813 F.3d 1321
10th Cir.2016Background
- Alderney Investments, LLC (Wyoming LLC) was formed in 1999; its members (past and present) have been foreign entities.
- Dispute arose over beneficial ownership among relatives of Rudolf Skowronska; Management Nominees, Inc. (MNI), a foreign corporation, claimed to be sole member of Alderney.
- Alderney was administratively dissolved after Edyta (purported transferee) filed articles of dissolution; MNI sued in federal district court seeking declaratory relief and reinstatement.
- District court granted summary judgment for MNI, declaring MNI the sole member and ordering relief; Alderney and Edyta appealed and raised subject-matter jurisdiction for the first time on appeal.
- The principal legal question on appeal was whether Alderney should be treated as a corporation (citizenship = state of incorporation/principal place of business) or as an unincorporated association (citizenship = citizenship of all members) for diversity jurisdiction purposes.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a Wyoming LLC is treated as a corporation for diversity or as an unincorporated association whose citizenship is that of all members | MNI: Alderney should be treated like a corporation (measure citizenship by state of organization/principal place of business) | Alderney/Edyta: Alderney is an unincorporated association; citizenship derives from its members | Court: Alderney is an unincorporated association; citizenship determined by all members (per Siloam Springs/Carden) |
| Whether the district court had subject-matter jurisdiction under 28 U.S.C. § 1332(a) | MNI: Diversity exists (relied on corporate treatment of LLC) | Alderney/Edyta: No complete diversity because members are foreign entities and MNI is foreign | Court: No complete diversity (all parties are foreign); district court lacked subject-matter jurisdiction; judgment vacated and case remanded with instructions to dismiss |
Key Cases Cited
- Siloam Springs Hotel, L.L.C. v. Century Surety Co., 781 F.3d 1233 (10th Cir. 2015) (LLC treated as unincorporated association for diversity; citizenship = members')
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (diversity jurisdiction depends on citizenship of all members of unincorporated associations)
- Conagra Foods, Inc. v. Americold Logistics, LLC, 776 F.3d 1175 (10th Cir. 2015) (affirming member-based citizenship analysis for certain unincorporated entities)
- Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (2004) (absence of requisite diversity requires dismissal)
- Gschwind v. Cessna Aircraft Co., 232 F.3d 1342 (10th Cir. 2000) (foreign parties on both sides defeat § 1332(a)(2) diversity)
