Coudert Bros. v. Easyfind International, Inc.
601 F. Supp. 525 (1985)
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Rule of Law:
For purposes of diversity jurisdiction, a partnership is considered a citizen of every state and foreign country of which its partners are citizens. If any partner is a United States citizen domiciled abroad, they are not a citizen of any U.S. state or a foreign state, which destroys the complete diversity required for federal jurisdiction.
Facts:
- Coudert Brothers is a law firm organized as a partnership.
- The majority of Coudert Brothers' partners are citizens of New York.
- A few of Coudert Brothers' partners are United States citizens who reside permanently in France.
- Defendant Easyfind International, Inc. is a Delaware corporation.
- Defendant Ion is a resident and citizen of Australia.
- Defendant Sowden is a resident of Georgia and a citizen of New Zealand.
Procedural Posture:
- Plaintiff Coudert Brothers initiated an action in New York state court.
- Defendant Easyfind International, Inc. removed the action to the United States District Court for the Southern District of New York, alleging federal jurisdiction based on diversity of citizenship.
- Plaintiff Coudert Brothers filed a motion to remand the action back to the state court, arguing the federal court lacked subject matter jurisdiction.
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Issue:
Does federal diversity jurisdiction exist over an action involving a partnership plaintiff when some of its partners are United States citizens domiciled abroad, rendering them citizens of neither a U.S. state nor a foreign country?
Opinions:
Majority - Griesa, District Judge.
No. Federal diversity jurisdiction does not exist where a partnership includes partners who are U.S. citizens domiciled abroad. The court's jurisdiction under the diversity statute requires complete diversity between all plaintiffs and all defendants. For jurisdictional purposes, a partnership's citizenship is determined by the citizenship of all its individual partners. In this case, some of Coudert's partners are U.S. citizens residing in France. These partners are not considered citizens of any U.S. state, nor are they citizens of a foreign state. Because these 'stateless' partners do not fit into any of the statutory categories for diversity jurisdiction, their presence in the partnership plaintiff destroys the complete diversity required by the rule in Strawbridge v. Curtiss, and the federal court lacks subject matter jurisdiction.
Analysis:
This decision illustrates a significant 'gap' in federal diversity jurisdiction concerning U.S. citizens domiciled abroad. It reaffirms the long-standing principle that partnerships, unlike corporations, are treated as an aggregation of their individual members for citizenship purposes. The ruling strictly applies the complete diversity requirement, meaning that a single 'stateless' partner can prevent an entire partnership from accessing federal courts. This has practical implications for businesses structured as partnerships, potentially limiting their choice of forum if they have partners who are American expatriates.
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