No. 12-­--3124 FELLOWES, INC v. Changzhou Xinrui Fellowes Office Equipment Company Ltd

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12-­‐‑3124
FELLOWES, INC.,
Plaintiff-­‐‑Appellee,
v.
CHANGZHOU XINRUI FELLOWES OFFICE EQUIPMENT COMPANY
LTD.,
Defendant-­‐‑Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 11 C 6289 — Ronald A. Guzmán, Judge.
____________________
ARGUED APRIL 2, 2014 — DECIDED JULY 22, 2014
____________________
Before EASTERBROOK, MANION, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. This suit presents a claim
that defendant (Changzhou Fellowes for short), a business
established under the law of China, broke a promise to
plaintiff (Fellowes for short). As the names suggest, the
businesses are related. One investor-­‐‑member of Changzhou
Fellowes is Hong Kong Fellowes, which despite its name has
its principal place of business in Illinois. Fellowes filed this

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2 No. 12-­‐‑3124
breach-­‐‑of-­‐‑contract suit under the international diversity ju-­‐‑
risdiction, 28 U.S.C. §1332(a)(2), a step that is proper only if
Changzhou Fellowes has its own citizenship, independent of
its investors or members. If it is a limited liability company,
by contrast, then it has the citizenship of each member, see
Cosgrove v. Bartolotta, 150 F.3d 729 (7th Cir. 1998), and the Il-­‐‑
linois citizenship of its member Hong Kong Fellowes pre-­‐‑
vents the complete diversity necessary to the use of §1332,
for Fellowes also is a citizen of Illinois.
Corporations are persons with two citizenships, which 28
U.S.C. §1332(c)(1) specifies as the jurisdiction of incorpora-­‐‑
tion plus the principal place of business. (Section 1332(c) was
amended in 2012; we apply the prior version, see Mas Capi-­‐‑
tal, Inc. v. Biodelivery Sciences International, Inc., 524 F.3d 831
(7th Cir. 2008), because the amended text applies only to
suits begun after January 5, 2012. Nothing turns on the dif-­‐‑
ference, for both versions impute Illinois citizenship to both
Fellowes and Hong Kong Fellowes.)
Other collective entities have the citizenship of each
member or equity investor. See, e.g., Carden v. Arkoma Asso-­‐‑
ciates, 494 U.S. 185 (1990). That norm was established in
Chapman v. Barney, 129 U.S. 677 (1889) (a joint stock company
has the citizenship of every investor), and reiterated in
Steelworkers v. R.H. Bouligny, Inc., 382 U.S. 145 (1965) (a labor
union has the citizenship of every member). This approach is
often stated as the rule that only a corporation has citizen-­‐‑
ship determined independently of the investors’ citizenship.
Without discussing subject-­‐‑matter jurisdiction, the dis-­‐‑
trict court entered a preliminary injunction in favor of Fel-­‐‑
lowes—and this despite the court’s assumption that Chang-­‐‑
zhou Fellowes has yet to be served with process. 2012 U.S.

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No. 12-­‐‑3124 3
Dist. LEXIS 115708 (N.D. Ill. Aug. 16, 2012). Changzhou Fel-­‐‑
lowes contends that the district court lacks both subject-­‐‑
matter jurisdiction over the case and personal jurisdiction
over it. We start and end with subject-­‐‑matter jurisdiction.
Deciding whether a business enterprise based in a for-­‐‑
eign nation should be treated as a corporation for the pur-­‐‑
pose of §1332 can be difficult. See, e.g., White Pearl Inversiones
S.A. (Uruguay) v. Cemusa, Inc., 647 F.3d 684 (7th Cir. 2011).
Businesses in other nations may have attributes that match
only a subset of those that in the United States distinguish a
“corporation”—a business with indefinite existence, person-­‐‑
hood (the right to contract and litigate in its own name), lim-­‐‑
ited liability for equity investors, and alienable shares,
among other features—from forms such as the limited liabil-­‐‑
ity company, the limited partnership, and the business trust.
Fellowes’s complaint calls Changzhou Fellowes a “lim-­‐‑
ited liability company”. Changzhou Fellowes describes itself
that way too. The parties agree that it has “members” (like
an LLC or partnership in the United States) rather than
“shareholders,” and that memberships are not alienable. It is
like a general partnership in the latter respect. It is unneces-­‐‑
sary to consider its other attributes, because Fellowes has
greatly simplified the task by pinning its entire argument on
a single proposition: That every “juridical person”—that is,
every entity that can own property, make contracts, transact
business, and litigate in its own name—is a corporation for
the purpose of §1332 no matter what other attributes it has
or lacks. If this proposition is wrong, then the suit must be
dismissed for lack of subject-­‐‑matter jurisdiction.
The proposition is indeed wrong. It is inconsistent with
Carden, which held that a limited partnership is not a corpo-­‐‑

