Much of the law-related news is about multi-national law firms. Leaving them aside there is a serious question over whether our regular old national law firms can be sued in US District Court under diversity jurisdiction.
Let’s review the basics, as set forth in Lee v. Brown, 3:08-CV-01206 (CSH); UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT; 2009 U.S. Dist. LEXIS 88494; September 25, 2009
1. It’s citizenship, not residence in diversity jurisdiction: "District courts have subject matter jurisdiction based on diversity of citizenship in civil cases where the matter in controversy exceeds the sum or value of $ 75,000 and is between citizens of different states. 28 U.S.C. § 1332(a)(1). Diversity of citizenship requires "complete diversity between all plaintiffs and all defendants," Lincoln Prop. Co. v. Roche, 546 U.S. 81, 88, 126 S. Ct. 606, 163 L. Ed. 2d 415 (2005), meaning that no plaintiff and no defendant are citizens of the same state. Wis. Dep’t of Corr. v. Schacht, 524 U.S. 381, 389, 118 S. Ct. 2047, 141 L. Ed. 2d 364 (1998). The party seeking to invoke diversity jurisdiction — here plaintiffs [*4] — bears the burden of demonstrating that complete diversity exists. Herrick Co. v. SCS Commc’ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001).
2. Citizenship [domicile] is more than residence: "Domicile is the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning." " A natural person is considered to be a citizen of the state where he is domiciled, Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000), and "it is well-established that allegations of residency alone cannot establish citizenship." Canedy v. Liberty Mut. Ins. Co., 126 F.3d 100, 102-103 (2d Cir. 1997).
3.Partnerships are citizens of the state of each parthers’ domicile: A person’s domicile is "the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning." Palazzo, 232 F.3d at 42. A partnership, which is not a natural person, has the citizenship of each of its partners. Herrick Co. v. SCS Commc’ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001).at 322. This is true also of limited liability partnerships. See Mudge Rose Guthrie Alexander & Ferdon v. Pickett, 11 F. Supp. 2d 449 (S.D.N.Y. 1998).
4. Lack of complete diversity may result in no subject matter jurisdiction.. "In moving to dismiss this action for lack of subject matter jurisdiction, McDermott claims that a number of its partners are domiciled in, and thus citizens of, the same states of which plaintiffs claim to be "residents" — California, Massachusetts, and Connecticut. The declaration of Alan M. Rutkoff indicates that 41 of McDermott’s partners work at the firm’s office in Boston, Massachusetts, and that at least 104 of its partners work at one of the firm’s California offices. According to the declaration, all or substantially all of the partners who work at these offices [*7] are domiciled in the state wherein their office is located." "If plaintiffs are indeed citizens of the states in which they claim to reside, then a number of McDermott’s partners are citizens of the same states and complete diversity is lacking in this action."
5. That determination may not be the end of the story Even if there is overlap between the citizenship of some of the plaintiffs and some of McDermott’s partners, it does not follow that the entire action must be dismissed for lack of subject matter jurisdiction. Under Fed. R. Civ. P. 21, a district court have the power to dismiss nondiverse dispensable parties to preserve diversity jurisdiction. Kafaru v. Burrows, 2008 U.S. Dist. LEXIS 1797, *4 (D. Conn. 2008); See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832, 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989). McDermott appears to be a dispensable party.
Rule 21 reads: "On motion or on its own, the court may at any time, on just terms, add or drop a party."