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Diversity Case Analysis

The case at bar could have been decided in two paragraphs. In one, the court could have found that, consistent with longstanding existing precedent, jurisdiction is present. In the second, it could have summarily rejected the malpractice claim that it deemed to have only “slight” merit.

Instead, the court directed the parties to address the jurisdictional question that neither considered relevant, and wrote two very lengthy opinions about it. Presumably, this was done for our edification, rather than the court’s. And for any attorney who wants to challenge the status quo, there is nothing comparable in the case law.

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7th Circuit Court

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Professional corporations are
jurisdictional corporations

The seminal case on the issue, Saxe, Bacon & Bolan, P.C. v. Martindale-Hubbell, Inc., 710 F.2d 87 (2d Cir. 1983), pays only lip service to the jurisdictional question.

In Coté v. Wadel, 796 F.2d 981, 983 (7th Cir. 1986), the Seventh Circuit adopted the rule that a professional corporation is a corporation for diversity purposes only for simplicity’s sake, without addressing whether another rule might be better. Finally, in Saecker v. Thorie, 234 F.3d 1010, 1012 (7th Cir. 2000), the court merely maintained the rule, with the discussion limited to concluding that there is no conflict between Coté and later cases holding that LLCs and LPs are not corporations.

Thus, for any party wishing to challenge the rule that a professional corporation is a corporation for diversity purposes, the decision in the case at bar is the only case to really address the merits of the issue. Even though both opinions ultimately hold to the contrary, Easterbrook’s concurrence is the best blueprint (and guide to relevant law review articles) available to any party wishing to pursue this issue to the U.S. Supreme Court.

– David Ziemer

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David Ziemer can be reached by email.

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