                                                                                         In the

        United States Court of Appeals
                                               For the Seventh Circuit
                                                           ____________________  

No.  16-­‐‑2902  
NALCO  COMPANY,  
                                                                                       Plaintiff-­‐‑Counterdefendant-­‐‑Appellee,  
                                                                                                v.  

DAVID  T.  CHEN,  
                                                                                 Defendant-­‐‑Counterplaintiff-­‐‑Appellant,  
                                                                                                v.  
NALCO  MOBOTEC,  INC.,  
                                                                                                        Counterdefendant-­‐‑Appellee.  
                                                           ____________________  

                       Appeal  from  the  United  States  District  Court  for  the  
                         Northern  District  of  Illinois,  Eastern  Division.  
                        No.  12  C  9931  —  Harry  D.  Leinenweber,  Judge.  
                                                           ____________________  

   ARGUED  DECEMBER  5,  2016  —  DECIDED  DECEMBER  9,  2016  
                 ____________________  

   Before   EASTERBROOK   and   ROVNER,   Circuit   Judges,   and  
SHADID,  District  Judge.*  


                                                                                                     
    *  Of  the  Central  District  of  Illinois,  sitting  by  designation.  
2                                                                No.  16-­‐‑2902  

      EASTERBROOK,   Circuit   Judge.   Nalco   and   David   Chen   con-­‐‑
ducted   a   joint   venture   to   sell   environmental   equipment   in  
China.   Nalco   owned   55%   of   the   venture,   Chen   40%,   and   a  
third  party  5%.  When  the  joint  venture  (Nalco  Mobotec  En-­‐‑
vironmental   Protection   Technology   (Shanghai)   Co.,   or  
NMEPT)  encountered  business  problems,  Nalco  guaranteed  
a   loan,   which   NMEPT   was   unable   to   cover.   Nalco   paid   the  
creditor  and  sued  Chen  (under  the  diversity  jurisdiction)  for  
his  40%  share  of  the  outlay.  The  district  court  entered  judg-­‐‑
ment   in   Nalco’s   favor   for   more   than   $2   million.   2014   U.S.  
Dist.  LEXIS  76207  (N.D.  Ill.  June  4,  2014).  
      Chen   filed   counterclaims   against   both   Nalco   and   a   sub-­‐‑
sidiary,   Nalco   Mobotec,   Inc.   (NMI),   through   which   Nalco  
had  made  its  investment  in  the  joint  venture.  Chen  contend-­‐‑
ed  that  NMI  had  violated  his  rights  under  the  agreement  by  
causing  the  joint  venture  to  borrow  $300,000  without  his  ap-­‐‑
proval,   even   though   the   agreement   required   all   investors’  
consent   for   borrowing   money.   When   the   joint   venture   did  
not  repay  this  loan,  the  creditor  petitioned  it  into  bankruptcy  
under   Chinese   law—another   violation   of   the   agreement,  
Chen  maintained.  As  Chen  described  things,  the  lender  was  
doing  Nalco’s  bidding  in  an  effort  to  get  around  a  clause  of  
the  agreement  requiring  the  three  investors’  unanimous  con-­‐‑
sent   for   bankruptcy   proceedings.   Nalco   wanted   to   wind   up  
the  unprofitable  venture,  but  Chen  preferred  to  keep  it  alive  
(if   dormant)   in   order   to   protect   its   intellectual   property.  
Chen’s   counterclaim   included   12   counts   under   the   laws   of  
both  China  and  Illinois.  The  district  court  granted  summary  
judgment   against   Chen   on   11   of   the   12,   see   2015   U.S.   Dist.  
LEXIS   68095   (N.D.   Ill.   2015),   and   he   soon   abandoned   the  
twelfth.  At  this  point  the  suit  was  over,  but  no  one  appealed.  
No.  16-­‐‑2902                                                                 3  

