Court Opinion

ID: 2999856
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:58:28.861674+00
Date Added: 2024-06-11T09:35:43.736765
License: Public Domain

In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

No. 06-1117
INTEC USA, LLC,
                                             Plaintiff-Appellant,
                                v.

JONATHAN ENGLE, et al.,
                                          Defendants-Appellees.
                          ____________
        Appeal from the United States District Court for the
          Northern District of Illinois, Eastern Division.
           No. 05 C 6171—Suzanne B. Conlon, Judge.
                          ____________
 ARGUED SEPTEMBER 12, 2006—DECIDED NOVEMBER 2, 2006
                    ____________

  Before POSNER, EASTERBROOK, and SYKES, Circuit Judges.
  EASTERBROOK, Circuit Judge. An arbitration between
Intec USA and a group of corporations controlled by
Raph Engle was settled in 2003. Engle had founded Intec in
1990 and sold a majority interest in 1997. Intec’s new
investors maintained in the arbitration that Engle’s other
ventures (IBEX Industries Ltd. and related firms) were
violating covenants not to compete that Engle had given
in order to induce them to buy out his interest in Intec. The
2003 pact appeared to resolve that dispute. After concluding
that Engle and his firms were not paying any more atten-
tion to the 2003 agreement than to the 1997 covenants,
Intec filed suit in North Carolina, its home state. The 2003
settlement specifies that North Carolina’s law will govern
but does not include a provision consenting to litigate there.
2                                                No. 06-1117

Engle is a citizen of New Zealand, as are three of the seven
corporate defendants. Of the remaining corporations, two
are citizens of Australia and one each of Brazil and the
United Kingdom. They do not do business in North Carolina
and denied that its courts have personal jurisdiction over
them.
  Before the court acted on the defendants’ motion in North
Carolina, Intec filed a new suit in Chicago, where it served
Jonathan Engle (Raph’s son) and the family corporations
with process during a trade show for the food-processing
industry, in which both Intec and the Engle businesses
compete. The district court dismissed this suit on the
ground of forum non conveniens. 2005 U.S. Dist. LEXIS
33365 (N.D. Ill. Dec. 13, 2005). See Piper Aircraft Co. v.
Reyno, 454 U.S. 235 (1981); In re Bridgestone/Firestone,
Inc., 420 F.3d 702 (7th Cir. 2005). North Carolina might be
a convenient forum (if the problems with personal jurisdic-
tion could be solved), and New Zealand might be a conve-
nient forum, but Chicago had nothing to do with the parties
or their dispute, the court concluded. As between Chicago
and New Zealand, the district court thought, New Zealand
is the more appropriate forum: only two of Intec’s potential
18 witnesses, and none of the defendants’, lives within the
range of compulsory process under Fed. R. Civ. P. 45(b)(2),
(c)(3). Many more potential witnesses can be compelled to
appear in New Zealand than in Chicago. All of the defen-
dants have consented to be sued in New Zealand, the base
of the supposedly forbidden activities. Most if not all of
the physical evidence is there. The district judge stressed
that, as Intec wants an injunction, it is appropriate for the
court that issues an injunction to have the on-the-spot
ability to supervise compliance and provide supplemental
relief.
  Intec’s appeal principally rests on the proposition that the
plaintiff’s choice of forum should be respected in all
No. 06-1117                                               3

but extraordinary cases. See Gulf Oil Co. v. Gilbert, 330
U.S. 501, 508-09 (1947). We doubt that this proposition
has controlling force in litigation among firms all of
which trade worldwide. See Kamel v. Hill-Rom Co., 108
F.3d 799, 804 (7th Cir. 1997). Intec has an affiliate (Intec
Pacific) in Oceania, and the materials-handling business is
international; it is not as if a person with no dealings
outside the Great Plains were being dragged halfway
around the world to litigate. Intec says that, because its
claims rest on U.S. law, this nation should do the enforce-
ment to protect domestic firms. Why courts should favor
their citizens in court—and why the first litigant to reach
a courthouse should receive this benefit (if it is one)—are
mysteries. International business transactions depend
on evenhanded application of legal rules; home-town
favoritism is the enemy of commerce.
  As a nation whose policy favors free international trade,
the United States must be prepared to trust the judiciary of
our partners, unless there are grounds to doubt the compe-
tence or honesty of the foreign judicial system. See The
Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) (enforc-
ing agreement to litigate in London); cf. Mitsubishi Motors
Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985)
(enforcing agreement to arbitrate in Japan). Intec does not
offer any reason to think that New Zealand would be a
biased forum for this litigation. North Carolina law is
“foreign” even to a federal court in Chicago (or for that
matter North Carolina). Under Erie R.R. v. Tompkins, 304
U.S. 64 (1938), the federal court’s task is not to made an
independent decision but to predict how the Supreme Court
of North Carolina would understand and apply its own law.
New Zealand would try to do the same. Just as federal
courts routinely enforce the laws and judicial decisions of
other jurisdictions, so do the courts of other nations. See
Omron Healthcare, Inc. v. Maclaren Exports Ltd., 28 F.3d
600 (7th Cir. 1994). Intec has not cited any decision imply-
4                                                No. 06-1117

ing that New Zealand is unwilling to enforce choice-of-law
clauses that specify other jurisdictions’ norms or that it is
hostile to any of the substantive rules of North Carolina’s
law. (Indeed, counsel for Intec revealed at oral argument
that he has done no research and hasn’t a clue how New
Zealand handles disputes that arise out of international
trade.)
  Before we decide just how much weight to give to the
plaintiff’s choice of forum, however, we must attend to
subject-matter jurisdiction, for if there is none then the suit
must be dismissed without regard to whether Chicago
would be the most convenient forum. It is an open ques-
tion whether a district court may dismiss on forum non
conveniens grounds without deciding whether it has subject-
matter jurisdiction. See Malaysia International Shipping
Corp. v. Sinochem International Co., 436 F.3d 349 (3d Cir.
2006), cert. granted, 2006 U.S. LEXIS 5422 (Sept. 26, 2006).
The majority in Sinochem concluded that jurisdictional
issues always must be resolved ahead of all others. It relied
principally on Steel Co. v. Citizens for A Better Environ-
ment, 523 U.S. 83 (1998), and Ruhrgas AG v. Marathon Oil
Co., 526 U.S. 574 (1999), for the proposition that “jurisdic-
tional” decisions must precede all others. Judge Stapleton
replied in dissent that there are many reasons for not
adjudicating—lack of subject-matter jurisdiction, lack of
personal jurisdiction, lack of ripeness, abstention, and
forum non conveniens, among others. He maintained that
jurisdiction is vital only if the court proposes to issue a
judgment on the merits. Ruhrgas says as much, 526 U.S. at
584-85, though in dictum. (Its holding is that there is no
priority between subject-matter jurisdiction and personal
jurisdiction.)
  Judge Stapleton’s view is the norm among federal appel-
late courts. See, e.g., Monegasque de Reassurances S.A.M.
v. Nak Naftogaz of Ukraine, 311 F.3d 488 (2d Cir. 2002); In
re Papandreou, 139 F.3d 247 (D.C. Cir. 1998). It seems to us
No. 06-1117                                                  5

the right approach; we expect Sinochem to turn Ruhrgas’s
dictum into a holding. Unlike the majority in Sinochem, we
do not read Kamel as committing this court to a rule that
subject-matter jurisdiction always must be resolved ahead
of forum non conveniens. But to avoid the need for further
proceedings should the Supreme Court affirm in Sinochem,
we turn to subject-matter jurisdiction. This is prudent in
any event, because Intec may be tempted to try still a third
federal forum (perhaps at the next trade show in Las
Vegas), and if subject-matter jurisdiction is absent that
maneuver must fail.
  Intec is a limited liability company, which has the
citizenship of each of its members. See Cosgrove v.
Bartolotta, 150 F.3d 729 (7th Cir. 1998); cf. Carden v.
Arkoma Associates, 494 U.S. 185 (1990) (all associations
other than corporations have the citizenship of each partner
or member). Intec has five members, all natural persons,
and it alleged that all five are citizens of North Carolina.
Yet one of them, John Smith, is a citizen of New Zealand. It
is common ground among the parties (at least, it became
common ground once we directed them to file supplemental
memoranda after oral argument) that, if Smith is treated as
a citizen of New Zealand, then Intec is a citizen of both
North Carolina and New Zealand. Subject-matter jurisdic-
tion then would be lacking, first because citizens of New
Zealand would be on both sides (so complete diversity, see
Strawbridge v. Curtiss, 3 Cranch 267 (1806), would be
missing), and second because 28 U.S.C. §1332(a)(2) does not
in any event extend to litigation in which all of the litigants
are aliens. See Hodgson v. Bowerbank, 5 Cranch 303 (1809);
Mossman v. Higginson, 4 Dall. 12 (1800). (For this purpose
Intec would be “an alien” in the same sense that a firm
incorporated in Delaware, with its principal place of
business in North Carolina, is a citizen of both states.)
  Intec rests its position on the trailing, unnumbered
sentence in §1332(a): “For the purposes of this section,
6                                               No. 06-1117

