Diversity Jurisdiction Under § 1332(a)(3) Fails When the Sole Plaintiff LLC Has Any Foreign Member

1. Introduction

In FS Medical Supplies, LLC v. Tanner Pharma UK Limited (4th Cir. June 25, 2026), the Fourth Circuit addressed a recurring but often mishandled diversity-jurisdiction problem: how to apply 28 U.S.C. § 1332(a)(3) when an LLC’s membership includes both U.S. citizens and foreign citizens, and the defendants include both domestic and foreign parties.

The plaintiff, FS Medical Supplies, LLC (“FS Medical”), brought contract-related claims arising from COVID-era supply arrangements against a North Carolina corporation (TannerGAP, Inc.), North Carolina individual defendants (the Bournes), and a United Kingdom corporation (Tanner Pharma UK Limited). After jurisdictional discovery, FS Medical disclosed that one of its members was a citizen of China at the time suit was filed. FS Medical attempted to “fix” the problem by transferring that member’s interest, but the district court dismissed for lack of subject matter jurisdiction.

The key issue on appeal was whether § 1332(a)(3)—covering actions between “citizens of different States” with foreign parties as “additional parties”— can be satisfied when the sole plaintiff is an LLC that includes any foreign member, even if other members are diverse U.S. citizens and the domestic defendants are citizens of a different state.

2. Summary of the Opinion

The Fourth Circuit affirmed dismissal. It held that because an LLC takes the citizenship of each of its members, FS Medical was a citizen of Texas, California, and China when the first two complaints were filed. Under § 1332(a)(3), the court must be able to identify “citizens of different States” on both sides of the caption, and it cannot “disregard” the LLC’s foreign citizenship.

Once FS Medical’s Chinese citizenship is considered (as it must be), the plaintiff side includes a foreign citizen, leaving no suit “between citizens of different States” as required by the first clause of § 1332(a)(3). The court also rejected requests to preserve jurisdiction by dropping the foreign defendant and refused to apply North Carolina’s Rule 41(b) savings statute, reasoning that a court without subject matter jurisdiction lacks power to grant that relief.

3. Analysis

A. Precedents Cited

General Technology Applications, Inc. v. Exro Ltda, 388 F.3d 114 (4th Cir. 2004)

General Technology supplied the Fourth Circuit’s core framework: an LLC has the citizenship of its members, and where an entity has multiple citizenships, all must be considered in the jurisdictional analysis. The opinion relied on General Technology for two propositions:

  • Member-by-member testing: the court must “test” diversity by considering each LLC member’s citizenship, rather than selecting only the domestic aspects.
  • No ignoring foreign citizenship for LLCs: unlike certain circumstances involving dual-citizen individuals, an LLC’s foreign citizenship “cannot be ignored.”

Although General Technology was not itself a § 1332(a)(3) case, the Fourth Circuit treated its reasoning as controlling on the more general point: courts may not “disregard either [the domestic or foreign] aspect of [an LLC’s] citizenship.”

Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (2004)

The Supreme Court’s Grupo Dataflux decision reinforced two points central here:

  • Time-of-filing rule: jurisdiction is assessed when the complaint is filed; later changes in party citizenship generally do not cure a defect.
  • Alien-on-both-sides destroys diversity: where a partnership had Mexican partners and sued a Mexican corporation, the shared foreign citizenship defeated diversity.

The Fourth Circuit used Grupo Dataflux to reject FS Medical’s attempt to “disaggregate” its citizenship—treating the LLC as domestic for one clause of § 1332(a)(3) while simultaneously treating the foreign member as merely an “additional party” for the other clause.

Slavchev v. Royal Caribbean Cruises, Ltd., 559 F.3d 251 (4th Cir. 2009)

Slavchev was cited to emphasize that complete diversity principles apply to entities with dual citizenship and that a foreign component of citizenship can defeat diversity even when the entity also has a U.S. citizenship. The opinion used Slavchev to bolster the general proposition that a foreign citizenship component cannot simply be ignored.

Tango Music, LLC v. DeadQuick Music, Inc., 348 F.3d 244 (7th Cir. 2003)

FS Medical relied on Tango Music, where the Seventh Circuit upheld § 1332(a)(3) jurisdiction in a case involving overlapping foreign citizenship. The Fourth Circuit distinguished it as addressing a different question (whether foreign parties from the same country on both sides can still qualify as “additional parties” under § 1332(a)(3)), and stated that any broader reading would be inconsistent with Grupo Dataflux.

