Hong Kong Limited Company is a “Corporation” for Diversity Jurisdiction Purposes

Hong Kong Limited Company is a “Corporation” for Diversity Jurisdiction Purposes

In a recent decision from the US Court of Appeals for the 8^th Circuit, it adopted the reasoning employed by the 7^th Circuit and held that a Hong Kong Limited Company would be, for purposes of diversity jurisdiction,  treated as a corporation. Jet Midwest International Co. Ltd v. Jet Midwest Group, LLC, No. 18-1311, 2019 WL 354-0060 (8^th Cir. August 2, 2019).

For purposes of diversity jurisdiction, none of the defendants may have the same citizenship as any of the plaintiffs. With respect to business organizations, there is a significant divide between those that are corporations and those that are not. If an entity is classified as a corporation, only its jurisdiction of incorporation and that of its principal place of business are the citizenships of the entity. Alternatively, if it is an unincorporated organization then the entity has the citizenship of each of the members. This classification problem is especially acute with respect to non-US business entities and the question of whether or not the entity should be treated as being incorporated or unincorporated.

In this dispute, the question was whether Jet Midwest International Co., LTD would or would not be treated as a corporation. This company (“JMI”) is organized as a Hong Kong Limited Company having its principal place of business in Beijing. The defendant in this action challenged whether JMI should be classified as a corporation or as an unincorporated organization.

The 8^th Circuit, acknowledging it had not previously addressed the question, looked to the extensive body of law in the 7^th Circuit Court of Appeals that had touched on the question. Under those decisions a Hong Kong limited company is classified, for purposes of diversity jurisdiction, as a corporation, and in this case that rule was followed.