section 1335, and section 1441, an alien admitted to the
United States for permanent residence shall be deemed
a citizen of the State in which such alien is domiciled.”
Smith’s immigration status is that of an alien “admitted
to the United States for permanent residence”, so this
clause applies to him. But what does it mean? It could mean
that a permanent-resident alien “shall be deemed a citizen
[exclusively] of the State in which such alien is domiciled.”
Or it could mean that the alien “shall be deemed a citizen
of the State in which such alien is domiciled [in addition to
his foreign citizenship].” If the former, then Intec is a
citizen of North Carolina only, and federal jurisdiction is
proper; if the latter, then Intec has dual citizenship, and
subject-matter jurisdiction is missing.
  The first appellate court that addressed the issue thought
that the language is “plain” and admits only of the former
meaning: a permanent-resident alien is deemed to be a
citizen of the state where he is domiciled, and not of his
native nation. Singh v. A.G. Daimler-Benz, 9 F.3d 303 (3d
Cir. 1993). The court recognized that the language origi-
nated in a proposal to the Judicial Conference of the United
States, which asked Congress to enact it as a means to
curtail diversity jurisdiction. See Report of the Proceedings
of the Judicial Conference of the United States 76-77 (Sept.
14, 1988). Without this “deemer” clause, federal jurisdiction
would extend to a suit between a citizen of North Carolina
and his next-door neighbor, who happened to be a citizen of
New Zealand even though admitted for permanent resi-
dence and domiciled in North Carolina. The Judicial
Conference thought that an unnecessary and unwise use of
the limited federal adjudicatory capacity. Senator Heflin, a
member of the Federal Courts Study Committee, introduced
this language as part of a package of uncontroversial
amendments, which immediately passed without discus-
sion. 134 Cong. Rec. 31,050 (1988); id. at 31,054 (Senator
Heflin’s section-by-section analysis showing this language’s
No. 06-1117                                                7

derivation); id. at 31,067 (passed by unanimous consent).
But this background is irrelevant, Singh thought: the
statute is plain, and when the text is clear legislative
history doesn’t count. See, e.g., Exxon Mobil Corp. v.
Allapattah Services, Inc., 545 U.S. 546, 125 S. Ct. 2611,
2625-27 (2005).
  Yet this statute is not self-contained. It does not say
whether the deemed citizenship replaces, or adds to, the
alien’s actual citizenship; it needs something more, such
as the language in brackets in our two possible completions.
Moreover, the background of this amendment is not the sort
of legislative history that committees or individual Mem-
bers of Congress slip into the record late at night. The
provenance of language, such as the fact that one or
another clause was amended in response to a judicial
interpretation that the sitting Congress wanted to alter,
differs from a potentially self-serving gloss put on language
by a Member or a committee. See Rivers v. Roadway
Express, Inc., 511 U.S. 298 (1994).
   Any text takes color from the circumstances that produce
it. When these circumstances precede the legislative process
and are objectively ascertainable by every legislator and
judge, no interest group has an opportunity to slant inter-
pretation in its favor by putting spin on language that other
people would understand quite differently. Even those
Justices resolutely opposed to reliance on what Members or
committees say about a text while it is under consideration
see no problem using history of this kind to decode an
ambiguity. E.g., Jones v. R.R. Donnelley & Sons Co., 541
U.S. 369, 377-83 (2004) (unanimous opinion tracing the
steps that led to 28 U.S.C. §1658); West Virginia University
Hospitals v. Casey, 499 U.S. 83, 92-97 (1991) (interpreting
a statute in light of the way courts had interpreted similar
language before the new law’s enactment).
  It is possible to imagine complications. Suppose, for
example, that Senator Heflin had announced that he
8                                                No. 06-1117

