In the
United States Court of Appeals
For the Seventh Circuit
No. 11-2172
IN RE:
IFC C REDIT C ORPORATION,
Debtor.
A PPEAL OF:
N ORTHBROOK B ANK & T RUST C OMPANY.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 11 C 1976—Blanche M. Manning, Judge.
A RGUED O CTOBER 17, 2011—D ECIDED D ECEMBER 5, 2011
Before B AUER, P OSNER, and W OOD , Circuit Judges.
P OSNER, Circuit Judge. IFC Credit Corporation volun-
tarily declared bankruptcy under Chapter 7 of the Bank-
ruptcy Code on July 27, 2009. Its bankruptcy petition
was signed only by its president, however, and he is not
a lawyer—a slip that precipitated this appeal—though
the next day the company filed an amended petition
signed by a lawyer.
Prior to the filing of the bankruptcy petition, a creditor
of IFC (Northbrook Bank & Trust—actually its predeces-
2 No. 11-2172
sor, First Chicago Bank & Trust, but we can ignore that
detail) had sued IFC, charging fraud. Upon the filing of
the original petition, all suits against the debtor were
automatically stayed. 11 U.S.C. § 362(a)(1). So Northbrook
refiled its fraud complaint as a claim in the bankruptcy
proceeding. In response, IFC’s trustee in bankruptcy
moved to rescind payments of pre-petition debts that
IFC had made to Northbrook, on the ground that the
payments were voidable preferences because they had
been made within 90 days before the declaration of bank-
ruptcy. See 11 U.S.C. §§ 547(b), (f). The parties settled the
trustee’s preferences claim conditional on a determina-
tion that the bankruptcy court had had jurisdiction over it.
Northbrook’s jurisdictional argument, rejected by the
bankruptcy and district judges and now pressed on us,
is that the fact that the original petition for bankruptcy
was not signed by a lawyer made the bankruptcy pro-
ceeding void, or as state court cases say (though the
question whether a person or firm or other entity may
litigate in federal court pro se is a question of federal
procedural law rather than of state law, Elustra v. Mineo,
595 F.3d 699, 704 (7th Cir. 2010)), a “nullity.” E.g.,
Applebaum v. Rush University Medical Center, 899 N.E.2d
262, 266 (Ill. 2008); Downtown Disposal Services, Inc. v. City
of Chicago, 943 N.E.2d 185, 194-95 (Ill. App. 2011), appeal
allowed, 949 N.E.2d 1097 (Ill. 2011); Torrey v. Leesburg
Regional Medical Center, 769 So. 2d 1040, 1044-45 (Fla.
2000); cf. Brewer v. Poole, 207 S.W.3d 458, 466 (Ark. 2005).
If so, the absence of jurisdiction could not be cured by
amending the petition, as IFC had done the day after
filing it.
No. 11-2172 3
Bankruptcy Rule 9011(a) allows the omission of a signa-
ture, including we assume the signature of a lawyer, to
be “corrected promptly.” But it is unclear whether the
corporation in this case was represented and its lawyer
just accidentally failed to sign the pleading. For the com-
plaint was signed, only by a person—IFC’s president—
ineligible to sign because he was not a lawyer. IFC’s
house counsel had, it is true, supervised the preparation
of the petition and filed it with the clerk of the bank-
ruptcy court. But we haven’t been told why she didn’t
sign it. Without an answer to that question we can’t
determine whether Rule 9011(a) is applicable.
We also set to one side the doctrine of “nunc pro tunc”
(now for then). It is not a substitute for relation back. It
can’t be used to revise history, but only to correct inac-
curate records. Central Laborers’ Pension, Welfare &
Annuity Funds v. Griffee, 198 F.3d 642, 644 (7th Cir. 1999);
King v. Ionization Int’l, Inc., 825 F.2d 1180, 1188 (7th Cir.
1987); United States v. Suarez-Perez, 484 F.3d 537, 541 (8th
Cir. 2007).
So we must meet Northbrook’s jurisdictional argument
head on.
Corporations unlike human beings are not permitted
to litigate pro se. Rowland v. California Men’s Colony, 506
U.S. 194, 201-02 (1993); United States v. Hagerman, 545 F.3d
579, 581 (7th Cir. 2008); Scandia Down Corp. v. Euroquilt,
Inc., 772 F.2d 1423, 1427 (7th Cir. 1985); Nixon, Ellison &
Co. v. Southwestern Ins. Co., 47 Ill. 444 (1868); Berg v. Mid-
America Industrial, Inc., 688 N.E.2d 699, 704 (Ill. App. 1997).
