Court Opinion

ID: 9847635
Source: CourtListenerOpinion
Date Created: 2023-09-24 04:03:47.666757+00
Date Added: 2024-06-11T09:17:24.197136
License: Public Domain

McKEE, Circuit Judge,
concurring in the judgment.
I agree that the authority relied upon by my colleagues strongly suggests the analysis the lead opinion has adopted and the result my colleagues have reached. I am therefore reluctant to disagree with that conclusion even though I do not think that the result we reach today is necessarily compelled by precedent of this court or the Supreme Court. I am, in fact, concerned that our decision today unnecessarily extends two conventions of diversity jurisprudence and thereby inappropriately circumscribes that jurisdiction. I think my colleagues would agree that it would be more logical to treat “stateless” partners in situations like this as “jurisdictional zeroes,” rather than as citizens of the plaintiffs state; but we are not writing on a-blank slate.
I realize, of course, that it is not the province of this or any other lower court to undermine the Carden rule or the “stateless person” doctrine discussed in the lead opinion. Nevertheless, applying the Car-den rule and “stateless person” doctrine here results in a ruling that is inconsistent with both reality and common sense. Accordingly, although I concur in the result, I hope that Congress will one day see fit to clarify that our diversity jurisdiction does extend to this situation.
I.
Article III of the Constitution provides, in pertinent part, that “[t]he judicial Power shall extend to ... Controversies ... between Citizens of different States.” In its current form, the diversity statute provides that “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds ... $75,000 ... and is between ... citizens of different States.... ” 28 U.S.C. § 1832(a). In Chapman v. Barney, 129 U.S. 677, 9 S.Ct. 426, 32 L.Ed. 800 (1889), the Supreme Court established that the “citizenship” of an unincorporated association (such as a partnership) is defined by the citizenship of its individual members. Unincorporated associations are thus treated differently than corporations which, under a 1958 amendment to the diversity statute, are considered to be citizens of their state 23 of incorporation and of their primary places of business.1 See 28 U.S.C. 1332(c)(1).
The Supreme Court has recognized that the disparate treatment of partnerships and corporations may not conform with modern business realities, but the Court has rejected invitations to reinterpret the rule. See Carden v. Arkoma Assocs., 494 U.S. 185, 196-97, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990), reaffirmed in Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 578 n. 6, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) (“Whether the Constitution requires it or not, Carden is the subconstitutional rule by which we determine the citizenship of a partnership— and in this case it leads to the conclusion that there were no opposing parties who were not co-citizens.”) (emphasis in origi*187nal). Indeed, in Carden, the Court stated that this rule “can validly be characterized as technical, precedent-bound, and unresponsive to policy considerations raised by the changing realities of business organization.” 494 U.S. at 196, 110 S.Ct. 1015. Yet, the Court viewed the 1958 amendment to 28 U.S.C. § 1332(c) as evidence of Congress’ tacit approval of the rule regarding citizenship of associations, as “[n]o provision was made for the treatment of artificial entities other than corporations.” Id. at 196-97, 110 S.Ct. 1015. The Court concluded that the limited scope of the amendment meant that Congress was content with the existing method of determining the citizenship of unincorporated associations such as partnerships. Accordingly, the Court declared that any change to the Carden rule must come from Congress, as “[s]uch accommodation is not only performed more legitimately by Congress than by courts, but it is performed more intelligently by legislation than by interpretation of the statutory word ‘citizen.’ ” Id.2
Nevertheless, despite its apparent relevance to this jurisdictional dispute, Carden does not definitively answer the specific question here. In Carden, an Arizona limited partnership brought a diversity action against two Louisiana citizens. Id. at 186, 110 S.Ct. 1015. The partnership asserted that complete diversity was satisfied because none of its general partners shared the same citizenship as any adverse party. The citizenship of its limited partners, it argued, was irrelevant to the presence of diversity jurisdiction. Id. at 192, 110 S.Ct. 1015. The Court rejected that position and held that complete diversity was lacking because one of the limited partners was, like the defendants, a citizen of Louisiana, thus precluding complete diversity. The Court held that the citizenship of partnerships is determined by the citizenship of all of its partners, not just the general partners. Id. at 195-96, 110 S.Ct. 1015.
The Court addressed the application of diversity jurisdiction to partnerships again in Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004). There, a Texas-based limited partnership brought a breach of contract action against a Mexican corporation based on the alienage clause of the diversity statute. As explained by the Supreme Court:
Because [the partnership] had two partners who were Mexican citizens at the time of filing, the partnership was a Mexican citizen. (It was also a citizen of Delaware and Texas based on the citizenship of its other partners.) And because the Defendant ... was a Mexican corporation, aliens were on both sides of the case, and the requisite diversity was therefore absent.
Id. at 569, 124 S.Ct. 1920. Therefore Grupo Dataflux, does not advance our inquiry much more than Carden. Neither case directly addresses the specific jurisdictional question before us. Rather, Grupo Dataflux, merely restates the principle that diversity jurisdiction (or alienage jurisdiction) does not obtain where a plaintiff and defendant share a common citizenship.
