Facts
- Arkoma Associates, an Arizona limited partnership with general and limited partners, filed a contract action in federal court against C. Tom Carden and Leonard L. Limes, Louisiana citizens.
- Arkoma asserted subject-matter jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332.
- The defendants moved to dismiss, arguing complete diversity was absent because at least one of Arkoma’s limited partners was a Louisiana citizen.
- The district court denied dismissal, found complete diversity, and entered judgment for Arkoma; Magee Drilling Company intervened and asserted counterclaims.
- The Fifth Circuit affirmed, holding that a limited partnership’s citizenship is determined by its general partners’ citizenship, not its limited partners’.
Issues
- For diversity jurisdiction under 28 U.S.C. § 1332, whether a limited partnership’s citizenship is determined by the citizenship of only its general partners or by the citizenship of all partners, including limited partners.
- Whether complete diversity exists when any limited partner shares citizenship with an opposing party.
Decision
- The Supreme Court reversed and remanded.
- The Court held that a limited partnership is not itself a “citizen” for diversity purposes in the manner a corporation is treated by statute.
- The Court required federal courts to consider the citizenship of all partners—general and limited—when testing complete diversity.
- Because a limited partner shared Louisiana citizenship with the defendants, complete diversity was lacking and the federal court could not exercise diversity jurisdiction.
- The Court left for remand any unresolved jurisdictional questions involving the intervenor and counterclaims not addressed by the court of appeals.
Legal Principles
- Unincorporated entities generally take the citizenship of each of their members for purposes of diversity jurisdiction.
- The corporate citizenship rule is a statutory exception and is not extended by courts to other business forms absent congressional action.
- In assessing complete diversity, courts do not limit the inquiry to members who manage or control the entity; the citizenship of all members is counted.
- Whether other artificial entities should be treated as “citizens” for diversity purposes is a policy choice for Congress, not the judiciary.
Conclusion
The Court held that diversity jurisdiction over a limited partnership depends on the citizenship of every partner, including limited partners; because a limited partner shared citizenship with the defendants, complete diversity was absent and the case was remanded for further proceedings consistent with that jurisdictional rule.