ÿWPC\ žx…1˜º¬¤»,»% IÅ RLD(½ò΂œL[6êt"X NûîpyjøœpœÂ…Ø6”@ßПWíÅZÊäÜni¬q^†èÀCA§ú¯…ŒGyQ»tŠË+%æRÛämô}‘KÁø:ó“üéWf°Re)ï išp¸'MˆË;Š"ÕæØv¼69½ ‘¦Ý‚ðÀ*& üaÂß’‡©¿9¹GLÓ«?Lÿ79‚ Õ÷%ì½H%5,FðؘÀ´ Y­Ci8I­³·¼:—\ª*¤ óýÇÿö”Î † >‰Ê\@:4Ѫ˜tˆiÛ/ ÏY — b¥¥¥¾­­­­­­kUFsUF¹U@ÿÿÿÿ B?˜HP LaserJet 5/5M - StandardÈÈ,,,,ÈÈ0"X(#Ã$òòÚ  Ú0Ú  Úóó($¡¡.Courier New Regular(d:2áz$¤¤Ý ƒ!ÝÝ  ÝÓ  ÓÓ=€!¤)!X‚ÐXdÐd=Óà  àÓÓòòÚ  Ú0Ú  Úóó $Ý ƒáz$ÝÓ  ÓÓ=€!¥‰!X‚ÐXdÐd=Óà  àÓÓòòÚ  Ú1Ú  ÚóóÝ  ÝÔ_ÔVirginia's€rule€in€this€respect€accords€with€the€majorityÐ ° Ðview.€€That€view,€however,€is€not€universally€held.€€SomeÐ †Ö Ðjurisdictions€allow€a€shareholder€to€bring€suit€directly€against€anÐ \¬ Ðerrant€officer€or€director€(at€least€when€a€close€corporation€isÐ 2‚ Ðinvolved).€€òòSeeóó,€òòe.g.óó,€òòDonahueóó€v.€òòRodd€Electrotype€Co.óó,€328€N.E.2dÐ X Ð505,€515„16€(Mass.€1975).€€In€such€a€jurisdiction,€a€suit€againstÐ Þ. Ðan€officer€or€director€may€be€maintained€without€joining€theÐ ´  Ðcorporation€as€a€party.«<þ6X9`("Courier NewTTXXxþ6X@ÉDQX@<þ6X9`(CourierTTXXwþ6X@ÉüQX@Ú32s ÉL=16Xy File3|x ÿU‹ÿÀÀÀøÀTABLE Aq:\template\OPINIONS\SELYA.WPT Ý ƒáz$ÝÓ  ÓÓ=€!¥‰!X‚ÐXdÐd=Óà  àÓÓòòÚ  Ú2Ú  ÚóóÝ  ÝÔ_ÔArguably,€the€corporation€also€may€be€a€citizen€ofÐ ° ÐMassachusetts.€€In€her€amended€complaint,€the€plaintiff€allegedÐ †Ö Ðthat€the€individual€defendants€moved€most€of€Stratin's€funds€to€aÐ \¬ Ðbank€account€in€Massachusetts,€shifted€payroll€administrationÐ 2‚ Ðthere,€and€changed€the€principal€office€address€to€a€MassachusettsÐ X Ðlocation.€€If€these€facts€are€true,€a€good€case€likely€can€be€madeÐ Þ. Ðthat€Stratin€had€its€principal€place€of€business€in€MassachusettsÐ ´  Ðwhen€the€plaintiff€sued.€€That€would€make€Stratin€a€citizen€of€bothÐ Š Ú ÐVirginia€and€Massachusetts,€òòseeóó€28€U.S.C.€ðð€1332(c)€(providing,Ð ` ° Ðinter€alia,€that€a€corporation€also€shall€be€deemed€a€citizen€"ofÐ 6 †  Ðthe€State€where€it€has€its€principal€place€of€business"),€wouldÐ  \  Ðplace€Massachusetts€citizens€on€each€side€of€the€case€and,€thus,Ð â 2  Ðdestroy€complete€diversity€even€if€Stratin€were€aligned€as€aÐ ¸  Ðplaintiff.- ù- ´Ý ƒáz$ÝÓ  ÓÓ=€!¥‰!X‚ÐXdÐd=Óà  àÓÓòòÚ  Ú3Ú  ÚóóÝ  ÝÔ_ÔWe€are€cognizant€of€the€òòSperlingóó€Court's€admonition€that€itÐ ° Ðwas€not€laying€down€a€mechanical€rule€as€to€the€alignment€ofÐ †Ö Ðparties€in€derivative€suits.