understood the language to accomplish something other
than the Judicial Conference’s objective, and that the House
had voted for the bill in ignorance of the Senator’s view. Cf.
Continental Can Co. v. Chicago Truck Drivers Pension
Fund, 916 F.2d 1154 (7th Cir. 1990) (discussing how to
proceed when Members of the two Chambers
put incompatible spins on statutory text). But that’s not
what happened.
   When the meaning of this sentence in §1332(a) came
under appellate consideration a second time, the court
held that the law’s genesis could be considered. Because
it unambiguously shows that the text’s function is to add a
(deemed) domestic citizenship to an alien who other-
wise would come within the jurisdiction under §1332(a)(2)
or §1332(a)(3), the court rejected Singh and held that the
alien retains his national citizenship for purposes of
§1332(a). See Saadeh v. Farouki, 107 F.3d 52 (D.C. Cir.
1997).
  No appellate court has returned to the subject in detail
since Saadeh. In passing, however, we cited Saadeh and
remarked this language gives every permanent-resident
alien two citizenships. Karazanos v. Madison Two Associ-
ates, 147 F.3d 624, 627 (7th Cir. 1998). See also John B.
Oakley, Recent Statutory Changes in the Law of Federal
Jurisdiction and Venue: The Judicial Improvements Acts of
1988 and 1990, 24 U.C. Davis L. Rev. 735, 741-45 (1991).
Intec observes that the question had not been briefed in
Karazanos and it asks us to revisit the subject in light of
Singh, which Karazanos did not mention. Fair enough. We
have reconsidered—and, for reasons that by now should be
apparent, we conclude that Singh is wrong and Karazanos
right.
 Whether Saadeh also is right is a more difficult question.
The D.C. Circuit stated that the 1988 amendment should be
understood so that it always defeats diversity jurisdiction.
No. 06-1117                                                 9
107 F.3d at 57-58. Yet on the reading we adopted in
Karazanos (and reaffirm today) the 1988 amendment could
support jurisdiction. Suppose A is a citizen of
Mexico admitted for permanent residence and domiciled
in California, B a citizen of New York, and C a citizen of
Canada. Under pre-1988 law, A could sue B under 28
U.S.C. §1332(a)(2) (which provides jurisdiction over suits
between “citizens of a State and citizens or subjects of a
foreign state”) but could not add C as a defendant, because
then aliens would be on both sides, and would not come
within §1332(a)(3) (which provides jurisdiction over suits
between “citizens of different States and in which citizens
or subjects of a foreign state are additional parties”). After
the 1988 amendment, however, the imputed state citizen-
ship of A would bring the suit A v. B and C within
§1332(a)(3).
  That may be a rare occurrence, but having selected
the best reading of the text (that permanent-resident aliens
have both state and foreign citizenship) a court should be
willing to follow through logically. The belief behind the
drafting choices made in 1988 was that dual citizenship
usually would move cases to state court (as does dual
corporate citizenship), but like other language it may have
unanticipated effects at the fringes. See, e.g., Dodd v.
United States, 545 U.S. 353 (2005). Congress passed, and
the President signed, concrete language, not the Judicial
Conference’s raw intent or expectations. Cf. Premier
Electrical Construction Co. v. National Electrical Contrac-
tors Ass’n, Inc., 814 F.2d 358 (7th Cir. 1987).
  Intec loses under both our reading and the D.C. Circuit’s,
however. Its suit against these defendants cannot pro-
ceed in any federal court. The judgment of the district court
is vacated, and the case is remanded with instructions to
dismiss for lack of subject-matter jurisdiction.
10                                        No. 06-1117

A true Copy:
      Teste:

                    ________________________________
                    Clerk of the United States Court of
                      Appeals for the Seventh Circuit

               USCA-02-C-0072—11-2-06