Rebel Hosp. v. Rebel Hosp.

REBEL HOSPITALITY LLC, Plaintiff, v. REBEL HOSPITALITY LLC, Defendant.

No. 21 C 5132

United States District Court, N.D. Illinois, Eastern Division

March 16, 2022

MEMORANDUM OPINION AND ORDER

RONALD A. GUZMÁN JUDGE

For the reasons explained below, Defendant's motion to dismiss for lack of jurisdiction is granted, and Plaintiff's request to delay dismissal while Plaintiff continues jurisdictional discovery is denied.

BACKGROUND

Plaintiff Rebel Hospitality LLC (Rebel IL), an Illinois limited liability company principally operating from Chicago Illinois, bills itself as “a leading provider of hotel and resort services, real estate development services in the field of hotels and resorts, hotel and resort management and advisory services, and other services related to the hotel and resort industry.” (ECF No. 1, Compl., ¶¶ 5-6.) Rebel IL has used the mark Rebel Hospitality since at least October 2014. (Id. ¶ 11.) Defendant Rebel Hospitality LLC (Rebel DE) is a Delaware limited liability company with individual members who are residents of New York. (ECF No. 20, Sparacino Aff., ¶ 5-6.) Rebel DE allegedly “provides hotel and resort services, real estate development services in the field of hotels and resorts, hotel and resort management and advisory services and other services related to the hotel and resort industry.” (Compl. ¶¶ 7-8.) Both Rebel IL and Rebel DE applied with the United States Patent and Trademark Office to register the service mark REBEL HOSPITALITY, and their applications remain pending. (Id. ¶¶ 11 10.) Third parties have contacted Rebel IL regarding actions or events related to Rebel DE. (Id. ¶¶ 38-41.) Rebel IL brought this lawsuit claiming unfair competition and false designation of origin under the Lanham Act, common law trademark infringement and unfair competition, and violations of Illinois law. Rebel DE answered the complaint, raising as an affirmative defense a lack of personal jurisdiction over it. (ECF No. 8, Answer, ¶ 89.) Rebel DE then filed this motion seeking dismissal for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(c). (ECF No. 20, Def. Mot. Dismiss.)

DISCUSSION

Rebel DE argues that the Court lacks personal jurisdiction over it because it has “no contacts in or with the state of Illinois, ” and that the only connection Plaintiff alleges is its own residence and injury in Illinois. (Def Mot. Dismiss, at 1.) Rebel DE supports its motion with an affidavit. Rebel IL opposes the motion but “[i]n the alternative” seeks “time [] to complete limited jurisdictional discovery and supplement its response.” (ECF No. 24, Mem. Opp'n Def.'s Mot. Dismiss.)

I. Timeliness and Procedural Posture of Rebel DE's Motion

The Court must first address the timing and vehicle for Rebel DE's motion. Federal Rule of Civil Procedure 12(b) permits parties to assert certain defenses, including a lack of personal jurisdiction, by motion, and provides that such a motion “must be made before pleading if a responsive pleading is allowed.” Fed.R.Civ.P. 12(b), (b)(2). Under Rule 12(h)(1), a party waives the defenses listed in Rule 12(b)(2)-(5) if the party “omit[s] [the defense] from” a previously filed motion invoking one of the defenses listed in Rule 12(b) if the omitted defense or objection was available to the party at the time of the earlier motion, or the party “fail[s] to either: (i) make it by motion under this rule; or (ii) include it in a responsive pleading or in an amendment allowed by Rule 15(a)(1) as a matter of course.” Fed.R.Civ.P. 12(g)(2), (h)(1). “Other[]” defenses, though, including “[f]ailure to state a claim upon which relief can be granted, to join a person required by Rule 19(b), or to state a legal defense to a claim may be raised: (A) in any pleading allowed or ordered under Rule 7(a); (B) by a motion under Rule 12(c); or (C) a trial.” Fed.R.Civ.P. 12(h)(2).

Here, Rebel DE did not file a motion invoking any defense listed in Rule 12(b) prior to filing a responsive pleading. Rebel DE answered the complaint on November 15, 2021, including as an affirmative defense that the Court lacked personal jurisdiction over it. (ECF No. 8, Answer.) On December 13, 2021, the parties signed a joint status report, in which they noted that Defendant had raised that defense. (ECF No. 15, Report of Rule 26(f) Planning Meeting, at 2.) On December 15, 2022, the Court set a fact-discovery close date of June 6, 2022. (ECF No. 16.) Rebel IL's counsel reported on the progress of discovery at a January 11, 2022 status hearing before the magistrate judge, at which Rebel DE did not appear. (ECF No. 19, Min. Entry of Jan. 11, 2022.)

