In a recent decision, the court was called upon to assess whether or not a non-equity partner in a law firm would be treated as a “partner” in the firm when assessing its citizenship for purposes of diversity jurisdiction.
EQT Production Co. v. Vorys, Sater, Seymour & Pase, LLP, 2018 WL 6790486 (E.D. Ky. Dec. 26, 2018).
In
this case, there was no dispute that an LLP has the citizenship of each of its partners. The question
turned upon whether a particular “non-equity partner”, he resident in Pennsylvania, would be attributed to the partnership. The court held that it would be.
It bears
noting that
there is not consistency
across all
of the courts with respect to this question. For example, in Morson v. Kreindler & Kreindler, LLP, 616 F.Supp.2d 171 (D. Mass. 2009), a “contract partner” who had no voting rights in the firm, was compensated
on the basis of a Form W-2 and did not share in the profits and losses was a classified as a mere employee whose
citizenship would
not be attributed to the partnership. Likewise, in Passavant Memorial
Area Hospital
Ass’n v. Lancaster Pollard
& Co., No. 11-CV-3116 (C.D. Ill. (Springfield Div.) April 2,
2012), the citizenship
of certain “contract partners” who had no equity interest
in the partnership, did not share in the firm’s profits and losses, who did not have voting rights in the partnership,
and were
paid fixed amount
by contract,
were not “partners” whose citizenship would be attributed
to the partnership.
See also
Rutledge, Unincorporated
Business Organizations and Diversity Jurisdiction: Who Is a “Member”?, Business Law Today (February 12, 2019)., available at
https://businesslawtoday.org/2019/02/unincorporated-business-organizations-diversity-jurisdiction-member/
No comments:
Post a Comment