. 304 U.S. 64, 78 (1938). To determine which state's substantive law applies, the Court must utilize the forum state's, Illinois', choice of law rules. Sosa v. Onfido, Inc., 8 F.4th 631, 637 (7th Cir. 2021). “Under Illinois choice-of-law rules, forum law is applied ‘unless an actual conflict with another state's law is shown, or the parties agree that forum law does not apply.'” Id. (citation omitted). The Hotel Defendants ask the Court to apply Texas substantive law to the entire lawsuit, arguing that Texas law substantively differs from Illinois law with respect to fault allocation and that Texas has the most significant relationship with the case. KEE, Rodokop, and Circassia do not object to the Hotel Defendants'

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motion. Kosar does not object to the application of Texas substantive law to joint and several liability and contribution but “objects to applying any other aspects of Texas substantive law to this case.” Doc. 79 ¶ 1. Because all parties agree that Texas law should apply to the issues of joint and several liability and contribution, the Court will apply Texas substantive law to these fault allocation issues.

But this does not end the inquiry because the Hotel Defendants ask the Court to apply Texas law to all the issues within the lawsuit, while Kosar argues that the Hotel Defendants have not properly identified how Texas law conflicts with Illinois law on any other potentially relevant issues. Illinois courts follow the doctrine of depecage, which allows for “cutting up a case into individual issues, each subject to a separate choice-of-law analysis.” Intercon Sols., Inc. v. Basel Action Network, 969 F.Supp.2d 1026, 1035 (N.D. Ill. 2013) (quoting Townsend v. Sears, Roebuck & Co., 227 Ill.2d 147, 161 (2007)). “Before the court is required to make a choice-of-law determination, the moving party must establish that ‘there is a conflict between Illinois law and the law of another state such that a difference in law will make a difference in the outcome.'” Mesa Lab 'ys., Inc. v. Fed. Ins. Co., 994 F.3d 865, 867-68 (7th Cir. 2021) (citation omitted). The Hotel Defendants argue that Kosar bears the burden of “indicat[ing] the issues to which Texas law should not apply, ” Doc. 86 at 4, but under Illinois choice of law rules, “[t]he party seeking the choice-of-law determination bears the burden of demonstrating a conflict, ” Bridgeview Health Care Ctr., Ltd. v. State Farm Fire & Cas. Co., 2014 IL 116389, ¶ 14. Because the Hotel Defendants have failed to identify any conflict between Texas and Illinois law other than with respect to fault allocation, the Court need not make a choice of law determination with respect to any other issue at this time. See id. (“A choice-of-law

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determination ‘is required only when a difference in law will make a difference in the outcome.'” (citation omitted)). The Court will address any other conflicts as they arise.

II. Personal Jurisdiction over Circassia

A motion to dismiss under Rule 12(b)(2) challenges the Court's jurisdiction over a party. Fed.R.Civ.P. 12(b)(2). When a defendant raises a Rule 12(b)(2) challenge, “the plaintiff bears the burden of demonstrating the existence of jurisdiction.” Curry v. Revolution Lab'ys., LLC, 949 F.3d 385, 392 (7th Cir. 2020) (citation omitted). If the Court rules on the Rule 12(b)(2) motion without an evidentiary hearing, the plaintiff need only establish a prima facie case of personal jurisdiction. Id. at 392-93; N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014). In resolving a Rule 12(b)(2) motion, the Court “accept[s] as true all well-pleaded facts alleged in the complaint, ” Felland v. Clifton, ...