The opinion of the court was delivered by: Bucklo, District Judge.
MEMORANDUM OPINION AND ORDER
Liberty Mutual Fire Insurance Company ("Liberty"), a
Massachusetts corporation with its principal place of business in
that state, sued the defendants for breach of contract in
connection with certain unpaid insurance premiums in this
diversity/alienage action. It won a default judgment against the
improbably named 241197, Inc., f/k/a Pals Express, Inc., and
d/b/a Pals Cartage Co. ("Pals"). Defendant Reimer Express
Enterprises ("Express") and Reimer Express World Corp ("World"),
Canadian corporations, moved for dismissal on the alternative
grounds that a federal district court in Illinois has no personal
jurisdiction, Fed.R.Civ.P. 12(b)(2), or that Liberty has failed
to state a claim upon which relief can be granted. Rule 12(b)(6).
The parties engaged in some jurisdictional discovery, and, after
rebriefing, the motions to dismiss are denied.
The question here is whether the relationship between Pals and
the Reimer defendants, Express and World, is close enough that
the defendants may be said to be "doing business" in Illinois for
purposes of exercising personal jurisdiction over them. Express
and World are Canadian Corporations based in Winnipeg, Manitoba.
World is a wholly owned subsidiary of Express, and their officers
and directors are the same. Both entities are holding companies
that do no business on their own. World is a "shelf" corporation
that can be "activated" if an appropriate transaction arises.
From 1989 to 1994, Express owned 100% of the stock of Reimer
Express Enterprises America, Inc. ("Express America"), a Delaware
holding corporation that also does no business of its own.
World was activated as part of a corporate restructuring in 1994,
when it became Express America's corporate parent. In 1989,
Express purchased 80% of the stock of Pals, a long-existing
trucking company incorporated in Illinois in 1982; Express then
assigned the shares or its rights to those shares under the
purchase agreement to Express America, which ended up owning the
Pals stock. In 1996, when Pals was in serious trouble, Express
America bought the rest of the stock. Pals went out of business
In federal court, the plaintiff has the burden of demonstrating
the existence of personal jurisdiction. Steel Warehouse of
Wisconsin, Inc. v. Leach, 154 F.3d 712, 714 (7th Cir. 1998). I
construe all disputed facts that bear on personal jurisdiction in
the light most favorable to the plaintiffs. Saylor v.
Dyniewski, 836 F.2d 341, 342 (7th Cir. 1988), superceded on
other grounds by 110 ILCS 2-209. A federal district court
sitting in diversity or alienage has personal jurisdiction over a
nonresident only if a court of the state in which it sits would
have such jurisdiction. Mid-America Tablewares, Inc. v. Mogi
Trading Co., Ltd., 100 F.3d 1353, 1358 (7th Cir. 1996). A
plaintiff can establish personal jurisdiction over a nonresident
corporate defendant under Illinois law: (1) if it is doing
business in Illinois with "a fair measure of permanence and
continuity." Cook Assoc., Inc. v. Lexington United Corp.,
87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847, 853 (1981) (citing
Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 115 N.E. 915, 917
(1917) (Cardozo, J.)); 735 ILCS 5/2-209(b)(4); (2) if the
plaintiff's claims arise out of any of the fourteen enumerated
statutory grounds in 735 ILCS 5/2-209(a); (3) or "on any other
basis" if the exercise of personal jurisdiction is "permitted by
the Illinois Constitution and the Constitution of the United
States." Id. 5/2-209(c); RAR, Inc. v. Turner Diesel. Ltd.,
107 F.3d 1272, 1276 (7th Cir. 1997).
Liberty argues for personal jurisdiction solely on the state
law basis that the Reimer defendants were doing business in
Illinois, see 735 ILCS 5/2-209(b)(4). As explained below, the
state and federal constitutional requirements are satisfied in
virtue of the facts that satisfy the statutory "doing business"
requirement. For personal jurisdiction under the "doing business"
doctrine, the nonresident corporation's contacts must be
"continuous, permanent, ongoing and systematic . . . not
occasional or casual." Milligan v. Soo Line RR, Co.,
775 F. Supp. 277, 279 (N.D.Ill. 1991) (citing Reeves v. Baltimore &
Ohio. R.R., 171 Ill. App.3d 1021, 122 Ill.Dec. 145,
526 N.E.2d 404, 407 (1988)). Liberty's argument boils down to the claim that
Express and World were doing business in Illinois because they
had enough control over Pals, which was indisputably doing
business in Illinois.
The key precedent, not cited by either party, is Japax, Inc.
v. Sodick Co. Ltd., 186 Ill. App.3d 656, 134 Ill.Dec. 446,
542 N.E.2d 792 (1989). In Japax, an Illinois state court found that
personal jurisdiction existed where:
Sodick USA, despite being set up as a separate
corporate entity, functions as the service arm of
Sodick Japan, maintaining the EDM systems in Illinois
and other states. . . . Sodick Japan maintains some
control over its subsidiary, or at least maintains
significant connections with it in order to
facilitate the sales and servicing of its systems.
Id. at 797. The facts on which the Japax court relied were
 Sodick Japan has "loaned" employees to Sodick
USA, accounting for a significant portion of USA's
personnel, including its president.
 Many or most of Sodick USA's officers and members
of the board of directors have come ...