                          RECOMMENDED FOR FULL-TEXT PUBLICATION
                               Pursuant to Sixth Circuit Rule 206
                                       File Name: 08a0464p.06

                 UNITED STATES COURT OF APPEALS
                                   FOR THE SIXTH CIRCUIT
                                     _________________


                                                X
                                                 -
 U. S. MOTORS, PRAHA MOTORS, LLC,
                                                 -
 BRATISLAVA MOTORS, LLC, U.S. MOTORS
 (SK), and JOSEPH LEVIN,                         -
                        Plaintiffs-Appellants, -
                                                      No. 07-2472

                                                 ,
                                                  >
                                                 -
                                                 -
            v.
                                                 -
                                                 -
 GENERAL MOTORS EUROPE, a Swiss
 corporation,                                    -
                         Defendant-Appellee. -
                                                 -
                                                N
                    Appeal from the United States District Court
                         for the Eastern District of Michigan at Detroit.
                        No. 07-12901—Gerald E. Rosen, District Judge.

                          Argued and Submitted: December 10, 2008
                            Decided and Filed: December 31, 2008
                                                                                               *
        Before: DAUGHTREY and GILMAN, Circuit Judges; RESTANI, Judge.

                                       _________________

                                             COUNSEL
ARGUED: Benjamin W. Jeffers, DYKEMA GOSSETT, Detroit, Michigan, for
Appellee. ON BRIEF: Joseph Levin, JOSEPH LEVIN, Detroit, Michigan, for
Appellant. Benjamin W. Jeffers, DYKEMA GOSSETT, Detroit, Michigan, James P.
Feeney, DYKEMA GOSSETT, Bloomfield Hills, Michigan, for Appellee.




         *
           The Honorable Jane A. Restani, Chief Judge for the United States Court of International Trade,
sitting by designation.


                                                   1
No. 07-2472            U.S. Motors, et al. v. Gen. Motors Europe                                  Page 2


                                       _________________

                                              OPINION
                                       _________________

         RESTANI, Judge. Appellants U.S. Motors, Praha Motors, LLC, Bratislava
Motors, LLC, U.S. Motors (SK), and Joseph Levin (collectively, “Appellants”) appeal
from the decision of the United States District Court for the Eastern District of Michigan
dismissing their complaint against appellee General Motors Europe (“G.M. Europe”) for
lack of subject matter jurisdiction. The district court held that under 28 U.S.C.
§ 1332(a)(2), diversity jurisdiction was lacking in a suit between domestic and foreign
plaintiffs and a foreign defendant. We affirm.

                                                    I.

         Appellants allege that G.M. Europe breached an agreement that would have
allowed U.S. Motors to serve as the exclusive distributor of General Motors vehicles in
the Czech Republic and Slovakia. Appellants are comprised of citizens of three
states—Florida, Iowa, and Michigan—and three countries—the Czech Republic,
Slovakia, and the Netherlands. G.M. Europe is a Swiss corporation.

         Appellants filed an amended complaint on July 27, 2007, stating that diversity
of citizenship was the basis for the district court’s subject matter jurisdiction. On August
1, 2007, G.M. Europe filed a motion to dismiss under Federal Rules of Civil Procedure
41(a) and 12(b)(6). On August 13, 2007, the district court, sua sponte, issued an order
to show cause why the case should not be dismissed for failure to set forth sufficient
information to support diversity of citizenship.1 Appellants submitted additional
information on August 23, 2007, and in an opinion and order dated October 24, 2007,




         1
          Unincorporated associations, such as U.S. Motors, have no separate legal identity and are not
considered citizens of any state for diversity purposes and, therefore, must show diversity of citizenship
based on the citizenship of each of their members. Certain Interested Underwriters at Lloyd’s, London,
Eng. v. Layne, 26 F.3d 39, 41 (6th Cir. 1994).
No. 07-2472            U.S. Motors, et al. v. Gen. Motors Europe                                   Page 3


the district court dismissed the case for lack of subject matter jurisdiction under 28
U.S.C. § 1332.2 Appellants now appeal.

                                                    II.

         We review a district court’s legal determination of subject matter jurisdiction de
novo and factual determinations for clear error. United States v. Gabrion, 517 F.3d 839,
872 (6th Cir. 2008).

