In the
`United States Court of Appeals
`For the Seventh Circuit
`
`
`No. 07-3425
`
`ILLINOIS BELL TELEPHONE COMPANY, INC.,
`
`Plaintiff-Appellant,
`
`v.
`
`GLOBAL NAPS ILLINOIS, INC., et al.,
`
`Defendants-Appellees.
`
`
`Appeal from the United States District Court
`for the Northern District of Illinois, Eastern Division.
`No. 06 C 3431—John W. Darrah, Judge.
`
`ARGUED SEPTEMBER 11, 2008—DECIDED DECEMBER 22, 2008
`
`
`Before EASTERBROOK, Chief Judge, and POSNER and
`EVANS, Circuit Judges.
`POSNER, Circuit Judge. This appeal in a suit against a
`group of affiliated corporations charges that in violation
`of the plaintiff’s federal tariffs filed with the Federal
`Communications Commission, its state tariffs filed with
`the Illinois Commerce Commission, and the interconnec-
`
`
`United States Court of Appeals
`For the Seventh Circuit
`
`
`No. 07-3425
`
`ILLINOIS BELL TELEPHONE COMPANY, INC.,
`
`Plaintiff-Appellant,
`
`v.
`
`GLOBAL NAPS ILLINOIS, INC., et al.,
`
`Defendants-Appellees.
`
`
`Appeal from the United States District Court
`for the Northern District of Illinois, Eastern Division.
`No. 06 C 3431—John W. Darrah, Judge.
`
`ARGUED SEPTEMBER 11, 2008—DECIDED DECEMBER 22, 2008
`
`
`Before EASTERBROOK, Chief Judge, and POSNER and
`EVANS, Circuit Judges.
`POSNER, Circuit Judge. This appeal in a suit against a
`group of affiliated corporations charges that in violation
`of the plaintiff’s federal tariffs filed with the Federal
`Communications Commission, its state tariffs filed with
`the Illinois Commerce Commission, and the interconnec-
`
`
`
`2
`
`No. 07-3425
`
`tion agreement between the plaintiff and one of the
`affiliates, Global NAPs Illinois, the defendants failed to
`pay for telecommunications services that the plaintiff
`had sold to that company.
`Questions about our jurisdiction led us to invite sup-
`plemental briefs. The plaintiff’s points out that a suit
`to enforce a tariff filed with the FCC is deemed to arise
`under federal law and is therefore within the federal-
`question jurisdiction of the district court. Louisville &
`Nashville R.R. v. Rice, 247 U.S. 201, 201-03 (1918); Thurston
`Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533 (1983)
`(per curiam); Cahnmann v. Sprint Corp., 133 F.3d 484, 488-89
`(7th Cir. 1998). It argues that the suit is within the
`diversity jurisdiction as well because, while Illinois Bell is
`an Illinois corporation, none of the defendants either is
`incorporated in Illinois or has its principal place of busi-
`ness there. That the case is within the diversity jurisdiction
`as well as the federal-question jurisdiction is potentially
`important because the plaintiff has at least one, and
`possibly two, claims under state law—one for failure to
`comply with its state tariffs and the other for violation of
`the interconnection agreement. Although both are within
`the supplemental jurisdiction conferred on the federal
`courts by 28 U.S.C. § 1367, the exercise of that jurisdiction
`is, as the statute makes clear, discretionary; the exercise
`of diversity jurisdiction is not.
`An exhibit to the plaintiff’s supplemental brief contains
`an admission by Global NAPs Illinois that “to the extent
`Global [NAPs Illinois] denied [that] it is a Delaware
`corporation with its principal place of business at 10
`
`
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`No. 07-3425
`
`3
`
`Merrymount Road, Quincy, MA that denial was inad-
`vertent and in error.” The defendants’ supplemental brief
`says, in a reversal of their previous position, that Global
`NAPs Illinois “obviously has its principal place of
`business in Illinois, the only state in which it is licensed
`and has established interconnection facilities.” But its
`being licensed to do business in Illinois and having
`“established interconnection facilities” are not evidence
`that it is a citizen of Illinois. AT&T is licensed to do busi-
`ness in Illinois and has “established interconnection
`facilities,” but is not a citizen of Illinois.