In contrast to Carden and Grupo Dataflux, no member of Morgan Lewis (nor any of the other defendants3) shares the citi*188zenship of the plaintiff in this case. Swig-er is a citizen of West Virginia. Morgan Lewis is a limited liability partnership registered in Pennsylvania with its principal place of business in Philadelphia, Pennsylvania. In addition to its stateless partner, Lubar, Morgan Lewis has partners who are citizens of Pennsylvania, New York and California. It is undisputed that no Morgan Lewis partner is a citizen of West Virginia. Ideally, that should be the beginning and end of our jurisdictional inquiry.
II.
The rule that a United States citizen permanently domiciled abroad may not sue or be sued on the basis of diversity of citizenship (sometimes called the “stateless person” doctrine) is a doctrine likely born of chance rather than design. It was recognized (without any particular discussion) by the Supreme Court in Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989). The rule has evolved from judicial interpretation of the words of the diversity statute. Section 1332 applies only to suits between “citizens of different States” and “citizens of a State and citizens of a foreign state.” 28 U.S.C. 1332(a)(1)-(2). The capitalized “State” refers to U.S. states. Hence, a U.S. citizen with no “State” citizenship falls outside the literal terms of the statute. This was likely not an intentional omission from diversity jurisdiction, but rather flowed from the (now incorrect) assumption that all U.S. citizens would also be domiciled in a U.S. state. See 13B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure, § 3621 (2008). See also Southern Cross Overseas Agencies, Inc. v. Wah Kwong Shipping Group Ltd., 181 F.3d 410, 415-16 (3d Cir.1999) (noting likelihood that problem of “stateless” person — in the international sense — was unanticipated by the Framers).
At this point, neither the rule nor the cases that have applied it are open to judicial revision unless the Supreme Court revisits the issue.4 However, the presence of a “stateless” partner in a partnership whose partners’ citizenship is otherwise completely diverse from all plaintiffs should not summarily defeat the exercise of our jurisdiction. After all, it is the partnership, not the individual partners, who are party to the action.
III.
It is certainly not our job to create law. We are, however, charged with filling gaps in statutes when unforeseen circumstances create ambiguities. For example, Congress has declared that a corporation is “deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). However, that statute does not determine if a court has jurisdiction when a U.S. corporation has its principal place of business outside of the United States, or has no principal place of business at all. When presented with this situation, courts have not concluded that such a corporation is “stateless” and thereby beyond the reach of diversity jurisdiction. Rather, courts have held that the citizenship of the corporation defaults to the only state citizenship that can be determined' — 'that of the state *189of incorporation. See, e.g., Torres v. Southern Peru Copper Corp., 113 F.3d 540, 543-44 (5th Cir.1997); Cabalceta v. Standard Fruit Co., 883 F.2d 1553, 1561 (11th Cir.1989).
Likewise, if partners in a partnership are citizens of several states, but one (or more) partner is not a citizen of any state, there is no reason to necessarily conclude that subject matter jurisdiction is defeated. Thus, were we free to address the issue of Lubar’s citizenship on a clean slate, I hope that we would readily concede that it adds nothing to the diversity equation and that there is no reason to allow it to defeat diversity jurisdiction. Lubar’s residence in England makes him a jurisdictional nullity, and his citizenship should be treated that way for purposes of determining subject matter jurisdiction. Carden and Grupo Dataflux are not necessarily to the contrary. They merely hold that it is the citizenship of all the members of a partnership that must be examined, they say nothing about the lack of a partner’s citizenship.
IV.
The traditional explanation of the purpose of diversity jurisdiction is “the fear that state courts would be prejudiced against out-of-state litigants.” See 13B Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 3601 (2008). Morgan Lewis is a nationally prominent law firm whose main office is in Philadelphia, Pennsylvania. It is certainly not unreasonable to believe that local bias might operate in state court in favor of a litigant that is as prominent and influential in the local community as Morgan Lewis.5 That is the rationale for allowing Swiger to sue in federal court — assuming complete diversity. The rationale is not undermined one iota merely because one of Morgan Lewis’ many hundreds of partners has been residing in England and will apparently continue to reside there indefinitely. So long as none of Morgan Lewis’ partners is a citizen of Swiger’s home state of West Virginia, the purpose of diversity jurisdiction is fully served, and Swiger should be permitted to test the merits of his claim in a federal forum. Lubar’s lack of citizenship in any state should not be the jurisdictional equivalent of citizenship in the same state as Swiger. Accordingly, we should be able to conclude that this suit presents “two adverse parties [who] are not co-citizens.” Grupo Dataflux, 541 U.S. at 579, 124 S.Ct. 1920 (internal quotation omitted).
V.
According to one 2004 survey, roughly 10,000 of the 110,000 lawyers at the top 250 U.S. firms work overseas. Michael D. Goldhaber & Carlyn Kolker, Supersonic Lawyers, American Lawyer (May 2004). As business ventures and legal relationships become more global in depth and breadth, the situation we face today will become increasingly common. When the expanding business universe and shrinking globe are considered along with the growing population of expatriates and the apparently increasing popularity of non-corporate business forms, courts will no doubt be confronted with applying the Carden rule and the “stateless” person doctrine in this context with increasing regularity. Unless Congress takes up the problem and clarifies the meaning of 28 U.S.C. § 1332(a), persons suing large partnerships will increasingly be barred from *190bringing their claim in federal court. Hopefully, Congress will address this situation and put the Carden genie back in its jurisdictional bottle. However, that day is not yet here, and I therefore concur in this judgment.