         The diversity statute, 28 U.S.C. § 1332, provides the district courts with original
jurisdiction over “all civil actions where the matter in controversy exceeds the sum or
value of $75,000, exclusive of interest and costs,” and involves “(1) citizens of different
States; (2) citizens of a State and citizens or subjects of a foreign state; [or] (3) citizens
of different States and in which citizens or subjects of a foreign state are additional
parties . . . .” 28 U.S.C. § 1332(a). As noted by the district court, jurisdiction in this
case cannot be predicated on either § 1332(a)(1) or (a)(3) because U.S. citizens are not
on both sides of the controversy. G.M. Europe, the only appellee in this suit, is a Swiss
company and not a citizen of a U.S. state.

         Section 1332(a)(2), however, also does not apply because this case is not
between “citizens of a State and citizens or subjects of a foreign state,” but rather,
involves a combination of domestic and foreign plaintiffs and a foreign defendant. The
district court reasoned that in order for § 1332(a)(2) to apply, “one would have to
construe the statutory language as encompassing suits between citizens of one or more
States, with or without citizens of foreign states as additional parties, and citizens or
subjects of a foreign state.” U.S. Motors v. Gen. Motors Europe, 519 F. Supp. 2d 671,
673 (E.D. Mich. 2007). The district court determined that subsection (a)(3) prevents that
interpretation of subsection (a)(2) because subsection (a)(3) makes clear that the
jurisdiction provided for under § 1332(a)(1)—for suits between “citizens of different
States”—is still available when foreign parties are added on either side. Id. The district


         2
         Because the district court held that it lacked subject matter jurisdiction, it did not address G.M.
Europe’s motion to dismiss.
No. 07-2472            U.S. Motors, et al. v. Gen. Motors Europe                                  Page 4


court reasoned that this implies that jurisdiction would be “defeated in other classes of
cases by the addition of foreign parties,” i.e., in a § 1332(a)(2) suit between domestic
citizens and foreigners, and dismissed the case for lack of subject matter jurisdiction.
Id. at 673–74; see also Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 428
(7th Cir. 1993) (noting that diversity jurisdiction would be lacking where “there was no
citizen on one side, which took it out of (a)(3)” and “(a)(2), when read in light of (a)(3),
does not permit a suit between foreigners and a mixture of citizens and foreigners”).3

         The district court’s interpretation is widely supported by case law that finds
subject matter jurisdiction lacking under § 1332(a)(2) where there are foreign parties on
each side of the dispute. In finding jurisdiction lacking, courts generally rely on two
rationales. First, because “[d]iversity jurisdiction does not encompass foreign plaintiffs
suing foreign defendants,” the presence of U.S. citizens on only one side of the dispute
does not preserve jurisdiction. Faysound Ltd. v. United Coconut Chems., Inc., 878 F.2d
290, 294 (9th Cir. 1989) (internal quotation marks and citation omitted); see also Extra
Equipamentos e Exportacao Ltda. v. Case Corp., 361 F.3d 359, 361 (7th Cir. 2004)
(“The diversity jurisdiction does not extend to a suit in which there is a U.S. citizen on
only one side of the suit and foreign parties on both sides.”); Universal Licensing Corp.
v. Paola Del Lungo S.P.A., 293 F.3d 579, 581 (2d Cir. 2002) (“[D]iversity is lacking
within the meaning of [§ 1332(a)(2) and (3)] where the only parties are foreign entities,
or where on one side there are citizens and aliens and on the opposite side there are only
aliens.”); Dresser Indus., Inc. v. Underwriters at Lloyd’s of London, 106 F.3d 494, 499
(3d Cir. 1997) (“[S]ection 1332(a)(2) only grants jurisdiction in cases between aliens and
citizens. Cases between aliens on one side and aliens and citizens on the other,
therefore, do not fit the jurisdictional pigeonhole.”).4