    Chen   is   not   reconciled   to   his   loss,   however,   and   filed   a  
new   suit,   this   time   in   China.   He   named   as   the   defendant  
Mobotec   LLC   (Mobotec).   Contending   that   Chen   was   at-­‐‑
tempting  to  relitigate  claims  already  resolved  in  this  nation,  
Nalco   asked   the   district   court   to   enjoin   him   from   pursuing  
the   Chinese   litigation.   The   court   issued   an   anti-­‐‑suit   injunc-­‐‑
tion,  2016  U.S.  Dist.  LEXIS  75698  (N.D.  Ill.  June  10,  2016),  and  
this  time  Chen  appealed.  
     His   principal   argument   is   that   Mobotec   was   not   a   party  
to  the  Illinois  litigation  and  therefore  cannot  benefit  from  the  
Illinois  judgment.  That  would  be  a  questionable  proposition  
even  if  Mobotec  were  a  distinct  entity,  for  federal  courts  no  
longer  require  mutuality  in  civil  litigation.  See  Parklane  Hosi-­‐‑
ery  Co.  v.  Shore,  439  U.S.  322  (1979);  Blonder-­‐‑Tongue  Laborato-­‐‑
ries,   Inc.   v.   University   of   Illinois   Foundation,   402   U.S.   313  
(1971).  Having  raised  and  lost  his  claims  under  the  joint  ven-­‐‑
ture   agreement,   Chen   is   hard   pressed   to   explain   why   he   is  
entitled   to   another   round   of   litigation.   But   then   one   might  
ask  what  skin  it  is  off  Nalco’s  nose  whether  Chen  seeks  and  
gets  relief  against  Mobotec;  why  would  Nalco  or  NMI  even  
have  standing  to  protest?  
     Their  answer,  seconded  by  the  district  court,  is  that  NMI  
and   Mobotec   are   the   same   entity.   Relying   on   documents  
from   Delaware’s   Secretary   of   State,   the   district   judge   found  
that   Nalco   Mobotec,   Inc.,   first   changed   its   organizational  
form   from   a   corporation   to   a   limited   liability   company,   be-­‐‑
coming   Nalco   Mobotec   LLC,   and   then   changed   its   name   to  
Mobotec   LLC   as   part   of   the   sale   of   this   business   to   Power  
Industrial  in  July  2013.  Nalco  retained  a  contractual  right  to  
act   for   Mobotec   in   connection   with   the   dispute   about   the  
joint  venture  with  Chen,  and  doubtless  a  duty  to  indemnify  
4                                                                  No.  16-­‐‑2902  

Power  Industrial  for  any  loss,  which  explains  why  this  litiga-­‐‑
tion   proceeded   as   it   did.   The   district   court   wrote   that,   be-­‐‑
cause   NMI   and   Mobotec   are   just   different   names   for   the  
same  thing,  Chen  cannot  avoid  the  consequences  of  his  loss  
by  changing  the  entity’s  name  on  legal  papers  in  China.  
    Chen   protests   that   he   was   surprised   by   the   district  
judge’s   conclusion.   Nalco   had   filed   a   lawyer’s   declaration  
analyzing   whether   the   Chinese   claims   overlapped   those   in  
Illinois,   and   the   Delaware   documents   were   attached   to   this  
declaration.   Chen   maintains   that,   when   the   district   court  
struck  this  declaration  on  the  ground  that  the  lawyer  had  not  
demonstrated   expertise   in   Chinese   law,   the   judge   disabled  
himself  from  relying  on  the  attachments  and  made  it  unnec-­‐‑
essary   for   Chen   to   discuss   their   significance.   When   the   at-­‐‑
tachments  played  a  role  in  the  district  court’s  decision,  Chen  
declares,  he  was  bushwhacked.  
      There  are  two  problems  with  this  line  of  argument.  One  
is   that   the   judge   was   free   to   get   the   documents   from   Dela-­‐‑
ware  and  to  take  judicial  notice  of  them,  whether  or  not  they  
had  been  tossed  out  along  with  the  declaration  to  which  they  
were  attached.  The  other  is  that  there  would  be  no  point  in  
remanding   for   further   proceedings   because,   in   the   months  
since   the   district   court   acted,   Chen   has   not   offered   any   rea-­‐‑
son   to   doubt   the   judge’s   understanding   of   the   corporate  
documents.  Chen’s  appellate  brief  does  not  contend  that  the  
judge   was   wrong   in   finding   that   NMI   and   Mobotec   are   dif-­‐‑
ferent  names  for  the  same  thing,  though  he  has  had  plenty  of  
time   to   find   any   flaws   in   the   judge’s   reasoning   or   its   docu-­‐‑
mentary   foundation.   To   the   contrary,   Chen’s   suit   in   China  
seeks   to   hold   Mobotec   liable   for   NMI’s   acts   relating   to   the  
No.  16-­‐‑2902                                                                    5  

joint  venture.  What  could  be  the  basis  for  that  approach,  un-­‐‑
less  the  two  names  denote  one  continuing  business  entity?  
     Still,  Chen  insists,  Nalco  is  estopped  to  deny  that  Mobo-­‐‑
tec   is   a   different   entity.   That’s   because   during   discovery  
Nalco  said  that  it  could  not  produce  certain  documents  held  
by   Mobotec.   Having   taken   that   stance   and   won   (at   least,  
won   an   order   concerning   discovery)   Nalco   cannot   reverse  
course,   the   argument   goes.   We   need   not   consider   how   far  
judicial  estoppel,  as  opposed  to  law  of  the  case,  governs  pro-­‐‑
ceedings  within  a  single  lawsuit.  Cf.  New  Hampshire  v.  Maine,  
532  U.S.  742,  749–51  (2001);  Astor  Chauffeured  Limousine  Co.  v.  
Runnfeldt   Investment   Corp.,   910   F.2d   1540,   1547–48   (7th   Cir.  
1990).   For   Chen   has   lifted   Nalco’s   statement   out   of   context.  
Recall  that  NMI  was  sold  to  Power  Industrial  in  2013.  Nalco  
told  the  district  court  that  it  could  not  get  the  documents—
not   because   Mobotec   was   a   different   entity   but   because   it  
had  a  new  owner,  and  Nalco  could  not  rummage  through  its  
files   at   will.   Nalco   was   inviting   Chen   to   serve   a   third-­‐‑party  
discovery  request,  which  he  elected  not  to  do.  Nalco  was  not  
representing  that  NMI  and  Mobotec  are  different  businesses.  
Civil  litigants  are  entitled  to  take  inconsistent  positions  with-­‐‑
in  a  single  suit,  see  Fed.  R.  Civ.  P.  8(d)(3),  but  Nalco  has  not  
been  inconsistent  in  this  one.  
      Chen   has   a   second   line   of   argument   against   the   district  
court’s  injunction.  One  might  have  expected  Chen  to  invoke  
principles  of  international  comity  and  contend  that  the  Chi-­‐‑
nese  court,  applying  Chinese  law,  is  the  right  body  to  ascer-­‐‑
tain  whether  Chen  is  attempting  inappropriate  litigation.  For  
all   we   know,   China   may   not   use   the   law   of   claim   or   issue  
preclusion  at  all  (these  are  common-­‐‑law  concepts,  and  China  
is  not  a  common-­‐‑law  nation)  and  may  rely  on  awards  of  at-­‐‑
6                                                                No.  16-­‐‑2902  

