No. 01-3406
United States Court of Appeals For the Seventh Circuit
Argued April 18, 2002—Decided May 31, 2002
Appeal from the United States District Court for the Western District of Wisconsin. No. 00 C 67—Barbara B. Crabb, Chief Judge.
Before Flaum, Chief Judge, and Harlington Wood, Jr., and Posner, Circuit Judges.
Posner, Circuit Judge. This is a personal injury suit brought by the parents of a young man killed in an accident in Wisconsin. Federal jurisdiction is based on diversity of citizenship. The suit was filed originally in a federal district court in Louisiana, but the judge there transferred the case to a federal
We note initially a serious deficiency in the jurisdictional statement in the plaintiffs’ brief that went unnoticed in the four briefs filed by defendants. With regard to the insurance-company defendants, the allegation of citizenship takes the following form: “Progressive Northern Insurance Company, a citizen of the State of Wisconsin, with its principal place of business in the State of Ohio.” (The allegations regarding the other insurance companies are identical except for name and states.) The diversity statute states that a corporation is a citizen of both the state in which it is incorporated and the state in which its principal place of business is located.
The corporate charter of one of the defendants had been revoked before this suit was brought; and though the charter was later restored, jurisdiction is normally determined as of the date of the filing of the suit. The only case we can find on the precise question, and it happens to be a decision by this court, allows retroactive reinstatement to confer jurisdiction, Costain Coal Holdings, Inc. v. Resource Investment Corp., 15 F.3d 733, 734 and n. 3 (7th Cir. 1994), contrary to (and without discussing) the general principle (an exception is discussed below) that jurisdiction is determined as of the date of the suit; and on that date, before reinstatement, the corporation had no corporate charter.
An approach consistent with the general principle, but which leads to the same result in this case as the approach in Costain would, makes the question of what state a corporation is a citizen of if its corporate charter has been revoked depend on the status of such an entity under the law of the state that granted (and later revoked) the charter. Most states sensibly permit a corporation whose charter has been revoked to continue nevertheless to operate as acorporation, specifically for purposes of suing and being sued, until it is actually dissolved. See, e.g., Paper Systems Inc. v. Mitsubishi Corp., 193 F.R.D. 601, 607-08 (E.D. Wis. 2000); Clipper Air Cargo, Inc. v. Aviation Products Int’l, Inc., 981 F. Supp. 956, 958-59 and n. 3 (D.S.C. 1997); Illinois Central Gulf R.R. v. Arbox Three Corp., 700 F. Supp. 389, 390-91 (N.D. Ill. 1988).
The complaint describes another defendant, Mutual Fire and Automobile Insurance Company, as a “foreign insurer authorized to conduct business in Louisiana“—which says nothing about where its principal place of business is (or its state of incorporation, but we have learned that it is Ohio, an answer that does not destroy complete diversity). In the plaintiffs’ brief on appeal, Mutual is described as “a citizen of a state other than Louisiana, with its principal place [of business?] in a State other than Louisiana.” But how can the plaintiffs know that the company’s principal place of business is not in Louisiana if they don’t know where its principal place of business is? We doubt that the plaintiffs conducted a census of all businesses whose principal place of business is in Louisiana and discovered that Mutual Fire and Automobile Insurance Company is not one of them. No matter. The company was later dropped as a party, and under Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 837 (1989), a want of complete diversity can be cured by dropping the party that made diversity incomplete.
With subject-matter jurisdiction secure, we turn to the transfer issue and the merits, first sketching in the factual background.
Subscription Plus, owned and operated by a woman named Karleen Hillery, is engaged in the business of processing magazine subscriptions. It contracted with Y.E.S.!, a sales agency, to secure magazine subscriptions for Subscription Plus. The Wilds’ son Joseph was a salesman employed by Y.E.S.! The Wilds live in Louisiana, and Joseph Wild was hired there.
