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BouMatic, LLC v. Idento Operations, BV

United States Court of Appeals, Seventh Circuit

July 22, 2014

BOUMATIC, LLC, Plaintiff-Appellant,
IDENTO OPERATIONS, BV, Defendant-Appellee

Argued February 20, 2014

Appeal from the United States District Court for the Western District of Wisconsin. No. 11-cv-822-wmc -- William M. Conley, Chief Judge.

For United States of America, Plaintiff - Appellee: Zachary Augustus Myers, Attorney, Office of The United States Attorney, Indianapolis, IN.

For Haitham Mohamed, Defendant - Appellant: Sara J. Varner, Attorney, Indiana Federal Community Defenders, Inc., Indianapolis, IN.

Before EASTERBROOK, MANION, and SYKES, Circuit Judges.


Page 791

Easterbrook, Circuit Judge.

Idento Operations, BV, makes robotic milking machines in the Netherlands. BouMatic, LLC, which is based in Wisconsin, entered into an agreement for purchasing and reselling those machines in Belgium. BouMatic filed this suit under the international diversity jurisdiction, 28 U.S.C. § 1332(a)(2), contending that Idento had broken its promises by selling direct to at least one of BouMatic's Belgian customers and by failing to provide parts and warranty service. The district court dismissed the suit, however, ruling that commercial transactions in the European Union do not expose Idento to litigation in Wisconsin even though BouMatic has its headquarters there, the parties exchanged drafts between Wisconsin and the Netherlands, and Idento shipped one machine to Wisconsin.

Before turning to personal jurisdiction, we discuss subject matter jurisdiction. BV stands for besloten vennootschap met beperkte aansprakelijkheid, a label that the Netherlands applies to closely held businesses whose shares are subject to a restriction of some kind, such as a buysell agreement that prevents investors from selling to strangers without offering them to the business first. Unless this is treated as a corporation for the purpose of American law, we need to know the citizenship of every equity investor. See Carden v. Arkoma Associates, 494 U.S. 185, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990); Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equipment Co., No. 12--3124, 759 F.3d 787, (7th Cir. July 22, 2014). This can require tracing through several layers. See Cosgrove v. Bartolotta, 150 F.3d 729 (7th Cir. 1998) (citizenship of an LLC depends on citizenship of its members, traced through as many levels as necessary to reach corporations or natural persons). BouMatic, which is organized as an LLC, has members in several states but not in the Netherlands. If Idento is treated as a corporation, or if all of its direct and indirect investors have citizenships outside the United States, subject--matter jurisdiction is established.

Classification of a foreign business entity can be difficult, see, e.g., White Pearl Inversiones S.A. (Uruguay) v. Cemusa, Inc., 647 F.3d 684 (7th Cir. 2011), because other nations may use subsets of the characteristics that distinguish corporations from other business entities in the United States. But treatment of a Netherlands BV is straightforward. A BV has the standard elements of " personhood" (perpetual existence, the right to contract and do business in its own name, and the right to sue and be sued) and issues shares to investors who enjoy limited liability (which is to say, are not liable for the business's debts). Shares can be bought and sold, subject to restrictions that the business declares. That is a common device in this nation's close corporations too. We held in Hoagland v. Sandberg, Phoenix & von Gontard, P.C., 385 F.3d 737 (7th Cir. 2004), that a professional corporation, in which only a few lawyers can invest, is a " corporation" for the purpose of § 1332. It follows that other close corporations, including the Netherlands BV, satisfy that standard.

Now for personal jurisdiction, which per Fed.R.Civ.P. 4(k)(1)(A) depends on Wisconsin law. In contract cases (of which this is one), Wisconsin provides for jurisdiction over persons who perform services or sell goods in Wisconsin. Wis. Stat. § 801.05(5)(a),

Page 792

(c). Neither of these provisions applies to Idento, for the dispute does not concern the single machine it delivered to Wisconsin. The dispute concerns Idento's provision of goods and services in Belgium. Wisconsin does not authorize personal jurisdiction just because one of the contracting parties operates in Wisconsin. This leaves only one possibility: that Idento has consented to be sued in Wisconsin, which treats consent as a valid extrastatutory basis of personal jurisdiction. Kohler Co. v. Wixen, 204 Wis.2d 327, 336, 555 N.W.2d 640 (Ct. App. 1996).

BouMatic contends that, before executing a written contract, the parties agreed orally that any dispute could be resolved in Wisconsin. The written agreement does not have a forum selection clause or a choice--of--law clause, but neither does it have an integration clause or otherwise demonstrate that the writing represents the parties' sole agreement. To the contrary, ¶ 13 of the contract contemplates additional terms from other sources. This means that terms orally agreed survive the signed writing. Idento contends that it did not orally agree to litigate in Wisconsin. This appears to set the stage for a hearing under Fed.R.Civ.P. 12(b)(2), (i) to ...

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