€€354€U.S.€òòóóat€97.€€We€leave€open€theÐ \¬ Ðpossibility€that€other€cases€may€present€sufficiently€unusual€factsÐ 2‚ Ðto€justify€departing€from€the€conventional€paradigm.€€Here,Ð X Ðhowever,€we€find€no€compelling€reason€to€deviate€from€standardÐ Þ. Ðpractice. ÿ.Courier New Regular<4šÛ 9Z+‹.Courier New Regular(ÖÃ9 Z‹(Times New Roman  dÝ ƒ!ÝÝ  ÝÔ_ÔÑTRY,3Ø'Xà3Ø' Letter 3Ø' Letterÿ3Ø'TÑÑ ? ÑÙ*ƒ !Ùò òÓ  ÓÓ  ÓÔ‡"°v°X"XÔÔ‡#°|à°°"°vÔUnited€States€Court€of€AppealsÐ ° ÐÔ#†#X¦@X°#°|àÅ#ÔÔ‡#„ÉQ„X#X¦@ÔFor€the€First€CircuitÔ#†#X¦@X„#„ÉQY#ÔÔ#†"X¥‰XX#X¦@ä#Ôó óÐ „Ô ÐÓ¹ÓÌÌßA€') °°` dE< ` AßÐ  à ÐÌNo.€04„1744Ð u Å ÐÌà@àà$ìàANNE€GABRIEL,ˆÐ ! q ÐÌà@ ìàPlaintiff,€Appellant,ˆÐ Í   ÐÌà@tt)ìàv.ˆÐ yÉ  ÐÌà@LLìàEDWARD€G.€PREBLE€ET€AL.,ˆÐ %u  ÐÌà@ÄÄìàDefendants,€Appellees.ˆÐ Ñ! ÐÌßA€') °°` dE<|` AßÐ }Í ÐÌà@œ œ ìàAPPEAL€FROM€THE€UNITED€STATES€DISTRICT€COURTˆÐ b² ÐÌà@0 0 ìàFOR€THE€DISTRICT€OF€MASSACHUSETTSˆÐ ^ ÐÌà@Œ Œ ìà[Hon.€Rya€W.€Zobel,€òòU.S.€District€Judgeóó]ˆÐ º  ÐÌßA€') °°` dE<e` AßÐ f¶ ÐÌà@„„'ìàBeforeˆÐ K› ÐÌÓ  Óà@@((ìà€Selya,€òòCircuit€Judgeóó,Ð ÷G ÐÌCampbell,€òòSenior€Circuit€Judgeóó,Ð £ó  ÐÌand€Lipez,€òòCircuit€Judgeóó.Ð O Ÿ" ÐÌßA€') °°` dE<ú!` AßÐ û!K$ ÐÌÓ  ÓÓ  Óà  àòòCornelius€J.€Moynihan,€Jr.óó,€with€whom€òòNixon€Peabody€LLPóó€was€onÐ à"0& Ðbrief,€for€appellant.Ð ¶#' Ðà  à€òòAllen€V.€Farberóó,€with€whom€òòRobert€D.€Hillmanóó,€òòDeutschÐ Œ$Ü( ÐWilliams,€Brooks,€DeRensis€&€Holland,€P.C.óó,€and€òòGardner,€Carton€&Ð b%² ) ÐDouglas,€LLPóó€were€on€brief,€for€appellee€Edward€G.€Preble.Ð 8&ˆ!* Ðà  àòòGeorge€A.€Bermanóó,€with€whom€òòMarjunette€deMagistrisóó€and€òòPeabodyÐ '^"+ Ð&€Arnold€LLPóó€were€on€brief,€for€appellee€James€L.€Ackerman.Ð ä'4#, ÐÌÔ*‹ƒ'ddd Xdd Xdd X°(#°(#‹ÔÔ,( dd ÔÔ,( dd ÔÔ,( dd ÔÔ+  ÔÐ )à$.)à$ ‹‹ÐÓŠÓÐ SIô)D%/ @¼â@38370„„‰@¼â@‰‹‹SÐÌJanuary€19,€2005Ð Ê*&1 ÐÐ RHC +ð&2" @¼â@38370 @¼â@ ‹‹RÐÐ(ô)D%3  (ÐÙ* !ÙÌÐ  |-Ì(4? ÐÑ  ÑÓÓÑ8€¥‰XXdÖdÈ8ÑÑ€ÑÓ*°,X°` ¨ ƒX°œX*Óà ` àò òSELYA,€òòCircuit€Judgeóó.ó ó€€In€this€diversity€case,€we€areÐ ° Ðcalled€upon€to€determine€the€proper€alignment€of€the€parties€to€aÐ xÈ Ðshareholder's€derivative€action.€€We€conclude€that€the€corporationÐ $t Ðmust€be€aligned€as€a€defendant.