controls for purposes of diversity want to trust is a named party to a lawsuit we believe based upon over two hundred years of jurisprudence from this court the answer is the trustees we believe a bright line rule is appropriate in this case circuit for review what the tenth circuit held here the issue that we appealed on was to look at the beneficiaries as opposed to the trustees and we would submit to you that that's just not supportable under common law it provides were results an unworkable  law that's correct justice scalia has created a statutory trust a real estate investment trust however our position is that just because that trust can sue and be sued as an entity that does not change the analysis there still has to be somebody we look to some real people that we looked at each term and who sits in ship controls well this new entity is called the trust but why is it more like a traditional trust than it is like another unincorporated artificial entity like an l l c you know it's more it's like a trust because there are two attributes that are trust have that have historically there is a separation between legal ownership and beneficial or equable ownership we have in this case if you look at marital law they defined read as another corporate business trust in which property is acquired held managed administered controlled invested or disposed of for the benefit and profit of any person who may become a shareholder that distinguishes between legal ownership and equitable ownership the next step we look at is a common law when that's a situation where you have a trust you look and see that the trustees have the customary power to control to manage and to oversee the asses also including to control who can loans who owns these assets under maryland law is it the trustees or is it this this new corporation type and if you're outed as unity the consumer and i assume that that's the entity that owns the property it could be both your honor under maryland the trustee is are sort of in the position of managers just desire you hired a c e o i would disagree on under maryland law the assets of a real estate investment trust can be held by the trustees or the trust in its entity and again i don't think that makes the changes the analysis it's all still what citizenship it would look to trustees can be owned by the entity it can be or the or the trustee that's that the legal ownership goes and the name of a trust beneficiary the ownership is always in the name of the trust or the trustees it is never held in the name of beneficiaries and we think that  controlling here for the reason that navarro is pretty clear on this when you have a trustee that has absolute control you don't look at the beneficiaries if the if a trustee has absolute control and legal ownership of trust assets that's where you l name as well and the way the navarro was framed by the lower court when they decided the opinion was the district court held that for purposes of a business trust we look to the citizenship of the beneficiaries this court card if you're a corporation that's one thing if you're any other kind of association we look to the members their shareholders their limited partners as well as the partners just drawing a clear line between corporations on one trust assets or trust beneficiaries that's why navarro did not control in carden and why carden does not control in this case carden tells us the first step we have to do is we have to look through the trust we have to look to somebody carden dealt with a partnership and in terms of a partnership or line a long line of cases carden said that for partnerships we look at all the members will there are no members of the trust there are no members it commonlaw a partnership was owned by members they had a concepts and now you're asking us to come and place trustee law above our general rule that you're either a corporation or you're not just a side and so and only the corporation can have a place of business a place of incorporation your honor we admit that the nomenclature is shareholder that's what's the use in the real estate investment trust act in maryland however that's not to be equated with another business entity it's the shareholders what they're called but still they are the official owners yet the definition i richey of a receipt under maryland makes clear that the shareholders own that that the trustees own the property for the benefit of the trust for the benefit of the shareholders that the shareholders realty trust in the section five point one on page sixty it defines the board of trustees and what their powers are under this trust this is a quote the business and affairs of the trust shall be managed under the direction of the board of trustees and the board shall haue full exclusive and absolute power control and authority over any and all property of the trust the board may take any action as in  judgment and discretion is necessary or appropriate to conduct the business in affairs of the trust that is almost identical to the language used to describe the trustees in the vario importantly in navarro this is a quote from the vario as well the court has never a mallet gys to express trust to business entities for purposes of diversity jurisdiction navarro realized that they were separate in card and realize that it was ees were the named parties navarro court went ahead and looked and said let's look at not only the trustees and what their power is but let's look at the beneficiary should we look at them as well there's one thousand five hundred of us and the courts pacifically said that is irrelevant we did not look at the nine thousand five hundred beneficiaries of this trust so the court didn't have a trust as a party in front of it but it went ahead to the next step to say look who do need to look and do we need to look at the beneficiary or the trustees and that same analysis applies here and it doesn't matter if the trust is the named party or the trustees the decision is still going to be the say a decision has to be made who you look to we would submit that one of the virtues of carbon was that it just set up a very categorical right nine rule everything that's an artificial legal entity that's not a corporation want to be treated in the same way doesn't matter what you call yourself you can put trust in the title or not trust