Boumatic, LLC v. Idento Operations, BV , 759 F.3d 790 ( 2014 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No.  13-­‐‑2300
BOUMATIC,  LLC,
Plaintiff-­‐‑Appellant,
v.
IDENTO  OPERATIONS,  BV,
Defendant-­‐‑Appellee.
____________________
Appeal  from  the  United  States  District  Court
for  the  Western  District  of  Wisconsin.
No.  11-­‐‑cv-­‐‑822-­‐‑wmc  —  William  M.  Conley,  Chief  Judge.
____________________
ARGUED  FEBRUARY  20,  2014  —  DECIDED  JULY  22,  2014
____________________
Before  EASTERBROOK,  MANION,  and  SYKES,  Circuit  Judges.
EASTERBROOK,   Circuit   Judge.   Idento   Operations,   BV,
makes   robotic   milking   machines   in   the   Netherlands.   Bou-­‐‑
Matic,   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  di-­‐‑
versity   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   pro-­‐‑
2   No.  13-­‐‑2300
vide  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   Wis-­‐‑
consin  even  though  BouMatic  has  its  headquarters  there,  the
parties  exchanged  drafts  between  Wisconsin  and  the  Nether-­‐‑
lands,  and  Idento  shipped  one  machine  to  Wisconsin.
Before   turning   to   personal   jurisdiction,   we   discuss   sub-­‐‑
ject-­‐‑matter   jurisdiction.   BV   stands   for   besloten   vennootschap
met  beperkte  aansprakelijkheid,  a  label  that  the  Netherlands  ap-­‐‑
plies  to  closely  held  businesses  whose  shares  are  subject  to  a
restriction   of   some   kind,   such   as   a   buy-­‐‑sell   agreement   that
prevents  investors  from  selling  to  strangers  without  offering
them  to  the  business  first.  Unless  this  is  treated  as  a  corpora-­‐‑
tion  for  the  purpose  of  American  law,  we  need  to  know  the
citizenship  of  every  equity  investor.  See  Carden  v.  Arkoma  As-­‐‑
sociates,  494  U.S.  185  (1990);  Fellowes,  Inc.  v.  Changzhou  Xinrui
Fellowes   Office   Equipment   Co.,   No.   12-­‐‑3124   (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   corpora-­‐‑
tions   from   other   business   entities   in   the   United   States.   But
No.  13-­‐‑2300   3
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),   (c).   Neither   of   these   provisions   ap-­‐‑
plies   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.   Wis-­‐‑
consin   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   extra-­‐‑
statutory   basis   of   personal   jurisdiction.   Kohler   Co.   v.   Wixen,
204  Wis.  2d  327,  336  (Ct.  App.  1996).
BouMatic   contends   that,   before   executing   a   written   con-­‐‑
tract,  the  parties  agreed  orally  that  any  dispute  could  be  re-­‐‑
solved  in  Wisconsin.  The  written  agreement  does  not  have  a
forum-­‐‑selection  clause  or  a  choice-­‐‑of-­‐‑law  clause,  but  neither
4   No.  13-­‐‑2300
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
determine  whose  version  of  events  is  correct.  But  the  district
court   thought   a   hearing   unnecessary   in   light   of   forms   the
parties  exchanged  after  signing  their  principal  contract.
Paragraph   13   of   the   main   contract   provides   that   addi-­‐‑
tional  terms  will  come  from  the  purchase  orders  and  invoic-­‐‑
es   that   the   parties   exchange   for   particular   machines.   When
ordering   machines,   BouMatic   sent   purchase   orders   that   in-­‐‑
corporated  a  clause  specifying  that  litigation  would  occur  in
Wisconsin   under   Wisconsin’s   law   of   contracts.   For   its   part,
Idento   sent   invoices   containing   a   clause   specifying   that   liti-­‐‑
gation  would  occur  in  the  Netherlands  under  its  substantive
law.  Inconsistencies  in  commercial  forms  bring  the  situation
within   the   scope   of   the   Uniform   Commercial   Code’s   battle-­‐‑
of-­‐‑the-­‐‑forms  provision,  §2–207,  which  Wisconsin  has  enacted
verbatim  as  Wis.  Stat.  402.207.  (We  use  Wisconsin  law  provi-­‐‑
sionally   here,   because   neither   side   contends   that   Nether-­‐‑
lands  law  governs  this  part  of  their  dispute.  Our  provisional
use   of   Wisconsin   law   does   not   imply   that   Wisconsin   pro-­‐‑
vides   the   rules   that   govern   the   substance   of   this   dispute,
should  personal  jurisdiction  be  established.)
