UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
September 15, 2008
No. 07-31106
Charles R. Fulbruge III
Clerk
ALICE GLINDA HARVEY,
Individually on behalf of her deceased
husband, Robert Joe Harvey and their
children, Tanya Gros and Tammy
Smith,
Plaintiff-Appellee,
v.
GREY WOLF DRILLING COMPANY,
Defendant-Appellant.
Appeal from the United States District Court
for the Eastern District of Louisiana
Before GARZA and ELROD, Circuit Judges, and HICKS, District Judge.1
HICKS, District Judge.
This appeal presents an issue of first impression in this circuit: whether,
for purposes of federal diversity jurisdiction, a limited liability company (“LLC”)
is a citizen of the state where it is organized or is a citizen of the states of which
its members are citizens. The district court held that 28 U.S.C. § 1332(c), which
governs citizenship for corporations, should be interpreted to include LLCs such
1
District Judge of the Western District of Louisiana, sitting by designation.
No. 07-31106
that LLCs would share the characteristics of a corporation for purposes of
diversity analysis. Based on this approach, the district court held that complete
diversity was lacking. Appellant Grey Wolf Drilling Company L.P. (“Grey Wolf”)
appeals the district court’s dismissal of the case for lack of subject matter
jurisdiction. We reverse.
I. BACKGROUND
On December 26, 2004, Robert Joe Harvey (“Harvey”) was working at a
land-based rig owned by Grey Wolf Drilling Company L.P. when he allegedly fell
after slipping on ice and/or snow that had accumulated on the drilling rig
location boards. After the slip and fall, Harvey was taken to the hospital. He
was released a few hours later and returned to the drilling rig location. Later
that evening, his condition appeared to worsen and the crew summoned
emergency medical services and transportation for Harvey. Harvey was again
transported to the hospital, where he was pronounced dead during the early
morning hours of December 27, 2004. The cause of death was a ruptured aortic
aneurysm.
On July 21, 2005, Harvey’s surviving spouse, Alice Glinda Harvey, and his
two adult daughters, Tanya Gros and Tammy Smith, filed suit against Grey
Wolf2 in the Eastern District of Louisiana, on the jurisdictional grounds of
diversity of citizenship. The complaint alleged that the abdominal aortic
aneurysm from which Harvey died was the result of his alleged fall, an accident
which they claim was caused by Grey Wolf’s negligence. The plaintiffs-appellees
later filed an amended complaint, adding James A. Whitson, Jr. (“Whitson”) as
2
The plaintiffs originally named as a defendant Grey Wolf Drilling Company, who answered
as Grey Wolf Drilling Company, L.P., its proper name.
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No. 07-31106
a defendant.
Alice Glinda Harvey, Tanya Gros, and Tammy Smith are all citizens of the
State of Louisiana. Whitson is a citizen of Texas. Grey Wolf is a Texas limited
partnership with two members: (1) Grey Wolf Holdings Company, a Nevada
corporation with its principal place of business in Texas; and (2) Grey Wolf
L.L.C., a limited liability company organized in Louisiana and comprised of one
member, Grey Wolf Holdings Company.
On August 14, 2007, Grey Wolf moved for summary judgment, seeking
dismissal of all claims. In September 2007, the district court judge conducted
a telephone status conference with all counsel and discussed, among other
things, the court’s subject matter jurisdiction. The parties were directed to file
memoranda addressing the court’s subject matter jurisdiction and Grey Wolf was
ordered to provide affirmative proof of its citizenship. The parties complied with
the district court’s order, all arguing in favor of a finding of complete diversity
and a rule that determines a LLC’s citizenship by the citizenship of its members
only, not the LLC’s state of organization and principal place of business.
On November 7, 2007, the district court entered an Order and Reasons
dismissing the case for lack of subject matter jurisdiction. The district court
relied almost entirely on the reasoning of a law review article, which addressed
the issue of determining a LLC’s citizenship for purposes of diversity
jurisdiction. See Debra R. Cohen, Limited Liability Company Citizenship:
Reconsidering An Illogical and Inconsistent Choice, 90 Marq.L.Rev. 269 (2006).
The district court adopted the author’s conclusion that “28 U.S.C. § 1332(c)
should be read ‘dynamically’ and ‘interpreted to include the LLC, an
organization created after that statute was adopted and sharing the entity
characteristics that are relevant to a diversity analysis.’” Based on this rationale,
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No. 07-31106
the district court determined that complete diversity was lacking.
Before this court, Grey Wolf argues that the district court erred in treating
Grey Wolf L.L.C. as a corporation and deeming it to be a citizen of Louisiana, its
state of organization. Appellees join Grey Wolf’s argument, not only adopting
the brief filed on behalf of Grey Wolf, but also stating that their interests are
identical to those of Grey Wolf.
II. DISCUSSION
A. Standard of Review
This court reviews subject matter jurisdiction de novo as a question of law.
See Gandy Nursery, Inc. v. U.S., 318 F.3d 631, 636 (5th Cir. 2003) (citing In re
Canion, 196 F.3d 579, 584 (5th Cir.2002)).
B. Subject Matter Jurisdiction
In Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806), the
Supreme Court established the rule of complete diversity for cases arising under
28 U.S.C. § 1332. See McLaughlin v. Mississippi Power Co., 376 F.3d 344, 353
(5th Cir 2004). Complete diversity “requires that all persons on one side of the
controversy be citizens of different states than all persons on the other side.” Id.