in the title if you're an artificial legal entity that is not a corporation that's subject to the rule of carbon and there's something to just doing that and that bright line categorical way is that we don't have to look at the thousands of different variations among legal entities and decide which bits and which box your honor card and dealt with the partnership they had members again there are no members of the trust so if we export to the language they use a card to say you have to go to look at the members because they're who really look at well the closest thing to a member of a trust is going to be the trustees it's not going to be the beneficiary let's look back at common law when a partnership before they can sue or be sued in their own name a partnership always had to  have the members of that partnership had to bring the cause of action now let's look at the common law for a trust before a trust could be sued or sue in its own name and those circumstances the trust isa were in charge of the litigation it was the trustees that brought that lawsuit so to the extent the current sheds any light on what is a member what is not a member for the trust we submit to the most analogous thing is the trustee is the equivalent to a member for a partnership the problem  trust has never been held to be equal to a business entity there are basically three different categories there is a corporation there is an unassociated unincorporated association excuse me and there are trusts and they are different but the beneficiary analysis used by the tenth circuit again not only be hard to identify who some beneficiaries are but we have sometimes look at navarro there were nine thousand and five hundred beneficiaries and that trust as as one of the purposes of federal taxation benefits it's got to be at least a one hundred at least a hundred at least one hundred you know of any that do that are more than a thousand oh yes yes your honor if you look at the amicus that was filed by marriage they point out that there are some publicly traded reefs that have tens of millions of shareholders or beneficiaries and then only all of cross the country they're all across the world and so a lot of the shares of reeds are also traded on a daily basis so you can have a beneficiary of real estate investment trusts that ten o'clock this morning i could be a beneficiary ten fifteen i'm not i sold my interest how are you ever going to identify who the beneficiaries are at any given time this course made clear pacifically for purposes that we need a simple test the courts can use that says we don't need to look behind dig down deep in the weeds let's just look at the case figure out who we look to in the proper way to do that as the trustees in this case there's five trustees very easy to find out who those trustees are all you to do is go to maryland skews the maryland secretary of state and you can look up and find the declaration of trust you got to see who those five individuals are there's no place ever consideration in terms of the impact on federal jurisdiction i mean this is standard run of the mill commercial dispute about a commercial accident and adopting one position would limit the number of times that such disputes would be brought in federal court the other one will be expanded is that i mean does america really feel that it's not going to get a fair shake in the kansas courts in this case yes your honor if they did that they believe like a lot of businesses do that they have more neutrality and a level playing ground in the federal court not only in kansas but all across the country where every american has one hundred seventy five different locations with with  deep stubs cold storage excuse me they're all of crossed the country they can be sued anywhere and under the rule the tenth circuit is put forth they're never going to be able go to federal court it's just never going to happen it's  a possibility maybe there's a problem for congress as as the problem of corporations was you know congress adopted a special rule for corporations and maybe it ought to adopt a special rule for real estate investment trusts congress so is could your honor however i don't think they have to in this case because i think this court's opinion in navarro couple of card provide the answer do you have any definition of what the common law trust was a i'll give you that one as i understand it you tell me how you joe i thought in a common law trusts the trustees had legal title they own the assets they could be sued in and and they could sue in their own names in this re as i understand it the assets are in the name of the trust not in the name of the individual trustees and it is the trust that sues or can be sued not the individual trustees am i wrong about those you are wrong the second point your honor all right so go i'm right on the first yes to the point that  in correct because under maryland law with a statute the property of a trust can be held in the name of the trust of self or the trustees you have a section for that out of them to look it up so ok if that's not how i originally understood things that's right you can give it to me on rebuttal just the sort of my your it's the marilyn code of corporations and associations section eight dash three zero one print twelve and that provision is also on page fourteen of the reply brief deliberative and that statute the provision says a reach may hold and dispose of legal title to property either quote in the name of the trust or in the name of the trustees thank you  so we believe the proper test is a combination between the borrow card and she look the trustees it doesn't matter whether or not real estate investment trusts can sue on its own behalf or has to sue the trustees it's all clear that the beneficiaries of the trust never have legal ownership so therefore we should never looked at them if the court has any other questions otherwise they'll remain my thank you names must measure their diversity citizenship by all of their members which would include those persons who own a beneficial interest in the entity in this case that would be the shareholder members of a repeat who are trust but you then have to still make a choice ok we're not going to look at the trust we look at the trustees are the beneficiaries i don't know if i'd call beneficiaries members