`When the facts that determine federal jurisdiction are
`contested, the plaintiff—or if it is a case that has been
`removed to federal court, the defendant—must establish
`those facts by a preponderance of the evidence. Meridian
`Security Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir.
`2006); Gafford v. General Elec. Co., 997 F.2d 150, 159-60 (6th
`Cir. 1993). Global NAPs Illinois has not mounted a suffi-
`ciently colorable challenge to diversity jurisdiction to
`require the plaintiff to present additional evidence of
`diversity. Global NAPs Illinois does not have an Illinois
`corporate charter. Nor is Illinois where it has its principal
`place of business. It admits that it has no employees other
`than its corporate officers, and they are all in Massachu-
`setts.
`A company’s principal place of business is where its
`“nerve center” is located, or, more concretely, where its
`executive headquarters are located. Krueger v. Cartwright,
`996 F.2d 928, 931 (7th Cir. 1993); Metropolitan Life Ins. Co. v.
`Estate of Cammon, 929 F.2d 1220, 1223 (7th Cir. 1991);
`Dimmitt & Owens Financial, Inc. v. United States, 787 F.2d
`
`
`
`4
`
`No. 07-3425
`
`1186, 1191 (7th Cir. 1986). There are no nerves (in all but
`the simplest animals) without a brain, and there is no
`human brain without a human being. An executive head-
`quarters without any executives is similarly oxymoronic.
`We can imagine an automated company that has no
`office anywhere but consists of pieces of equipment
`operated by telecommuting employees scattered across
`the globe. But what we have in this case is commonplace:
`a company located in one state (Massachusetts) that has
`contracts with firms in other states, including Illinois.
`“[A] corporation whose center of gravity is in the same
`state [as the opposing party] even though it may be
`incorporated elsewhere
`.
`.
`.
`[is] sufficiently
`‘lo-
`cal’—sufficiently identified with the state—to avoid the
`obloquy that may attach to a ‘foreign’ corporation in
`litigation with a local resident and that provides the
`modern rationale of the diversity jurisdiction. The words
`‘principal place of business’ are to be construed with this
`purpose in mind.” Dimmitt & Owens Financial, Inc. v. United
`States, supra, 787 F.2d at 1190. There is nothing local about
`a corporation chartered in another state, managed in
`another state, administered in another state, headquartered
`in another state, its local “presence” actually a ghostly
`absence of living bodies.
`But the defendants argue that even if there is prima
`facie federal jurisdiction, whether based on a federal
`question or diversity of citizenship, the Telecommunica-
`tions Act of 1996, 47 U.S.C. §§ 151 et seq., withdraws
`that jurisdiction from a suit of this kind.
`
`
`
`No. 07-3425
`
`5
`
`To understand the argument one must understand the
`two types of charge that one telecommunications carrier
`can extract from another pursuant to the Telecommunica-
`tions Act. Iowa Network Services, Inc. v. Qwest Corp., 363
`F.3d 683, 686 (8th Cir. 2004). First, an “incumbent local
`exchange carrier” (a carrier that provided local phone
`service when the Act was passed, such as Illinois Bell) is
`required to interconnect on demand with other carriers
`that provide local telecommunications services within
`its service area. 47 U.S.C. § 251(c)(2). A carrier demanding
`interconnection must negotiate with the incumbent local
`exchange carrier on price and other terms. If the two
`carriers cannot reach agreement, their disagreement is
`submitted to what is called “arbitration” but is really the
`first stage in a regulatory proceeding, as the “arbitration”
`decision must be submitted to the state regulatory com-
`mission for its approval, as must an agreement reached
`by negotiation. Id., §§ 252(a)(1), (b)(1), (e)(1); Illinois Bell
`Tel. Co. v. Box, No. 08-1489, 2008 WL 5006614, at *1 (7th
`Cir. Nov. 26, 2008); Illinois Bell Tel. Co. v. Box, 526
`F.3d 1069, 1070 (7th Cir. 2008).
`The interconnection agreement between the plaintiff and
`Global NAPs Illinois was approved by the Illinois Com-
`merce Commission. A party aggrieved by the state com-
`mission’s decision, whether imposing or altering the terms
`of an interconnection agreement, can seek judicial review
`in federal district court on the ground that the decision
`violates sections 251 or 252 of the Telecommunications
`Act. 47 U.S.C. § 252(e)(6). But so far as appears both
`parties were content with the agreement and neither
`sought judicial review of the commission’s order ap-
`proving it. Nor did anyone else.
