Eqt Prod. Co. v. Vorys, Sater, Seymour & Pease, LLP

EQT PRODUCTION CO., Plaintiff, v. VORYS, SATER, SEYMOUR AND PEASE, LLP, et al., Defendants.

No. 6:15-CV-146-REW-EBA

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF KENTUCKY SOUTHERN DIVISION LONDON

December 26, 2018

OPINION & ORDER*** *** *** ***

The Court previously ordered briefing on issues related to subject-matter jurisdiction. See DE #90. Specifically, the Court required clarification concerning the citizenship(s) of the two Defendants: Vorys, Sater, Seymour and Pease, LLP (Vorys), and John Keller. See id. EQT Production Co. (EQT), a citizen of Pennsylvania, DE #1, at ¶ 1, summarily responded. See DE #101. Though Defendants had the opportunity to address the issues, see DE #90, at 2, neither did. The topics are, therefore, ripe for consideration.

District courts "have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between," as relevant here, "citizens of different States." 28 U.S.C. § 1332(a)(1); see also U.S. Const. Art. III § 2 ("The judicial Power shall extend . . . to Controversies . . . between Citizens of different States[.]"). Courts refer to this concept as "diversity jurisdiction," a form of subject-matter jurisdiction in a case. See Grupo Dataflux v. Atlas Global Grp., LP, 124 S. Ct. 1920, 1925-26 (2004); see also DE #1, at ¶ 4 (EQT asserting jurisdiction only under § 1332).

Diversity jurisdiction "require[s] complete diversity of citizenship," i.e., "the citizenship of each plaintiff" must be "diverse from the citizenship of each defendant." Caterpillar Inc. v. Lewis, 117 S. Ct. 467, 472 (1996). Thus, phrased another way, for diversity to exist, "no plaintiff" can be "a citizen of the same state as any defendant." V & M Star, LP v. Centimark Corp., 596 F.3d 354, 355 (6th Cir. 2010). "[T]he state of facts that existed at the time of filing" defines citizenship, in context. Grupo Dataflux, 124 S. Ct. at 1924. Complete diversity is a statutory, not constitutional, requirement. Owen Equip. & Erecting Co. v. Kroger, 98 S. Ct. 2396, 2402 n.13 (1978).

Importantly, "Federal courts are courts of limited jurisdiction," and "the burden of establishing" a jurisdictional basis "rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 114 S. Ct. 1673, 1675 (1994). Here, the burden is EQT's, as a plaintiff filing directly in federal court. See Chevalier v. Estate of Barnhart, 803 F.3d 789, 794 (6th Cir. 2015). The Court, no party questions, has an omnipresent "duty to consider [its] subject matter jurisdiction in regard to every case and may raise the issue sua sponte." Answers in Genesis of Ky., Inc. v. Creation Ministries Int'l, Ltd., 556 F.3d 459, 465 (6th Cir. 2009); see also Hertz Corp. v. Friend, 130 S. Ct. 1181, 1193 (2010) ("Courts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it."). As to EQT's observations at DE #101, ¶ 3, the "consent of parties cannot give the courts of the United States jurisdiction." Pittsburgh, C. & St. L.R. Co. v. Ramsey, 89 U.S. (22 Wall.) 322, 328 (1874); see also Watson v. Cartee, 817 F.3d 299, 302-03 (6th Cir. 2016) ("[P]arties cannot waive the requirement of subject matter jurisdiction.").

True, as EQT points out, see DE #101, at ¶ 4, Judge Bunning did previously state that the Court has jurisdiction in this case pursuant to 28 U.S.C. § 1332. See DE #81, at 1-2. However, the statement was conclusory and unreasoned, the topic was not at issue in the briefing, and the Court undoubtedly has inherent authority "to reconsider interlocutory orders and reopen any part of a case before entry of a final judgment." Mallory v. Eyrich, 922 F.2d 1273, 1282 (6th Cir. 1991); see also, e.g., In re Life Investors Ins. Co. of Am., 589 F.3d 319, 326 n.6 (6th Cir. 2009) ("[A] district court may always reconsider and revise its interlocutory orders while it retains jurisdiction over the case."). Facial deficiencies in the jurisdictional record required the Court to order clarification on the foundational question of whether the case can go forward under § 1332. The show-cause order, DE #90, decried the specific problems and warned the parties to address all implicated issues and submit appropriate proof or, on failure, face dismissal.

First, EQT's deficient jurisdictional allegations as to Keller are a self-sufficient basis for dismissal. In the Complaint, EQT merely alleged that Keller "resides" in Ohio. See DE #1, at ¶ 3. Keller disagreed. See DE #6, at ¶ 3. A later pleading, DE #23, at ¶¶ 1-2, cast him as an Arizona resident. In any event, residence, for § 1332 purposes, is not synonymous with citizenship, which is a function of domicile. See, e.g., Kaiser v. Loomis, 391 F.2d 1007, 1009 (6th Cir. 1968). "For adults, domicile is established by physical presence in a place in connection with a certain state of mind concerning one's intent to remain there." Miss. Band of Choctaw Indians v. Holyfield, 109 S. Ct. 1597, 1608 (1989). Simply put, "one can reside in one place but be domiciled in another[.]" Id.

