                                                                                 FILED
                                                                     United States Court of Appeals
                                      PUBLISH                                Tenth Circuit

                     UNITED STATES COURT OF APPEALS                       November 2, 2015

                                                                         Elisabeth A. Shumaker
                           FOR THE TENTH CIRCUIT                             Clerk of Court
                       _________________________________

CELESTE C. GRYNBERG, individually
and as Trustee on behalf of the Rachel
Susan Trust, the Stephen Mark Trust, and
the Miriam Zela Trust; JACK J.
GRYNBERG,

      Petitioners - Appellants,

v.                                                         No. 14-1465

KINDER MORGAN ENERGY
PARTNERS, L.P., a Delaware Master
Limited Partnership; KINDER MORGAN
CO2 COMPANY, L.P., a Texas Limited
Partnership,

      Respondents - Appellees.
                      _________________________________

           APPEAL FROM THE UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLORADO
                       (D.C. No. 1:14-CV-01832-WJM)
                    _________________________________

Daniel L. Abrams, Law Office of Daniel L. Abrams, PLLC, New York, New York
(Richard P. Barkley, The Barkley Law Firm, Englewood, Colorado, with him on the
briefs), appearing for Appellants.

Stacy M. Neal (Guy S. Lipe, Mark C. Rodriguez, and James L. Leader, Jr., with her on
the brief),Vinson & Elkins, Houston, Texas, appearing for Appellee.
                        _________________________________

Before BRISCOE, MATHESON, and BACHARACH, Circuit Judges.
                  _________________________________

MATHESON, Circuit Judge.
                        _________________________________

       Celeste C. Grynberg—individually and as trustee on behalf of the Rachel Susan

Trust, Stephen Mark Trust, and Miriam Zela Trust—and Jack J. Grynberg petitioned the

federal district court to vacate an arbitration award that had been entered against them

and in favor of Kinder Morgan Energy Partners, L.P. (“KMEP”) and Kinder Morgan

CO2 Company, L.P. (“KMCO2,” and together with KMEP, “Kinder Morgan entities”).

       The Grynbergs invoked the court’s diversity jurisdiction. When they filed the

action, the Grynbergs were citizens of Colorado, KMEP was a Delaware master limited

partnership (“MLP”), and KMCO2 was a Texas limited partnership with one partner,

KMEP.1 The district court dismissed the action for lack of jurisdiction. It concluded that

under Carden v. Arkoma Associates, 494 U.S. 185, 195 (1990), KMEP’s citizenship was

the citizenship of all its unitholders, and because KMEP had at least one Colorado

unitholder, its citizenship was not completely diverse from the Grynbergs’.

       The Grynbergs appeal, arguing the district court improperly applied Carden.

Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

                                  I. BACKGROUND

                                 A. Overview of MLPs

       This case addresses diversity jurisdiction for MLPs. MLPs are limited

partnerships or limited liability companies whose ownership interests, called “common


       1
      Because KMEP was the sole partner of KMCO2, KMCO2’s citizenship included
KMEP’s citizenship.



                                             -2-
units,” are publicly traded. John Goodgame, New Developments in Master Limited

Partnership Governance, 68 Bus. L. 81, 82 (2012); Wood v. Walton, No. WDQ-09-3398,

2010 WL 458574, at *1 n.3 (D. Md. Feb. 2, 2010) (unpublished).2 MLPs are similar to

limited partnerships in that they have general partners who manage the partnership’s

affairs and limited partners (called “unitholders”) who provide capital. Trafigura AG v.

Enter. Prods. Operating LLC, 995 F. Supp. 2d 641, 643 n.1 (S.D. Tex. 2014). MLPs are

classified as partnerships for federal taxation purposes, which allows them to benefit

from “pass-through” taxation. Id. They are similar to corporations, however, in that

MLPs are publicly traded. See id. Although MLPs are organized under state law, federal

law permits federal pass-through taxation for MLPs engaged predominately in the

“exploration, development, mining, or production, processing, refining, [or]

transportation . . . of any mineral or natural resource.” 26 U.S.C. § 7704(d)(1)(E).

                              B. Procedural Background

       On July 1, 2014, the Grynbergs petitioned the United States District Court for the

District of Colorado to vacate an arbitration award that had been entered against them and

in favor of the Kinder Morgan entities. The petition alleged the district court had

diversity jurisdiction because the amount in controversy exceeded $75,000 and the parties

were completely diverse. See 28 U.S.C. § 1332. The petition alleged that the Grynbergs


       2
        Although unpublished, out-of-circuit, district court opinions lack precedential
value, we find the reasoning of such decisions cited here to be instructive under the
circumstances of this case. See 10th Cir. R. 32.1 (“Unpublished decisions are not
precedential, but may be cited for their persuasive value.”); see also Fed. R. App. P. 32.1.