The salesmen would travel in groups in vans to various states to sell subscriptions. Y.E.S.!’s owner, Lane, bought a green van and employed a man named Holmes to drive it. (The color turns out to be relevant, as we’ll see later but can ignore for now.) While driving the sales crew in Wisconsin after a day of door-to-door subscription selling, Holmes, noticing that he was being pursued by a police car and not having a valid driver’s license, tried to switch seats with one of the passengers, lost control, and crashed the van. Seven members of the sales crew, including young Wild, were killed and the others injured. Suits were brought on behalf of all the victims except Wild in a Wisconsin state court, where the suits were consolidated and are pending. Besides suing Hillery, Lane, Holmes, Subscription Plus, Y.E.S.! and the dealership that sold the van, the Wilds sued the liability insurers of these defendants; it could do this because Louisiana, like Wisconsin, is a direct-action state, meaning that a tort plaintiff can sue his injurer’s liability insurer as well as the injurer.
Section 1406(a) of the Judicial Code provides that if a suit is brought in a district that is not a proper venue under
The only basis for the motion to retransfer the case was that the district judge had ruled that Hillery could not be served under Wisconsin’s long-arm statute, thus forcing the Wilds, unless the case was retransferred, to split their suit between Wisconsin (all the defendants except Hillery) and Louisiana (Hillery). After the judge ruled, the Wilds did bring a suit against Hillery in Louisiana, but it was promptly transferred to Wisconsin (and is pending before the same district judge), because in the interim a Wisconsin state court ruling in one of the cases arising from the accident interpreted Wisconsin’s long-arm statute in a way that makes clear that Hillery is within the statute’s reach after all. Forgues v. Heart of Texas Dodge, Inc., No. 99CV0952, slip op. at 2 (Wis. Cir. Ct. Nov. 5, 2001). Although an unpublished opinion of a trial court, and so hardly an authoritative guide to the law of Wisconsin, the parties do not question its soundness.
It is very difficult in these unusual circumstances to get excited about the prospect of bouncing this three-year-old case back to Louisiana, but cf. Shutte v. Armco Steel Corp., 431 F.2d 22, 24 (3d Cir. 1970), even apart from the fact that, since venue cannot be laid in Louisiana, the case would have to be dismissed or transferred elsewhere. Supposing the district judge had gotten Wisconsin law right when she ruled on Hillery’s motion to dismiss for want of personal jurisdiction (that is, supposing she had anticipated the decision in Forgues), Hillery would be a party to the present case and the claim against her, which is indistinguishable from that against her company, Subscription Plus, would have gone down the drain with that claim. As it is, the claim against her remains alive in the district court—if barely, since the defendants have moved to dismiss it as barred by res judicata. Still, the plaintiffs are no worse off, or, in any practical sense, differently situated, than if the district judge had not mistakenly dismissed Hillery, thus raising the retransfer issue.
But in any event we do not agree with the plaintiffs that a transfer under
A multidefendant case, this multidefendant case in any case, is different. The 13 defendants are scattered all over the United States. There is (or so the district judge believed when she denied the retransfer back to Louisiana) no federal district in which all could be served. If the case could not have been transferred from Louisiana to Wisconsin, it could not have been transferred anywhere, which means it would have had to be dismissed in its entirety because Louisiana was not a proper venue for any of the defendants, and the Wilds forced to sue maybe in 13 different districts or states. This result would be contrary to the purpose of