On January 13, 2022, Rebel DE moved to dismiss for lack of personal jurisdiction under Rule 12(c), which provides that, “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Rebel DE devoted more than a page of its motion to arguing that its “motion is procedurally proper and timely” before analyzing personal jurisdiction on the merits. Rebel IL, though, did not challenge the procedural propriety or timing of Rebel DE's motion and thus has forfeited any argument on those grounds.^[1] Walker v. Weatherspoon, 900 F.3d 354, 357 (7th Cir. 2018) (finding that appellees forfeited their rights under an appellate rule by characterizing the appeal as early instead of arguing that it was late under the rule).

II. Merits of Personal Jurisdiction Defense

A complaint need not include facts alleging personal jurisdiction, but once a defendant moves to dismiss the complaint on that ground, the plaintiff bears the burden of demonstrating the existence of jurisdiction. Purdue Rsch. Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When the Court rules on the motion without a hearing, the plaintiff's burden is to establish a prima facie case of personal jurisdiction. Kipp v. Ski Enter. Corp. of Wis., 783 F.3d 695, 697 (7th Cir. 2015). “The parties may submit affidavits to support their arguments for personal jurisdiction, and ‘once the defendant has submitted affidavits or other evidence in opposition to the exercise of jurisdiction, the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the exercise of jurisdiction.'” Tower Commc'ns Expert, LLC v. TSC Constr., LLC, No. 18 C 2903, 2018 WL 5624268, at *4 (N.D. Ill. Oct. 30, 2018) (citing Purdue Rsch. Found., 338 F.3d at 783).

“The Lanham Act does not authorize nationwide service of process [], so a federal court sitting in Illinois may exercise jurisdiction over [Rebel DE] in this case only if it is authorized by Illinois law and by the United States Constitution.” be2 LLC v. Ivanov, 642 F.3d 555, 558 (7th Cir. 2011) (citations omitted). “Because Illinois permits personal jurisdiction if it would be authorized by either the Illinois Constitution or the United States Constitution, the state statutory and federal constitutional requirements merge.” uBID, Inc. v. GoDaddy Grp., Inc., 623 F.3d 421, 425 (7th Cir. 2010) (citing, inter alia, 735 ILCS 5/2-209(c)).

Personal jurisdiction can be general or specific, depending on the extent of the defendant's contacts with the forum state. Id. Although Rebel IL does not begin by specifying the basis for claiming personal jurisdiction, it does not argue that Rebel DE is “‘at home' in Illinois, ” see Hub Group, Inc. v. Go Hub Group Holdings Corp., No. 19 C 7648, 2021 WL 4264349, at *3 (N.D. Ill. Sept. 20, 2021), and uses language drawn from the test for specific jurisdiction. Specific jurisdiction refers to jurisdiction over a defendant in a suit arising out of or related to the defendant's contacts with the forum; those contacts must be “directly related to the conduct pertaining to the claims asserted.” Brook v. McCormley, 873 F.3d 549, 552 (7th Cir. 2017). Although the formulations of the standard for establishing specific personal jurisdiction vary, they condense into three requirements: (1) the defendant must have purposefully availed itself of the privilege of conducting business in the forum state or purposefully directed its activities at the state; (2) the alleged injury must have arisen from the defendant's forum-related activities; and (3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice. Felland v. Clifton, 682 F.3d 665, 673 (7th Cir. 2012).

The parties dispute whether Rebel DE has purposefully availed itself of the privilege of conducting business in Illinois or purposefully directed its activities at Illinois. For intentional torts such as those alleged here, see Chloè v. Queen Bee of Beverly Hills, LLC, 616 F.3d 158, 171 (2d Cir. 2010) (“Trademark infringement is . . . a tort.”), the purposeful-direction inquiry has three prongs, requiring “(1) intentional conduct (or ‘intentional and allegedly tortious' conduct); (2) expressly aimed at the forum state; (3) with the defendant's knowledge that the effects would be felt-that is, the plaintiff would be injured-in the forum state.” Tamburo v. Dworkin, 601 F.3d 693, 703 (7th Cir. 2010).

Rebel IL devotes much of its opposition to where and how it was injured, but the dispute centers on whether Rebel DE “expressly aimed” its conduct at Illinois. The Court thus considers whether Rebel DE's suit-related conduct is connected to Illinois in a meaningful way. Walden v. Fiore, 571 U.S. 277, 286-90 (2014); Ariel Invs., LLC v. Ariel Cap. Advisors LLC, 881 F.3d 520, 522 (7th Cir. 2018). “The connection must be of the defendant's creation, not of the plaintiff's.” Ariel, 881 F.3d at 522. “It is not enough that a defendant know that any injury resulting from alleged tortious conduct would be felt in the forum state.” Green Light Nat'l, LLC v Kent, No. 17 C...