In the
United States Court of Appeals
For the Seventh Circuit
No. 07-1019
A PEX D IGITAL, INC.,
Plaintiff-Appellant,
v.
S EARS, R OEBUCK & C OMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 06 C 3972—George W. Lindberg, Judge.
A RGUED JUNE 2, 2009—D ECIDED JULY 16, 2009
Before P OSNER, R IPPLE, and K ANNE, Circuit Judges.
K ANNE, Circuit Judge. Apex Digital sued Sears to
collect an unpaid debt. Sears filed a motion to dismiss
for lack of subject matter jurisdiction under Federal Rule
of Civil Procedure 12(b)(1), claiming that Apex lacked
standing because it had assigned all of its rights in the
debt to the CIT Group/Commercial Services, Inc. The
district court agreed with Sears and granted its motion.
We now affirm.
2 No. 07-1019
I. B ACKGROUND
On July 24, 2006, Apex Digital brought a diversity
suit against Sears in the Northern District of Illinois for
breach of contract and other related claims. The com-
plaint alleged that over several years, Sears had pur-
chased products from Apex worth in excess of
$100 million. According to Apex, Sears accepted delivery
but stopped paying for these products in 2005; the out-
standing amount due after all potentially applicable
credits is at least $8,185,302.24.
Sears responded on August 14 with a motion to
dismiss for lack of subject matter jurisdiction under
Federal Rule of Civil Procedure 12(b)(1) or, in the alterna-
tive, Rule 12(b)(6). Sears claimed that Apex sold and
assigned all of its rights in its accounts receivable to
CIT and therefore no longer had standing to sue. In
support of its motion, Sears attached a letter from
Apex dated June 20, 2003, which stated:
We are pleased to inform you that we have
entered into a factoring arrangement with The CIT
Group/Commercial Services, Inc. (herein “CIT”).
Under our agreement with CIT, all of our existing
and future accounts receivable have been sold
and assigned to CIT. We feel that this arrange-
ment will provide a higher level of service for all
our customers.
In accordance with our arrangement with CIT,
commencing immediately, payment on all out-
standing invoices and all invoices hereafter ren-
dered by us must be made directly to CIT, strictly
No. 07-1019 3
in accordance with the terms of sale . . . . In the
event of any merchandise returns or claims, you
thereof must give prompt notice to CIT.
Apex offered nothing in response to dispute Sears’s
factual allegations. Instead, it pointed to perceived
defects in Sears’s argument. Apex claimed that its letter
to Sears was insufficient to determine the terms of the
assignment between Apex and CIT and that, at most, it
suggested that at some point in the last three years CIT
and Apex had entered into an assignment of collection.
Apex claimed that because an assignment of collection
does not transfer beneficial ownership to the assignee
under Illinois law, see Ecker v. Big Wheels, Inc., 483 N.E.2d
639, 641-42 (Ill. App. Ct. 1985), the assignment Sears
had alleged was not sufficient to divest Apex of its
interest in the suit. Apex averred that because there was
no facial defect in its complaint, Sears’s motion was
without merit.
Sears replied that the letter established a sale and
assignment of all of Apex’s rights in the debt, not merely
the right to collect. The district court apparently agreed
and granted Sears’s motion on September 27, 2006, noting
that the only relevant evidence presented was the
letter from Apex’s president stating, “[u]nder our agree-
ment with CIT, all of our existing and future accounts
receivable have been sold and assigned to CIT.” The
court concluded that, in the absence of further evidence
4 No. 07-1019
to the contrary, Apex lacked standing to sue. 1 This
appeal followed.
II. A NALYSIS
We review de novo a district court’s dismissal for lack
of subject matter jurisdiction. Johnson v. Orr, 551 F.3d 564,
567 (7th Cir. 2008). Apex claims that the district court
applied the wrong standard to Sears’s motion to dis-
miss. According to Apex, because the district court
looked beyond the pleadings and considered extrinsic
evidence, it improperly converted Sears’s Rule 12(b)(1)
motion into a Rule 56 summary judgment motion. In
support of its argument, Apex cites cases establishing
that to survive a motion to dismiss for lack of subject
matter jurisdiction, a plaintiff need only show the
existence of facts that could, consistent with the com-
plaint’s allegations, establish standing. See Lujan v. Defend-
ers of Wildlife, 504 U.S. 555, 561 (1992); Lac du Flambeau Band
of Lake Superior Chippewa Indians v. Norton, 422 F.3d 490,
495 (7th Cir. 2005). Because no facts in the pleadings
defeated its standing, Apex claims that the district
court erred in dismissing the suit. We disagree.
1
Apex also filed a motion to vacate the dismissal under Rule
59(e) or, in the alternative, to permit the filing of an amended
complaint under Rule 17(a). The district court denied both
motions. The Rule 59(e) motion presented largely the same
issues before us on appeal, and the Rule 17(a) motion is not
before us, so we need not discuss either motion.