. Even before the diversity statute was amended, the Supreme Court had judicially devised the rule that a corporation would be treated as a citizen of its state of incorporation. See Louisville, C. & C.R. Co. v. Letson, 43 U.S. (2 How.) 497, 11 L.Ed. 353 (1844). The 1958 amendment, adding the principal place of business to the corporation's citizenship, was designed to prevent misuse of the diversity jurisdiction by corporations. See 15 Moore's Federal Practice § 102.50 (3d ed.2008). A corporation, treated as out-of-state because incorporated elsewhere, was unlikely to suffer local prejudice in the courts of the state where the corporation had its principal place of business. Id.

. The Court further explained that this course "does not so much disregard the policy of accommodating our diversity jurisdiction to the changing realities of commercial organization, as it honors the more important policy of leaving that to the people’s elected representatives.” Carden, 494 U.S. at 197, 110 S.Ct. 1015.

. Defendants Allegheny Energy, Inc. and Allegheny Energy Service Corp. are Maryland corporations with their principal places of *188business in Greensburg, Pennsylvania. Defendant Allegheny Energy Supply Co. is a Delaware limited liability corporation with its principal place of business in Monroeville, Pennsylvania.

. Given its statements in Carden, it is not likely to do so unless Congress once again amends § 1332.

. I do not, of course, suggest the accuracy or wisdom of perpetuating that long-standing assumption, but its historical role in the evolution of our subject matter jurisdiction can not be ignored.