         3
           Appellants do not allege that there are any dispensable, non-diverse parties that may be
dismissed pursuant to Federal Rule of Civil Procedure 21 to cure this jurisdictional defect and preserve
jurisdiction over the U.S. citizen plaintiffs under § 1332(a)(2).
         4
           A few courts have opined, albeit in dicta, that it is not clear under § 1332(a)(2) whether U.S.
citizens are required on both sides of an action between foreign parties. See Allendale, 10 F.3d at 428
(“Exactly what sense all this makes rather eludes us.”); see also Gschwind v. Cessna Aircraft Co., 232 F.3d
1342, 1345 (10th Cir. 2000) (“[W]e concur with Judge Posner’s observation [in Allendale] that this
interpretation is far from apparent from the face of 28 U.S.C. § 1332(a)(2).”).
No. 07-2472           U.S. Motors, et al. v. Gen. Motors Europe                                  Page 5


         Second, courts have consistently interpreted Strawbridge v. Curtiss, 7 U.S.
(3 Cranch) 267 (1806), for purposes of § 1332(a)(2) to require complete diversity
between the parties. See Craig v. Atl. Richfield Co., 19 F.3d 472, 476 (9th Cir. 1994)
(Under § 1332(a)(2) complete diversity was lacking where “the case involved a single
foreign plaintiff . . . and numerous foreign defendants (in addition to U.S. defendants).”);
Eze v. Yellow Cab Co. of Alexandria, Va., 782 F.2d 1064, 1065 (D.C. Cir. 1986)
(“[U]nder long-held precedent, diversity must be ‘complete.’. . . A diversity suit, in line
with the Strawbridge rule, may not be maintained in federal court by an alien against a
citizen of a state and a citizen of some other foreign country.”); Chick Kam Choo v.
Exxon Corp., 764 F.2d 1148, 1151 (5th Cir. 1985) (“For the purposes of section
1332(a)(2) complete diversity is required.”).5

         Our recent discussion in Peninsula Asset Management (Cayman) Ltd. v. Hankook
Tire Co., 509 F.3d 271 (6th Cir. 2007), issued after the district court’s decision, is also
instructive in this matter. In Peninsula, the plaintiffs, a Grand Cayman Islands
corporation and two U.S. residents, attempted to avoid the limitations of § 1332(a)(2)
by alleging that because the Grand Cayman Islands corporation had its principal place
of business in the United States, the plaintiffs were diverse from the defendants, a South
Korean corporation and a South Korean citizen. Id. at 271–72. We noted, however, that
“[i]t is well established that, under § 1332(a)(2), ‘even if a corporation organized under
the laws of a foreign nation maintains its principal place of business in a State, and is
considered a citizen of that State, diversity is nonetheless defeated if another alien party
is present on the other side of the litigation.’” Id. at 272–73 (quoting Creaciones Con
Idea, S.A. de C.V. v. Mashreqbank PSC, 232 F.3d 79, 82 (2d Cir. 2000)). In Peninsula,
as here, § 1332(a)(3) was not applicable because there were not U.S. citizens on each


         5
           Most courts have accepted that an express exception to the complete diversity requirement is
present in § 1332(a)(3). See, e.g., Dresser Indus.,106 F.3d at 499; Transure, Inc. v. Marsh & McLennan,
Inc., 766 F.2d 1297, 1298–99 (9th Cir. 1985). That is, § 1332(a)(3) is worded differently from the other
sections and provides for jurisdiction over cases between diverse U.S. citizens “in which citizens or
subjects of a foreign state are additional parties.” 28 U.S.C. § 1332(a)(3); see also Dresser Indus., 106
F.3d at 499. Indeed, “Congress was well aware of the judicial interpretation of the diversity statute
requiring complete diversity” when section 1332(a)(3) was added under the 1948 revision and codification
of the Judicial Code, Title 28, and “specifically used language that differs from the sections in which
complete diversity had been applied.” Id. at 498. There is no indication, however, that Congress intended
to change the complete diversity requirement for § 1332(a)(1) and (a)(2).
No. 07-2472        U.S. Motors, et al. v. Gen. Motors Europe                        Page 6


side of the dispute. Id. at 273. Finding “alien corporations on both sides of the
controversy,” we stated that the case lacked “the complete diversity required for a
federal court to exercise diversity jurisdiction under § 1332(a)(2).” Id. at 272.

       We join our sister circuits that have held the presence of foreign parties on both
sides of the dispute destroys the complete diversity required by § 1332(a)(2).
Accordingly, the case must be dismissed for lack of subject matter jurisdiction.

                                          III.

       For the foregoing reasons, we AFFIRM the judgment of the district court.