                                             -3-
were citizens of Colorado, that KMEP was a Delaware limited partnership3 with its

principal place of business in Texas, and that KMCO2 was a Texas limited partnership

with its principal place of business in Texas.

       On July 2, 2014, the district court issued an Order to Show Cause, which said the

Grynbergs’ petition did not adequately allege diversity jurisdiction because it did not

properly identify the citizenship of the two limited partnerships, KMEP and KMCO2, as

of the filing date. The court explained that under Carden, 494 U.S. at 195, the citizenship

of limited partnerships was the citizenship of all its unitholders. The court ordered the

Grynbergs to identify all of KMEP’s unitholders and KMCO2’s members.

       The Grynbergs responded, explaining that KMEP was a publicly traded Delaware

MLP and that KMCO2 was a Texas limited partnership wholly owned by KMEP. The

Kinder Morgan entities responded and explained that KMEP had unitholders who were

citizens of Colorado. The Grynbergs argued that, because KMEP was an MLP and not a

limited partnership, Carden was inapplicable. Instead, the Grynbergs argued, KMEP’s

citizenship was its principal place of business and state of formation.

       The district court concluded Carden controlled and the Grynbergs had failed to

establish complete diversity. It therefore dismissed the action without prejudice for lack

of jurisdiction.



       3
        The petition did not allege that KMEP was an MLP. As explained below, the
Grynbergs first identified KMEP as an MLP in their response to the district court’s order
to show cause why it had jurisdiction.



                                             -4-
                                         II. DISCUSSION

       The Grynbergs appeal the district court’s decision concluding it lacked diversity

jurisdiction. Deciding an issue of first impression, we hold the citizenship of an MLP

consists of its unitholders’ citizenship and therefore affirm.

                                       A. Standard of Review

       “We review the district court’s order dismissing the case for lack of subject matter

jurisdiction de novo.” Lindstrom v. United States, 510 F.3d 1191, 1193 (10th Cir. 2007).

                                   B. Diversity Jurisdiction

       The Constitution states, “The judicial Power shall extend to . . . Controversies . . .

between Citizens of different States.” U.S. Const. art. III, § 2, cl. 1. Because “[t]he

judicial Power of the United States, shall be vested in . . . such inferior Courts as the

Congress may from time to time ordain and establish,” id. art. III, § 1, Congress

determines the jurisdiction of the federal district courts. Sheldon v. Sill, 49 U.S. (8 How.)

441 (1850). “Congress first authorized the federal courts to exercise diversity jurisdiction

in the Judiciary Act of 1789 . . . .” Carden, 494 U.S. at 187. Under the current diversity

statute, 28 U.S.C. § 1332, district courts have diversity jurisdiction over “all civil actions

where the matter in controversy exceeds the sum or value of $75,000 . . . and is between

. . . citizens of different States.”

       Diversity jurisdiction requires complete diversity—no plaintiff may be a citizen of

the same state as any defendant. See, e.g., Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267

(1806); Ravenswood Inv. Co., L.P. v. Avalon Corr. Servs., 651 F.3d 1219, 1223 (10th Cir.

2011). “[F]or purposes of determining the existence of diversity jurisdiction, the


                                                 -5-
citizenship of the parties is to be determined with reference to the facts as they existed at

the time of filing.” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 569-70

(2004).

                                        C. Analysis

       Three reasons support our conclusion that an MLP’s citizenship consists of its

unitholders’ citizenship. First, the long-standing rule guiding the jurisdictional

citizenship of unincorporated entities, most recently stated in Carden, applies to MLPs.

Second, the narrow exception to this rule does not apply. Third, the Grynbergs’ policy

arguments are appropriately addressed to Congress, not the courts.

1. Unincorporated Associations, the Chapman Rule, and Diversity Jurisdiction

       In general, for jurisdictional citizenship, there are two types of business

organizations: corporations and unincorporated associations. For diversity, a corporation

is a citizen of its state of incorporation and the state where its principal place of business

is located. 28 U.S.C. § 1332(c)(1); see also Hertz Corp. v. Friend, 559 U.S. 77, 85, 88

(2010) (citing Louisville, Cincinnati, & Charleston R.R. Co. v. Letson, 43 U.S. (2 How.)

497, 558 (1844)). The Supreme Court has “firmly resisted extending that treatment to

other entities.” Carden, 494 U.S. at 189.