`
`
`
`6
`
`No. 07-3425
`
`If as in this case the incumbent local exchange carrier
`sues merely
`to collect
`the
`interconnection charge
`specified in the approved interconnection agreement, the
`suit is not based on federal law in any realistic sense, but
`on a price term in a contract. Just as a suit to enforce a
`copyright license is held to arise under state rather than
`federal law even though the grant of a copyright is gov-
`erned by federal law, Gaiman v. McFarlane, 360 F.3d 644,
`652 (7th Cir. 2004); T. B. Harms Co. v. Eliscu, 339 F.2d 823,
`824, 826-27 (2d Cir. 1964) (Friendly, J.), so likewise, while
`“section 252(c)(6) authorizes a federal court to determine
`whether the agency’s decision departs from federal law,”
`“a decision ‘interpreting’ an agreement contrary to its
`terms creates a different kind of problem—one under
`the law of contracts, and therefore one for which a state
`forum can supply a remedy.” Illinois Bell Tel. Co. v.
`Worldcom Technologies, Inc., 179 F.3d 566, 574 (7th Cir. 1999);
`see also Connect Communications Corp. v. Southwestern Bell
`Tel., L.P., 467 F.3d 703, 708 (8th Cir. 2006); Southwestern Bell
`Tel. Co. v. Public Utility Comm’n, 208 F.3d 475, 484-86
`(5th Cir. 2000).
`Judge Friendly analogized a suit on a contract by a
`motor carrier regulated by the Interstate Commerce
`Commission to a copyright license, in words equally
`applicable to this case: “That the contracts could not
`lawfully be carried out save with ICC approval does not,
`without more, demonstrate that Congress meant all
`aspects of their performance or non-performance to be
`governed by law to be fashioned by federal courts rather
`than by the state law applicable to similar contracts
`relating to businesses not under federal regulation. This
`
`
`
`No. 07-3425
`
`7
`
`is not to say that a particular issue concerning such a
`contract, e.g., whether ICC approval had or had not been
`granted prior to a particular date, would not require
`determination under federal principles. But the com-
`plaint does not suggest that any such issue is present
`here.” McFaddin Express, Inc. v. Adley Corp., 346 F.2d 424,
`426-27 (2d Cir. 1965) (citation omitted); see also Chicago &
`North Western Ry. v. Toledo, Peoria & Western R.R., 324
`F.2d 936, 938-39 (7th Cir. 1963).
`We are mindful that Verizon Maryland, Inc. v. Global
`NAPs, Inc., 377 F.3d 355, 364-65 (4th Cir. 2004), says that
`interconnection agreements are so important to the fed-
`eral regulation of telecommunications that suits to
`enforce them arise under the Telecommunications Act.
`But that was a very different case from this. Verizon was
`suing state commissioners to block their order requiring
`it to pay compensation to another carrier, and while it
`was doing so in part because it thought they had misinter-
`preted the interconnection agreement, “according to
`Verizon’s complaint, whether it must pay reciprocal
`compensation on ISP-bound traffic under the terms of the
`agreement depends in substantial measure upon the re-
`quirements of the Act and the FCC’s regulations and
`interpretations. On its face, then, Verizon’s contract claim
`is tied directly to federal law, and its asserted basis in
`federal law is not ‘insubstantial [or] frivolous.’ ” Id. at 363-
`64 (emphasis in original).
`BellSouth Telecommunications, Inc. v. MCIMetro Access
`Transmission Services, Inc., 317 F.3d 1270, 1278-79 (11th Cir.
`2003) (en banc), was a similar case—and the majority
`
`
`
`8
`
`No. 07-3425
`
`opinion drew a powerful dissent by Judge Tjoflat, see id.
`at 1285-1308—but we need not take sides, as our case is
`distinguishable. Illinois Bell is seeking merely to collect
`charges specified in the interconnection agreement.
`The second type of charge that one carrier can levy
`against another is a charge for transmission of a carrier’s
`long-distance telecommunications. Such a charge must
`be embodied in and collected pursuant to a tariff filed
`with the Federal Communications Commission. 47 U.S.C.