The reasons courts give for the rule—which really are
4 No. 11-2172
just variations on the theme of distrust of nonlawyers’
ability ever to conduct litigation in a competent and
ethical fashion, see, e.g., Strong Delivery Ministry Ass’n
v. Board of Appeals of Cook County, 543 F.2d 32, 33-34 (7th
Cir. 1976); Eagle Associates v. Bank of Montreal, 926 F.2d
1305, 1308 (2d Cir. 1991); National Independent Theatre
Exhibitors, Inc. v. Buena Vista Distribution Co., 748 F.2d 602,
609 (11th Cir. 1984), since nonlawyers are not subject to
discipline as members of the bar—apply equally to in-
dividuals. Yet individuals are permitted to litigate pro se,
though not to represent other litigants, Elustra v. Mineo,
supra, 595 F.3d at 704; see 28 U.S.C. § 1654, with some
exceptions, such as tax advisers in Tax Court proceedings.
Tax Ct. R. 200(a)(3); Hawkins v. Commissioner, 85 T.C.M.
(CCH) 1530, 2003 WL 21436740, at *2 (U.S. Tax Ct. 2003).
See also Machadio v. Apfel, 276 F.3d 103, 107 (2d Cir. 2002).
Corporations have, it is true, on average more money
for hiring lawyers than individuals do, but there are
many tiny corporations and many wealthy individuals.
But there is a difference, unrelated to scale or resources,
between individual self-representation and corporate
representation. There is no agency problem when
an individual represents himself (and remember that
with just a few exceptions unless he is a lawyer he is
forbidden to represent anyone other than himself), but
there can be an acute agency problem when the pro se
litigant is a corporation. A corporation can’t literally
represent itself; it has to be represented by an individual.
And like any institution a corporation is itself a collective
of individuals. In this case the president was representing
the corporation (initially), but in other cases there might
No. 11-2172 5
be a question whether the designated individual’s rela-
tion to the corporation made him an appropriate repre-
sentative of its owners. Confining corporate representa-
tion to lawyers mitigates the problem.
That is a reason why corporations are represented
by lawyers rather than a reason why a corporation,
acting through its board of directors, should be for-
bidden to select a nonlawyer to represent it in litigation.
But a court does not permit an individual to represent
another person; why should it treat corporations differ-
ently in this respect? Judges for good reason don’t like
dealing with pro se litigants and have better grounds
for their antipathy when the pro se litigant is a corpora-
tion, not only because corporate representation is third
party rather than first party but also because corpora-
tions enjoy a number of privileges denied individuals,
such as the cloak of limited liability worn by their
investors (whether individuals or other corporations),
which enables corporations to raise equity capital more
cheaply than individuals can. Inability to litigate pro se
can be thought of as part of the price for corporations’
privileges. United States v. Hagerman, supra, 545 F.3d at 581-
82; Jadair Inc. v. United States Fire Ins. Co., 562 N.W.2d
401, 407 n. 14 (Wis. 1997); Eckles v. Atlanta Technology
Group, Inc., 485 S.E.2d 22, 26 (Ga. 1997).
But is prohibiting corporations from litigating pro se
a rule of federal subject-matter jurisdiction, as North-
brook insists, so that the only thing a federal court can
do with a complaint (including a petition for bankruptcy)
not signed by a lawyer is dismiss it? That might seem
6 No. 11-2172
a question of no practical significance, since the com-
plaint can be refiled forthwith, signed by a lawyer—as
happened in this case. But the statute of limitations may
have run in the interim, however brief. Moreover, prefer-
ence liability in bankruptcy is limited to payments made
to favored creditors within 90 days before the declara-
tion of bankruptcy (unless the creditor is an insider,
in which event the period is extended to a year, 11 U.S.C.
§ 547(b)(4)(B)) and so could be lost if the date of filing
were delayed by even a day.
