SIXTH DIVISION
Plaintiffs-Appellees, v. PHILIP MORRIS, INCORPORATED, et
al., Defendants, and B.A.T. INDUSTRIES, P.L.C., Defendant-Appellant. Honorable Richard E. Neville, Judge
Presiding. PRESIDING JUSTICE ZWICK delivered the opinion of
the court: This action, brought on behalf of a State-wide
class of smokers, seeks to recover money spent on tobacco products. Defendant,
B.A.T. Industries, p.l.c. ("BAT Industries") appeals from the circuit court's
order denying its motion to dismiss plaintiffs' complaint as against it for lack
of personal jurisdiction. We granted B.A.T. Industries Petition for Leave to
Appeal under Supreme Court Rule 306(a)(3). 134 Ill. 2d R. 306(a)(3). The record shows that B.A.T. Industries is
incorporated under the laws of England and Wales with its office located in
London, England. Affidavits filed by B.A.T. Industries state that it has never
had more than 185 employees, all located in London. The company is engaged in
the administering of its investment interests as a shareholder in hundreds of
subsidiaries, including defendants Brown & Williamson Tobacco Corporation
("B&W") and British-American Tobacco Company Limited ("BATCo")(which company
changed its name on April 24, 1998 to British-American Tobacco (Investments)
Limited.) Neither of those two subsidiaries has contested personal jurisdiction
in this matter. B.A.T. Industries asserts, without challenge
from plaintiffs, that it has never engaged in the manufacture, sale, advertising
or marketing of tobacco products, nor any other goods or products, in Illinois
or anywhere else. It has no office, place of business, mailing address, bank
account, telephone listing, real estate or personal property in Illinois, does
not pay taxes of any kind in Illinois, is not licensed or qualified to do
business in Illinois, has no employees in Illinois, and does not contract to
supply goods or services in Illinois. Whether plaintiffs can assert jurisdiction over
B.A.T. Industries is initially considered by examining the Illinois long-arm
statute. 735 ILCS 5/2-209 (West 1998). The doing of any of the specific acts
enumerated in section 2-209 furnishes the "minimum contacts" with Illinois to
satisfy due process. Illinois applies a two-step analysis to determine whether
the court acquires personal jurisdiction pursuant to the long-arm statute.
IBM v. Martin Property, 281 Ill. App. 3d 854, 666 N.E.2d 866 (1996).
The first step is to determine if jurisdiction is proper under the specific
language used by section 2-209. If the answer is no, the inquiry ends; but if
jurisdiction if found to be proper under the statute, then we reach the second
step and determine whether the exercise of jurisdiction comports with due
process of law. IBM, 281 Ill. App. 3d at 858. The "commission of a tortious act within this
State" is a sufficient basis on which to base the assertion of personal
jurisdiction under the long-arm statute. 735 ILCS 5/2-209(a)(2)(1998). The
plaintiffs contend that B.A.T. Industries is subject to Illinois jurisdiction as
a result of its joining a conspiracy the purpose of which was to commit tortious
acts in Illinois, as well as violations of the Illinois Consumer Fraud and
Deceptive Business Practices Act. The complaint alleges, for example, that the
defendants engaged in a scheme to conceal the addictive nature of nicotine and
that Brown & Williams, a B.A.T. Industries American subsidiary, sent to
B.A.T. Industries in England certain research and development reports compiled
in the United States on the topic of smoking, disease and addiction, in order to
remove sensitive and inculpatory documents from the United States. This and
other actions undertaken by B.A.T. Industries were meant to deceive Illinois
consumers about the true addictive and harmful nature of tobacco use. Thus,
plaintiffs claim that B.A.T. Industries comes within Illinois' jurisdiction as a
co-conspirator. B.A.T. Industries first challenges the notion
that it can be summoned into court in Illinois merely on the basis of its
alleged participation in a conspiracy to do harm in Illinois. The conspiracy theory of personal jurisdiction
employed by plaintiffs is based on the premise "that the acts of [a] conspirator
in furtherance of a conspiracy may be attributed to the other members of the
conspiracy." Markarian v. Garoogian, 767 F. Supp 173 (N.D.Ill 1991). A
non-resident defendant can be subject to an Illinois court under the theory if:
(1) the defendant was part of an actionable conspiracy, and (2) a co-conspirator
performed a substantial act in furtherance of the conspiracy in Illinois.
Textor v. Board of Regents, 711 F.2d 1387, 1392-93 (7th Cir.
1983). Up until recently, the viability of the
conspiracy theory of jurisdiction in Illinois was unclear. As B.A.T. Industries
argues, our supreme court has indicated some hesitancy in applying it. See
Green v. Advance Ross Electronics Corp., 86 Ill. 2d 431, 427 N.E.2d
1203 (1981), citing Chromium Industries, Inc. v. Mirror Polishing
& Plating Co., 448 F. Supp 544, 552 (N.D.Ill 1978). In Cameron v.
