Lincoln Property Co. v. Roche
Headline: Out-of-state companies can move cases to federal court when all named defendants are citizens of other states, blocking plaintiffs’ late claims that unnamed local affiliates defeat removal.
Holding: Defendants may remove a case to federal court when all named plaintiffs and named defendants are citizens of different states, and defendants need not disprove unnamed affiliates that could destroy diversity.
- Makes it harder for plaintiffs to force remand by alleging unnamed local affiliates.
- Allows out-of-state companies to keep cases in federal court when named parties are diverse.
- Encourages plaintiffs to identify local defendants early through discovery.
Summary
Background
Christophe and Juanita Roche, Virginia residents, sued after finding toxic mold in their apartment. They named Lincoln Property Company, which the complaints described as the property manager, and two other defendants in Virginia state court. The defendants removed the suits to federal court based on diversity of citizenship. After discovery the federal court granted summary judgment for defendants. Days before final judgment, the Roches moved to remand, claiming Lincoln was actually a partnership with a Virginia partner.
Reasoning
The Court addressed whether an unnamed, potentially local affiliate can be treated as the “real party in interest” and used to defeat removal. The Justices held that removal depends on the citizenship of the named parties. For corporations, Congress defines citizenship by state of incorporation and principal place of business. Lincoln admitted it was a Texas corporation that managed the property, so complete diversity existed between the named Virginia plaintiffs and the named Texas defendant. Rules about who should be joined in a suit (like Rules 17 and 19) do not change that jurisdictional rule, and defendants are not required to disprove the existence of unnamed affiliates.
Real world impact
The Court reversed the Fourth Circuit and allowed the federal case to stand. The decision makes it harder for plaintiffs to defeat removal by later alleging unnamed local affiliates. Plaintiffs who believe other parties may be responsible must pursue them through discovery or by joining them early, rather than relying on speculative claims to force remand.
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