NEW ORLEANS (CN) – The citizenship of a limited liability company is determined by the citizenship of its members, not where it was organized, the 5th Circuit ruled.
Louisiana resident Robert Joe Harvey slipped on snow and ice while working for Grey Wolf Drilling Co. His condition worsened as the day went on and he passed away of a ruptured aortic aneurysm.
Grey Wolf is a Texas company consisting of a Nevada corporation and a Louisiana limited liability company.
All of the parties argued in favor of a finding of complete diversity and a rule that determines an LLC’s citizenship by the citizenship of its members, not the state where it was organized.
Instead, the district court treated the LLC like a corporation and dismissed the case. In this case of first impression, Judge Hicks reversed the decision.
“All federal appellate courts that have addressed the issue have reached the same conclusion,” Hicks wrote, “the citizenship of an LLC is determined by the citizenship of all of its members.”
Since Grey Wolf is a citizen of Nevada and Texas, complete diversity is achieved, Hicks ruled. Therefore, the district court should not have dismissed the case.