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4 No. 12-­‐‑3124
ration under §1332 even though it has all the properties of a
juridical person. It is inconsistent with Cosgrove, which held
that a limited liability company is not a corporation under
§1332 even though it has all the properties of a juridical per-­‐‑
son. It is inconsistent with Indiana Gas Co. v. Home Insurance
Co., 141 F.3d 314, rehearing denied, 141 F.3d 320 (7th Cir.
1998), which held that a syndicate underwriting insurance at
Lloyd’s of London is not a corporation under §1332 even
though it has all the properties of a juridical person.
Fellowes locates its “juridical entity” principle in Puerto
Rico v. Russell & Co., 288 U.S. 476 (1933), which held that a
sociedad en comandita created under the law of Puerto Rico
could litigate in federal court as an entity. The Court ex-­‐‑
plained that it reached that conclusion in large measure be-­‐‑
cause Puerto Rico recognized the sociedad en comandita as a
juridical person. 288 U.S. at 481. Our opinion in Auto-­‐‑
cephalous Greek-­‐‑Orthodox Church v. Goldberg and Feldman Fine
Arts, Inc., 917 F.2d 278, 285 (7th Cir. 1990), concluded that
anything that qualifies as a single entity under Russell has
only its own citizenships for the purpose of the diversity ju-­‐‑
risdiction. This meant that a church based in Cyprus was a
corporation in part because Cyprus treated it as a juridical
entity able to make contracts and sue in its own name. So
there is certainly support for the argument that Fellowes has
staked out. But it is wrong nonetheless.
Autocephalous Greek-­‐‑Orthodox Church did not mention ei-­‐‑
ther Chapman or Bouligny, even though Bouligny had con-­‐‑
fined Russell to its facts. Nor did it mention Carden, which
discussed Russell at length. Here’s what the Court had to say
in Carden, 494 U.S. at 189–90:

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No. 12-­‐‑3124 5
The one exception to the admirable consistency of our jurispru-­‐‑
dence … is Puerto Rico v. Russell & Co., 288 U.S. 476 (1933), which
held that the entity known as a sociedad en comandita, created un-­‐‑
der the civil law of Puerto Rico, could be treated as a citizen of
Puerto Rico for purposes of determining federal-­‐‑court jurisdic-­‐‑
tion. The sociedad’s juridical personality, we said, “is so complete
in contemplation of the law of Puerto Rico that we see no ade-­‐‑
quate reason for holding that the sociedad has a different status
for purposes of federal jurisdiction than a corporation organized
under that law.” Id. at 482. Arkoma fairly argues that this lan-­‐‑
guage, and the outcome of the case, “reflect the Supreme Court’s
willingness to look beyond the incorporated/unincorporated di-­‐‑
chotomy and to study the internal organization, state law re-­‐‑
quirements, management structure, and capacity or lack thereof
to act and/or sue, to determine diversity of citizenship.” Brief for
Respondent 14. The problem with this argument lies not in its
logic, but in the fact that the approach it espouses was proposed
and specifically rejected in Bouligny. There, in reaffirming “the
doctrinal wall of Chapman v. Barney,” we explained Russell as a
case resolving the distinctive problem “of fitting an exotic crea-­‐‑
tion of the civil law … into a federal scheme which knew it not.”
382 U.S. at 151. There could be no doubt, after Bouligny, that at
least common-­‐‑law entities (and likely all entities beyond the
Puerto Rican sociedad en comandita) would be treated for purpos-­‐‑
es of the diversity statute pursuant to what Russell called “the
tradition of the common law,” which is “to treat as legal persons
only incorporated groups and to assimilate all others to partner-­‐‑
ships.” 288 U.S. at 480.
In other words, Russell and its juridical-­‐‑entity approach cov-­‐‑
er the sociedad en comandita and nothing else. Russell does not
mean that limited liability companies—organized within or
outside the United States—have their own citizenships. Hav-­‐‑
ing held in Cosgrove that an American LLC has the citizen-­‐‑
ship of every member-­‐‑investor, we are not about to establish
a different rule for functionally identical entities established
under other nations’ laws.

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6 No. 12-­‐‑3124
Given the parties’ agreement that Changzhou Fellowes is
closer to a limited liability company than to any other busi-­‐‑
ness structure in this nation, it does not have its own citizen-­‐‑
ship—and it does have the Illinois citizenship of its member
Hong Kong Fellowes, which prevents litigation under the
diversity jurisdiction. We need not decide today whether to
overrule Autocephalous Greek-­‐‑Orthodox Church, in which the
juridical-­‐‑entity reasoning was an alternative ground of deci-­‐‑
sion. It should be understood, however, that the case cannot
be generalized to entities other than religious bodies orga-­‐‑
nized under the law of Cyprus.
The judgment of the district court is vacated, and the case
is remanded with instructions to dismiss for want of subject-­‐‑
matter jurisdiction.

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