No. 07-1019 5
Standing is an essential component of Article III’s case-
or-controversy requirement. Lujan, 504 U.S. at 560. “ ‘In
essence the question of standing is whether the litigant
is entitled to have the court decide the merits of the
dispute or particular issues.’ ” Perry v. Vill. of Arlington
Heights, 186 F.3d 826, 829 (7th Cir. 1999) (quoting Warth
v. Seldin, 422 U.S. 490, 498 (1975)). As a jurisdictional
requirement, the plaintiff bears the burden of establishing
standing. Id. Because standing is “not [a] mere pleading
requirement[] but rather an indispensable part of the
plaintiff’s case, [it] must be supported in the same way
as any other matter on which the plaintiff bears the
burden of proof, i.e., with the manner and degree of
evidence required at the successive stages of the litiga-
tion.” Lujan, 504 U.S. at 561.
Apex claims that at the pleading stage, the “manner
and degree of evidence” it needed to establish standing
was no evidence at all. Instead, Apex relies on Lujan and
Lac du Flambeau for the proposition that general
factual allegations of standing may suffice. See Lujan,
504 U.S. at 561 (“At the pleading stage, general factual
allegations of injury resulting from the defendant’s
conduct may suffice, for on a motion to dismiss we
‘presum[e] that general allegations embrace those
specific facts that are necessary to support the
claim.’ ” (alteration in original) (quoting Lujan v. Nat’l
Wildlife Fed’n, 497 U.S. 871, 889 (1990))); Lac du Flambeau,
422 F.3d at 496. This, according to Apex, means that the
district court is forbidden from considering any ex-
trinsic evidence related to standing at the pleading stage.
6 No. 07-1019
But Apex ignores the critical difference between facial
and factual challenges to jurisdiction. Facial challenges
require only that the court look to the complaint and see
if the plaintiff has sufficiently alleged a basis of subject
matter jurisdiction. Lawrence v. Dunbar, 919 F.2d 1525,
1529 (11th Cir. 1990). Both Lujan and Lac du
Flambeau involved facial attacks because the allegations
in the plaintiffs’ complaints, even if true, were pur-
portedly insufficient to establish injury-in-fact. See
Lujan, 504 U.S. at 563-78 (analyzing why none of the
allegations in the plaintiff’s complaint satisfied the ele-
ments of standing); Lac du Flambeau, 422 F.3d at 496 (“The
Secretary argues that LDF lacks standing because it has
not adequately pleaded an injury in fact.” (emphasis
added)). In the context of facial challenges, Apex is
correct that the court does not look beyond the allega-
tions in the complaint, which are taken as true for
purposes of the motion. Lawrence, 919 F.2d at 1529.
In contrast, a factual challenge lies where “the com-
plaint is formally sufficient but the contention is that
there is in fact no subject matter jurisdiction.” United
Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th
Cir. 2003). Sears has raised such a factual challenge here.
It claims that although Apex’s complaint was facially
sufficient, external facts called the court’s jurisdiction
into question. The law is clear that when considering a
motion that launches a factual attack against jurisdic-
tion, “ ‘[t]he district court may properly look beyond the
jurisdictional allegations of the complaint and view
whatever evidence has been submitted on the issue to
determine whether in fact subject matter jurisdiction
No. 07-1019 7
exists.’ ” Evers v. Astrue, 536 F.3d 651, 656-57 (7th Cir. 2008)
(quoting St. John’s United Church of Christ v. City of Chi., 502
F.3d 616, 625 (7th Cir. 2007)); see also, e.g., United Phospho-
rus, 322 F.3d at 946; Hay v. Ind. State Bd. of Tax Comm’rs, 312
F.3d 876, 879 n.2 (7th Cir. 2002); Sapperstein v. Hager, 188
F.3d 852, 855 (7th Cir. 1999).
This difference between facial and factual attacks on
jurisdiction was aptly described by the Third Circuit:
The facial attack does offer similar safeguards to
the plaintiff [as Rule 12(b)(6) and Rule 56]: the
court must consider the allegations of the com-
plaint as true. The factual attack, however, differs
greatly for here the trial court may proceed as it
never could under [Rule 12(b)(6) or Rule 56].
Because at issue in a factual 12(b)(1) motion is the
trial court’s jurisdiction—its very power to hear the
case—there is substantial authority that the trial
court is free to weigh the evidence and satisfy
itself as to the existence of its power to hear the
case. In short, no presumptive truthfulness atta-
ches to plaintiff’s allegations, and the existence
of disputed material facts will not preclude the
trial court from evaluating for itself the merits of
jurisdictional claims.
Mortenson v. First Fed. Sav. & Loan Ass’n, 549 F.2d 884, 891
(3d Cir. 1977). In other words, the district court’s ability
to consider evidence beyond the pleadings derives
from the importance of limiting federal jurisdiction.
Because such “jurisdiction cannot be conferred by
consent of the parties, if the facts place the district court
on notice that the jurisdictional allegation probably is
8 No. 07-1019
false, the court is duty-bound to demand proof of its
truth.” Kanzelberger v. Kanzelberger, 782 F.2d 774, 777 (7th
Cir. 1986).
