Swiger v. Alghny Energy Inc

Opinions of the United
2008 Decisions States Court of Appeals
for the Third Circuit

8-25-2008

Swiger v. Alghny Energy Inc
Precedential or Non-Precedential: Precedential

Docket No. 07-1706

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

____________

NO. 07-1706
____________

CLIFTON G. SWIGER

Appellants

v.

ALLEGHENY ENERGY, INC.,
ALLEGHENY ENERGY SUPPLY CO., LLC,
ALLEGHENY ENERGY SERVICES CORP., and
MORGAN, LEWIS & BOCKIUS, LLP

____________

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 05-CV-5725)
District Judge: The Honorable J. Curtis Joyner

Argued March 25, 2008
 BEFORE: MCKEE, RENDELL and TASHIMA * ,
Circuit Judges,

(Filed: August 25, 2008)

Gregory A. Beck (Argued)
Paul Alan Levy
Public Citizen Litigation Group
1600 20th Street, NW
Washington, DC 20009
Counsel for Appellants

Theresa J. Chung (Argued)
Michael J. Ossip, Esq.
Michael A. Bloom, Esq.
Morgan, Lewis & Bockius LLP
1701 Market Street
Philadelphia, PA 19103

Sara A. Begley, Esq.
Robert A. Nicholas, Esq.
Tracey G. Weiss, Esq.
Reed Smith 1650 Market Street
2500 One Liberty Place
Philadelphia, PA 19103-7301
Counsel for Appellees

*
The Honorable A. Wallace Tashima, Senior United States
Circuit Judge for the Ninth Circuit, sitting by designation.

2
 OPINION

TASHIMA, Circuit Judge:

We must decide whether a federal district court has

diversity jurisdiction over a lawsuit involving a partnership

where one of its partners is a dual American-British citizen

domiciled in a foreign state. The district court held that it lacked

diversity jurisdiction over such an entity, and we affirm.

I. APPELLATE JURISDICTION & STANDARD OF

REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291 over

a dismissal for lack of subject matter jurisdiction, and our

review for lack of subject matter jurisdiction is plenary. See

Frett-Smith v. Vanterpool, 511 F.3d 396, 399 (3d Cir. 2008).

II. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Clifton G. Swiger sued Allegheny Energy, Inc.,

3
Allegheny Energy Supply Co., LLC, Allegheny Energy Services

Corp., and Morgan, Lewis & Bockius LLP (“Morgan Lewis”),

(collectively “Defendants”), on several state law claims,

including abuse of process, wrongful use of civil proceedings,

invasion of privacy, and wrongful discharge, in the Eastern

District of Pennsylvania based upon diversity jurisdiction.

Morgan Lewis, joined by the other Defendants, moved to

dismiss the complaint pursuant to Federal Rule of Civil

Procedure 12(b)(1), on the ground that complete diversity

between the parties was lacking. Morgan Lewis is a partnership

that, at the time of the filing of the lawsuit, had among its

partners, Charles Lubar, a dual United States and United

Kingdom citizen domiciled in the United Kingdom. The district

court dismissed the case for lack of jurisdiction, concluding that

“[g]iven that for diversity purposes, the court must consult the

citizenship of all of the members of an artificial entity such as

4
a general or limited partnership and because a United States

citizen who is not domiciled in one of the United States cannot

invoke diversity jurisdiction in one particular state, we must

conclude that we are without jurisdiction to act in this matter.”

Swiger v. Allegheny Energy, Inc., No. 05-CV-5725, 2007 WL

442383, at *5 (E.D. Pa. Feb. 7, 2007) (emphasis in the original)

(citations omitted). Swiger timely appealed.

III. ANALYSIS

Swiger argues that the district court erred in holding that

it lacked diversity jurisdiction because, according to Swiger, a

single partner who is not a citizen of a state does not render the

entire partnership stateless for diversity purposes.1 Whether a

federal district court has diversity jurisdiction over a lawsuit

1
Swiger “assumes” that Lubar is in fact stateless, thus
accepting the factual basis of the district court’s ruling, that
Lubar is an American-British dual citizen domiciled in the
United Kingdom.