`§ 203(a). Carriers file similar tariffs with state com-
`missions such as the Illinois Commerce Commission for
`the transmission of long-distance intrastate communica-
`tions, and the plaintiff’s other state-law claim is based
`on such a tariff.
`The defendants argue that the federal tariff cannot
`create federal jurisdiction over this suit, as the plaintiff
`claims it does, because, they say, the interconnection
`agreement between the plaintiff and Global NAPs Illinois
`“includes an ‘integration clause,’ whereby all the terms
`and conditions of the interconnection to which Global
`was entitled by the [Telecommunications Act] were
`acknowledged by the parties to be set forth in the [inter-
`connection agreement]. Thus, whatever
`the parties
`might owe one another on account of the traffic passing
`by virtue of their interconnection was plainly acknowl-
`edged to be set forth in the [agreement] (and not else-
`where) in compliance with the regime [created by the Act].
`Tariff claims presented as ‘alternative pleading’ do not
`create federal subject matter jurisdiction.”
`But the clause is more limited than the defendants
`claim. It reads: “Entire Agreement. This Reciprocal Com-
`
`
`
`No. 07-3425
`
`9
`
`pensation Appendix is intended to be read in conjunc-
`tion with the underlying Interconnection Agreement
`between ILEC [Illinois Bell, the incumbent local ex-
`change carrier, to which reciprocal compensation is due
`from competing local exchange carriers that interconnect
`with it, 47 U.S.C. § 251(b)(5); In re Core Communications, Inc.,
`455 F.3d 267, 270 (D.C. Cir. 2006)] and CLEC [Global NAPs
`Illinois, the competitive local exchange carrier], but that
`as to the Reciprocal Compensation terms and conditions,
`this Appendix constitutes the entire agreement between
`the Parties on these issues, and there are no other oral
`agreements or understandings between
`them on
`Reciprocal Compensation that are not incorporated into
`this Appendix.” The “entire agreement” to which the
`clause refers is thus the reciprocal-compensation ap-
`pendix, and a number of the plaintiff’s claims are
`unrelated to reciprocal compensation. The duty to
`provide such compensation is only one of the duties
`created by the interconnection provisions of the Tele-
`communications Act. See 47 U.S.C. §§ 251(b)(1)-(4), (c).
`We cannot find the “underlying Interconnection Agree-
`ment” in the record, but the plaintiff concedes that some
`of the payments that it claims Global NAPs Illinois owes
`it are based solely on the interconnection agreement, and
`we have just ruled that a suit for nonpayment in viola-
`tion of such an agreement does not arise under federal
`law. And we suppose an integration clause (though not
`this one, which is narrow in scope) could make all
`claims for payment to a carrier arise under the agreement
`rather than under filed tariffs. An ordinary agreement
`couldn’t do that—the obligation created by a filed tariff
`
`
`
`10
`
`No. 07-3425
`
`cannot be altered by an agreement of the parties. Maislin
`Industries, Inc. v. Primary Steel, Inc., 497 U.S. 116, 126-30
`(1990); Louisville & Nashville R.R. Co. v. Central Iron & Coal
`Co., 265 U.S. 59, 65 (1924). But telecommunications com-
`mon carriers are authorized to make binding intercon-
`nection agreements setting forth the prices of the
`services agreed upon. 47 U.S.C. § 252(a)(1).
`The possibility of turning a federal tariff claim into a
`simple contract claim does not affect jurisdiction, how-
`ever. A suit to enforce a federal tariff arises under federal
`law even if the defendant has a good defense to the claim,
`such as that the plaintiff had agreed not to make it. That
`is the implication of the well-pleaded complaint rule.
`Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). (For its
`application to a case similar to this, involving one of the
`defendants in this case, see Verizon New York Inc. v. Global
`NAPs, Inc., No. 1:03-cv-05073-ENV-RML, at 6-7 (E.D.N.Y.
`Sept. 20, 2007).) Only if the complaint’s invocation of
`federal law is frivolous does the rule forbid access to
`federal court under the federal-question jurisdiction. E.g.,
`Saturday Evening Post Co. v. Rumbleseat Press, Inc., 816
`F.2d 1191, 1195 (7th Cir. 1987).