ImagineX Consulting, L.P. v. Reprivata, L.L.C., No. 1:20-cv-03045-DDD-KLM, 2021 WL 520107 (D. Colo. Feb. 11, 2021)

The court cited ImagineX Consulting as persuasive authority reading Grupo Dataflux to require that LLCs with both domestic and foreign members “must be treated as aliens” for jurisdictional purposes—consistent with the Fourth Circuit’s approach.

Additional authorities

  • Evans v. United States, 105 F.4th 606 (4th Cir. 2024): cited for de novo review of subject matter jurisdiction dismissals.
  • Axel Johnson, Inc. v. Carroll Carolina Oil Co., 145 F.3d 660 (4th Cir. 1998): cited for citizenship principles tied to national citizenship and domicile for individuals.
  • Topshelf Mgmt., Inc. v. Campbell-Ewald Co., 203 F. Supp. 3d 608 (M.D.N.C. 2016): cited for the proposition that a federal court sitting in diversity may apply North Carolina’s Rule 41(b) savings statute—if it has jurisdiction.
  • Shortt v. Richlands Mall Assocs., Inc., No. 90-2056, 1990 WL 207354 (4th Cir. Dec. 19, 1990) and Willy v. Coastal Corp., 503 U.S. 131 (1992): cited to distinguish true “collateral issues” (like sanctions) from merits-adjacent relief unavailable absent jurisdiction.
  • 84 Lumber Co. v. Barkley, 461 S.E.2d 780 (N.C. Ct. App. 1995): cited for the discretionary nature of Rule 41(b) relief (even if jurisdiction existed).
  • WG/Welch Mech. Contractors, LLC v. Int'l Ass'n of Sheet Metal, Air, Rail & Transpo. Workers, 684 F. Supp. 3d 432 (D. Md. 2023): cited to emphasize the plaintiff’s burden to investigate and plead diversity correctly.
  • FS Med. Supplies, LLC v. TannerGAP, Inc. et al, No. 3:25-cv-00102-UJ1-WCM: noted as a later-filed action where defendants sought dismissal under 28 U.S.C. § 1359, illustrating the risks of “manufactured” jurisdiction attempts.

B. Legal Reasoning

1) Citizenship “sorting” and the LLC rule

The court began by identifying the citizenships that matter under settled doctrine:

  • LLC: takes the citizenship of each member (General Technology Applications, Inc. v. Exro Ltda).
  • Corporation: is a citizen of its place of incorporation and principal place of business (28 U.S.C. § 1332(c)(1)).
  • Individuals: citizenship depends on domicile and national citizenship (Axel Johnson, Inc. v. Carroll Carolina Oil Co.).

As pleaded at the relevant time, FS Medical was a citizen of Texas, California, and China; defendants included North Carolina citizens and a United Kingdom corporation.

2) The controlling statutory choke point: § 1332(a)(3)’s first clause

Section 1332(a)(3) covers actions between “citizens of different States” in which foreign citizens are “additional parties.” The Fourth Circuit treated the opening phrase—“citizens of different States”—as a threshold requirement that must be satisfied before foreign “additional parties” matter.

Critically, the court held that the threshold cannot be met if, after properly accounting for an LLC’s foreign member, there is no U.S. citizen on the plaintiff side. The opinion framed this as a straightforward application of the “testing” requirement: once the court tests FS Medical’s Chinese citizenship, the suit is no longer a suit between state citizens on both sides of the caption.

3) Rejection of “domestic-only” parsing for LLCs

FS Medical argued that only its domestic citizenship should “count” for the first clause of § 1332(a)(3), because its domestic members (Texas and California) were completely diverse from the domestic defendants (North Carolina). The Fourth Circuit rejected that approach as incompatible with General Technology Applications, Inc. v. Exro Ltda and Grupo Dataflux v. Atlas Global Group, L.P..

The court’s reasoning is conceptual as well as doctrinal: allowing a party to ignore the foreign member for clause one, while invoking foreign citizenship for clause two, would permit impermissible “disaggregation” of the same entity’s citizenship to manufacture jurisdictional alignment.