But we can’t think why the rule barring corporations
from litigating without counsel should be deemed a
rule of subject-matter jurisdiction. In part to spare the
courts the bother of addressing issues not presented by
the parties, and also in recognition of the adversary
character of the American adjudicative process, Hender-
son v. Shinseki, 131 S. Ct. 1197, 1202 (2011) (“branding
a rule as going to a court’s subject-matter jurisdic-
tion alters the normal operation of our adversarial sys-
tem. Under that system, courts are generally limited to
addressing the claims and arguments advanced by the
parties. Courts do not usually raise claims or arguments
on their own” (citation omitted)), the Supreme Court
has taken a sharp turn toward confining dismissals
for want of subject-matter jurisdiction to cases in which
the federal tribunal has been denied by the Constitution
or Congress or a valid federal regulation the authority
to adjudicate a particular type of suit. See (besides
Henderson) Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237,
1248 (2010); Union Pacific R.R. v. Brotherhood of Locomotive
Engineers & Trainmen General Committee, 130 S. Ct. 584, 596-
No. 11-2172 7
98 (2009); Arbaugh v. Y & H Corp., 546 U.S. 500, 514-16
(2006); Eberhart v. United States, 546 U.S. 12, 18-19 (2005)
(per curiam); Scarborough v. Principi, 541 U.S. 401, 413-14
(2004); Kontrick v. Ryan, 540 U.S. 443, 454-55 (2004). These
days, therefore, subject-matter jurisdiction is (with an
exception noted below) about the competence of the
tribunal—“competence” in the sense of legal empower-
ment to decide a case—rather than about the mistakes
that litigants and sometimes judges make in a case that
is within the tribunal’s competence.
An example of a case that is outside federal judicial
competence is a suit that does not fit within the limits of
the federal judicial power set forth in Article III of the
Constitution, or a type of suit expressly barred by Con-
gress, for example under its constitutional power to
restrict the appellate jurisdiction of the Supreme Court
(Article III, section 2, provides in part that “the Supreme
Court shall have appellate Jurisdiction, both as to Law
and Fact, with such Exceptions, and under such Regula-
tions[,] as the Congress shall make”) or its implied (and
exercised) power to refuse to allow federal courts to
entertain diversity suits in which the stakes fall short of a
dollar threshold specified by Congress. Arbaugh v. Y & H
Corp., supra, 546 U.S. at 515-16.
The primary distinction is thus between classes of case
that the Constitution or legislation declares off limits to
the federal courts and errors in the conduct of cases that
are within limits. (The exception is for statutory limits
on the time for filing an appeal. E.g., Bowles v. Russell, 551
U.S. 205 (2007). It has no application to this case.) IFC’s
8 No. 11-2172
bankruptcy is the type of proceeding that Congress has
authorized federal courts to handle, while the rule
barring lay representation of a corporation concerns the
conduct of cases that are within that authority.
The usual effects of establishing a jurisdictional pre-
requisite to suit are twofold. First, the prerequisite is not
waivable, Arbaugh v. Y & H Corp., supra, 546 U.S. at 514;
Hurley v. Motor Coach Industries, Inc., 222 F.3d 377, 379 (7th
Cir. 2000), until final judgment has been entered and
appellate remedies exhausted. (That is, “even subject-
matter jurisdiction . . . may not be attacked collaterally,”
Travelers Indemnity Co. v. Bailey, 129 S. Ct. 2195, 2205-06
(2009), quoting Kontrick v. Ryan, supra, 540 U.S. at 445 n. 9,
although there are a few exceptions. Id. at 2206 n. 6.)
Second, dismissal for want of jurisdiction, not being
an adjudication on the merits, is without prejudice, Fed.
R. Civ. P. 41(b); Semtek Int’l Inc. v. Lockheed Martin Corp.,
531 U.S. 497, 505-06 (2001); Costello v. United States, 365
U.S. 265, 285-86 (1961); T.W. v. Brophy, 124 F.3d 893, 898
(7th Cir. 1997), which is to say that it doesn’t foreclose,
by operation of the doctrine of res judicata, a future
litigation to decide the merits.
These consequences of an absence of subject-matter
jurisdiction are not appropriate punishments for pro se
litigation by a corporation. Requiring a do-over of a
lawsuit is costly to everyone yet can actually benefit
the plaintiff—the usual author of the jurisdictional
mistake—because dismissal without prejudice allows a
complete do-over if the plaintiff can refile his case without
running afoul of the jurisdictional obstacle that wrecked
No. 11-2172 9
his original claim. That could be a particularly costly
consequence if the jurisdictional defect were discovered
late in a protracted bankruptcy, as it was here; deeming
a pro se filing by a corporation a defect of subject-
matter jurisdiction would require IFC to file a new bank-
ruptcy proceeding more than two years after the
original and amended petitions.
