Determining Citizenship Diversity
In the United States, diversity jurisdiction is a form of federal court jurisdiction that permits lawsuits involving parties from different states to be heard in federal court. Establishing diversity jurisdiction requires meeting specific criteria, including diversity of citizenship and an amount in controversy exceeding a certain threshold.
Complete Diversity
Complete diversity of citizenship is required for diversity jurisdiction. This means that no plaintiff and defendant should be domiciled in the same state. If all plaintiffs are citizens of different states than all defendants, diversity jurisdiction may be established.
Citizenship of Individuals
U.S. citizens are considered citizens of the state in which they are domiciled, which is the last state in which they resided and intended to remain. Determining an individual’s citizenship is based on their residency and intent to remain in a particular state.
Citizenship of Corporations
A corporation is considered a citizen of both its state of incorporation and its principal place of business. The citizenship of a corporation is determined by the states in which it is incorporated and where its main operations are conducted.
Citizenship of LLCs and Partnerships
For limited liability companies (LLCs) and partnerships, their citizenship is determined by the citizenship of all their constituent partners/members. If any member or partner shares citizenship with an opposing party, it can affect diversity jurisdiction.
Research and Due Diligence
When determining citizenship diversity, it is crucial to conduct research and due diligence. This may involve:
Key Facts
- Complete Diversity: In the United States, complete diversity of citizenship exists when no plaintiff and defendant are domiciled in the same state. This means that if all plaintiffs are citizens of different states than all defendants, diversity jurisdiction may be established.
- Citizenship of Individuals: U.S. citizens are citizens of the state in which they are domiciled, which is the last state in which they resided and had an intent to remain. Determining an individual’s citizenship can be based on their residency and intent to remain in a particular state.
- Citizenship of Corporations: A corporation is considered a citizen of both its state of incorporation and its principal place of business. This means that the citizenship of a corporation is determined by the states in which it is incorporated and where its main operations are conducted.
- Citizenship of LLCs and Partnerships: For limited liability companies (LLCs) and partnerships, their citizenship is determined by the citizenship of all their constituent partners/members. If any member or partner shares citizenship with an opposing party, it can affect diversity jurisdiction.
- Research and Due Diligence: When determining citizenship diversity, it is important to conduct research and due diligence. This can involve reaching out to opposing counsel to request information about the citizenship of LLC members. Additionally, researching publicly available information, such as Articles of Organization, can help demonstrate efforts to determine member information.
- Reaching out to opposing counsel to request information about the citizenship of LLC members.
- Researching publicly available information, such as Articles of Organization, to demonstrate efforts to determine member information.
By conducting thorough research, parties can establish the citizenship of all parties involved and determine whether diversity jurisdiction is appropriate.
References
- Cornell Law School: Diversity Jurisdiction (https://www.law.cornell.edu/wex/diversity_jurisdiction)
- American Bar Association: Diversity Jurisdiction Involving an LLC: Member Citizenship Is Key (https://www.americanbar.org/groups/business_law/resources/business-law-today/2019-august/diversity-jurisdiction-involving-an-llc-member/)
- Wikipedia: Diversity Jurisdiction (https://en.wikipedia.org/wiki/Diversity_jurisdiction)
FAQs
What is complete diversity?
Complete diversity exists when no plaintiff and defendant are domiciled in the same state.
How is the citizenship of individuals determined?
Individuals are considered citizens of the state in which they are domiciled, which is the last state in which they resided and intended to remain.
How is the citizenship of corporations determined?
Corporations are considered citizens of both their state of incorporation and their principal place of business.
How is the citizenship of LLCs and partnerships determined?
The citizenship of LLCs and partnerships is determined by the citizenship of all their constituent partners/members.
Why is research and due diligence important in determining citizenship diversity?
Research and due diligence help establish the citizenship of all parties involved and determine whether diversity jurisdiction is appropriate.
What steps can be taken to conduct research and due diligence?
Steps include reaching out to opposing counsel for information and researching publicly available records like Articles of Organization.
What are the benefits of establishing diversity jurisdiction?
Establishing diversity jurisdiction allows lawsuits involving parties from different states to be heard in federal court.
What are the potential consequences of failing to establish diversity jurisdiction?
Failing to establish diversity jurisdiction may result in a case being dismissed or remanded to state court.