managing, or lead, underwriter for each syndicate should be considered
the real parties in interest. Each of the lead underwriters are citizens
of the U.K., and complete diversity would exist between the parties.
Defendants agree that the real parties in interest test should apply.
However, as with the Second and Seventh Circuits, Defendants believe that
application of such an analysis yields the conclusion that the Names
themselves are the real parties in interest. In Indiana Gas, the Seventh
Circuit noted that "[e]very name in a syndicate faces unlimited personal
liability, like a general partnership. Syndicates are run, however, much
like limited partnerships, with a lead member (the active underwriter or
managing agent) able to transact business without consulting the
investors." Indiana Gas, 141 F.3d at 316. The Court concluded that
because "general partnerships, limited partnerships. joint stock
companies, and unincorporated associations are all treated as citizens of
every state of which any partner or member is a citizen," so should
underwriting syndicates have the citizenship of each Name. Indiana Gas,
141 F.3d at 317.
The Second Circuit, in Squibb, engaged in a more extensive analysis
while reaching the same conclusion as the Seventh Circuit. The Court
stated that the "general rule undoubtedly is that the federal courts must
look to the individuals being represented rather than their collective
representative to determine whether diversity of citizenship exists."
Squibb, 160 F.3d at 931 (internal citations and quotations omitted). The
Court then analyzed whether the Lloyd's syndicates and Names fit into one
of the three principal exceptions to this rule: corporations, trusts, and
For corporations, the citizenship of the corporation alone matters,
regardless of the citizenship of any individual shareholder. The
shareholders' citizenship may therefore be ignored. However, as
Syndicates are unincorporated associations, the Second Circuit found that
this exception was not relevant.
For trusts, the Supreme Court has deemed the citizenship of the
trustees to be determinative. Navarro Savings Ass'n v. Lee, 446 U.S. 458,
461, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). The Second Circuit, agreeing
with the Seventh Circuit's opinion in Indiana Gas, found that the lead
Lloyd's underwriter cannot be considered a trustee for jurisdictional
purposes. The Court found that, while "Trustees own the corpus; ownership
is what distinguishes a trustee from an agent," the lead underwriters of
the Syndicates do not own the wealth of the Syndicate's Names, nor
exercise over it any dominion other than the power to underwrite risks.
Squibb, 160 F.3d at 930.
Finally, for class actions, the Supreme Court has found that only the
citizenship of the class representatives is relevant for the
establishment of diversity jurisdiction. See Snyder v. Harris,
394 U.S. 332, 340, 89 S.Ct. 1053, 22 L.Ed.2d 319 (1969). The Second
Circuit found that essentially converting a suit against the Lloyd's
underwriters into a class action would undermine the substantive
distinction between Rule 23 classes and limited partnerships. Squibb, 160
F.3d at 931. Consequently, the Second Circuit concluded that each Name
must be completely diverse from the Plaintiff in order to satisfy the
After careful consideration, the Court agrees with the Second Circuit's
analysis. The Syndicate has the personal-liability characteristics of a
general partnership and the management structure of a limited
partnership. While the individual Names may be represented in certain
negotiations and agreements, the general rule is that the Court must look
at the individuals being represented rather than their collective
representative to determine whether diversity of citizenship exists. As
with the Second Circuit, the Court finds that none of the exception to
this general rule — corporations, trustees, and class actions
— applies in this case. The Syndicates are not incorporated, do not
have the structure of a trust, and should not be converted into a Rule 23
class simply to find diversity jurisdiction. Therefore, the Court,
following the reasoning of the Second and Seventh Circuits, finds that
each Name must be diverse from Plaintiff to satisfy diversity
Plaintiff contends that Defendants should be estopped from arguing that
the citizenship of each individual Name should be considered for
determining diversity jurisdiction due to inconsistent positions taken in
prior litigation. The Court has discretion to exercise judicial estoppel
in order to protect the integrity of the judicial process. Interstate
Fire & Casualty Co., Underwriters of Lloyds, London, 139 F.3d 1234, 1239
(9th Cir. 1998). However, judicial estoppel applies "when a party's
position is tantamount to a knowing misrepresentation, or even fraud on
the court." Fredenburg v. Contra Costa Co. Department of Health,
172 F.3d 1176, 1179 (9th Cir. 1999). Plaintiff has made no showing that
Defendants' representations in any case require the application of
judicial estoppel in this case.
Plaintiff bears the burden of establishing complete diversity.
Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673. Defendants have submitted
evidence demonstrating that certain individual Names are residents of
California. As such, these individual Names are not diverse from
Plaintiff, who is also a California resident. Lacking any demonstration
that these Names are not residents of California, Plaintiff has failed to
meet its burden. Consequently, the Court lacks subject matter
jurisdiction and the present action must be dismissed.
B. Amount In Controversy
Defendants also argue that Plaintiff cannot establish the required
amount in controversy. As the Court has determined that Plaintiff failed
to meet its burden of establishing complete diversity, the Court need not
consider this issue.
For the foregoing reasons, Defendants' motion to dismiss for lack of
jurisdiction is HEREBY GRANTED.
IT IS SO ORDERED.
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