Owens-Corning Fiberglas Corp., 296 Ill. App. 3d 978, 695 N.E.2d 572 (1998),
however, this court endorsed the theory, finding that it was both consistent
with the Illinois long-arm statute and the requirements of due process. In its
ruling, the circuit court held that the conspiracy allegations against the
defendants, including B.A.T. Industries, created a sufficient basis for it to
assert personal jurisdiction under Cameron, even though B.A.T.
Industries was an overseas defendant and had submitted affidavits countering
many of the allegations of the complaint. B.A.T. Industries asks that we review
Cameron, a case which has not yet been considered by a First District
panel, as well as consider the question of whether the circuit court applied
Cameron properly to the facts of the case before it. According to
B.A.T. Industries, the conspiracy theory of jurisdiction is not "well-rooted in
Illinois law"; it is conceptually flawed because it conflates liability and
jurisdiction; it violates the Illinois and federal constitutions by removing the
individualized analysis required by due process; and "courts across the nation"
have recognized its weakness. We summarily reject any argument that the
conspiracy theory of personal jurisdiction should not be adopted simply because
it is novel. The fact that it is not "well-rooted" in Illinois jurisprudence or
even that other courts have rejected it are not sufficient reasons to reject the
theory in the absence of an analysis of its strengths and flaws. It is enough
for us to note that, at the present time, the theory has not been widely
rejected by Illinois courts. As for the logical basis of the theory, we
believe there is more to support its adoption in Illinois than to oppose it.
B.A.T. Industries argues strongly that the theory is defective because it
confuses liability with jurisdiction. To be sure, there is an important
distinction to be drawn between these two concepts. The fact that a defendant
may be liable under Illinois law is not particularly relevant to the question of
whether jurisdiction may be asserted. See Olinski v. Duce, 155 Ill.
App. 3d 441, 443-44, 508 N.E.2d 398 (1987). One of this court's decisions has
specifically cautioned that "the question of personal jurisdiction and personal
liability should not be blurred." Burnhope v. National Mortgage Equity
Corp., 208 Ill. App. 3d 426, 440, 567 N.E.2d (1990). However, the rationale underlying the due
process requirement of "minimum contacts" is that the defendant must be able to
foresee the possibility of being haled into a forum court given its conduct and
connection with the forum state. Burger King Corp. v. Rudzewicz, 471
U.S. 462, 474, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985). To reject the
conspiracy in all cases has the effect of giving those outside Illinois who have
perpetrated an Illinois tort through the agency of others a potentially unfair
immunity from suit. Surely those that join a conspiracy the purpose of which is
to commit fraud or other tort in Illinois should, in some circumstances,
reasonably foresee the possibility of being haled into court here. We therefore
hold that in circumstance where the defendant has actively supported a
conspiracy where one of its members operated in Illinois, there may exist the
"minimum contacts" necessary to fairly assert jurisdiction. We reject the argument that the conspiracy
theory somehow undermines the individualized analysis required by due process.
Defendants who are subjected to conspiracy-based long-arm jurisdiction in
Illinois must necessarily be provided the same due process protections as any
other out-of-state defendant. See R.W. Sawant & Co. v. Allied Programs
Corp., 111 Ill. 2d 304, 311, 489 N.E.2d 1360 (1986)(describing two-part
test for determining personal jurisdiction in Illinois). If the application of
the theory results in a given defendant being denied due process, such a fact
would preclude its use. We turn, therefore, to the question of whether
the record in this case is sufficient to support the assertion of jurisdiction
over B.A.T. Industries under the conspiracy theory. Section 2-301 of the Code of
Civil Procedure (735 ILCS 5/2-301 (West 1998)) provides that prior to filing any
pleading or motion, a defendant may make a special appearance to contest the
assertion of personal jurisdiction by the plaintiff. The procedure created by
section 2-301 differs from the federal procedure governing jurisdiction because,
under the federal procedure, personal jurisdiction is only preliminarily
addressed before trial but may be litigated on the merits at trial. Finnegan
v. Les Pourvoiries Fortier, Inc., 205 Ill. App. 3d 17, 25, 562 N.E.2d 989
(1990). In Illinois, in contrast, section 2-301 contemplates that the trial
court may be required to make a factual determination on whether
personal jurisdiction exists. See TCA International, Inc. v. B&B Custom
Auto, Inc., 299 Ill. App. 3d 522, 531, 701 N.E.2d 105 (1998). Such a
finding may be made on the face of the affidavits presented and on the pleadings
should the plaintiff not make out a prima facie case of jurisdiction
(TCA, 299 Ill. App. 3d at 530), or after a hearing, at which the
circuit court would receive the "evidence adduced upon disputed issues of fact."
