The Fourth Circuit Bounces Express Check Class Action Back to State Court Based on Lack of Diversity Jurisdiction


The United States Court of Appeals for the Fourth Circuit in Ferrell v. Express Check Advance of South Carolina, LLC (No. 09-2401) examined the citizenship of limited liability companies for purposes of diversity jurisdiction in a class action. The Plaintiff in Ferrell, a citizen of South Carolina, commenced a class action lawsuit on behalf of “other South Carolina citizens” against four “payday loan” businesses in South Carolina state court. The lawsuit alleged that defendants? payday loans violated various South Carolina laws. One of the defendants, Express Check Advance of South Carolina, LLC (“Express Check”), removed the case to the United States District Court for the District of South Carolina on diversity grounds, contending that it was a citizen of Missouri and Kansas, and not a citizen of South Carolina.

The Plaintiff filed a motion to remand the case back to state court. In its motion, the plaintiff asserted that Express Check was a South Carolina citizen and there was thus no diversity jurisdiction. The District Court determined that Express Check was an “unincorporated association” whose citizenship should be determined by “the State where it has its principal place of business and the State under whose laws it is organized” pursuant to 28 U.S.C. § 1332(d)(10). Because Express Check had its principal place of business in South Carolina, the District Court concluded that it did not have jurisdiction over the matter and granted Plaintiff's motion to remand.

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