       Instead, beginning with Chapman v. Barney, 129 U.S. 677 (1889), the Supreme

Court has held an unincorporated entity’s citizenship is typically determined by its

members’ citizenship (the “Chapman rule”). Carden, 494 U.S. at 189, 195-96. The

Court has characterized the Chapman rule as a “doctrinal wall,” United Steelworkers of

Am., AFL-CIO v. R.H. Bouligny, Inc., 382 U.S. 145, 151 (1965), and has applied it to


                                              -6-
joint stock companies, Chapman, 129 U.S. at 681-82, limited partnership associations,

Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 450, 454 (1900), labor unions,

Bouligny, 382 U.S. at 147, and limited partnerships, Carden, 494 U.S. at 195-96. The

Tenth Circuit has further applied the rule to trusts, ConAgra Foods, Inc. v. Americold

Logistics, LLC, 776 F.3d 1175, 1182 (10th Cir. 2015), cert. granted, 83 U.S.L.W. 3880

(U.S. Oct. 1, 2015) (No. 14-1382), and limited liability companies, Siloam Springs Hotel,

L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1234 (10th Cir. 2015). The district court in

this case, relying on Carden, applied the Chapman rule to MLPs to recognize that MLPs

are unincorporated and hold that their citizenship for diversity purposes is determined by

the citizenship of their unitholders.

       The Grynbergs argue the district court misapplied the Chapman rule because

Carden only applied the rule to limited partnerships, and any reference in that decision to

other non-corporate business entities was merely dicta. We disagree. Carden was the

result of case authority spanning a century of Supreme Court decisions uniformly

applying the Chapman rule and holding that various forms of unincorporated associations

are citizens of their members’ states of citizenship. See, e.g., Chapman, 129 U.S. at 681-

82; Great S. Fire Proof Hotel, 177 U.S. at 450, 454; Bouligny, 382 U.S. at 147; Carden,

494 U.S. at 195-96. The rule applies to MLPs because they are unincorporated

associations (1) formed under state law as limited partnerships or limited liability

companies and (2) classified as partnerships for federal income tax purposes. See 26

U.S.C. § 7704(a); Hite Hedge LP v. El Paso Corp., No. 7117VCG, 2012 WL 4788658, at




                                             -7-
*1 (Del. Ch. Oct. 9, 2012) (unpublished).4 MLPs are not corporations. We next address

the Grynbergs’ argument that MLPs are akin to corporations and should be treated as an

exception to Chapman for diversity jurisdiction.

2. MLPs Do Not Qualify for an Exception Similar to Russell

       The Supreme Court recognized one exception to the Chapman rule in Puerto Rico

v. Russell & Co., 288 U.S. 476, 481-82 (1933). The Court determined a sociedad en

comandita—an entity created under Puerto Rico law—was a citizen of Puerto Rico for

diversity analysis. The Court explained, “[T]he sociedad is a juridical person . . . [whose]

personality is so complete in contemplation of the law of Puerto Rico that we see no

adequate reason for holding that the sociedad has a different status for purposes of federal

jurisdiction than a corporation organized under that law.” Russell, 288 U.S. at 481. For

example, the sociedad en comandita is created by filing articles of association as public

records, the articles may allow the entity to continue to exist despite the death or


       4
          At least eight district courts have addressed this issue. All have held that the
citizenship of MLPs is the citizenship of all their general and limited partners. These
courts have concluded either that an MLP is not distinct from a limited partnership, see,
e.g., LL & E Royalty Tr. ex rel. Parsons v. Quantum Res. Mgmt., LLC, No. 14-CV-13833,
2015 WL 4274987, at *5 (E.D. Mich. July 14, 2015) (unpublished); Great Lakes Gas
Transmission, LP v. Essar Steel Minn., LLC, No. 09-cv-3037, --- F. Supp. 3d ---, 2015
WL 2070558, at *5 (D. Minn. May 4, 2015); Stevens Eng’rs & Constructors, Inc. v.
MarkWest Liberty Midstream & Res. LLC, No. 14-cv-00054-RBJ, 2014 WL 2922631, at
*2 (D. Colo. June 27, 2014) (unpublished); Gonyer v. Enbridge Energy, Ltd. P’ship, No.
1:13-CV-796, 2014 WL 1255915, at *1-2 (W.D. Mich. Mar. 26, 2014) (unpublished);
Ada Cty. Highway Dist. v. Nw. Pipeline GP, No. 1:12-cv-00184-BLW, 2012 WL
4737869, at *1 (D. Idaho Oct. 3, 2012) (unpublished); Vosburg v. Williams Field Servs.
Co., No 3:11- cv-1624, 2011 WL 3881277, at *2 (M.D. Pa. Sept. 2, 2011) (unpublished);
Wood, 2010 WL 458574, at *1-2, or that the Chapman rule applies to all unincorporated
entities, Trafigura AG, 995 F. Supp. 2d. at 646.


                                              -8-
withdrawal of members, management and legally binding decision making power may be

vested solely in designated managers, and the members are not typically liable for the

sociedad’s acts and debts. Id. at 481. The Grynbergs argue a similar exception is

warranted here because MLPs share many corporate characteristics. We disagree for two

reasons.