There is no danger that litigation by unrepresented
corporations will flourish unless the prohibition of lay
representation of corporations is deemed jurisdictional
because opponents will often prefer to litigate against a
party that is not represented and so will waive any objec-
tion. Judges as we said dislike pro se litigation and will
be vigorous enforcers of the rule that bars it, except
in cases like this where the violation was utterly incon-
sequential.
We conclude that the rule is not jurisdictional—and
we note that even the Illinois courts, staunch defenders of
the “nullity” rule though they are, consider it discretionary
rather than mandatory, see Applebaum v. Rush University
Medical Center, supra, 899 N.E.2d at 266; Downtown Disposal
Services, Inc. v. City of Chicago, supra, 943 N.E.2d at 194-95,
while the Supreme Court of Florida has jettisoned it.
Torrey v. Leesburg Regional Medical Center, supra, 769 So. 2d
at 1045-46. The conclusion we reach today was implicit
in United States v. Tri-No Enterprises, Inc., 819 F.2d 154,
159 (7th Cir. 1987), which held that harmless violations
could be ignored, and in Scandia Down Corp. v. Euroquilt,
Inc., supra, 772 F.2d at 1427, where we said that “[i]f
Scandia had objected to [a nonlawyer’s] representation of
10 No. 11-2172
Euroquilt, the district court would have been required
to prevent Euroquilt from appearing at trial” (emphasis
added). It’s a rule and should be enforced, but sanctions
for its violation should be proportioned to the gravity of
the violation’s consequences. E.g., Ty Inc. v. Softbelly’s Inc.,
517 F.3d 494, 499-500 (7th Cir. 2008). There were no
adverse consequences to IFC’s filing error, so there was
no reason to impose any sanction, let alone the sanction
of dismissal.
Dismissal would have been proper, in order to imple-
ment the rule, had the court discovered at the outset that
IFC was unrepresented. But having promptly obtained
counsel, IFC could resurrect the litigation by amending
its petition on the authority of Bankruptcy Rule 1009(a)
(“a voluntary petition . . . may be amended by the debtor
as a matter of course at any time before the case is
closed”) with relation back to the date of the original
filing. That is what it did.
It’s true that Rule 1009(a) doesn’t mention relation
back, unlike its counterpart in nonbankruptcy cases, Fed.
R. Civ. P. 15(c), which allows relation back on various
grounds in cases governed by the civil rules (bankruptcy
proceedings have their own procedural rules). Yet
relation back can be important in a bankruptcy case
because without it amendments to the petition would
shift the preference period.
Rule 7015 of the bankruptcy rules applies Rule 15 of the
civil rules to adversary proceedings and Rule 1018
applies it to contested involuntary petitions—that is,
contested declarations of bankruptcy filed by creditors
No. 11-2172 11
rather than by debtors. See Bixby v. First National Bank of
Elwood, 250 F.2d 713, 719 (7th Cir. 1957); 6 Charles Alan
Wright et al., Federal Practice and Procedure, § 1472, pp. 510-
13 (3d ed. 1990). But no rule applies it to voluntary peti-
tions. There are reasons for this difference in treatment,
however. Rule 1009(a), by allowing a voluntary petition
to be amended at any time, makes most of Rule 15 super-
erogatory. And there is no statute of limitations for
filing a bankruptcy petition—a debtor is not required to
file the petition when he becomes insolvent, or within
any definite time afterwards. It’s fine if he tries to resolve
his financial problems without a bankruptcy proceeding;
should his delay hurt the creditors, they can petition
him into bankruptcy. So Rule 15(c) would have a dimin-
ished role in a voluntary bankruptcy, where relation
back would not be needed to avert dismissal on the
basis of the statute of limitations, though it could alter
the preference period.
Most important, Rule 15(c) doesn’t specify correction
of formal defects as a ground for relation back either—yet
so obviously appropriate is allowing relation back on
such a ground that the courts allow it anyway. BCS
Financial Corp. v. United States, 118 F.3d 522, 524 (7th
Cir. 1997); United States ex rel. Canion v. Randall & Blake,
817 F.2d 1188, 1190-91 (5th Cir. 1987); 6A Charles Alan
Wright et al., supra, § 1497, pp. 74-79. Courts can allow
it in bankruptcy cases as well, without explicit textual
authority, as the bankruptcy judge did in this case.
A FFIRMED.
12-5-11