Third Circuit Challenges Supreme Court To Reconsider Whether An LLC's Citizenship Should Be Based On Its Members

Action Item: An LLC's state of organization and principal place of business are legally irrelevant for purposes of determining diversity jurisdiction in the Third Circuit. Despite the practical difficulties this law imposes on litigants, it will remain the standard until the U.S. Supreme Court accepts the Third Circuit's direct invitation to change the law.

In Lincoln Benefit Life Company v. AEI Life, LLC, the Third Circuit removed any doubt that may have existed regarding how the citizenship of limited liability companies ("LLCs") is determined for purposes of establishing diversity jurisdiction in federal court. In the Third Circuit, the state of organization and the principal place of business of an unincorporated association are "legally irrelevant," and instead, parties and courts must determine jurisdiction based on the citizenship of the entity's members. As a result, LLCs seeking to file suit in federal court under diversity jurisdiction, as well as defendant