Grynberg Ex Rel. Trust v. Kinder Morgan Energy Partners, L.P., 2015 U.S. App. LEXIS 19132

Plaintiffs Celeste and Jack Grynberg sought to vacate an arbitration award and invoked federal diversity jurisdiction, alleging they were Colorado citizens and defendants Kinder Morgan entities were not.
KMEP is a publicly traded master limited partnership (MLP) formed in Delaware with principal place of business in Texas; KMCO2 was a Texas limited partnership wholly owned by KMEP.
The district court ordered the parties to identify the citizenship of KMEP’s unitholders, citing Carden v. Arkoma Associates, and concluded that KMEP’s citizenship included its unitholders’ citizenships.
Kinder Morgan showed at least one KMEP unitholder was a Colorado citizen; the district court dismissed for lack of complete diversity.
On appeal, the Tenth Circuit considered whether an MLP’s citizenship for diversity purposes is determined by the citizenship of its unitholders (the Chapman rule) or by corporate-style tests (state of formation and principal place of business).
The Tenth Circuit affirmed, holding MLPs are unincorporated entities whose citizenship is determined by the citizenship of their unitholders; the Russell exception (treating an entity like a corporation) did not apply.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether an MLP’s citizenship for diversity jurisdiction is determined by its unitholders’ citizenship	MLPs are functionally corporate; citizenship should be state of formation and principal place of business, not the members’ citizenship	MLPs are unincorporated (partnerships) and citizenship follows each unitholder under Carden/Chapman	Held: MLP citizenship is the citizenship of its unitholders (Chapman rule applies)
Whether the Russell exception permits treating an MLP like a corporation for diversity purposes	MLPs share corporate characteristics (publicly traded, centralized management) and thus qualify for a Russell-type exception	Russell is narrow and has not been extended; MLPs remain unincorporated under state and federal law	Held: Russell does not apply; courts should not extend exception to MLPs
Whether policy concerns about access to federal courts justify judicial reclassification of MLPs	Applying Chapman blocks diversity jurisdiction and limits federal forum; courts should adapt to modern business forms	Policy questions are for Congress, not courts; precedent controls	Held: Policy arguments are for Congress; courts must follow precedent (Carden)

Carden v. Arkoma Assocs., 494 U.S. 185 (MLP/limited partnership citizenship follows members; Chapman rule reaffirmed)
Chapman v. Barney, 129 U.S. 677 (origin of rule that unincorporated associations take citizenship of their members)
Puerto Rico v. Russell & Co., 288 U.S. 476 (narrow exception treating certain entities as having corporate-like citizenship)
United Steelworkers v. R.H. Bouligny, Inc., 382 U.S. 145 (refusal to extend Russell exception broadly)
Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (citizenship tested as of filing date)
Hertz Corp. v. Friend, 559 U.S. 77 (corporation citizenship: state of incorporation and principal place of business)
Strawbridge v. Curtiss, 7 U.S. 267 (complete diversity requirement)