March 07, 2016

Supreme Court Decides Americold Realty Trust v. Conagra Foods, Inc.

On March 7, 2016, the Supreme Court of the United States decided Americold Realty Trust v. Conagra Foods, Inc., No. 14-1382, holding that, for purposes of diversity jurisdiction, a “real estate investment trust” established under Maryland law was a citizen of each state of which one or more of its shareholders was a citizen.

A group of corporations filed a lawsuit in Kansas state court against warehouse owner Americold Realty Trust, a real estate investment trust established under Maryland law, seeking compensation for food that perished in a fire in the warehouse. Americold removed the suit to federal court on the basis of diversity jurisdiction. The federal court in Kansas resolved the dispute in favor of Americold and did not explicitly address whether the parties were diverse.

On appeal, the Tenth Circuit addressed the issue of the district court’s jurisdiction as a threshold matter, holding that for purposes of federal diversity jurisdiction, a real estate investment trust is a citizen of (at a minimum) each of the states in which one of more its shareholders is a citizen. Because there was no record of the citizenship of Americold’s shareholders, the Tenth Circuit held that the district court lacked subject-matter jurisdiction.

The Supreme Court affirmed, resolving a split of authority regarding the citizenship of unincorporated entities. The Court reiterated its categorical rule that unincorporated associations — including limited partnerships, joint stock companies, and labor unions — are, for purposes of diversity jurisdiction, citizens of all the states in which any of their members is a citizen. The Court applied this rule to “real estate investment trusts,” which are also unincorporated associations, and held that a real estate investment trust is a citizen of each state of which each of its shareholders is a citizen. The Court expressly rejected an alternate rule that such a trust is a citizen only of the state of which the trustee is a citizen, concluding that such a rule would require Congress to change the diversity statute.

Justice Sotomayor delivered the opinion for a unanimous Court.

Download the Opinion of the Court

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