€€Because€that€alignment€destroysÐ Ð  Ðcomplete€diversity,€we€affirm€the€dismissal€of€the€action€for€wantÐ | Ì Ðof€federal€subject€matter€jurisdiction.ò òòòóóó óÐ ( x  Ðà ` àWhen€an€appeal€turns€on€the€existence€vel€non€of€subjectÐ Ô$  Ðmatter€jurisdiction€and€there€has€been€no€evidentiary€hearing,€weÐ €Ð  Ðaccept€at€face€value€the€facts€alleged€in€the€operative€pleadingÐ ,|  Ð(here,€the€amended€complaint),€drawing€all€reasonable€inferences€inÐ Ø( Ðthe€plaintiff's€favor.€€òòSeeóó€òòValentinóó€v.€òòHosp.€Bella€Vistaóó,€254€F.3dÐ „Ô Ð358,€363€(1st€Cir.€2001).€€This€is€such€an€instance.Ð 0€ Ðà ` àOn€October€20,€1999,€Richard€Gabriel€and€Edward€PrebleÐ Ü, Ðformed€a€Virginia€corporation,€Stratin€Consulting€Inc.€€Stratin'sÐ ˆØ Ðbusiness€was€to€provide€management€consulting€services.€€EachÐ 4„ Ðfounder€held€a€fifty€percent€ownership€interest.€€Gabriel€served€asÐ à0 Ðpresident;€Preble€served€as€vice„president„treasurer;€and€the€twoÐ ŒÜ  Ðmen€comprised€the€entire€membership€of€the€board€of€directors.Ð 8!ˆ" Ðà ` àAt€the€start,€Stratin€maintained€its€principal€place€ofÐ ä"4$ Ðbusiness€in€Virginia,€where€Gabriel€lived€and€worked.€€Preble,€aÐ $à& Ðcitizen€of€New€Hampshire,€worked€principally€from€Massachusetts.Ð <&Œ!( Ðà ` àGabriel€passed€away€in€2001.€€His€widow,€plaintiff„Ð è'8#* Ðappellant€Anne€Gabriel,€inherited€his€equity€interest€in€theÐ ”)ä$, Ðcorporation.€€She€claims€that€after€her€husband's€death€Preble€tookÐ @+&. Ðseveral€steps€designed€to€give€him€total€control€of€Stratin,€drainÐ ° Ðits€assets,€and€"freeze€[her]€out."€€She€alleges,€among€otherÐ \¬ Ðthings,€that€Preble,€with€the€connivance€of€the€company's€lawyer,Ð X ÐJames€L.€Ackerman,€covertly€appointed€a€"straw"€to€the€vacancy€onÐ ´  Ðthe€board€of€directors€caused€by€Gabriel's€death;€that€PrebleÐ ` ° Ðrefused€to€furnish€the€plaintiff€with€information€concerning€theÐ  \  Ðcompany's€finances;€that€Preble€and€Ackerman€neglected€to€hold€anÐ ¸  Ðannual€meeting€as€required€by€the€bylaws;€and€that€the€boardÐ d´  Ðarbitrarily€increased€Preble's€salary€to€ensure€that€there€would€beÐ `  Ðno€profits€remaining€for€distribution€to€the€shareholders.Ð ¼  Ðà ` àThe€plaintiff€responded€to€this€course€of€conduct€byÐ h¸ Ðfiling€suit€in€the€United€States€District€Court€for€the€District€ofÐ d ÐMassachusetts€against€Preble€and€Ackerman.