5
involving a partnership that has among its partners an American

citizen domiciled in a foreign state is an issue of first impression

in this Circuit. To our knowledge, however, all courts that have

addressed this issue have held that such an entity does not

qualify for diversity jurisdiction. For the reasons set forth

below, we agree with those other courts and hold that if a

partner of a partnership is a United States citizen permanently

living abroad, there can be no diversity of jurisdiction over the

partnership because the partner is neither a citizen of a state nor

a citizen of a foreign country.

Swiger also argues that even if the stateless partner

destroys diversity, the district court nevertheless had alienage

jurisdiction because Lubar, as a dual citizen of the United States

and the United Kingdom, is a citizen or subject of a foreign

state. This argument, however, is foreclosed by our recent

decision in Frett-Smith, 511 F.3d at 400, in which we held that,

6
for purposes of diversity jurisdiction, we consider only the

American citizenship of a dual American-foreign national. We

consider each of Swiger’s arguments in turn.

A. Diversity Jurisdiction and the “Stateless” Partner

Under 28 U.S.C. § 1332(a):

district courts . . . have original jurisdiction of all
civil actions where the matter in controversy
exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between—(1) citizens of
different States; (2) citizens of a State and citizens
or subjects of a foreign state; (3) citizens of
different States and in which citizens or subjects
of a foreign state are additional parties; and (4) a
foreign state, defined in section 1603(a) of this
title, as plaintiff and citizens of a State or of
different States.

A natural person is deemed to be a citizen of the state where she

is domiciled. See Gilbert v. David, 235 U.S. 561, 569 (1915).

A corporation is a citizen both of the state where it is

incorporated and of the state where it has its principal place of

business. 28 U.S.C. § 1332(c).

7
 Partnerships and other unincorporated associations,

however, unlike corporations, are not considered “citizens” as

that term is used in the diversity statute. See Carden v. Arkoma

Assocs., 494 U.S. 185, 187–92 (1990) (holding that a limited

partnership is not a citizen under the jurisdictional statute); see

also Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 n.1 (2006)

(“[F]or diversity purposes, a partnership entity, unlike a

corporation, does not rank as a citizen[.]”); United Steelworkers

of Am. v. Bouligny, 382 U.S. 145, 149–50 (1965) (holding that

a labor union is not a citizen for purposes of the jurisdictional

statute); Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449,

454–55 (1900) (holding that a limited partnership association,

even though it was called a quasi-corporation and declared to be

a citizen of the state under the applicable state law, is not a

citizen of that state within the meaning of the jurisdictional

statute); Chapman v. Barney, 129 U.S. 677, 682 (1889) (holding

8
that although the plaintiff-stock company was endowed by New

York law with the capacity to sue, it could not be considered a

“citizen” for diversity purposes); 15 James Wm. Moore,

Moore’s Federal Practice § 102.57[1] (3d ed. 2006) [hereinafter

Moore’s Federal Practice] (“[A] partnership is not a ‘citizen’ of

any state within the meaning of the statutes regulating

jurisdiction[.]”).

Given that partnerships are not citizens for diversity

purposes, the Supreme Court has long applied the rule of

Chapman v. Barney: that courts are to look to the citizenship of

all the partners (or members of other unincorporated

associations) to determine whether the federal district court has

diversity jurisdiction. See Lincoln Prop. Co., 546 U.S. at 84 n.1;

Carden, 494 U.S. at 196–97; Bouligny, 382 U.S. at 151; Great

S. Fire Proof Hotel, 177 U.S. at 456; Chapman, 129 U.S. at 682;

see also 13B Charles Alan Wright et al., Federal Practice &

9
Procedure § 3630 (2d ed. 1984) (“[W]henever a partnership, a

limited partnership . . . , a joint venture, a joint stock company,

a labor union, a religious or charitable organization, a governing

board of an unincorporated institution, or a similar association

brings suit or is sued in a federal court, the actual citizenship of

each of its members must be considered in determining whether

diversity jurisdiction exists.”). In Chapman, the Supreme Court,

on its own motion, reversed a judgment on the grounds that the

federal court did not have jurisdiction over a stock company

because the record did not demonstrate that all the partners of

the stock company were citizens of a state different than that of

the defendant:

On looking into the record, we find no
satisfactory showing as to the citizenship of the
plaintiff. The allegation of the amended petition
is that the United States Express Company is a
joint-stock company organized under a law of the
state of New York, and is a citizen of that state.
But the express company cannot be a citizen of
New York, within the meaning of the statutes

10
 regulating jurisdiction, unless it be a corporation.
[T]he company . . . is, a mere partnership. . . .

