FS Medical Supplies, LLC v. Tanner Pharma UK Limited

Holding: The court affirmed the dismissal for lack of subject matter jurisdiction because the plaintiff LLC's dual citizenship destroyed the required diversity under Section thirteen thirty-two subsection a three.
Standard: 28 U.S.C. § 1332(a)(3) diversity analysis
Vote: Panel Decision
Practical effect: The ruling clarifies that dual-citizen LLCs cannot avoid diversity defects by ignoring their foreign members, reinforcing strict adherence to complete diversity requirements in mixed-party litigation.

The Fourth Circuit affirmed a district court dismissal for lack of subject matter jurisdiction in a contract dispute involving a limited liability company with mixed domestic and foreign members. The court held that the LLC's dual citizenship destroyed diversity under Section thirteen thirty-two subsection a three because no United States citizen remained on the plaintiff side when the foreign member was considered.

Background

FS Medical Supplies, LLC, a limited liability company with members from Texas, California, and China, sued various defendants including domestic corporations, domestic individuals, and a foreign corporation for breach of contract regarding personal protective equipment supplies. The district court dismissed the case for lack of subject matter jurisdiction after determining that the LLC’s citizenship included a foreign citizen, thereby destroying complete diversity under the federal statute.

The court’s reasoning

The court applied the principle that an LLC’s citizenship includes that of all its members, citing General Technology Applications and Grupo Dataflux. When testing the LLC’s citizenship, the presence of a Chinese citizen member meant there was no United States citizen on the plaintiff side. Consequently, the suit was not between citizens of different states as required by Section thirteen thirty-two subsection a three. The court rejected the argument that the LLC’s domestic citizenship could be isolated for the analysis. Additionally, the court found it lacked jurisdiction to grant relief under North Carolina’s savings statute because the defect was jurisdictional, not procedural.

What it means going forward

The ruling clarifies that dual-citizen LLCs cannot avoid diversity defects by ignoring their foreign members, reinforcing strict adherence to complete diversity requirements in mixed-party litigation.