Thoughtful Decision on Whether LLCs are Treated as Corporations for Purposes of General Personal Jurisdiction

By David Hricik, Mercer Law School

In  Avus Designs Inc. v.  Grezxx LLC (D. Wyo. 22-CV-00173-SWS Dec. 2, 2022) (here), the district court analyzed whether it could properly enter default judgment against a Wyoming limited liability corporation, or “LLC.” As part of doing so, the court was required to analyze whether it had, among other things, personal jurisdiction over the defendant LLC.

After concluding the allegations of the complaint were likely insufficient to support specific jurisdiction, it turned to whether an LLC should be treated the same as a corporation for purposes of general personal jurisdiction. Corporations generally are subject to general personal jurisdiction in the state of incorporation and the state of its principal place of business (generally believed to be where the corporation’s “nerve center” is located), and, potentially, in an exceptional case in a third state. LLCs are organized and registered, not incorporated in the same sense.

The decision thoughtfully discusses splits in the case law and the distinctions between a corporation and LLC, including the fact that members of an LLC may be anonymous, and so it may be impossible to determine the citizenship of each of its members.

I cannot find it on-line but it raises some fascinating issues for pre-suit due diligence for patent suits as well as in general commercial litigation, since it may allow for diversity subject matter jurisdiction in more instances (that is, if an LLC has only the citizenship of its state of organization and nerve center, rather than the citizenship of each of its members, then more state law claims may be brought in federal court).