. . . . The company may been organized
under the laws of the State of New York, and may
be doing business in that State, and yet all the
members of it may not be citizens of that State.
The record does not show the citizenship of
Barney, or of any of the members of the company.

129 U.S. at 682 (emphasis added). In a nearly unbroken chain,2

2
As the Supreme Court put it in Carden:
The one exception to the admirable consistency
of our jurisprudence [regarding the Chapman
rule] is Puerto Rico v. Russell & Co., 288 U.S.
476 (1933), which held that the entity known as
a soceidad en comandita, created under the civil
law of Puerto Rico, could be treated as a citizen
of Puerto Rico for purposes of determining
federal-court jurisdiction. . . . [However,]
[t]here could be no doubt, after Bouligny, that at
least common-law entities (and likely all entities
beyond the Puerto Rican sociedad en
comandita) would be treated for purposes of the
diversity statute pursuant to what Russell called
“[t]he tradition of the common law,” which is
“to treat as legal persons only incorporated
groups and to assimilate all others to
(continued...)

11
the Supreme Court has consistently applied the Chapman rule,

holding that a partnership is not a citizen, but that the court

“must look in the case of a suit by or against a partnership

association to the citizenship of the several persons composing

such association.” Great S. Fire Proof Hotel, 177 U.S. at 456;

see also Carden, 493 U.S. at 189; Bouligny, 382 U.S. at 151.

Further, in the context of partnerships, the complete

diversity requirement demands that all partners be diverse from

all parties on the opposing side. See Lincoln Prop. Co., 546

U.S. at 84 n.1; accord Carden, 494 U.S. at 195 (accepting the

“rule that the Court will . . . count every member of an

unincorporated association for purposes of diversity

jurisdiction” and “reject[ing] the contention that to determine,

for diversity purposes, the citizenship of an artificial entity, the

2
(...continued)
partnerships.”
494 U.S. at 189–90.

12
court may consult the citizenship of less than all of the entity’s

members”); Carlsberg Res. Corp. v. Cambria Sav. & Loan

Ass’n, 554 F.2d 1254, 1259 (3d Cir. 1977) (“When the rule of

complete diversity is read in conjunction with the principle that

the citizenship of a partnership depends upon that of its

members, it becomes clear that diversity jurisdiction may not

obtain here, unless all of the members of the plaintiff

partnership are of distinct citizenship from all of the

defendants.”); Underwood v. Maloney, 256 F.2d 334, 338 (3d

Cir. 1958) (“[W]here jurisdiction is sought to be founded on

diversity of citizenship, the action being by or against an

unincorporated association . . . the citizenship of the individual

members must be shown to be wholly diverse from that of the

opposing party or those of the opposing parties.”); cf.

Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806) (“[W]here

the interest is joint, each of the persons concerned in that interest

13
must be competent to sue, or liable to be sued in [the federal]

courts.”).

Partnerships which have American partners living abroad

pose a special problem. “In order to be a citizen of a State

within the meaning of the diversity statute, a natural person

must be both a citizen of the United States and be domiciled

within the State.” Newman-Green, Inc. v. Alfonzo-Larrain, 490

U.S. 826, 828 (1988). An American citizen domiciled abroad,

while being a citizen of the United States is, of course, not

domiciled in a particular state, and therefore such a person is

“stateless” for purposes of diversity jurisdiction. See id. Thus,

American citizens living abroad cannot be sued (or sue) in

federal court based on diversity jurisdiction as they are neither

“citizens of a State,” see 28 U.S.C. § 1332(a)(1), nor “citizens

or subjects of a foreign state,” see id. § 1332(a)(2). See

Newman-Green, 490 U.S. at 826.