`The integration clause is a reminder, however, that if
`an interconnection agreement specifies a particular price
`for a particular service, the seller cannot, simply by filing
`a tariff, prevent the buyer from challenging the price in
`the tariff as discrepant with the price in the intercon-
`nection agreement. Global NAPs Illinois argues that the
`plaintiff’s claim is based on a misinterpretation of the
`agreement. Such a disagreement should normally be
`
`
`
`No. 07-3425
`
`11
`
`referred to the state regulatory agency, in this case the
`Illinois Commerce Commission, before the federal court
`decides the case. The agency had to approve the parties’
`agreement and had the authority to impose a different
`agreement on them, or, what amounts to the same thing,
`to modify the agreement they had negotiated. 47 U.S.C.
`§ 252(e)(1), (2). If a dispute over the meaning of the agree-
`ment arises, the agency will usually be in the best posi-
`tion to resolve it.
`True, the Telecommunications Act does not expressly
`authorize a state commission, after it approves an inter-
`connection agreement, to resolve disputes arising under it.
`Nor does the Act expressly authorize a federal court to
`refer such a dispute, if the dispute arises in a suit in
`federal court, to the state commission, either. But such
`authority is a sensible corollary to the allocation of state
`and federal responsibilities made by the Act. Core Commu-
`nications, Inc. v. Verizon Pennsylvania, Inc., 493 F.3d 333,
`344 (3d Cir. 2007); BellSouth Telecommunications, Inc. v.
`MCIMetro Access Transmission Services, Inc., supra, 317 F.3d
`at 1276-77; cf. Peter W. Huber, Michael K. Kellogg & John
`Thorne, Federal Telecommunications Law § 3.3.4, pp. 226-28
`(2d ed. 1999) (the Telecommunications Act of 1996 “di-
`rectly controls intrastate issues that were once the ex-
`clusive province of the states. To that extent, the Act
`federalizes these local interconnection issues. But the
`respective roles of the state and federal agencies in imple-
`menting these market-opening provisions have been
`a matter of considerable dispute . . . . As a backstop to
`its primary
`reliance on privately negotiated
`agreements . . . Congress enlisted the aid of state public
`
`
`
`12
`
`No. 07-3425
`
`utility commissions to ensure that local competition
`was implemented fairly and with due regard to the
`local conditions and the particular historical circumstances
`of local regulation under the prior regime”); Leon T.
`Knauer, Ronald K. Machtley & Thomas M. Lynch, Telecom-
`munications Act Handbook 127-31 (1996).
`Regulatory agencies don’t usually engage in contract
`interpretation. But since interconnection agreements are
`complex and have to be approved by a state commission
`and disputes over their meaning are very likely to present
`issues related to the commission’s federal statutory
`authority—for example whether the contractual inter-
`pretation urged by one of the parties would result in price
`discrimination, 47 U.S.C. § 252(d)(1)(A)(ii)—the referral of
`interpretive disputes to the state commission, unless they
`seem contrived or are otherwise easy to resolve, is a
`sensible procedure; and there is nothing in the Telecom-
`munications Act to forbid it. And if this is right, then a
`carrier seeking to enforce an interconnection agreement
`must not be permitted to prevent referral by filing a
`tariff and suing to enforce it rather than the intercon-
`nection agreement. U.S. West Communications, Inc., v. Hix,
`183 F. Supp. 2d 1249, 1266 (D. Colo. 2000); see Global NAPs,
`Inc. v. FCC, 247 F.3d 252, 255-56 (D.C. Cir. 2001).
`To give the referral procedure a label, we are saying
`that issues that arise in the course of a federal suit to
`enforce an interconnection agreement may sometimes
`be within the “primary jurisdiction” of the state reg-
`ulatory agency. As explained in United States v. Western
`Pacific Ry., 352 U.S. 59, 63-64 (1956), “the doctrine of
`primary jurisdiction, like the rule requiring exhaustion of
`
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`No. 07-3425
`
`13
`
`administrative remedies, is concerned with promoting
`proper relationships between the courts and administrative
`agencies charged with particular regulatory duties . . . .
