Americold Realty Trust v. Conagra Foods, Inc., et al.

PETITIONER: Americold Realty Trust
RESPONDENT: Conagra Foods, Inc., et al.
LOCATION: Americold Logistics, LLC.

DOCKET NO.: 14-1382
DECIDED BY: Roberts Court (2016- )
LOWER COURT: United States Court of Appeals for the Tenth Circuit

CITATION: 577 US (2016)
GRANTED: Oct 01, 2015
ARGUED: Jan 19, 2016
DECIDED: Mar 07, 2016

ADVOCATES:
John M. Duggan - for the respondents
Michael D. Pospisil - for the petitioner

Facts of the case

The plaintiffs, food distributors including Conagra Foods Inc. and Kraft Foodservice, sued Americold Logistics LLC and Americold Realty Trust (Americold) in state court for a breach of contract stemming from a dispute regarding liability for a warehouse fire. Americold sought to remove the case to federal court based on diversity jurisdiction because of the diversity of the trust’s board. No party challenged the propriety of the removal, and the district court addressed the case solely on its merits. Both parties moved for summary judgment, and the district court found in favor of the defendant.

On appeal, the U.S. Court of Appeals of the Tenth Circuit raised the issue of potentially improper removal and asked the parties to submit briefs addressing the issue. The appellate court held that Americold did not meet its burden to demonstrate that diversity jurisdiction was appropriate because the inquiry must extend to the trust’s beneficiaries, not just the trustees.

Question

Is the citizenship of a trust for the purposes of diversity jurisdiction based on the diversity of the trust’s beneficiaries as well as the trustees?

Media for Americold Realty Trust v. Conagra Foods, Inc., et al.

Audio Transcription for Oral Argument - January 19, 2016 in Americold Realty Trust v. Conagra Foods, Inc., et al.

Audio Transcription for Opinion Announcement - March 07, 2016 in Americold Realty Trust v. Conagra Foods, Inc., et al.

John G. Roberts, Jr.:

Today's orders of the Court have been duly entered and certified and filed with the clerk.

Justice Sotomayor has the opinion of the Court today in case 14-1382, Americold Realty Trust versus ConAgra Foods, and she has asked me to announce it for her.

Federal Law permits Federal Courts to resolve certain non-Federal controversies between citizens of different states.

This rule is easy enough to apply to humans, but can become metaphysical when applied to legal entities.

This case asks how to determine the citizenship of a real estate investment trust, an inanimate creature of Maryland Law.

We answer by reaffirming our historical rule that for purposes of diversity jurisdiction an unincorporated entity takes the citizenship of its members, that is its owners or the people who compose it.

Now this action began when corporate citizens of Delaware, Nebraska and Illinois filed a lawsuit in Kansas against Americold Realty Trust, an entity organized under Maryland Law.

Americold removed the case to federal district court based on the statute that authorizes federal courts to hear controversies between citizens of different states.

The district court accepted jurisdiction and ruled in Americold's favor.

On appeal, however, the Tenth Circuit held that the district court lacked jurisdiction to hear the suit.

The court reasoned that Americold was not necessarily a citizen of Maryland, rather as an unincorporated entity, Americold took the citizenship of its members which include its shareholders.

Because no record of those shareholders’ citizenship existed diversity was not proved.

We agree with the Tenth Circuit.

Under Maryland Law the people who own or compose a real estate investment trust are the entity’s shareholders.

Americold's shareholders are in the same position as other people we have considered members of an organization such as partners in a partnership or stock owners in a joint stock company.

As an unincorporated organization Americold is therefore a citizen of whichever states its shareholders are citizens of.

We disagree with Americold's counter argument that the members of anything called the trust are the trustees alone, not the shareholders as well.

Americold bases this argument on a separate rule that when a trustee files a lawsuit in her own name her personal citizenship is all that matters for jurisdictional purposes.

But this rule is about trustees suing in their personal names has no application to a suit brought against an organization in the organization's name, even if state law labels the organization a Trust.

Despite what such an organization calls itself, so long as it is unincorporated it possesses the citizenship of all its members, which in this case includes Americold's shareholders.

The opinion of the Court is unanimous.

Sarah from Law Aspect

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