14
 Putting these principles together, that is, that the

citizenship of the individual partners must be shown to be

wholly diverse from that of the opposing party (or those of the

opposing parties) and that American citizens living abroad

cannot sue (or be sued) in federal court based on diversity

jurisdiction, our sister circuits and other federal courts have

concluded that if a partnership has among its partners any

American citizen who is domiciled abroad, the partnership

cannot sue (or be sued) in federal court based upon diversity

jurisdiction. See Herrick Co. v. SCS Commc’ns, Inc., 251 F.3d

315, 322 (2d Cir. 2001); accord ISI Int’l, Inc. v. Borden Ladner

Gervais LLP, 316 F.3d 731, 733 (7th Cir. 2003) (“One of [the

partnership’s] partners is a U.S. citizen domiciled in Canada; she

has no state citizenship, so the diversity jurisdiction is

unavailable.”); Cresswell v. Sullivan & Cromwell, 922 F.2d 60,

69 (2d Cir. 1990) (“If in fact any of S & C's foreign-residing

15
United States citizen partners are domiciled abroad, a diversity

suit could not be brought against them individually; in that

circumstance, since for diversity purposes a partnership is

deemed to take on the citizenship of each of its partners, a suit

against S & C could not be premised on diversity.” (internal

citations omitted)); see also 15 Moore’s Federal Practice §

102.37[16] (“If a member of a partnership is a United States

citizen permanently living abroad, there can be no diversity of

jurisdiction because the member is neither a citizen of a state nor

a citizen of a foreign country.”).

Swiger, however, asks us to disregard these cases and

create an exception to the Chapman tradition. He argues that we

should ignore Lubar’s lack of state citizenship and focus only on

the partners who are citizens of a state. Morgan Lewis has

American partners domiciled in, among other states,

Pennsylvania, New York, and California; therefore, Morgan

16
Lewis, according to Swiger, is a citizen of Pennsylvania, New

York, California, and so on. Although Morgan Lewis has a

stateless partner, Swiger contends that the partnership can hardly

be characterized as “stateless”; indeed, under this view, Morgan

Lewis is quite “stateful.” That is, according to Swiger, one

party, Morgan Lewis, is a citizen of Pennsylvania, New York,

and California, and so on, and the other party, Swiger, is a

citizen of West Virginia, ipso facto, the parties are “citizens of

different States.”

We cannot agree. First, the Supreme Court has explicitly

held, and consistently stated, as we have already noted, that a

partnership is not a “citizen” for purpose of diversity

jurisdiction. Instead, for purposes of diversity jurisdiction, a

partnership’s citizenship as a party is determined by reference to

all partners, and all partners must be diverse from all parties on

17
the opposing side.3 Lincoln Prop. Co., 546 U.S. at 84 n.1; see

also Carden, 494 U.S. at 195 (“[W]e reject the contention that

to determine, for diversity purposes, the citizenship of an

artificial entity, the court may consult the citizenship of less than

all of the entity’s members.”). Second, Morgan Lewis, as an

entity, is just as “stateless” as it is “stateful”: Morgan Lewis is

not an American citizen, and it “has no domicile in any state.”

3
Despite this, Swiger contends that the Supreme Court’s
recent decision in Grupo Dataflux v. Atlas Global Group,
L.P., supports his view that the partnership takes on the state
citizenship of its partners. See 541 U.S. 567, 569 (2004)
(“[A]s a partnership, [it] is a citizen of each State or foreign
country of which any of its partners is a citizen.”). Grupo
Dataflux, however, does not change the basic principles as to
how an unincorporated association’s citizenship is determined
for purposes of diversity jurisdiction. Indeed, in a post-Grupo
Dataflux opinion, the Supreme Court again reiterated that “for
diversity purposes, a partnership entity, unlike a corporation,
does not rank as a citizen; to meet the complete diversity
requirement, all partners, limited as well as general, must be
diverse from all parties on the opposing side.” Lincoln Prop.
Co., 546 U.S. at 84 n.1 (citing Carden, 494 U.S. at 189,
192–97).