`‘Primary jurisdiction’ . . . applies where a claim is origi-
`nally cognizable in the courts, and comes into play when-
`ever enforcement of the claim requires the resolution of
`issues which, under a regulatory scheme, have been
`placed within the special competence of an administrative
`body; in such a case the judicial process is suspended
`pending referral of such issues to the administrative
`body for its views.” See also City of Peoria v. General
`Electric Cablevision Corp., 690 F.2d 116, 120-21 (7th Cir.
`1982). Although the role assigned by the Telecommunica-
`tions Act to the state commission in approving, rejecting,
`or imposing agreements is largely limited to assuring
`that they are “nondiscriminatory” and serve the “public
`interest, convenience and necessity,” 47 U.S.C.
`§§ 252(d)(1)(A)(ii), (e)(2)(A), these are broad criteria that
`create regulatory discretion based on familiarity with a
`technical field. See also Illinois Public Utilities Act, 220
`ILCS 5/9-250, 5/10-108. A federal court can properly stay
`its proceedings to allow the state commission to inter-
`pret the terms of an interconnection agreement to assure
`compliance with the statutory criteria before the court
`addresses other aspects of the suit, including (as in
`this case) federal tariff and veil-piercing claims.
`Primary
`jurisdiction usually involves referral to a
`federal agency, but in a case such as this, in which a
`state commission is exercising in effect delegated federal
`power, the logic of the doctrine permits a federal court’s
`reference to a state agency. Cf. Kendra Oil & Gas, Inc. v.
`
`
`
`14
`
`No. 07-3425
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`Homco, Ltd., 879 F.2d 240, 242 (7th Cir. 1989). An alterna-
`tive approach—the doctrine of Burford v. Sun Oil Co., 319
`U.S. 315 (1943), which requires federal district courts to
`decline to exercise federal jurisdiction over certain types
`of cases confided by state law to state administrative
`agencies—does not fit this case. The reason is not the
`uncertainty about whether the state commission can
`resolve the entire dispute over nonpayment of the plain-
`tiff’s interconnection charges, even though, if not, the
`proper disposition is a stay of the court case rather
`than—what is the normal result of Burford abstention—its
`dismissal. Hi Tech Trans, LLC v. New Jersey, 382 F.3d 295,
`302 (3d Cir. 2004). For in a damages suit, a stay might be
`an appropriate means of effectuating Burford abstention,
`as explained in Front Royal & Warren County Industrial
`Park Corp. v. Town of Front Royal, 135 F.3d 275, 282-83 (4th
`Cir. 1998). The critical point, rather, is that Burford is
`limited to cases in which “adjudication in federal court
`would ‘unduly intrude into the processes of state govern-
`ment or undermine the State’s ability to maintain
`desired uniformity,’ ” or invade “the State’s interests in
`maintaining ‘uniformity in the treatment of an essentially
`local problem’ . . . and [in] retaining local control over
`‘difficult questions of state law bearing on policy problems
`of substantial public import.’ ” Quackenbush v. Allstate Ins.
`Co., 517 U.S. 706, 728 (1996) (citations omitted); see also
`Behavioral Institute of Indiana, LLC v. Hobart City of
`Common Council, 406 F.3d 926, 931 (7th Cir. 2005).
`The regulatory issues that arise in cases governed by
`the Telecommunications Act are not “local” in the Burford
`sense. The role that the Act carves out for the states is
`
`
`
`No. 07-3425
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`15
`
`that of ancillary enforcers of the comprehensive scheme
`of federal telecommunications regulation set forth in the
`Act. The state commissions are not enforcing policies
`central to state government when they are regulating
`telecommunications; in that role they are “ ‘deputized’
`federal regulator[s]” of the Telecommunications Act.
`MCI Telecommunications Corp. v. Illinois Bell Tel. Co., 222
`F.3d 323, 344 (7th Cir. 2000).
