The ABA has recommend amendment of 28 U.S.C. § 1332 through Resolution 103B, which
urges Congress to amend 28 U.S.C. § 1332, to provide that any unincorporated business entity shall, for diversity jurisdiction purposes, be deemed a citizen of its state of organization and the state where the entity maintains its principal places of business.
I'm on record as saying a legislative fix is how this should happen because I don't think courts should read "incorporated" in the act to include any entities other than corporations. I still believe that. However, I have come up with an argument that supports the idea in a way I had not thought of. I still disagree with the idea of a court adding entities other than corporations to 1332 absent legislative action, so I disagree with what follows, but I thought of an interesting argument that I almost find compelling , so I am putting it out there anyway.
In Hobby Lobby decision, Justice Alito stated:
No known understanding of the term "person" includes some but not all corporations. The term "person" sometimes encompasses artificial persons (as the Dictionary Act instructs), and it sometimes is limited to natural persons. But no conceivable definition of the term includes natural persons and nonprofit corporations, but not for-profit corporations.
The decision continues:
Under the Dictionary Act, "the wor[d] 'person' . . . include[s] corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals."
Section 1332 provides district courts jurisdiction over "citizens of different States," and citizens are people. Now, citizen is likely intended to mean natural persons, but 1332 says "a corporation shall be deemed to be a citizen of every State." So entities can be citizens. And citizens are people. And the Dictionary Act says LLCs are people, so one could argue that 1332's corporations clause is intended to include like entities.
I still think that's wrong, but I admit it is a better argument than some I have heard.