Comment by Matthew C. Dodge
Academics have long debated whether LLCs, or more generally unincorporated associations, should qualify as corporations (rather than as partnerships) for the purposes of federal diversity jurisdiction under 28 U.S.C. § 1332(c)(1). The more pertinent inquiry asks, what are the logistical ramifications of treating LLCs as partnerships for diversity purposes? An examination of the practical implications of enforcing the current federal construction of citizenship as applied to LLCs reveals the rule's limitations. While the current jurisdictional rule is centered on the domicile of individual investors, state law does not require LLCs to document or provide such information. Under this jurisdictional construction, not even due diligence can ensure that a federal suit against an LLC is diverse. Strict adherence to a jurisdictional rule that creates limitations on the success that due diligence can produce is bad policy and practicality demands that Congress amend § 1332(c)(1) to treat LLCs synonymously with corporations for federal jurisdictional purposes.
About the Author
Matthew C. Dodge. J.D./M.B.A. candidate 2007, Tulane University School of Law; B.A. 2002, Boston College University.
Citation
80 Tul. L. Rev. 661 (2005)