(citing Harrison v. Prather, 404 F.2d 267, 272 (5th Cir.1968)).
Again, the plaintiffs are Louisiana citizens and the individual defendant,
Whitson, is a Texas citizen. Thus, the citizenship of Grey Wolf determines
complete diversity. Grey Wolf is a Texas limited partnership with two members:
(1) Grey Wolf Holdings Company, a Nevada corporation with its principal place
of business in Texas; and (2) Grey Wolf L.L.C., a limited liability company
organized in Louisiana whose sole member is Grey Wolf Holdings Company.
The citizenship of a limited partnership is based upon the citizenship of each of
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No. 07-31106
its partners. See Carden v. Arkoma Assocs., 494 U.S. 185, 195-96, 110 S.Ct.
1015, 1021-22 (1990) (holding that the citizenship of an unincorporated entity
or association, such as a partnership, is based upon the citizenship of each of its
members). Grey Wolf’s first partner, Grey Wolf Holdings Company, is a citizen
of both Nevada and Texas. See 28 U.S.C. § 1332(c)(1) (“[A] corporation shall be
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.”). The citizenship of Grey
Wolf’s second partner, Grey Wolf L.L.C., is less clear.
Neither the Supreme Court nor this circuit have previously addressed the
question of how to determine the citizenship of a LLC for purposes of diversity
jurisdiction. See Unity Commc’ns, Inc. v. Unity Commc’ns of Colo. LLC, 105
Fed.Appx. 546, 547 n.1 (5th Cir. 2004) (“We express no opinion about whether
or not the district court’s holding regarding the citizenship of limited liability
companies is the proper interpretation of the law.”). All federal appellate courts
that have addressed the issue have reached the same conclusion: like limited
partnerships and other unincorporated associations or entities, the citizenship
of a LLC is determined by the citizenship of all of its members. See Pramco, LLC
ex rel. CFSC Consortium, LLC v. San Juan Bay Marina, Inc., 435 F.3d 51 (1st
Cir. 2006); Handelsman v. Bedford Village Assocs. Ltd. P’ship, 213 F.3d 48 (2nd
Cir. 2000); Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114 (4th Cir.
2004); Homfeld II, L.L.C. v. Comair Holdings, Inc., 53 Fed.Appx. 731 (6th Cir.
2002); Wise v. Wachovia Securities, LLC, 450 F.3d 265 (7th Cir. 2006); GMAC
Commercial Credit LLC v. Dillard Dept. Stores, Inc., 357 F.3d 827 (8th Cir.
2004); Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006);
Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020 (11th
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No. 07-31106
Cir. 2004). We now join the other circuits in this holding.
The Supreme Court has not specifically addressed the citizenship of a
LLC, but has stated that “[w]hile the rule regarding the treatment of
corporations as ‘citizens’ has become firmly established, we have . . . just as
firmly resisted extending that treatment to other entities.” Carden, 494 U.S. at
189, 110 S.Ct. at 1018. The Court has refused to treat unincorporated
associations as corporations for diversity purposes. In Great Southern Fire Proof
Hotel Co. v. Jones, 177 U.S. 449, 20 S.Ct. 690 (1900), the Court reasoned:
That a limited partnership association created under the
Pennsylvania statute may be described as a “quasi corporation,”
having some of the characteristics of a corporation, or as a “new
artificial person,” is not a sufficient reason for regarding it as a
corporation within the jurisdictional rule heretofore adverted to.
That rule must not be extended. We are unwilling to extend it so as
to embrace partnership associations.
Id. at 457, 20 S.Ct. at 693. The district court’s rationale and ultimate holding
are not reconcilable with the aforementioned Supreme Court jurisprudence.
The district court’s holding is also unsupported by statutory language and
interpretation. The plain language of Section § 1332(c)(1) is simply not
applicable to unincorporated associations. Additionally, in the limited context
of class actions, Congress has created a statutory exception to Carden’s rule of
citizenship for unincorporated associations. See 28 U.S.C. § 1332(d)(10) (“For
purposes of this subsection and section 1453, an unincorporated association shall
be deemed to be a citizen of the State where it has its principal place of business
and the State under whose laws it is organized.”). Congress has made no similar
exception in any other area of the general diversity jurisdiction statute. Finally,
the Louisiana statute defining a LLC explicitly provides that a LLC “is an
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No. 07-31106
unincorporated association” and that no LLC “shall be deemed, described as, or
referred to as . . . [a] corporation.” Louisiana Revised Statutes §12:1301(a)(10).
Supreme Court precedent, case law from other circuits, and the statutory
language of both Section 1332 and Louisiana Revised Statutes §12:1301(a)(10)
overwhelmingly support the position that a LLC should not be treated as a
corporation for purposes of diversity jurisdiction. Rather, the citizenship of a
LLC is determined by the citizenship of all of its members. Under this approach,
Grey Wolf is a citizen of Nevada and Texas, not Louisiana, resulting in complete
diversity. Accordingly, the district court’s dismissal of the case for lack of subject
matter jurisdiction is reversed.
III. CONCLUSION
The order of the district court dismissing this case for lack of subject
matter jurisdiction is REVERSED and this case is REMANDED for further
proceedings.
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