Americold Realty Trust v. ConAgra Foods, Inc.
2016 U.S. LEXIS 1652, 577 U.S. 378, 136 S. Ct. 1012 (2016)
Rule of Law:
For purposes of diversity jurisdiction, the citizenship of an unincorporated legal entity, such as a real estate investment trust (REIT), is determined by the citizenship of all its members, which includes its shareholders, consistent with the long-standing 'oft-repeated rule' for non-corporate entities.
Facts:
- In 1991, an underground food-storage warehouse fire occurred.
- A group of corporations, including Conagra Foods, Inc., whose food perished in the fire, sought compensation from the warehouse's owner.
- The warehouse owner is now known as Americold Realty Trust.
- Americold Realty Trust is a 'real estate investment trust' organized under Maryland law.
- The plaintiff corporations (respondents) are citizens of Delaware, Nebraska, and Illinois.
Procedural Posture:
- Conagra Foods, Inc., and other corporations sued Americold Realty Trust in a Kansas state court.
- Americold Realty Trust removed the suit to the Federal District Court for the District of Kansas, based on diversity-of-citizenship jurisdiction.
- The District Court accepted jurisdiction and ruled in Americold's favor.
- Conagra Foods, Inc., and other corporations (appellees) appealed the District Court's judgment to the United States Court of Appeals for the Tenth Circuit.
- The Tenth Circuit held that the District Court lacked jurisdiction because diversity was not proved, determining that Americold's citizenship included its shareholders' citizenship, which was not on record.
- Americold Realty Trust (petitioner) filed a petition for a writ of certiorari, which the Supreme Court granted to resolve confusion among the Courts of Appeals.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does an unincorporated real estate investment trust (REIT) possess the citizenship of its trustees alone for diversity jurisdiction purposes, or does it possess the citizenship of all its members, including its shareholders?
Opinions:
Majority - Justice Sotomayor
No, an unincorporated real estate investment trust (REIT) does not possess the citizenship of its trustees alone; rather, for purposes of diversity jurisdiction, it possesses the citizenship of all its members, including its shareholders. The Court reaffirmed its "oft-repeated rule" that the citizenship of any unincorporated entity, unlike a corporation, depends on the citizenship of all its members (citing Carden v. Arkoma Associates, Chapman v. Barney, and Great Southern Fire Proof Hotel Co. v. Jones). The Court clarified that while traditionally a trust was a fiduciary relationship not suable as an entity (Bank of United States v. Deveaux), many modern entities, including Maryland REITs, are treated as "separate legal entities" that can sue or be sued. In such cases, the entity's citizenship for diversity purposes is determined by its members, which Maryland law identifies as including its shareholders (Md. Corp. & Assns. Code Ann. §§8–101(c), 8–102). The Court further distinguished Navarro Savings Assn. v. Lee, explaining that Navarro applied to a trustee suing or being sued in her own name, where her personal citizenship governs, not to the entity itself. The Court declined to extend the corporate citizenship rule, codified in 28 U.S.C. §1332(c) and established in Louisville, C. & C. R. Co. v. Letson, to other unincorporated entities, reaffirming its stance from Carden v. Arkoma Associates that such an expansion is for Congress to decide.
Analysis:
This decision clarifies and reinforces the long-standing principle of diversity jurisdiction for unincorporated entities, preventing parties from manipulating the 'trust' label to circumvent the complete diversity requirement. It underscores the Court's judicial restraint regarding statutory interpretation, deferring to Congress to amend 28 U.S.C. §1332(c) if it wishes to extend corporate-style citizenship rules to other entity types. The ruling ensures that the 'oft-repeated rule' from Carden remains the default for all non-corporate entities, impacting litigation strategy and forum selection for entities structured as REITs, limited partnerships, and similar associations. Future cases involving diversity jurisdiction for complex unincorporated entities will need to meticulously identify the citizenship of all members, including shareholders, to establish federal jurisdiction.
