Milwaukee court rules alien permanent residents are citizens of both the state and native country.

• Author: Ziemer, David

Byline: David Ziemer

An alien permanent resident is a citizen of both the state in which he resides and his native country, the Seventh Circuit held on Nov. 2. In 1990, Raph Engle founded Intec USA. He sold a majority interest in 1997, and started new ventures. Intec's new investors maintained that Engle's new ventures were violating covenants not to compete that Engle gave in order to induce them to buy out his interest in Intec. In 2003, the dispute between Intec USA and Engle's new ventures was settled in arbitration. The settlement specified that North Carolina law would govern any dispute, but no forum selection clause was included. However, after concluding that Engle and his firms were violating both the settlement and the 1997 covenants, Intec filed suit in North Carolina, its home state. Engle is a citizen of New Zealand, as are three of seven corporate defendants. Two of the other corporations are citizens of Australia, one of Brazil, and one of the United Kingdom. They do not do business in North Carolina, and moved to dismiss, arguing lack of personal jurisdiction over them. Before the North Carolina court acted on the motions to dismiss, Intec filed a new suit in federal court in Illinois. The district court dismissed the suit on the ground of forum non conveniens. Intec appealed, and, in a decision by Judge Frank H. Easterbrook, the Seventh Circuit held that diversity jurisdiction was not present, and vacated the order, with directions to dismiss the suit on remand on that ground. The court began by noting a split of authority in other circuits on whether a court should always first consider whether jurisdiction is present, or whether dismissing on another ground (such as forum non conveniens), without considering jurisdiction is proper. The court opined that, in its view, a court need not always resolve jurisdiction ahead of other issues. However, it elected to consider jurisdiction first to avoid any potential for further proceedings should the Supreme Court hold to the contrary in Malaysia Int'l Shipping Corp. v. Sinochem Int'l Co., 436 F.3d 349 (3d Cir. 2006), cert granted, 2006 U.S. Lexis 5422 (Sept. 26, 2006). The court noted that Intec is a limited liability company, and thus, is a citizen of the state of each of its members. One of those members, John Smith, is a citizen of New Zealand, and a permanent resident alien of North Carolina. The issue, thus, is whether Smith is treated as a citizen of New Zealand or North...