United States Court of Appeals

For the First Circuit

No. 11-1172

D.B. ZWIRN SPECIAL OPPORTUNITIES FUND, L.P.,

n/k/a FORTRESS VALUE RECOVERY FUND 1 LLC,

Plaintiff, Appellant,

v.

VIKAS MEHROTRA,

Defendant, Appellee.

 

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Rya W. Zobel, U.S. District Judge]

 

Before

Howard, Ripple, and Selya, *

Circuit Judges.

 

Eric S. Rein, with whom Michelle K. Schindler, Dykema Gossett

PLLC, Allison O’Neil and Craig and Macauley Professional

Corporation, were on brief for appellant.

John A. Shope, with whom Thomas J. Bone, Benjamin F. Nardone

and Foley Hoag LLP, were on brief for appellee.

November 18, 2011

 Of the Seventh Circuit, sitting by designation. *
Per Curiam. D.B. Zwirn Special Opportunities Fund, L.P.,

now known as Fortress Value Recovery Fund I, LLC (“Zwirn”), brought

this action against Vikas Mehrotra, an investment fund manager.

The suit was brought originally in Massachusetts state court on May

7, 2010. The complaint alleged various fraud claims under

Massachusetts law against Mr. Mehrotra, specifically, that he

assisted an associate, Dinesh Dalmia, in defrauding Zwirn of

approximately $7.5 million. On June 11, 2010, Mr. Mehrotra removed

the action to the United States District Court for the District of

Massachusetts, contending that the district court had jurisdiction

because the parties were citizens of different states and the

amount in controversy exceeded $75,000. See 28 U.S.C. §§ 1332,

1441. On January 31, 2011, the district court granted Mr.

Mehrotra’s motion to dismiss, holding that Zwirn’s complaint was

filed after the statute of limitations had expired and that Zwirn

had not alleged facts sufficient to support tolling the limitations

period. Zwirn then appealed the district court’s judgment to this

court.1

Mr. Mehrotra is a citizen of the State of Rhode Island. 

The notice of removal alleged that the plaintiff, Zwirn, “is a

Delaware limited liability company with a principal place of

business in New York, New York.” At oral argument, we noted that

the allegations in the notice of removal were insufficient to

 Our jurisdiction is predicated on 28 U.S.C. § 1291. 1

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establish that the parties were diverse for purposes of diversity

jurisdiction because the citizenship of a limited liability company

“is determined by the citizenship of all of its members.” Pramco,

LLC ex rel. CFSC Consortium, LLC v. San Juan Bay Marina, Inc., 435

F.3d 51, 54 (1st Cir. 2006) (citing Carden v. Arkoma Assocs., 494

U.S. 185, 195-96 (1990)). We therefore instructed counsel for

Zwirn to file “an affidavit of jurisdictional facts describing the

identities and place of citizenship of each and all of the

[members] as of the date of removal, which is the date that 2

controls.” This filing was to be under seal. We then instructed

counsel for Mr. Mehrotra to advise us if he contested the contents

of that affidavit.

Zwirn did not comply with our instruction that the

identity and citizenship of each member be provided. Instead, it

attempted to establish diversity in the negative. The affidavit

that it filed in response to our request recited: “[A]s of June

11, 2010, according to the Fund’s records, there were no members of

the limited liability company who were citizens of Rhode Island.” 

In his response, Mr. Mehrotra’s counsel did not contest these

allegations. He further assented to the constructive amendment of

At oral argument, we instructed Zwirn to inform us of its 2

“limited partners” rather than its “members.” As the caption of

this matter indicates, Zwirn was once a limited partnership. At

the time of removal, however, Zwirn was a limited liability

company. The parties understood that we were inquiring about

Zwirn’s members, as their responsive filings discuss LLCs and

members rather than LPs and partners. 

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the pleadings to reflect them and asserted that diversity

jurisdiction had been established. 

Putting aside for the moment the non-compliance with our

order, these allegations are insufficient to invoke diversity

jurisdiction under 28 U.S.C. § 1332. That Mr. Mehrotra is a

citizen of Rhode Island and that Zwirn is not considered a citizen

of Rhode Island “is not sufficient to give jurisdiction in a . . .

Court of the United States.” Cameron v. Hodges, 127 U.S. 322, 324

(1888). In Cameron, the defendant was an Arkansas citizen who

sought to remove an action from Tennessee state court. Id. at

324-25. He attempted to invoke diversity jurisdiction by alleging

“‘that none of the complainants are or were at that time citizens

of said State of Arkansas.’” Id. at 324. In rejecting this

attempt, the Supreme Court reasoned:

That the defendant, Hodges, was a citizen of

Arkansas, in connection with the fact that

none of the complainants were citizens of that

State, is not sufficient to give jurisdiction

in a Circuit Court of the United States. 

Brown v. Keene, [33 U.S.] (8 Pet.) 112, 115

[(1834)]. 