`Despite the term primary jurisdiction, the reference of a
`case to an agency pursuant to that doctrine, rather than
`denying the jurisdiction of the court over the case, presup-
`poses that jurisdiction. See, e.g., United States v. Western
`Pacific Ry., supra, 352 U.S. at 63-64; Baker v. IBP, Inc., 357
`F.3d 685, 692 (7th Cir. 2004); Clark v. Time Warner Cable, 523
`F.3d 1110, 1114-15 (9th Cir. 2008). If the court lacked
`jurisdiction it would have to dismiss the suit, not stay it in
`anticipation of its eventual resumption after the agency
`rules. As explained in Arsberry v. Illinois, 244 F.3d 558, 563-
`64 (7th Cir. 2001) (citations omitted), we are at the heart of
`the doctrine of primary jurisdiction when “in a suit involv-
`ing a regulated firm but not brought under the regulatory
`statute itself, an issue arises that is within the exclusive
`original jurisdiction of the regulatory agency to resolve,
`although the agency’s resolution of it will usually be
`subject to judicial review. When such an issue arises, the
`suit must stop and the issue must be referred to the agency
`for resolution. If the agency’s resolution of the issue does
`not dispose of the entire case, the case can resume, subject
`to judicial review of that resolution along whatever path
`governs review of the agency’s decisions, whether back to
`
`
`
`16
`
`No. 07-3425
`
`the court in which the original case is pending or, if the
`statute governing review of the agency’s decisions desig-
`nates another court, to that court.” Despite the reference in
`this passage to the “exclusive original jurisdiction of the
`regulatory agency,” as we said earlier we do not think
`the court need refer all disputes over an interconnection
`agreement to the state commission, only those where the
`dispute raises a genuine policy issue the resolution of
`which has been confided by the Telecommunications
`Act to the state commissions.
`For completeness we note that in the absence of
`diversity or federal-question jurisdiction, a suit to en-
`force an interconnection agreement would have to be
`brought in state court, though if in the course of the
`litigation a question within the primary jurisdiction of
`the state commission arose the question would have to
`be referred to the commission.
`The defendants do raise issues concerning the meaning
`of the interconnection agreement, as we said, but it
`would be premature at this juncture to refer any of those
`issues to the Illinois Commerce Commission. The only
`issue addressed thus far in this litigation (apart from
`subject-matter jurisdiction) is whether the district court
`has personal jurisdiction over six affiliates of Global NAPs
`Illinois on a theory of “piercing the corporate veil.” To ask
`the Illinois Commerce Commission to opine on that topic
`would be to ask it to rule on an issue unrelated to its
`regulatory responsibilities. It is a threshold issue because
`unless it is resolved in Illinois Bell’s favor this suit is
`academic—Global NAPs Illinois has no assets out of which
`
`
`
`No. 07-3425
`
`17
`
`to pay a judgment. The issue of piercing the corporate
`veil has to be resolved before there is any referral to the
`state commission. The district court therefore properly
`addressed the issue and we have now to determine
`whether the court resolved it correctly.
`Ferrous Miner Holdings is the parent of Global NAPs
`Illinois and the other defendants. The district court dis-
`missed it as not being within the court’s personal juris-
`diction. The judge entered that dismissal as a final judg-
`ment under Rule 54(b), finding no reason to delay the
`entry of an appealable order letting Ferrous Miner out
`of the case.
`The plaintiff argues that the district judge was not
`authorized to issue a Rule 54(b) judgment because the
`question of personal jurisdiction over Ferrous Miner is
`entwined with questions involving other defendants,
`such as whether the doctrine of piercing the corporate veil
`can be used by the plaintiff to fix liability on other
`affiliates of Global NAPs Illinois, four of which (all but
`Ferrous Miner) remain defendants in the district court.
`The argument is frivolous. The rule provides that “when
`an action presents more than one claim for relief . . . or
`when multiple parties are involved, the court may [pro-
`vided there is no just reason for delay] direct entry
`of a final judgment as to one or more, but fewer than all,
`of the claims or parties.” Multiple claims or multiple
`parties. If there is one claim but multiple parties, the court
`can enter judgment as to one or more of the parties,
`releasing them from the threat of liability. E.g., United
`
`
`
`18
`
`No. 07-3425
`
`States v. Ettrick Wood Products, Inc., 916 F.2d 1211, 1217-19
`(7th Cir. 1990).
`That the plaintiff should be seeking in this appeal to
`change the judgment into a mere interlocutory ruling by
`the district judge that the plaintiff cannot bring Ferrous
`Miner into the case (a ruling without res judicata effect
`until a final
`judgment is entered) is defeatist, and
`surprises us, as the merits of the appeal—which fortu-
`nately for the plaintiff it has also argued—are compelling.
