SW Legal studies in Business

Citizenship of LLC Determined by Citizenship of Its Members
Description

Appeals court held that for purposes of determining diversity of citizenship in litigation involving a limited partnership or LLC, the citizenship of the partners and the citizenship of the members would determine citizenship of the business entity.

Topic Business Organization
Key Words

Limited Partnership, LLC, Jurisdiction, Citizenship, Negligence

C A S E   S U M M A R Y
Facts

Robert Harvey was working on an oil rig in Louisiana owned by Grey Wolf Drilling, L.P. when he fell after slipping on ice that was on the boards around the rig. His survivors sued Grey Wolf for negligence in federal court in Louisiana on the jurisdictional grounds of diversity of citizenship. The court dismissed the suit for lack of subject matter jurisdiction, ruling that the parties were all Louisiana residents, so the case should be tried in state court. Grey Wolf appealed.

Decision

Reversed and remanded. Complete diversity for diversity jurisdiction requires that all persons on one side of a controversy be citizens of different states than all persons on the other side. Grey Wolf Drilling is a Texas limited partnership with two members: 1) a Nevada corporation with its principal place of business in Texas, Grey Wolf Holdings Company, and 2) a LLC organized in Louisiana but owned by Grey Wolf Holdings Company. Citizenship of a limited partnership and of a LLC, for diversity jurisdiction purposes, is determined by the citizenship of all of its members. The federal district court had subject matter jurisdiction over the negligence action since the parties were diverse. The plaintiffs were Louisiana citizens and defendant LLC and LP were composed of citizens of Nevada and of Texas; there were no Louisiana partners or members. Hence, there was complete diversity.

Citation Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir., 2008)

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