EQT's show-cause response did not cure the problem. All EQT added is that, at the time of Complaint filing, Keller "did not reside in Pennsylvania" and that, thus, he"was not domiciled in Pennsylvania for purposes of diversity jurisdiction." DE #101, at ¶ 10; see also DE #101-1 (expressing confusion whether Keller "still resided" in Ohio or possibly had "moved to Arizona"). The lawyers all seem to inaccurately equate residence and domicile. The concepts are distinct; a party can have multiple residences, yet only one domicile, topics demanding exploration that EQT declined to mine. See Holyfield, 109 S. Ct. at 1608; Edick v. Poznanski, 6 F. Supp. 2d 666, 669-70 (W.D. Mich. 1998). Further, merely identifying a Commonwealth in which Keller was not a citizen is insufficient for § 1332 purposes. In the Sixth Circuit's own words: in assessing diversity, "the federal court needs to know the citizenship of each" party. See Delay v. Rosenthal Collins Grp., LLC, 585 F.3d 1003, 1005 (6th Cir. 2009). EQT thus failed in its duty to affirmatively pinpoint Keller's specific citizenship(s). See id.; see also, e.g., Great S. Fire Proof Hotel Co. v. Jones, 20 S. Ct. 690, 691-92 (1900) (requiring "the necessary citizenship [to] affirmatively appear[] in the pleadings or elsewhere in the record"); Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001); McClelland v. Wal-Mart Stores E., LP, No. 06-12811-BC, 2007 WL 844634, at *1 (E.D. Mich. Mar. 16, 2007). The Court dismisses the case independently on this basis.

As to Vorys, an LLP carries the citizenship(s) of each partner—a principle no party disputes. See, e.g., V & M Star, 596 F.3d at 355-56; Carden v. Arkoma Assocs., 110 S. Ct. 1015, 1021 (1990); Morson v. Kreindler & Kreindler, LLP, 616 F. Supp. 2d 171, 172 (D. Mass. 2009); Mudge Rose Guthrie Alexander & Ferdon v. Pickett, 11 F. Supp. 2d 449, 451-52 (S.D.N.Y. 1998); Reisman v. KPMG Peat Marwick LLP, 965 F. Supp. 165, 176 (D. Mass. 1997). EQT's Complaint allegations—that Vorys is "an Ohio limitedliability partnership with its principal place of business" in Ohio, see DE #1, at ¶ 2; see also DE #6, at ¶ 2—thus were facially insufficient under pellucid § 1332 law.

In the show-cause response, EQT alleged that, at the time of Complaint filing (August 17, 2015), Vorys had "one attorney who was domiciled in Pennsylvania with the title of a 'Partner,' but that individual—Kevin Gormly—was a 'non-equity partner' who had no 'ownership or profits' interest in Vorys." DE #101, at ¶ 8; see also DE #101-1 (Vorys's counsel confirming that "there was one listed partner at the Pittsburgh office in August, 2015").¹ If Gormly's citizenship (as a partner and then-domiciliary of Pennsylvania) is imputed to Vorys, the Court would lack diversity jurisdiction because Vorys and EQT would share Pennsylvania citizenship. See also DE #1, at ¶ 1.

The Court, on full consideration, holds that Gormly's (an LLP non-equity partner) citizenship counts, for § 1332 purposes, as would any other partner's, depriving the Court of subject-matter jurisdiction in this case—a controversy between, at a minimum, two Pennsylvania citizens. Carden set the guideposts:

Arkoma asserts that the Fifth Circuit correctly determined its citizenship solely by reference to the citizenship of its general partners, without regard to the citizenship of its limited partners. Only the general partners, it points out, manage the assets, control the litigation, and bear the risk of liability for the limited partnership's debts, and, more broadly, have exclusive and complete management and control of the operations of the partnership. This approach of looking to the citizenship of only some of the members of the artificial entity finds even less support in our precedent than looking to the State of organization . . . . We have never held that an artificial entity, suing or being sued in its own name, can invoke the diversity jurisdiction of the federal courts based on the citizenship of some but not all of its members. No doubt some members of the joint stock company in Chapman, the labor union in Bouligny, and the limited partnership association in Great Southern exercised greater control over their respective entities than other members. But such considerations have played no part in our decisions.

110 S. Ct. at 1019-20 (internal quotation marks and citation removed). At bottom, Carden "reject[ed] the contention that to determine, for diversity purposes, the citizenship of an artificial entity, the court may consult the citizenship of less than all of the entity's members." Id. at 1021. Instead, diversity "depends on the citizenship of all of the members." Id. (emphasis added and internal quotation marks removed). [Tellingly, EQT cited Carden, a Supreme Court decision, with a "but see" signal in ¶ 8 of DE #101.] Subsequent cases, from around the...