of the trust mr chief justice i think it's important to understand that there is a very human significant distinction between a shareholder of a rate and a beneficiary of a common law traditional trust as set forth in the appendix to the petition page seventy nine which is the declaration of trust for a the actual shareholders have personal property interest in the shares they do not have any interest in the property of the trust entity and they have no right to compel any partition division di distribution of the trust property and that makes them uniquely different than a common law beneficiary who actually has an equitable ownership interest in the trust property under common law traditions the trustee holds the legal title of the asset but only for the benefit of those persons who are named as beneficiaries and those beneficiaries have equitable rights in the property that's legally nominally in the name of the trustee here the shareholder members as we describe them only have an interest in the personal property of a certificate of ownership very much like the limited partners and carving in card in the limited partners didn't have an ownership interest in the assets of the entity it had a certificate of ownership as a limited partner in those two sit instances meet mr chief justice this limited partner in carton and the trustee member or the beneficiary member in this case are virtually identical they do two things they invest money in an artificial entity and receive a certificate of ownership and they periodic lee vote on important matters that affect the entity they are in most instances virtually identical so in my view and i think this case rests upon defining a clear rule a clear rule that says when you have an artificial and if he were going to measure by those persons that i consider to be the beneficial owners and i'll tell you why that important because that is consonant with the rule announced by this court in chapman great southern polygamy and cardinal chapman v barney the doctrinal wall case those persons that were deemed to be members were the persons that were the stock owners of the joint stock company under new york law in great southern again a limited partnership case it were those persons that had an economic interest in the entity and the same rule applied in card if we are to adopt a its position in this case and now suggest that the board of trustees the do not have an economic ownership interest in the entity itself controls we're going to open the floodgates of uncertainty for the under for the lower courts and i'll tell you why the court has never explicitly addressed a limited liability company in their common throughout the united states limited liability companies can call their boards of managers boards of trustees and in certain instances under those uniform laws both the general partnership law and the l l c law managers can hold property in trust for the entity just like the trustees in this case can hold property in trust for the entity at the end of the day we're going to now say it's the board of managers that are called trustees that we look to everyone is going to analogize in the circuits that haven't decided the l l c question i'm much more like the board of managers  old and much different then the limited partners in khartoum and it's going to create uncertainty in our rule the bright line rule is very clear when an artificial entity is sued or being or suing in its own name we look to the members which in this case constitutes those persons that own the beneficial interest in the entity the shareholder members just like this court did in chapman great southern polygamy and card and i think it's important to understand in our view navarro never decided the question did in fact a trust constitute an entity in who the members of the entity were navarro stands for the limited proposition  suggested by justice ginsburg that in fact we look to those persons that had a right to sue and in this case you couldn't do the test the individual and that is correct in this case under maryland law the trustees even if they are the owners of the property in trust for the entity still have no authority under the statute to bring suit nor do they have the ability to be sued the entity itself americal realty trust has admitted in this court in the tenth that it is the successor in interest to the corporation that my client's con agra foods entered into a contract with i had no choice but to sue the entity when the entity is sued the doctrinal wall of chat movie barney is in play ar a corporation or are you in order fishel association in this case they're an association we measure by those persons that have an ownership interest in the artificial into the shareholder members not the board of managers mr doesn't you think it's possible that we took a bit of a wrong turn and in hard in another words and that in fact all of these entities should be treated like corporations and the strongest arguments on the other side you know  really those arguments and those arguments fly in the face of cardan but that but there really arguments about what line not to treat these just like a corporation well justice kagan i agree and i think the court said in cardin that our decision is precedent down and perhaps even unresponsive to policy considerations but it is in the congress's parag of to change the law and indeed congress has spoken congress spoke in two thousand and five and congress well as i think congress has fixed it in congress has recognized for specifically with class action lawsuits that they would treat associations the same as corporations if they are named as a party in a class action lawsuit in the two thousand and five amendments section thirteen thirty two and they specifically said if you are an unincorporated association we're going to look to your place of incorporation and your principal place of business for purposes of diversity jurisdiction in class action lawsuits but they did not say if worth regarding every other garden variety commercial dispute like the one we have here today that that rule would apply and congress is capable of speaking they've spoken postcard in two thousand and five and they've made it clear that those doctrinal walls of chapman to be barney should remain in play as announced by this court but with the limited