Americold Realty Trust v. ConAgra Foods, Inc.

Background

A group of corporations whose food was destroyed in a 1991 warehouse fire sued the warehouse owner, now called Americold Realty Trust, in Kansas state court. Americold removed the case to federal district court in Kansas. The district court accepted federal diversity jurisdiction and ruled for Americold. On appeal, the Tenth Circuit asked whether the federal court had proper diversity because Americold is a real estate investment trust, not a corporation. The parties had not shown the citizenship of Americold’s shareholders, and the Tenth Circuit concluded the record did not prove the parties were citizens of different States. The Supreme Court took the case to resolve split views among appeals courts.

Reasoning

The central question was how to determine the citizenship of an unincorporated entity labeled a trust. The Court explained that, under its precedents, unincorporated associations take the citizenship of all their members. The Court looked to Maryland law, which treats a real estate investment trust as an unincorporated association whose shareholders hold beneficial interests and have ownership rights. The Court therefore concluded that Americold’s shareholders count as its members for diversity purposes. The opinion rejected the idea that a trustee’s personal citizenship or the corporate rule for corporations controls.

Real world impact

The ruling means that lawsuits against unincorporated trusts or similar entities must identify the states where all members live to show federal diversity jurisdiction. Companies, investment trusts, and plaintiffs will need to gather and present shareholders’ residency information. The Court said Congress, not the courts, must extend special corporate rules to other entity types if it wishes to do so.