Section   2–207(2)   treats   a   form   such   as   BouMatic’s   (or
Idento’s)   as   a   proposal   for   additions   to   the   contract   and
states   that   between   merchants   (which   BouMatic   and   Idento
are)  these  terms  become  part  of  the  contract  unless  “the  offer
No.  13-­‐‑2300   5
expressly   limits   acceptance   to   the   terms   of   the   offer”   (§2–
207(2)(a)).   BouMatic’s   purchase   orders   incorporate   such   a
restriction;   each   says   that   the   transactions   must   be   on   its
terms   and   no   others.   When   Idento   replied   with   different
terms,  the  purchase  orders  and  invoices  canceled  each  other
out.  This  means  that  neither  the  purchase  orders  nor  the  in-­‐‑
voices  vary  the  terms  of  the  preexisting  contract.
The  district  court  inferred  from  this  that  the  only  terms  in
force  between  the  parties  are  those  in  the  master  contract.  As
that   contract   does   not   specify   where   litigation   will   occur,
Idento  has  not  consented  to  suit  in  Wisconsin.  The  problem
with  that  approach  is  that  the  inconsistent  purchase-­‐‑and-­‐‑sale
forms   countermand   each   other;   they   leave   the   parties’   prior
agreements   unaffected.   It   takes   a   new   agreement   to   knock
out   an   old   one,   and   the   inconsistent   forms   mean   that   there
has   not   been   a   new   agreement.   If   the   parties’   prior   agree-­‐‑
ments  include  consent  to  litigate  in  Wisconsin,  then  this  suit
can  proceed.
BouMatic  contends  that  a  hearing  is  unnecessary  because
its  form  is  the  only  one  in  the  record.  If  Idento  neglected  to
introduce   its   forms,   then   the   record   is   one-­‐‑sided   and   Bou-­‐‑
Matic’s   proposals   (including   consent   to   suit   in   Wisconsin)
became   part   of   the   contract.   But   BouMatic   is   mistaken;   the
record  has  several  copies  of  Idento’s  terms,  which  its  invoic-­‐‑
es   (also   in   the   record)   incorporate.   And   the   district   court
added   (footnote   1   of   its   opinion)   that   BouMatic   has   waived
any  contention  that  Idento  did  not  send  sets  of  terms  incom-­‐‑
patible  with  BouMatic’s  own.
According   to   Idento,   if   it   agreed   orally   to   anything
(which   it   denies)   it   specified   Wisconsin   as   a   forum   but   did
not   agree   to   personal   jurisdiction.   That   makes   no   sense.   A
6   No.  13-­‐‑2300
forum-­‐‑selection   clause   can   work   only   if   both   parties   are
amenable   to   suit   in   the   chosen   forum;   to   agree   to   a   forum
thus  is  to  agree  to  personal  jurisdiction  in  that  forum.  Heller
Financial,  Inc.  v.  Midwhey  Powder  Co.,  883  F.2d  1286,  1292  n.4
(7th  Cir.  1989).
Finally,  Idento  asserts  that  it  would  violate  the  Due  Pro-­‐‑
cess   Clause   of   the   Fifth   Amendment   to   base   personal   juris-­‐‑
diction  on  consent.  That  is  nonsense.  The  Supreme  Court  has
stated  that  personal  jurisdiction  can  rest  on  consent.  See,  e.g.,
Burger  King  Corp.  v.  Rudzewicz,  471  U.S.  462,  472  n.14  (1985);
see  also  Heller  Financial,  883  F.2d  at  1290.  Cf.  Atlantic  Marine
Construction  Co.  v.  United  States  District  Court,  134  S.  Ct.  568(2013).   Indeed,   an   argument   that   personal   jurisdiction   is
missing  can  be  forfeited  by  delay  in  moving  to  dismiss.  Fed.
R.  Civ.  P.  12(h)(1).
Litigants   cannot   confer   subject-­‐‑matter   jurisdiction   by
agreement  or  omission,  but  personal  jurisdiction  is  a  person-­‐‑
al  right  that  a  litigant  may  waive  or  forfeit.  Idento  maintains
that  only  “freely  negotiated”  forum  selection  clauses  can  be
enforced.  Put  to  one  side  the  fact  that  the  Supreme  Court  has
enforced   a   clause   preprinted   in   tiny   type   on   the   back   of   a
cruise  ticket  and  not  “negotiated”  at  all.  Carnival  Cruise  Lines,
Inc.  v.  Shute,  499  U.S.  585  (1991).  Nor  is  personal  jurisdiction
achieved   when   the   defendant   forfeits   its   objection   “freely
negotiated.”  At  all  events,  Idento  does  not  contend  that  any-­‐‑
one   twisted   its   (corporate)   arm.   If   it   agreed   with   BouMatic
on  a  Wisconsin  forum,  in  a  manner  compatible  with  contract
(i.e.,  without  fraud),  no  more  is  necessary.
A  few  additional  arguments  have  been  considered  but  do
not  require  discussion.
No.  13-­‐‑2300   7
There  is  no  shortcut;  a  hearing  is  essential.  The  judgment
is   vacated,   and   the   case   is   remanded   for   proceedings   con-­‐‑
sistent  with  this  opinion.