torneys’  fees  or  some  other  device  to  discourage  losers  from  
continuing   their   battles.   Or   China   may   see   more   difference  
between  Chen’s  claims  there  and  his  claims  here  than  a  fed-­‐‑
eral  judge  in  this  nation  perceives.  
    But   comity   is   not   Chen’s   theme.   His   lawyer   told   us   at  
oral   argument   that   it   had   been   considered   but   deliberately  
omitted  from  the  appellate  brief.  Instead  he  relies  entirely  on  
a  doctrine  of  American  law:  The  difference  between  permis-­‐‑
sive   and   compulsory   counterclaims.   The   sort   of   claims   ad-­‐‑
vanced  in  China,  Chen  asserts,  would  have  been  permissive  
counterclaims  under  Fed.  R.  Civ.  P.  13(b).  And  since  he  was  
free  to  omit  them  from  Nalco’s  suit,  he  is  equally  free  to  as-­‐‑
sert  them  in  China.  
     This   would   be   a   powerful   argument   if   Chen   had   done  
nothing  but  defend  against  Nalco’s  claim  for  his  share  of  the  
guaranty.   But   that’s   not   what   he   did.   He   added   NMI   as   a  
third-­‐‑party  defendant  and  asserted  12  counterclaims  against  
both   Nalco   and   NMI.   Having   elected   to   take   the   offensive,  
Chen  was  obliged  to  raise  all  claims  that  stem  from  the  same  
transaction   or   series   of   related   transactions   (what   courts  
sometimes  call  the  “core  of  operative  facts”).  See  Restatement  
(Second)  of  Judgments  §24  (1982)  (rule  against  claim  splitting).  
Chen   did   not   try   to   raise   US   counterclaims   in   the   US   and  
Chinese  counterclaims  in  China,  a  strategy  that  our  nation’s  
rules   of   preclusion   allow   if   the   reservation   is   expressed   to  
and  accepted  by  the  original  court.  See  Restatement  §26(1)(b).  
Instead   his   12   counterclaims   included   several   resting   on  
Chinese   law.   Under   ordinary   rules   of   claim   preclusion,   ex-­‐‑
emplified   by   Restatement   §24,   the   claims   now   pending   in  
China   arise   from   the   same   set   of   related   transactions   as   his  
12   counterclaims   and   therefore   had   to   be   litigated   together  
No.  16-­‐‑2902                                                                   7  

with   them.   As   Restatement   §25   puts   it,   “The   rule   of   §24   ap-­‐‑
plies   to   extinguish   a   claim   by   the   plaintiff   against   the   de-­‐‑
fendant   even   though   the   plaintiff   is   prepared   in   the   second  
action  (1)  To  present  evidence  or  grounds  or  theories  of  the  
case  not  presented  in  the  first  action,  or  (2)  To  seek  remedies  
or   forms   of   relief   not   demanded   in   the   first   action.”   This   is  
known   as   the   doctrine   of   merger   and   bar.   See   also   Restate-­‐‑
ment  §19.  
     Chen   does   not   contest   this   understanding   of   preclusion  
or  dispute  the  way  the  district  judge  applied  it.  He  rests  his  
appeal  on  the  distinction  between  permissive  and  compulso-­‐‑
ry  counterclaims,  a  distinction  of  no  moment  given  his  deci-­‐‑
sion  to  add  NMI  as  a  party  and  present  12  counterclaims  in  
Nalco’s  debt-­‐‑collection  suit.  See  Restatement  §23  (“Where  the  
defendant   interposes   a   claim   as   a   counterclaim   and   a   valid  
and  final  judgment  is  rendered  against  him  on  the  counter-­‐‑
claim,  the  rules  of  bar  are  applicable  to  the  judgment.”).  The  
permissive/compulsory   distinction   is   a   real   one,   but   it   is   a  
red  herring  for  current  purposes.  
                                                                      AFFIRMED  