       First, in cases since Russell, the Supreme Court has declined to extend the

exception to any other form of entity and has said it likely applies only to the sociedad en

comandita. Carden, 494 U.S. at 190; Bouligny, 382 U.S. at 151. In Bouligny, the Court

explained that Russell presented a distinctive problem of “fitting an exotic creation of the

civil law . . . into a federal scheme that knew it not.” 382 U.S. at 151. In Carden, the

Court said that after the Bouligny Court declined to extend the exception to labor unions,

“[t]here could be no doubt . . . that at least common-law entities (and likely all entities

beyond the Puerto Rican sociedad en comandita) would be treated for purposes of the

diversity statute” as partnerships, whose citizenship is determined according to each

member’s citizenship. 494 U.S. at 190. And in Russell itself, the Court said, “The

tradition of the common law is to treat as legal persons only incorporated groups and to

assimilate all others to partnerships.” 288 U.S. at 480.

       Moreover, the Carden Court noted that although Russell might be read to “reflect

the Supreme Court’s willingness to look beyond the incorporated/unincorporated

dichotomy and to study the [entity’s] internal organization, state law requirements,

management structure, and capacity or lack thereof to act and/or sue, to determine




                                              -9-
diversity of citizenship,” the Court had specifically rejected that approach in decisions

since Russell. 494 U.S. at 190 (alteration omitted) (citing Bouligny, 382 U.S. at 151).

       Second, even if we consider the MLP’s characteristics, they do not support

treating an MLP like a corporation for diversity jurisdiction. MLPs and corporations are

publicly traded, centrally managed, and have freely transferable interests. But the

similarities end there. MLPs are formed as unincorporated entities under state law, and

Carden reaffirmed the dichotomy between corporations and unincorporated entities.

       The Grynbergs do not attempt to compare the management structures of an MLP

to those of a sociedad en comandita or a corporation, perhaps because MLP governance

differs from corporate governance. See John Goodgame, Master Limited Partnership

Governance, 60 Bus. L. 471, 485 (2005). For example, because MLPs are creatures of

state limited partnership law, the partnership agreement can modify the fiduciary duties

owed by the MLP’s partners. Id. at 485-87. But corporate law disallows modifying or

restricting the fiduciary duties owed by the corporate board of directors. Id. at 486.

3. The Grynbergs’ Policy Arguments Should Be Addressed to Congress, Not the
   Courts

       The Grynbergs urge us not to apply Carden to MLPs because doing so would

preclude diversity jurisdiction over MLPs.5 The Carden Court acknowledged the law in



       5
         The Grynbergs argue applying the Chapman rule to MLPs “protect[s] 130 very
large natural resources companies from ever having to answer in federal court for any
wrongdoing, [which] raises grave concerns, which arguably rise to the level of
constitutional concerns, about the denial of access to the courts, equal protection, and due
process.” Aplt. Reply Br. at 18-19. To the extent the Grynbergs raise any constitutional
                                                                              Continued . . .

                                            - 10 -
this area “can validly be characterized as technical, precedent-bound, and unresponsive to

policy considerations raised by the changing realities of business organization.” 494 U.S.

at 196. Nevertheless, despite practical similarities between corporations and certain types

of unincorporated entities, the Court said it was up to Congress, not the courts, to make

“further adjustments.” Id. Whether MLPs should be “assimilated to the status of

corporations for diversity purposes, how such citizenship is to be determined, and what if

any related rules ought to apply, are decisions which we believe suited to the legislative

and not the judicial branch.” Bouligny, 382 U.S. at 153.

                                   III. CONCLUSION

       The Grynbergs of Colorado concede diversity jurisdiction is lacking in this case if

we determine the Chapman rule applies. It does. They acknowledge that when they filed

this action, at least one KMEP unitholder was a Colorado citizen. Accordingly, the

district court properly dismissed this case for lack of jurisdiction. We affirm.6




arguments for the first time in their reply brief, we will not consider them. Stump v.
Gates, 211 F.3d 527, 533 (10th Cir. 2000).
       6
         The Kinder Morgan entities move to seal portions of the record containing the
Grynbergs’ petition to vacate the arbitration award and certain exhibits to the petition,
including the arbitration award, the settlement agreement at issue in the arbitration
proceeding, and the full transcript of the arbitration proceeding. The Clerk of the Court
ordered the Kinder Morgan entities to show cause to justify their sealing request.
        We have reviewed the Kinder Morgan entities’ response and these materials. We
find the Kinder Morgan entities have established good cause for protecting those pages
identified in their response as containing confidential and proprietary information and
grant their motion as to those documents.



                                             - 11 -
