Americold Realty Trust v. ConAgra Foods, Inc.
The Supreme Court ruled that a real estate investment trust's citizenship, for purposes of deciding whether a lawsuit can be heard in federal court, depends on the citizenship of all its members - including its shareholders, not just its trustees.
The unanimous decision clears up confusion among lower courts about how to treat the many modern business entities that use the word 'trust' but function nothing like a traditional trust.
How it got here: A federal district court accepted the case and ruled for Americold; the Tenth Circuit found the citizenship record incomplete and vacated jurisdiction, prompting Supreme Court review.
The Case in Depth
What happened
Food companies whose goods were destroyed in a 1991 warehouse fire sued the warehouse's owner, now called Americold Realty Trust, in Kansas state court over the resulting contract dispute. Americold, organized as a "real estate investment trust" under Maryland law, moved the case to federal court, arguing the parties were citizens of different states.
The question before the Court
When a business calls itself a "real estate investment trust," whose citizenship counts for deciding if a lawsuit belongs in federal court?
The Court's answer
The citizenship of Americold's members, including its shareholders, counts for deciding whether the case belongs in federal court because the parties are citizens of different states. Unlike a corporation, which is treated as a citizen of its own state under a special rule Congress wrote into law, an unincorporated entity like Americold takes on the citizenship of everyone who has an ownership stake in it.
Because Maryland law treats a real estate investment trust as a stand-alone legal entity whose shareholders hold ownership interests and voting rights, those shareholders count as "members" whose home states must be counted. The label "trust" does not change this outcome, since Americold is not the kind of traditional trust where only the trustee's citizenship would matter.
Curious how the Court got there? See the step-by-step legal reasoning →
Why it matters
Businesses organized as trusts, partnerships, or other unincorporated entities - and the companies that sue or get sued by them - now have a clearer rule for figuring out whether a case can go to federal court based on the parties living in different states. Lawyers must identify all of an entity's shareholder-members' home states, not just its trustees'.
What changes now
The Supreme Court affirmed the Tenth Circuit's ruling that the record failed to establish complete diversity of citizenship because Americold's shareholders' citizenship was never documented. This is a final decision on the legal standard, though the underlying case may need further proceedings to establish jurisdiction properly or proceed in state court. The ruling also invites Congress to expand the corporate citizenship rule to other entities if it chooses.
What this does not decide
The Court did not extend the corporation-only citizenship rule (based on state of incorporation and principal place of business) to unincorporated entities, and it left the "doctrinal wall" between corporations and other business entities in place, leaving any such change up to Congress.
How the Court got there
The legal reasoning, step by step
- The Court applied its long-standing rule that unincorporated business entities - unlike corporations, which get their own special citizenship rule from Congress - take on the citizenship of all their members for purposes of deciding whether federal courts can hear a case between citizens of different states.
- The Court explained that 'members' of an unincorporated entity means the people who own it, following the same approach used for joint-stock companies (whose members are shareholders), partnerships (whose members are partners), and unions (whose members are affiliated workers).
- Turning to Maryland law, the Court found that a real estate investment trust is a stand-alone legal entity whose shareholders hold ownership interests and voting rights through their shares, placing them in the same position as joint-stock company shareholders or limited-partnership partners.
- The Court rejected Americold's argument that a prior case, which addressed the separate question of a trustee's own citizenship when she sues in her personal name, controlled here, distinguishing a traditional trust from a modern entity that itself can sue or be sued in its own name.
- Because Americold is unincorporated and its shareholders are its members under Maryland law, the Court concluded that those shareholders' citizenship must be counted, meaning the record's lack of shareholder-citizenship information left diversity unproven.
Doctrinal impact
Cases affected by this decision
Reaffirms Carden v. Arkoma Associates (494 U. S. 185)
The Court relies on this case's rule that unincorporated entities take the citizenship of all their members.
Distinguishes Navarro Savings Assn. v. Lee (446 U. S. 458)
The Court says this case addressed only a trustee's personal citizenship, not an entity's citizenship.