Supreme Court Reinforces Strict Rule On Citizenship Of Unincorporated Entities For Diversity Jurisdiction To The Detriment Of Publicly-Traded REITs

Article III of the U.S. Constitution extends the jurisdiction of federal courts to "[c]ontroversies ... between Citizens of different States." U.S. Const. art. III, § 2, cl. 1. "This rule is easy enough to apply to humans, but can become metaphysical when applied to legal entities." Americold Realty Trust v. ConAgra Foods, Inc.

In a unanimous decision in Americold, the Supreme Court reiterated its strict rule regarding the citizenship of non-corporate entities when determining diversity jurisdiction. As Justice Sotomayor wrote: "While humans and corporations can assert their own citizenship, other entities take the citizenship of their members." Id. The court concluded that the "members" of a Maryland real estate investment trust ("REIT") include its shareholders. Id. at *4. This decision could prevent large, publicly-traded REITs from invoking diversity jurisdiction to access federal courts.

Americold was a state-law case, in which several corporations sued the owner of a warehouse for damages following a fire. The owner, now known as Americold Realty Trust, is a REIT created under Maryland law, which recognizes REITs as separate legal entities that can sue and be sued. Id. at *4. The case was originally filed in state court in Kansas, but Americold removed the case to federal court. The District Court accepted jurisdiction and resolved the dispute. Id. at *2.

On appeal, the Tenth Circuit raised the issue of subject matter jurisdiction. The parties responded that the District Court had original jurisdiction because the parties were "citizens of different States" as codified in 28 U.S.C. § 1332(a)(1). Id. The Tenth Circuit disagreed. The corporate plaintiffs were citizens of the states where they were incorporated and had their principle place of business. 28 U.S.C. § 1332(c)(1). But because Americold was not a corporation, the Tenth Circuit ruled that it was a citizen of all states in which its "members" were citizens, and that "members" included all of the REIT's shareholders. Because there was no record of the citizenship of Americold's shareholders, the Tenth Circuit held the parties had failed to make the required showing that plaintiffs were "citizens of different States" than the defendants. The Tenth Circuit remanded the case to the District Court with orders to vacate its judgment on the merits and remand the case back to state court. ConAgra Foods, Inc. v. Americold Logistics, LLC. The Supreme Court affirmed.

In Americold, the...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT