It’s Congress’s Prerogative: Citizenship of LLCs Under CAFA
Everybody’s talkin’ all this stuff about LLCs. Well, not exactly, but the Tenth Circuit is talking about LLC citizenship. Joining the chorus of every other circuit court to consider the issue, the Tenth Circuit recently held that citizenship of an unincorporated association (e.g., an LLC) for removal-diversity purposes is to be determined by reference to the citizenship of each of its members. See Siloam Springs Hotel, L.L.C. v. Century Sur. Co., No. 14-6119, 2015 WL 1430335 (10th Cir. Mar. 31, 2015).
Were this a class action, the result would be different. For purposes of CAFA, said the Court in footnote 1, an LLC’s citizenship for removal-diversity purposes is determined in the same manner as a corporation—by its state of organization and principal place of business. Why the different result under CAFA? As the Tenth Circuit put it: Not my prerogative. The prerogative to expand the established citizenship rule for corporations to other entities is legislative. Congress exercised its prerogative by including § 1332(d)(10) in CAFA.
So for all those LLC members finding themselves involved in a class action and asking, Why don’t they just let me live? Keep § 1332(d)(10) in mind when preparing the notice of removal. Live wherever you want, LLC members! Your citizenship won’t count when applying CAFA’s minimal-diversity requirement. And for the counsel preparing that removal notice, no need to worry about tracking down the details of each LLC member. Under CAFA, you don’t need to prepare a lengthy affidavit outlining the citizenship of each member of an LLC.
As for LLCs involved in individual cases, well, they’ll have to wait for a “New Edition” of the removal statute to change the citizenship rules.