`Ferrous Miner is the sole stockholder of Global NAPs
`Illinois, which has no assets other than its Illinois certi-
`ficate of convenience and necessity, no revenues, no
`income, no financial statements, no payroll accounts, and
`no employees besides its three officers.
`The district judge seems to have thought that a court
`in Illinois could obtain jurisdiction over Ferrous Miner
`only if there was a basis for piercing Ferrous Miner’s
`corporate veil. But the plaintiff is not trying to obtain
`relief against Frank Gangi, the owner of Ferrous Miner. The
`veil it wishes to pierce is that of Ferrous Miner’s subsid-
`iary—the corporate limited liability of Global NAPs
`Illinois—so that it can get at the parent company. United
`States v. Bestfoods, 524 U.S. 51, 61-64 (1998); Papa v. Katy
`Industries, Inc., 166 F.3d 937, 940-41 (7th Cir. 1999); APS
`Sports Collectibles, Inc. v. Sports Time, Inc., 299 F.3d 624, 630-
`31 (7th Cir. 2002). That corporation is a shell. For aught
`that appears, the only reason for its existence is that
`Ferrous Miner does not want to pay for the communica-
`tions services that it bought from the plaintiff in the
`name of the shell. Richard Gangi, the treasurer of Global
`NAPs Illinois, has acknowledged that Ferrous Miner’s
`
`
`
`No. 07-3425
`
`19
`
`subsidiaries are “file companies” that “don’t do anything.”
`“They have no assets. They have no employees.” Frank
`Gangi similarly described what he calls “regulatory”
`corporations as ones that exist “for the purpose of serving
`a regulatory requirement.” It “may have no assets, it
`may have no income, it may have no expenses. It may be
`just what we call a file drawer company.” The corporate
`structure that the Gangi brothers have created appears
`to be designed to keep all its assets in corporations that
`have no liabilities and all its liabilities in corporations
`that have no assets.
`Ferrous Miner argues that the law applicable to piercing
`the corporate veil in this case is Delaware law, and that
`under Delaware law the veil can be pierced only upon a
`showing of fraud. That is not true, as it would enable
`companies to insulate themselves from tort liability by
`operating through shell corporations. For if you are a
`bystander injured by a truck driven by the employee of
`a corporation that has no assets, you cannot cry
`“fraud”—the corporation had made no representations
`to you.
`What is true is that in a contractual veil-piercing case,
`such as this case, Delaware permits piercing the veil only
`upon proof either of fraud or that the corporation
`simply functioned as a façade for the dominant share-
`holder. See Stephen B. Presser, Piercing the Corporate Veil
`§ 2:8 (2008). These are closely related criteria. See Trustees
`of National Elevator Industry Pension, Health Benefit &
`Educational Funds v. Lutyk, 332 F.3d 188, 193-94 (3d Cir.
`2003); Southeast Texas Inns, Inc. v. Prime Hospitality Corp.,
`462 F.3d 666, 674-75 (6th Cir. 2006), citing Wallace v.
`
`
`
`20
`
`No. 07-3425
`
`Wood, 752 A.2d 1175, 1184 (Del. Ch. 1999). If there is no
`substance at all to a corporation, so that it cannot be
`made to answer for any of its debts, no rational person
`would make a contract with it unless he were deceived.
`“Suppose a controlling
`shareholder
`[Ferrous
`Miner] . . . persuades a lender to extend credit on
`favorable terms to the shareholder’s corporation [Global
`NAPs Illinois] by representing that the corporation has
`substantial net assets, but in fact it is a shell, and all
`the assets ostensibly owned by the corporation are
`actually owned by the shareholder. The corporation
`defaults, and when the lender tries to sue the share-
`holder to collect his loan—for the corporation has no
`assets out of which to collect it—he is met by the defense
`of limited liability. This is the paradigmatic case for
`rejecting the defense.” In re Kaiser, 791 F.2d 73, 75 (7th Cir.
`1986); see also Browning-Ferris Industries of Illinois, Inc. v.
`Ter Maat, 195 F.3d 953, 959-60 (7th Cir. 1999). Had
`Global NAPs Illinois during its negotiations with the
`plaintiff said that in the event it broke its contract the
`plai
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