18
But rather than treating partnerships as stateless, the Chapman

rule determines the partnership’s citizenship for purposes of

diversity by referring to the citizenship of each partner. The rule

of Chapman is a legal construct that allows a real legal entity,

though a non-citizen, to sue and be sued in federal court based

upon diversity by looking through the partnership to the

citizenship of each partner.

Because Morgan Lewis has a stateless partner, and thus,

all partners of Morgan Lewis are not diverse from all parties on

the opposing side, the district court correctly held that it lacked

diversity jurisdiction over this action.

B. Alienage Jurisdiction

Swiger argues that even if jurisdiction based on diversity

of state citizenship is lacking, the district court nevertheless had

diversity jurisdiction under 28 U.S.C. § 1332(a)(2), because

Lubar, as a dual citizen of the United States and the United

19
Kingdom would still be a “citizen[] or subject[] of a foreign

state,” and as such, Lubar would be diverse from Swiger within

the meaning of § 1332(a)(2). That is, complete diversity would

exist because Swiger is a citizen of West Virginia and Lubar is

a citizen of the United Kingdom. After this appeal was briefed,

but before oral argument, we decided this question in Frett-

Smith, in which we held “that for purposes of diversity

jurisdiction, only the American nationality of a dual national is

recognized.” See Frett-Smith, 511 F.3d at 400. Because Lubar

is a United States citizen, any reliance on § 1332(a)(2)’s

alienage jurisdiction would be in error. Id. at 400. Thus,

“[o]nly if [Lubar] was domiciled in a particular state of the

United States at the time the suit was filed, and that state was

diverse from that of [Swiger], would subject matter jurisdiction

be present” as against Morgan Lewis. Id.

IV. CONCLUSION

20
 Whenever a partnership (or other unincorporated

association) brings suit or is sued in a federal court, the

citizenship of each of its partners (or members) must be

considered in determining whether diversity jurisdiction exists,

and all partners (or members) must be diverse from all parties on

the opposing side. Lubar, a Morgan Lewis partner and

American citizen domiciled abroad, is “stateless” for purposes

of diversity jurisdiction. Because Lubar, as a stateless person,

cannot sue or be sued in federal court based upon diversity

jurisdiction, neither can Morgan Lewis. The judgment of the

district court is AFFIRMED.

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

21
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 plaintiff’s 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 Carden rule and “stateless person”

doctrine here results in a ruling that is inconsistent with both

reality and common sense. Accordingly, although I concur in

22
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. § 1332(a). In Chapman v.

Barney, 129 U.S. 677 (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 (1990), reaffirmed in Grupo

Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 578 n.6

(2004) (“Whether the Constitution requires it or not, Carden is

1
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 (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.

24
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 original). 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.

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. 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

25
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. 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

2
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.

26
presence of diversity jurisdiction. Id. at 192. 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.

The Court addressed the application of diversity

jurisdiction to partnerships again in Grupo Dataflux v. Atlas

Global Group, L.P., 541 U.S. 567 (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

27
 Defendant . . . was a Mexican corporation, aliens
were on both sides of the case, and the requisite
diversity was therefore absent.

Id. at 569. 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 defendants 3 ) shares the

citizenship of the plaintiff in this case. Swiger is a citizen of

West Virginia. Morgan Lewis is a limited liability partnership

3
Defendants Allegheny Energy, Inc. and Allegheny
Energy Service Corp. are Maryland corporations with their
principal places of business in Greensburg, Pennsylvania.
Defendant Allegheny Energy Supply Co. is a Delaware
limited liability corporation with its principal place of
business in Monroeville, Pennsylvania.

28
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 (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

29
“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

30
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

4
Given its statements in Carden, it is not likely to do so
unless Congress once again amends § 1332.

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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 of incorporation. See, e.g., Torres v. Southern Peru

Copper Corp., 113 F.3d 540, 543-44 (5th Cir. 1997); Cabalcetta

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

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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 Datflux 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

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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

5
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.

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suit presents “two adverse parties [who] are not co-citizens.”

Grupo Dataflux, 541 U.S. at 579 (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),

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persons suing large partnerships will increasingly be barred from

bringing 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.

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