exception of a class action lawsuit so if the court took a wrong turn in card congress has affirmed it only to the extent that it is announce a rule that applies to associations for policy reasons and class action case the problem just from the point of view the common sense of it is you have an organization that has a the organization be and see the shareholders so applying carden like you would say and the varo if you sue the trustees you look to their citizenship but if you shoot to sue the trust itself you don't look to the citizenship of the trust you don't look to the citizenship of the trustees you go beyond that look to the citizenship of the members i mean it seems odd what why do you look to the members or the shareholders the or the or the beneficiaries to the trust itself but you don't in the identical situation where the law of the state allows you to sue the trustees i mean that seems such a sport to such a fl but it is the sport that's played even with regard to women partnerships just as prior because in the instance where in a limited partnership a general partner who is managing the affairs of the entity breaches a duty to a third party and the entity itself also is responsible for a breach of duty a party can sue both the general partner in the artificial end of the and if the general partner happens to be an individual you measure by his natural citizenship and you measure the entity by virtue of who the members are and people make tactical reasons every day in the united states about who to sue and who not to sue in some instances they may choose to sue the general partner because they want to get into federal court and they don't want to sue the entity but they'll take their risks on suing only one of the parties is liable or they may sue all of them but they have to satisfy the rules applicable to each one of those particular parties that may be responsible i think the other thing that's important here is that the hint the argument suggested by the petitioner is that we look to the control test a test of those persons that are in control in this court has implicitly expressly rejected that test specifically the court rejected that more implicitly if you look at the chapman to be barney case barney was a plaintiff in the case brought the suit as president of the new york stock opening and he had the absolutely right or new york law to control the litigation and bring the claim but the court never looked to the control of the litigation by barney as a reason why it should measure the citizenship of the entity it looked to all the owner members of the company in this court is the petitioners position that the  real estate investment trust is more like a trust than an l l c the in limited partnership i think it's made that suggestion to the court that in our end it if that is their position what would your response be our response would be what it was is an aria more like a limited partner then it is to become a motorist there's two primary reasons justice kennedy the first one is this is an artificial entity and the entity can hold the assets and it's managed by a board of trustees some of whom may or may not hold the assets of the entity in trust but that's no different than a general partner of a limited partnership well they can hold as seems to me that's a wash because what you describe is the artificial entity it is not an artificial entity as we know it so well or what we're talking it's been around since the middle ages as i understand the brief of winston wanting the amakosa in the case and from that vantage point common law trust entities have never been recognised as entity status with capacity to sue and be sued as an entity the trustees who are the legal nominal owners of the assets bring the claim that's a significant distinction but just as important y the beneficiary shareholders of a read have no equitable interest in the assets of the artificial in city because the very trust decoration itself provides it's merely personal property they are so much like the limited partners in carton and it's striking but just as importantly i think back to the point i was making in the court express asli rejected the controlled test in carton and said quote real persons to controversy test and quote which part control over the subject of the litigation have never guided our reasoning with regard to who are the citizens of an artificial into t and in fact they can't point to one single case by this court where this court has ignored the citizenship of the beneficial owners of an entity and said so instead substituted in a board of managers and indeed if that were the holding of the court today the court would be reversing itself from hundreds of years of precedent where it chose in chapman great southern polygamy and current to look to the ownership of the members in the artificial entity one final with regard to difficulty in measuring these entities it was suggested that there might be thousands of members of a reach well that very well could be true but there also could be thousands of limited partners in these sophisticated limited partnerships that are being used for real estate transactions just because there are a lot of owners of an artificial into the association doesn't seem to weigh heavily enough to create the ambiguity that you would look at look at the other odd thing in writing this opinion you way he said well this isn't really like a truss i mean it is sort of the dross but there are important differences they can sue and be sued the trust itself can hold the property and the beneficiaries do not have an equitable interest and because they don't have an equitable interest it's more like a private association or cetera in the cart but of course that means that we look to their interest we look to their property we're basically having them as part of the necessary parties because they have a property interest the very people we just said that this is a different kind of organization because they lack an equitable interest in the property but that's no different than what we do with limited partnerships under hardwoods we simply look at the limited partners for purposes of measuring diversity they're only important to the extent that they're required for measuring the final point is there was an argument that said well you know reefs are publicly traded and that is true but the brief the amakosa brief points out that nearly eighty percent of all reeds opt to be corporations and most publicly traded reeds are corporations and indeed maryland reads can choose the corporate form of incorporation and they would be measured simply by the principal place of business and their state of incorporation just because a few reads choose to be associations doesn't seem to justify creating uncertainty in the doctrinal wall framework that's been announced by the court and now have people trying to analogize to a board of managers instead of the owner an official numbers i have nothing further unless there's more questions from the court i just have one question and then the safeway and craft business in the tenth circuit you can you do advise the court that you thought they were dispensable non diverse parties i wonder why seems a little bit of sharp practice well i think i think mr chief justice that if in fact that's a question that still remains if you refer or if you reverse and say that we measured by the trustees it should be took the wrong position in front of the tenth circuit and we don't think newman green supports that position and i think the court can review newman greed and look at it and say well really are they dispensable parties or not and i think quite frankly if in fact the court adopts a ruling here that says we measure by the board of managers instead of the owner members then it would be appropriate to remain and back to the tenth circuit not only to decide the case on the merits which they didn't decide but also to make a determination as to whether kraft and safeway really truly are dispensable or not so does extend the litigation even further than it's unfortunately perhaps ok thank you counsel thank you so much it's a pop so you have been minutes remaining th chief justice may please the court let's start off by addressing justice briar's comments about gamesmanship you're absolutely right what difference does it make if the trust is sued or the trustee is we're still looking at trust assets it doesn't is the point really is that this is sort of like a trust but not very much and indeed the keep point to me is that the shareholders here have no beneficial interest in the property and that's the second argument where to make your honor there are two statute two statutory sites that i want to give to the court and one of my right already under maryland code of corporations and associations eight dash one zero one prince see the definition of retail is as follows in unincorporated business trust in which property is acquired held managed administered controlled invested or disposed of for the benefit and profit of any person who may become a shareholder second provision missouri or maryland code of corporations and associations one dash one zero one print the definition of a business trust is  reach engaged in business in which property is acquired held and managed for the benefit of shareholders will do feel have no interest in the property at the trust your honor if anything that that distinction makes this even further removed what why why would those shareholders they have no interest whatsoever why would we have really looked to them that makes even more so no i didn't write that i didn't write section six your client that's what it says you are we supposed to think that i would say that the statue obviously is what controls here i mean because we want to have a rule that's across the board for all trusts and if you look at the statute of maryland the statute language i just said definitely ethical interest and she circled us but for real estate investment trust there was another point that respondents made electrical point out is that they said there is no case in which this court has looked to anything other  beneficiaries when you're involved in a case of a trust i would submit there's two response to that number one there is a case that we cited in our brief is called thomas vs the board of trustees of the ohio state university in that case the board itself was sued in its own name it was the party of allowed to be sued by the high loss it was a case that involved adverse possession with some property that that the the students and the university and there was an issue of jurisdiction whether or not there was diversity the court looked not to who the beneficiaries of that board of trustees were the court looked to the trustees that sat on that board that's who they looked they want to party to that action the court nowhere look at the beneficiaries you're not going to see that that language at all in that case and a second case this court i don't know who who is the party who is the defend would be like the equivalent of a trust you look at the trust ok well who do you look to do look to the beneficiaries of that are or do you look at who controls them and what the courts in that case as they look to controlled look to the members of that board is that standard with with common  of trustees are they normally referred to as the board of trustees that's true your honor however this was a specific provision under ohio law that allowed that entity itself to be sued or sue in its own name and what the court did is it look behind the curtain there is special statute that that allowed t to control and i realise the trust was not the named party there but the court it would've been superb for us for this court to even look at the beneficiaries if that was not an issue the court knew that it's going to be the trustees or the beneficiaries and they specifically said synthesis of which both guards are or scott on trusts has is the characteristic of the traditional common law trust and then i'd like over in the other column the characteristics of your organization ok between legal ownership and equitable ownership was look at the right side will say look at a real estate investment trust of america law you have legal ownership which is either in the name of the trustees or the trust and you also have equable ownership in the shareholders now go back to those two statutes that i say that i cited to you earlier on or so those are the attributes that exist a common law trust and there are also the attributes of exist with a maryland real estate investment trust the court has a motive for the questions we would request that