FORUM STOPPING: How the presence of a U.S. citizen domiciled abroad defeats diversity jurisdiction.

• Position: Page v. Democratic Nat'l Comm.

Byline: Bridgetower Media Newswires

According to the most recent records published by the Administrate Office of the United States Courts, nearly 60% of new civil cases brought in the federal courts were based on diversity jurisdiction.

If you remove cases in which the U.S. is a party, that number jumps to more than 67%. Thus, more than two-thirds of recent civil cases brought in federal courts between private litigants are based on diversity of citizenship and less than one-third are based on federal question jurisdiction. A recent case from the Seventh Circuit Court of Appeals details an important variable in determining a company's access to the federal court system.

In Page v. Democratic Nat'l Comm., the Seventh Circuit determined that, for business entities in which the citizenship of a business is determined by the citizenship of the owners (limited liability companies, partnerships, etc.), the presence of any owner who is a U.S. citizen domiciled abroad will defeat diversity jurisdiction. Thus, any such business cannot litigate in federal court when the only basis of subject-matter jurisdiction is diversity.

Page was a former advisor to the Donald Trump Presidential Campaign. In 2020, he brought suit in the Northern District of Illinois against the Democratic National Committee and several other entities, including a prominent law firm that is organized as a limited liability partnership. The purported basis of subject-matter jurisdiction was complete diversity of citizenship among the parties. The District Court dismissed for lack of personal jurisdiction, and Page appealed. On appeal, the Seventh Circuit questioned whether the court had subject-matter jurisdiction, as three of the partners of the law firm are U.S. citizens domiciled in China. In a matter of first impression for the Seventh Circuit, the court determined that the presence of any "stateless" partner destroys complete diversity of citizenship, and thus the court dismissed the case for lack of subject-matter jurisdiction.

The Court of Appeals began by noting that, whereas the United States Supreme Court has not directly ruled on this issue (and it recently denied certiorari in the Page case) the Supreme Court in a 1989 case had determined that a U.S. citizen domiciled abroad is not a citizen of any state. Therefore, that citizen destroys complete diversity in cases brought by or against that person, as diversity requires (for U.S. citizens) that they be citizens of...