4) No cure by dropping the foreign defendant

FS Medical asked the appellate court to dismiss Tanner Pharma UK (the foreign defendant) to preserve jurisdiction. The court refused, reasoning that the jurisdictional defect flowed from FS Medical’s own citizenship composition (the presence of a Chinese member), not from the foreign defendant’s presence. Removing Tanner Pharma UK would not create the required “citizens of different States” alignment.

5) No power to grant North Carolina Rule 41(b) savings-statute relief

FS Medical sought a dismissal “without prejudice” with Rule 41(b) language allowing refiling within a year under North Carolina’s savings statute. The Fourth Circuit held that without subject matter jurisdiction, federal courts are “powerless to act” in the manner requested.

The court distinguished sanctions-type orders permitted as “collateral issues” under Willy v. Coastal Corp. from Rule 41(b) relief, which affects substantive litigation rights and is not merely an incident of a court’s inherent authority to manage its proceedings.

C. Impact

1) A clarified Fourth Circuit rule for § 1332(a)(3) and mixed-citizenship LLCs

The opinion crystallizes a practical rule: for § 1332(a)(3), a plaintiff LLC with any foreign member cannot rely on its domestic members to satisfy the “citizens of different States” requirement if accounting for the foreign member leaves no state citizen on the plaintiff side. In effect, the Fourth Circuit treats such an LLC as an alien for the threshold inquiry, preventing § 1332(a)(3) jurisdiction where the plaintiff-side state-citizen anchor disappears upon proper “testing.”

2) Increased importance of pre-suit membership diligence

The court’s discussion—especially its refusal to provide Rule 41(b) relief and its emphasis on plaintiff responsibility (citing WG/Welch Mech. Contractors, LLC v. Int'l Ass'n of Sheet Metal, Air, Rail & Transpo. Workers)— raises the stakes for verifying LLC membership citizenship before filing. This is particularly acute for LLCs with:

  • members who are non-U.S. citizens, dual nationals, or have unclear domicile;
  • recently admitted/removed members;
  • multi-tier ownership (members that are themselves LLCs/partnerships).

3) Litigation strategy effects: removal, refiling, and § 1359 risk

The opinion signals skepticism toward attempts to “moot out” jurisdictional defects by post-filing transfers of interests, consistent with the time-of-filing rule and the reference to a later suit challenged under 28 U.S.C. § 1359. Parties attempting to restructure ownership solely to create federal jurisdiction should expect close scrutiny.

4) Limits on equitable “escape hatches” once jurisdiction is absent

By holding that North Carolina’s savings statute relief is unavailable absent jurisdiction, the Fourth Circuit reinforces a hard boundary: equitable or discretionary measures that affect the ability to relitigate are generally not “collateral” and cannot be issued by a court that lacks subject matter jurisdiction. Plaintiffs cannot assume that a federal court will cushion limitations consequences after a jurisdictional dismissal.

4. Complex Concepts Simplified

  • Complete diversity: generally means no plaintiff shares relevant citizenship with any defendant. In alienage contexts, the presence of foreign citizens on both sides can defeat jurisdiction depending on the subsection invoked.
  • LLC citizenship: unlike corporations, LLCs are citizens of every state (and foreign country) of each member. One foreign member makes the LLC a foreign citizen too.
  • “Testing” an LLC’s citizenship: the court checks jurisdiction against each member’s citizenship; you cannot pick only the favorable members.
  • Time-of-filing rule: jurisdiction is determined when the complaint is filed; later changes to citizenship typically do not fix a defect (Grupo Dataflux v. Atlas Global Group, L.P.).
  • § 1332(a)(3) structure: requires (1) state citizens on both sides who are citizens of different states, and then (2) foreign citizens may appear as “additional parties.”
  • Collateral issues: matters like sanctions may be decided even after a jurisdictional dismissal (Willy v. Coastal Corp.); but relief that affects substantive rights to refile (like a savings statute order) is not treated as collateral here.

5. Conclusion

FS Medical Supplies, LLC v. Tanner Pharma UK Limited firmly applies member-by-member citizenship “testing” to LLCs in the § 1332(a)(3) context and rejects efforts to ignore an LLC’s foreign member to create the statute’s required state-citizen anchor. The decision also underscores the unforgiving consequences of jurisdictional defects: absent subject matter jurisdiction, federal courts will not grant merits-adjacent procedural relief—such as North Carolina’s Rule 41(b) savings-statute language—to mitigate limitations risks.