Swiger v. Allegheny Energy, Inc.

• Decision Date: 25 August 2008
• Docket Number: No. 07-1706.,07-1706.
• Citation: 540 F.3d 179
• Parties: Clifton G. SWIGER, Appellants v. ALLEGHENY ENERGY, INC., Allegheny Energy Supply Co., LLC, Allegheny Energy Services Corp., and Morgan, Lewis & Bockius, LLP.
• Court: U.S. Court of Appeals — Third Circuit

540 F.3d 179

Clifton G. SWIGER, Appellants v. ALLEGHENY ENERGY, INC., Allegheny Energy Supply Co., LLC, Allegheny Energy Services Corp., and Morgan, Lewis & Bockius, LLP.

No. 07-1706.

United States Court of Appeals, Third Circuit.

Argued March 25, 2008.

Filed: August 25, 2008.

Gregory A. Beck (Argued), Paul Alan Levy Public Citizen Litigation Group, Washington, DC, Counsel for Appellants.

Theresa J. Chung (Argued), Michael J. Ossip, Esq., Michael A. Bloom, Esq., Morgan, Lewis & Bockius LLP, Sara A. Begley, Esq., Robert A. Nicholas, Esq., Tracey G. Weiss, Esq., Reed Smith Philadelphia, PA, Counsel for Appellees.

Before: McKEE, RENDELL and TASHIMA^*, Circuit Judges.

OPINION

TASHIMA, Circuit Judge:

We must decide whether a federal district court has diversity jurisdiction over a lawsuit involving a partnership where one of its partners is a dual American-British citizen domiciled in a foreign state. The district court held that it lacked diversity jurisdiction over such an entity, and we affirm.

I. APPELLATE JURISDICTION & STANDARD OF REVIEW

We have jurisdiction pursuant to 28 U.S.C. § 1291 over a dismissal for lack of subject matter jurisdiction, and our review for lack of subject matter jurisdiction is plenary. See Frett-Smith v. Vanterpool, 511 F.3d 396, 399 (3d Cir.2008).

II. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Clifton G. Swiger sued Allegheny Energy, Inc., Allegheny Energy Supply Co., LLC, Allegheny Energy Services Corp., and Morgan, Lewis & Bockius LLP ("Morgan Lewis"), (collectively "Defendants"), on several state law claims, including abuse of process, wrongful use of civil proceedings, invasion of privacy, and wrongful discharge, in the Eastern District of Pennsylvania based upon diversity jurisdiction.

Morgan Lewis, joined by the other Defendants, moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1), on the ground that complete diversity between the parties was lacking. Morgan Lewis is a partnership that, at the time of the filing of the lawsuit, had among its partners, Charles Lubar, a dual United States and United Kingdom citizen domiciled in the United Kingdom. The district court dismissed the case for lack of jurisdiction, concluding that "[g]iven that for diversity purposes, the court must consult the citizenship of all of the members of an artificial entity such as a general or limited partnership and because a United States citizen who is not domiciled in one of the United States cannot invoke diversity jurisdiction in one particular state, we must conclude that we are without jurisdiction to act in this matter." Swiger v. Allegheny Energy, Inc., No. 05-CV-5725, 2007 WL 442383, at *5 (E.D.Pa. Feb.7, 2007) (emphasis in the original) (citations omitted). Swiger timely appealed.

III. ANALYSIS

Swiger argues that the district court erred in holding that it lacked diversity jurisdiction because, according to Swiger, a single partner who is not a citizen of a state does not render the entire partnership stateless for diversity purposes.¹ Whether a federal district court has diversity jurisdiction over a lawsuit involving a partnership that has among its partners an American citizen domiciled in a foreign state is an issue of first impression in this Circuit. To our knowledge, however, all courts that have addressed this issue have held that such an entity does not qualify for diversity jurisdiction. For the reasons set forth below, we agree with those other courts and hold that if a partner of a partnership is a United States citizen permanently living abroad, there can be no diversity of jurisdiction over the partnership because the partner is neither a citizen of a state nor a citizen of a foreign country.

Swiger also argues that even if the stateless partner destroys diversity, the district court nevertheless had alienage jurisdiction because Lubar, as a dual citizen of the United States and the United Kingdom, is a citizen or subject of a foreign state. This argument, however, is foreclosed by our recent decision in Frett-Smith, 511 F.3d at 400, in which we held that, for purposes of diversity jurisdiction, we consider only the American citizenship of a dual American-foreign national. We consider each of Swiger's arguments in turn.

A. Diversity Jurisdiction and the "Stateless" Partner

Under 28 U.S.C. § 1332(a):

district courts ... have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between — (1) citizens of different States; (2) citizens of a State and citizens or subjects of a foreign state; (3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and (4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States.