735 ILCS 5/2-301(b)(West 1998). The TCA court set out the proper
procedure in addressing a motion to dismiss a complaint for lack of in
personam jurisdiction as follows: TCA, 299
Ill. App. 3d at 531 (emphasis in original). In this case, plaintiffs have sufficiently pled
the elements necessary to create a prima facie case of
jurisdiction. One of the allegations of the complaint states, for example, that
B.A.T. Industries received research and development reports compiled in the
United States on the topic of smoking, disease and addiction from the other
defendants in furtherance of the conspiracy, presumably for the purpose of
shielding those documents from the discovery process. It is our view that if
B.A.T. Industries accepted documents from companies which do business in the
United States (and in Illinois) for the purpose of promoting fraud here, then
B.A.T. Industries should reasonably anticipate being haled into court to defend
itself from those charges. As B.A.T. Industries points out, however, it has
specifically denied each and every allegation made by plaintiffs which would
tend to show B.A.T. Industries committed any act designed to further a
conspiracy in Illinois. The plaintiffs did not file affidavits countering B.A.T.
Industries specific denials of the allegations in the complaint. Well-alleged
facts in an affidavit regarding jurisdiction, which are not contradicted by
counteraffidavit, are taken as true notwithstanding the existence of contrary
averments in the adverse party's pleadings. Kunter v. DeMassa, 96 Ill.
App. 3d 243, 248, 421 N.E.2d 231 (1981). Accordingly, there are no longer any
controverted jurisdictional facts which support the assertion of personal
jurisdiction over B.A.T. Industries. At times plaintiffs seem to take the postion
that B.A.T. Industries should be subject to jurisdiction in Illinois merely
because B.A.T. Industries was a dominant shareholder in its American
subsidiaries or that those subsidiaries are alleged to have acted in furtherance
of a conspiracy within the United States. Yet such claims cannot properly form
the basis for asserting jurisdiction over B.A.T. Industries in the absence of a
showing by plaintiffs that the corporate veil between B.A.T. Industries and its
American subsidiaries should be pierced. See Adcock v. Brakegate, Ltd.,
164 Ill. 2d 54, 62-63, 645 N.E.2d 888 (1994)(requiring some tortious act or
acts performed in furtherance of the agreement by the defendant). In sum, we decline to reject in all cases the
conspiracy theory of jurisdiction because we believe there may be factual
scenarios where the theory is properly applied to an out-of-State defendant.
Nonetheless, we reverse the circuit court and dismiss B.A.T. Industries from the
proceedings in light of the failure of the plaintiffs to counter the affidavits
by B.A.T. Industries which specifically denied that it undertook the actions set
out by plaintiffs in furtherance of the alleged conspiracy. Because B.A.T.
Industries has countered the essential jurisdictional allegations of plaintiffs'
complaint, there are no "controverted jurisdictional facts" at issue (TCA,
299 Ill. App. 3d at 531), and the assertion of jurisdiction over B.A.T.
Industries is improper. For the foregoing reasons, the decision of the
circuit court is reversed. Reversed. CAMPBELL, J., and BUCKLEY, J.,
concur.
BRIAN CLEARY and DAN TRENHOLM,
individually and on behalf of all others similarly situated,
Appeal from the Circuit Court of Cook
County.
"the first question in ruling on a special appearance is whether
plaintiff has established a prima facie case of jurisdiction through
the untraversed pleadings, documents and affidavits. In making this
determination, the circuit court must resolve in favor of the plaintiff (or
other party urging jurisdiction) any conflicts between affidavits.
Concomitantly, at this juncture the court must also accept as true any facts
averred by the defendant (or other party opposing jurisdiction) which have not
been contradicted by an affidavit submitted by plaintiff. [Citation]. If
plaintiff has failed to establish a prima facie case, the inquiry is
at an end and the defendant's motion should be granted. On appeal from an
order dismissing a case on this basis our standard of review would be de
novo, as it would involve 'solely the application of law to undisputed
facts.' [Citation.].
However, in most cases a
determination that plaintiff has established a prima facie case of
jurisdiction will not end the inquiry. If the trial court finds plaintiff has
established a prima facie case, it must next determine whether there
are any controverted jurisdictional facts. If so, it must hold a hearing to
resolve these facts. [Citation]. Such a hearing should be granted in any case
in which facts averred in the defendant's affidavits contradict the relevant
facts in plaintiff's affidavit, i.e., where defendant has established
a prima facie case of a lack of jurisdiction. In those cases in which
the circuit court holds a hearing, and determines issues of fact, we will
reverse the circuit court's result only if it is against the manifest weight
of the evidence. [Citation].