The Explainer: Diversity Jurisdiction Involving the Limited Liability Company

The test for citizenship of a limited liability company is solely the citizenship of its members. Frith v. Martinsville Thermal LLC, 2006 U.S. Dist. LEXIS 31338 (May 19, 2006) (citing Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114

In General Technology Applications, Inc., the Fourth Circuit followed Carden v. Arkoma Assocs., 494 U.S. 185, 110 S. Ct. 1015, 108 L. Ed. 2d 157 (1990), by holding that all non-corporate artificial entities, such as limited liability companies, should not be treated the same as corporations despite how similar an entity might appear to a corporation; and therefore, for citizenship purposes an entity other than a corporation should be considered a citizen of its members as opposed to the state under whose laws it was created. Id. at 388 F.3d 114, 121. The court found that to determine whether diversity was complete it had to look at the citizenship of the members of the limited liability company at issue. Id. at 120. The court reasoned that when the citizenship of an LLC is at issue, although

a manager-managed limited liability company looks and acts somewhat like a corporation, especially with regard to derivative actions and members’ claims, this argument misses the mark. A limited liability company organized under the laws of a state is not a corporation and cannot be treated as such under section 1332 until Congress says otherwise. [] It is an unincorporated association, akin to a partnership for diversity purposes, whose citizenship is that of its members.

at 121 (internal citations omitted).

(4th Cir. 2004)).

About Christian Stegmaier
Senior Shareholder

Christian Stegmaier is a shareholder and chair of the Retail & Hospitality Practice Group at Collins & Lacy in Columbia. He is also active in the firm’s professional liability and appellate practices. Stegmaier welcomes your questions at (803) 255-0454 or