A natural person is deemed to be a citizen of the state where she is domiciled. See Gilbert v. David, 235 U.S. 561, 569, 35 S.Ct. 164, 59 L.Ed. 360 (1915). A corporation is a citizen both of the state where it is incorporated and of the state where it has its principal place of business. 28 U.S.C. § 1332(c).

Partnerships and other unincorporated associations, however, unlike corporations, are not considered "citizens" as that term is used in the diversity statute. See Carden v. Arkoma Assocs., 494 U.S. 185, 187-92, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990) (holding that a limited partnership is not a citizen under the jurisdictional statute); see also Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 n. 1, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005) ("[F]or diversity purposes, a partnership entity, unlike a corporation, does not rank as a citizen[.]"); United Steelworkers of Am. v. Bouligny, 382 U.S. 145, 149-50, 86 S.Ct. 272, 15 L.Ed.2d 217 (1965) (holding that a labor union is not a citizen for purposes of the jurisdictional statute); Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 454-55, 20 S.Ct. 690, 44 L.Ed. 842 (1900) (holding that a limited partnership association, even though it was called a quasi-corporation and declared to be a citizen of the state under the applicable state law, is not a citizen of that state within the meaning of the jurisdictional statute); Chapman v. Barney, 129 U.S. 677, 682, 9 S.Ct. 426, 32 L.Ed. 800 (1889) (holding that although the plaintiff-stock company was endowed by New York law with the capacity to sue, it could not be considered a "citizen" for diversity purposes); 15 James Wm. Moore, Moore's Federal Practice § 102.57[1] (3d ed.2006) [hereinafter Moore's Federal Practice] ("[A] partnership is not a `citizen' of any state within the meaning of the statutes regulating jurisdiction[.]").

Given that partnerships are not citizens for diversity purposes, the Supreme Court has long applied the rule of Chapman v. Barney: that courts are to look to the citizenship of all the partners (or members of other unincorporated associations) to determine whether the federal district court has diversity jurisdiction. See Lincoln Prop. Co., 546 U.S. at 84 n. 1, 126 S.Ct. 606; Carden, 494 U.S. at 196-97, 110 S.Ct. 1015; Bouligny, 382 U.S. at 151, 86 S.Ct. 272; Great S. Fire Proof Hotel, 177 U.S. at 456, 20 S.Ct. 690; Chapman, 129 U.S. at 682, 9 S.Ct. 426; see also 13B Charles Alan Wright et al., Federal Practice & Procedure § 3630 (2d ed. 1984) ("[W]henever a partnership, a limited partnership ..., a joint venture, a joint stock company, a labor union, a religious or charitable organization, a governing board of an unincorporated institution, or a similar association brings suit or is sued in a federal court, the actual citizenship of each of its members must be considered in determining whether diversity jurisdiction exists."). In Chapman, the Supreme Court, on its own motion, reversed a judgment on the grounds that the federal court did not have jurisdiction over a stock company because the record did not demonstrate that all the partners of the stock company were citizens of a state different than that of the defendant:

On looking into the record, we find no satisfactory showing as to the citizenship of the plaintiff. The allegation of the amended petition is that the United States Express Company is a joint-stock company organized under a law of the state of New York, and is a citizen of that state. But the express company cannot be a citizen of New York, within the meaning of the statutes regulating jurisdiction, unless it be a corporation. [T]he company ... is, a mere partnership....

.... The company may been organized under the laws of the State of New York, and may be doing business in that State, and yet all the members of it may not be citizens of that State. The record does not show the citizenship of Barney, or of any of the members of the company.

129 U.S. at 682, 9 S.Ct. 426 (emphasis added). In a nearly unbroken chain,² the Supreme Court has consistently applied the Chapman rule, holding that a partnership is not a citizen, but that the court "must look in the case of a suit by or against a partnership association to the citizenship of the several persons composing such association." Great S. Fire Proof Hotel, 177 U.S. at 456, 20 S.Ct. 690; see also Carden, 494 U.S. at 189, 110 S.Ct. 1015; Bouligny, 382 U.S. at 151, 86 S.Ct. 272.

Further, in the context of partnerships, the complete diversity requirement demands that all partners be diverse from all parties on the opposing side. See Lincoln Prop. Co., 546 U.S. at 84 n. 1, 126 S.Ct. 606; accord Carden, 494 U.S. at 195, 110 S.Ct. 1015 (accepting the "rule that the Court will ... count every member of an unincorporated association for purposes of diversity jurisdiction" and "reject[ing] the contention that to determine, for diversity purposes, the citizenship of an artificial entity, the court may consult the citizenship of less than all of the entity's members"); Carlsberg Res. Corp. v. Cambria Sav. & Loan Ass'n, 554 F.2d 1254, 1259 (...