The adverse party must be a citizen of

some other named State than Arkansas, or an

alien. All the complainants might be

residents and citizens of the District of

Columbia, or of any Territory, and they might

not be citizens of the State of Tennessee

where the suit was brought, or indeed, of any

State in the Union. . . .

This court has always been very

particular in requiring a distinct statement

of the citizenship of the parties, and of the

particular State in which it is claimed, in

order to sustain the jurisdiction of those

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courts; and inasmuch as the only citizenship

specifically averred and set out in the case

before us is that of the defendant, Hodges, at

whose instance the cause was removed, and as

that is the only ground upon which the removal

was placed, it seems clear that the Circuit

Court did not have jurisdiction of it, and

that the suit should have been dismissed or

remanded for that reason.

Cameron, 127 U.S. at 324-25.

Cameron remains the governing precedent. Although the

word “States” is now defined to include the Territories and the

District of Columbia, see 28 U.S.C. § 1332(e), citizens of the

United States and other entities still might be citizens of no

state at all under the diversity statute. For instance, United

States citizens who are domiciled abroad are citizens of no state;

their “‘stateless’ status destroy[s] complete diversity under

§ 1332(a)(3), and [their] United States citizenship destroy[s]

complete diversity under § 1332(a)(2).” Newman-Green, Inc. v.

Alfonzo-Larrain, 490 U.S. 826, 829 (1989). Furthermore, Indian

tribes are treated as stateless for purposes of the diversity

statute. See Ninigret Dev. Corp. v. Narragansett Indian Wetuomuck

Hous. Auth., 207 F.3d 21, 27 (1st Cir. 2000). Other entities are

treated similarly. See, e.g., Petroleum Exploration, Inc. v. Pub.

Serv. Comm’n of Kentucky, 304 U.S. 209, 217 (1938) (noting that

states are not “citizens” for purposes of the diversity statute). 

If, therefore, any member of Zwirn is a stateless person, or an

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entity treated like a stateless person, we would lack diversity

jurisdiction.

We note as well that this jurisdictional issue has the

potential to be iterative. If even one of Zwirn’s members is

another unincorporated entity, the citizenship of each of that

member’s members (or partners, as the case may be) must then be

considered. See Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412,

420 (3d Cir. 2010); Delay v. Rosenthal Collins Grp., LLC, 585 F.3d

1003, 1005 (6th Cir. 2009); Meyerson v. Harrah’s E. Chi. Casino

(Meyerson I), 299 F.3d 616, 617 (7th Cir. 2002) (per curiam). 

Therefore, if even one of Zwirn’s members is another unincorporated

association, and if that association has one member or partner that

is either a stateless person or an entity treated like a stateless

person, we would not have diversity jurisdiction over this matter. 

An issue similar to the one before us arose in Meyerson

v. Showboat Marina Casino Partnership (Meyerson II), 312 F.3d 318

(7th Cir. 2002) (per curiam). When Meyerson first reached the

appellate court, the court determined that the complaint was

insufficient to support diversity jurisdiction because, among other

reasons, the complaint contained no allegations about the

defendants’ citizenship. Meyerson I, 299 F.3d at 617. Although

the complaint did allege that one of the defendants was “an

unincorporated business licensed by the State of Indiana,” the

court noted that the citizenship of the unincorporated entity’s

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owners determined the business’s citizenship. Id. The court

remanded the case for further jurisdictional inquiry. Id. The

district court, on remand, relied on the defendant partnership’s

assertion that none of its partners was a citizen of Michigan,

which was the plaintiff’s state of citizenship. Meyerson II, 312

F.3d at 320. When the matter returned to the appellate court, the

defendant partnership’s jurisdictional statement provided:

Showboat . . . is an Indiana general

partnership whose partners/members are two

additional Indiana general partnerships,

Showboat Marina Partnership and Showboat

Marina Investment Partnership. Neither

Showboat nor any of its aforementioned

constituent members are citizens of the state

of Michigan. . . . Showboat's citizenship is

in no other state but Indiana. Thus,

diversity is complete.

Id. (alterations in original). The Seventh Circuit concluded that

this “statement does not tell us the identity and citizenship of

the partners in the two entities that own Showboat. Far from

showing jurisdiction, this statement multiplies the questions by

increasing from one to two the number of partnerships whose

partners’ citizenship matters.” Id. at 320-21.

The approach in Meyerson is compatible with the Supreme

Court’s instruction in Cameron. Consequently, we cannot permit

this case to proceed to judgment without the additional information

that we ordered at oral argument. As noted earlier, the parties

have failed to comply with that order. Accordingly, within fifteen

days of the date of this order, Zwirn shall file a statement in

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compliance with this court’s previous order. In doing so, Zwirn

must not only identify its members and their respective

citizenship, but must also trace the citizenship of any member that

is an unincorporated association through however many layers of

members or partners there may be. This filing will be under seal. 

Mr. Mehrotra shall inform us whether he contests Zwirn’s affidavit

within ten days of the filing of Zwirn’s affidavit.

IT IS SO ORDERED.

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