NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with Fed. R. App. P. 32.1



# United States Court of Appeals

For the Seventh Circuit Chicago, Illinois 60604
Argued September 16, 2014 Decided September 18, 2014



### Before

W ILLIAM J. B AUER
, Circuit Judge

R ICHARD A. P OSNER
, Circuit Judge

F RANK H. E ASTERBROOK
, Circuit Judge

No. 13

- 3713

I N S TEP S OFTWARE LLC

, Plaintiff

- Appellee

,

v

.

I NSTEP (B EIJING ) S OFTWARE C O
., L TD

. , Defendant

- Appellant

. Appeal from the United

States District Court for the Northern District of Illinois,

Eastern Division.

No. 11 C 3947 John W. Darrah

, Judge

.

Order

InStep Software asked the district court to declare that Instep (Beijing) Software is no longer authorized to sell or license InStep’s products

. The district court entered jud gment in InStep’s favor, and Instep (Beijing) has appealed.

As the names sugge st, the two parties are related: InStep is among the equity inve stors in Instep (Beijing)

. This means that the requirements of subject

- matter jurisdiction under 28 U.S.C. §1332(a)(2) are satisfied only if Instep (Beijing) is treated as having it s

own citizenship, independent of the citizenships of its investors. If the citizenships of InStep’s members (for InStep is itself not a corporation) are imputed to Instep (Beijing)

, complete diversity is missing.No. 13

- 3713 Page 2

In the district court, InStep argued, and the judge found, that Instep (Beijing) is a ci tizen of China (and only China) because Chinese law treats it as a “juridical person.”

Our decision in Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equipment Co

., No. 12

- 3124 ( 7th Cir. July 22, 2014)

, shows that this approach is untenable.

That leaves the question whether Instep (Beijing) has attributes sufficiently similar to those of a corporation organized in the United States. See, e.g., BouMatic, LLC v. Idento Operations, BV , No. 13

- 2300 (7th Cir. July 22, 2014). At oral argument counsel disagree d about just what attributes Instep (Beijing) possesses

— could not agree, indeed, on what kind of entity it is as a matter of Chinese law. Instep (Beijing) calls itself a “common law joint venture.” InStep ca lls it both a “limited liability company” and a “Chinese

– fo reign equity joint venture.”

Instead of attempting to resolve factual disputes in this court, we think it prudent to remand so that the district court may determine, in the first instance, (a) wh at kind of

business form Instep (Beijing) has ; (b) what attributes such a form possesses under Ch inese law (for example, does it have alienable shares, and what role does the gover nment of China play in determining the venture’s duration and ownership?); a nd (c) whether a business organization of this kind should be treated as a corporation for the purpose of §1332, given the analysis in Fellowes and BouMatic

.

If the district court finds that Instep (Beijing) is not a corporation, the case must be

dismissed for lack of subject

- matter jurisdiction. If Instep (Beijing) is a corporation, the judgment on the merits should be reentered. Any appeal from the new decision will r eturn to this panel.

V ACATED AND R EMANDED