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Boston Culinary Group, Inc. v. JDK Catering

August 25, 2009

BOSTON CULINARY GROUP, INC., PLAINTIFF
v.
JDK CATERING, INC., DEFENDANT AND PENNSYLVANIA CULINARY GROUP, LLC, NOMINAL DEFENDANT



The opinion of the court was delivered by: Sylvia H. Rambo United States District Judge

JUDGE SYLVIA H. RAMBO

MEMORANDUM

The instant case arises out of a contract dispute between Boston Culinary Group, Inc. ("BCG") and JDK Catering, Inc. ("JDK") concerning their partnership in Pennsylvania Culinary Group, LLC ("Pennsylvania Culinary"). On July 20, 2009, the court issued a memorandum and order denying JDK's motion for summary judgment, and granting BCG's partial motion for summary judgment. In a footnote in that memorandum, the court stated:

After reading the parties submissions, it is clear that neither party appears to be concerned with the contractual niceties that BCG's breach of contract claims are premised upon alleged breaches by JDK of contracts that JDK had with Pennsylvania Culinary rather than BCG. Both parties appear to concede that Pennsylvania Culinary is merely a nominal party, and that BCG and JDK are the real parties in interest both in this lawsuit and the contracts that are the subject of dispute of this lawsuit. (Doc. 40, slip op. at 7 n.1.) In its pretrial memorandum, JDK raised the issue of whether the court's language in this footnote highlights a deficiency in the court's subject matter jurisdiction. In short, the dispute is whether Pennsylvania Culinary really is a nominal party. If so, then the court must disregard its citizenship for purposes of diversity jurisdiction. See Navarro Sav. Ass'n v. Lee, 446 U.S. 458 (1980). If, however, Pennsylvania Culinary has more than a nominal interest in this case, then complete diversity of citizenship is compromised and this court lacks subject matter jurisdiction. The court had the parties submit letter briefs on this issue at the pretrial conference. (See Docs. 57 & 58.)

I. Citizenship of Pennsylvania Culinary

The first issue for the court to decide is how to determine the citizenship of Pennsylvania Culinary. The Third Circuit has not yet addressed how the citizenship of a limited liability company ("LLC") like Pennsylvania Culinary is to be determined. Other courts in this district, however, have consistently held that citizenship of an LLC is determined like that of a limited partnership, by imputing to it the citizenship of its members. See, e.g., Kalian at Poconos, LLC v. Saw Creek Estates Community Assoc., Inc., 275 F.Supp.2d 578, 586 (M.D. Pa. 2003). The court adopts this approach as it is in accord with the reasoning of the United States Supreme Court in Carden v. Akoma Assocs., 494 U.S. 185, 190 (1990), which held that the citizenship of a limited partnership is to be determined by looking at the citizenship of its partners. Thus, Pennsylvania Culinary is a citizen of both Massachusetts and Pennsylvania.

II. Nominal Party

The Third Circuit has defined a nominal party as one without "any real interest in the litigation." Bumberger v. Ins. Co. of North Am., 952 F.2d 764, 767 (3d Cir. 1991). The court prefers this basic definition over others cited by the parties because of its inherent flexibility. Most of the cases cited by the parties point the court towards an analysis under Federal Rule of Civil Procedure 19. While that rule-dealing with joinder-may provide guidance to the court, it is not necessary to the court's analysis. Furthermore, most of the cases cited by the parties dealt with Rule 19 prior to the 2007 Amendments to the rules, which disposed of the "necessary" and "indispensable" distinctions discussed in those cases. Nonetheless, the court recognizes that whether a party has "any real interest in the litigation" will often coincide with the factors addressed in Rule 19(b), and the court will turn to that rule for guidance.*fn1 Id.

Rule 19(b) sets out four requirements for the court to consider when the joinder of a party would defeat subject matter jurisdiction. The court should consider:

(1) The extent to which a judgment rendered in the person's absence might prejudice that person or the existing parties;

(2) the extent to which any prejudice could be lessened or avoided by:

(A) protective provisions of the judgment;

(B) shaping the ...


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