It is a bad result, not contemplated by Congress; and we conclude that there is no absolute bar to the transfer of a multidefendant suit to a district in which one of the defendants cannot be served. But that leaves the question whether a defendant in a multidefendant suit who cannot be served can be forced to defend in the transferee district or, as most cases hold, must be severed from the rest of the suit and the suit against him either dismissed or (better, to avoid the running of the statute of limitations) transferred back to the district in which the suit was first filed or to a district in which service upon him is possible. Liaw Su Teng v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir. 1984); Sharp Electronics Corp. v. Hayman Cash Register Co., 655 F.2d 1228, 1230 (D.C. Cir. 1981) (per curiam); Relf v. Gasch, 511 F.2d 804, 807-08 and n. 13 (D.C. Cir. 1975); Shutte v. Armco Steel Corp., supra, 431 F.2d at 24; 15 Wright, Miller & Cooper, supra, sec. 3845, pp. 351-53 (2d ed. 1986 & 2002 Supp.). The argument for the latter course, nowhere made in the notably sparse discussions in the cases, is that the transfer statutes do not purport to alter the rules governing personal jurisdiction; and of course the outer bounds of those rules are set by the Constitution. At all events, by dismissing
We move on to the merits, where we can be brief. The nonsettling defendants are Subscription Plus, the dealership that sold the van to Lane, and several of the insurance companies. Since Y.E.S.! was an independent contractor of Subscription Plus, the Wilds could not impute the negligence (or worse) of Holmes, Y.E.S.!’s employee, to Subscription Plus. Wagner v. Continental Casualty Co., 421 N.W.2d 835, 844 (Wis. 1988); Snider v. Northern States Power Co., 260 N.W.2d 260, 261 (Wis. 1977); Giffin v. Poetzl, 634 N.W.2d 901, 905 (Wis. App. 2001); Sullivan v. Freeman, 944 F.2d 334, 336 (7th Cir. 1991). There are a number of exceptions to the rule that a principal is not liable for the torts of his independent contractors, but, as explained at length by the district judge, none of them is applicable to this case. And anyway if Holmes had been an employee of Subscription Plus, he would be subject to Wisconsin’s workers’ compensation law, which preempts tort claims by employees against their employers.
The claim against the dealership is completely frivolous. Lane when he bought the van showed the dealer a valid driver’s license and proof of insurance. The dealer had no reason to think Lane would entrust the van to a person who did not have a valid driver’s license and was reckless; and so no negligence can be attributed to the dealer. Bankert by Habush v. Threshermen’s Mutual Ins. Co., 329 N.W.2d 150, 153 (Wis. 1983); Halverson by Boles v. Halverson, 541 N.W.2d 150, 153 (Wis. App. 1995); Joyce v. Joyce, 975 F.2d 379, 385 (7th Cir. 1992).
That leaves only the insurance companies. Two of them, Acceptance and Scottsdale, were the liability insurers of Subscription Plus and of Hillery, respectively. Wisconsin permits a direct action regardless of whether the insured is a party, but only if the insurance policy was issued or delivered in Wisconsin, Kenison v. Wellington Ins. Co., 582 N.W.2d 69, 73 (Wis. App. 1998); Lexington Ins. Co. v. Rugg & Knopp, Inc., 165 F.3d 1087, 1092 (7th Cir. 1999) (Wisconsin law), which neither of these policies was. Otherwise the direct action can be maintained only if and so long as the insureds remain parties. See
Progressive was Lane’s insurer; Lane, remember, owned the van that crashed as well as owning and controlling Y.E.S.!, which operated the van. But here is where color becomes significant. The van was green; but the policy was written to cover a white van that had been purchased earlier but was out of service. The green van was bought in January 1999; the policy on the white van became effective on March 5; and the accident occurred on March 25. The policy provides coverage for replacement vehicles but only “for a period of not greater than 30 days without notification to us.” The purpose is to enable the policy holder to obtain coverage without having to buy a separate policy while enabling the insurance company to adjust the premium retroactively to reflect any greater risk created by the substitution. Lewis v. Bradley, 97 N.W.2d 408, 411 (Wis. 1959); Rabatie v. U.S. Security Ins. Co., 581 So. 2d 1327, 1329-30 (Fla. App. 1989) (en banc) (per curiam). The plaintiffs argue that the 30 days did not begin to run until March 5, even though the replacement vehicle had been in service for more than a month before then. We think that either the green van was never covered, either because it was
The deficiency in the parties’ jurisdictional statements is inexcusable, just as in Cincinnati Ins. Co. v. Eastern Atlantic Ins. Co., 260 F.3d 742, 747-48 (7th Cir. 2001), where we reprimanded the lawyers for both sides. As in that case, so in this one, the lawyers disregarded an utterly clear jurisdictional provision, here regarding the citizenship of corporations, and are hereby reprimanded.
Affirmed.