Sears produced evidence calling Apex’s standing into
question—a letter indicating that Apex had sold and
assigned all rights in its accounts receivable to CIT. Once
such evidence is proffered, “[t]he presumption of correct-
ness that we accord to a complaint’s allegations falls
away,” Commodity Trend Serv., Inc. v. Commodity Futures
Trading Comm’n, 149 F.3d 679, 685 (7th Cir. 1998), and the
plaintiff bears the burden of coming forward with compe-
tent proof that standing exists, Lee v. City of Chi., 330
F.3d 456, 468 (7th Cir. 2003); Retired Chi. Police Ass’n v. City
of Chi., 76 F.3d 856, 862 (7th Cir. 1996). In this case, Apex
failed to produce any evidence to rebut Sears’s allega-
tion that it had assigned all of its rights in the debt to
CIT. It never provided evidence that the assignment
had ended, nor that it was merely an assignment for
purposes of collection. The district court correctly con-
cluded that Apex had failed to meet its burden of proof.
Having determined that Apex did not meet its burden
of proof to establish jurisdiction, the only remaining
question before us is purely procedural. Apex notes
that the district court never asked for additional briefing
or conducted an evidentiary hearing before holding that
it lacked jurisdiction. Thus, Apex claims that it never
had the opportunity to present evidence that could
have defeated Sears’s claim.
We find Apex’s claim to be without merit. Although the
court did not hold an evidentiary hearing, Apex could
No. 07-1019 9
have attached its agreement with CIT to its response to
Sears’s motion. It chose not to do so.2 Furthermore, this
case does not present the same concerns as previous cases
where we have held that an evidentiary hearing was
required.
For example, in Hemmings v. Barian, 822 F.2d 688 (7th
Cir. 1987), we reversed a district court that had dismissed
a case for lack of jurisdiction without conducting an
inquiry into the factual basis for the plaintiff’s claim of
diversity. In that case, the complaint alleged that the
plaintiff was a citizen of Florida, that the defendant
resided in Wisconsin, and that the parties were therefore
citizens of different states. Id. at 693. As we noted,
these allegations were insufficient to establish diversity
jurisdiction because residency alone does not determine
citizenship. Id. The district court dismissed the claim
because diversity had not been properly alleged. Id. at
689. We remanded, holding that although the plaintiff’s
attempt to invoke diversity jurisdiction was “clumsy,”
dismissal was “overkill.” Id. at 693. The proper course
2
Apex did, however, attach the factoring agreement to its
amended complaint, which the district court refused to
accept. A review of that agreement reveals the likely reason that
Apex withheld it in response to Sears’s motion—the agreement
stated: “You [Apex] sell and assign to us [CIT], and we purchase
as absolute owner, all accounts arising from your sales of
inventory or rendition of services which you in your discre-
tion choose to factor with us . . . .” Thus, this agreement
further undermines Apex’s argument that Sears’s evidence
established no more than a collection agreement with CIT.
10 No. 07-1019
of action, we noted, was not to dismiss the complaint
but to determine whether jurisdiction in fact existed. Id.
The instant case is distinguishable from Hemmings.
First, the court in that case had no information before it
on which to base its jurisdictional ruling. The defendant
had not brought forward evidence to question the
diversity of the parties, so the court had no factual basis
for its decision. In contrast, Sears provided the court
with concrete evidence that Apex lacked standing to
sue, which formed a sufficient factual basis for the
district court’s decision.
Moreover, unlike in Hemmings, where the plaintiff made
a “clumsy” attempt to invoke diversity jurisdiction,
Apex made no attempt whatsoever to refute Sears’s
factual allegations. Sears claimed, based on the letter
attached to its motion, that Apex had sold and assigned
all of its interests to CIT. Apex argued that Sears’s
evidence established only an assignment of collection,
but it never offered any factual information of its own
to support that claim. It did not describe the contours of
its relationship with CIT, nor did it attempt to define
the assignment that had occurred. The district court
therefore had no conflicting facts before it, and, using
the evidence that Sears had presented, it determined
that no jurisdiction in fact existed.
Although the district court is duty-bound to demand
proof of jurisdiction when resolving factual disputes, see
Kanzelberger, 782 F.2d at 777, it need not make such a
demand when no true factual dispute exists. In this
case, there was no such dispute before the court because
No. 07-1019 11
only one set of facts had been alleged. The district court
certainly would have been within its discretion to
conduct an evidentiary hearing, but we see no reason
to require one under these circumstances.
III. C ONCLUSION
In its motion to dismiss, Sears produced evidence that
called into question Apex’s standing to sue. In response,
Apex brought forward no competent evidence to
establish the court’s jurisdiction. Although the court
did not conduct an evidentiary inquiry, none was
required under the facts of this case. The dismissal of
the suit is A FFIRMED.
7-16-09