€€She€charged€breach€ofÐ À Ðfiduciary€duty€and€wrongful€diversion€of€corporate€assets,€soughtÐ l¼ Ðan€accounting,€and€prayed€for€damages€of€$1.5€million.€€TheÐ h Ðdefendants€answered€the€complaint€and€moved€to€dismiss€for€failureÐ Ä Ðto€state€a€claim€upon€which€relief€could€be€granted.€€òòSeeóó€Fed.€R.Ð pÀ  ÐCiv.€P.€12(b)(6).€€The€motion€pointed€out€that,€under€Virginia€law,Ð !l" Ða€shareholder€could€not€directly€sue€a€corporate€officer€orÐ È"$ Ðdirector€for€breach€of€fiduciary€duty;€rather,€such€a€suit€must€beÐ t$Ä& Ðbrought€as€a€derivative€action€on€behalf€of€the€corporation.Ð  &p!( Ðà ` àBecause€the€motion€to€dismiss€was€untimely,€òòseeóó€Fed.€R.Ð Ì'#* ÐCiv.€P.€12(b)€(requiring€that€such€a€motion€be€filed€before€theÐ x)È$, Ðmovant€has€answered€the€complaint),€the€district€court€treated€itÐ $+t&. Ðas€a€motion€for€judgment€on€the€pleadings,€òòseeóó€Fed.€R.€Civ.€P.Ð ° Ð12(c).€€The€court€concluded€that€Virginia€law€required€the€suit€toÐ \¬ Ðbe€brought€as€a€derivative€action.€€It€therefore€dismissed€theÐ X Ðcomplaint€with€leave€for€the€plaintiff€to€join€Stratin€and€file€anÐ ´  Ðamended€"derivative€action"€complaint.Ð ` ° Ðà ` àThe€plaintiff€served€her€amended€complaint€within€theÐ  \  Ðtime€allotted.€€In€it,€she€purported€to€sue€"derivatively€on€behalfÐ ¸  Ðof€Stratin€Consulting€Inc."€€She€did€not,€however,€formallyÐ d´  Ðdenominate€Stratin€as€a€party.Ð `  Ðà ` àThe€defendants€moved€to€dismiss€the€amended€complaintÐ ¼  Ðfor,€among€other€things,€lack€of€subject€matter€jurisdiction.€€òòSeeóóÐ h¸ ÐFed.€R.€Civ.€P.€12(b)(1).€€They€posited€that€the€corporation€was€anÐ d Ðindispensable€party€to€the€suit;€that€it€should€be€aligned€as€aÐ À Ðdefendant;€and€that€the€plaintiff's€assertion€of€diversityÐ l¼ Ðjurisdiction€could€not€survive€such€an€alignment.€€The€districtÐ h Ðcourt€granted€the€motion€to€dismiss€without€opinion.€€This€appealÐ Ä Ðensued.ò òòòóóó óÐ pÀ  Ðà ` àWe€review€de€novo€the€legal€basis€of€a€dismissal€for€wantÐ !l" Ðof€subject€matter€jurisdiction.€€òòValentinóó,€254€F.3d€at€365.€€We€mayÐ È"$ Ðaffirm€the€order€of€dismissal€on€any€ground€fairly€presented€by€theÐ t$Ä& Ðrecord.€€òòSeeóó€òòHoulton€Citizens'€Coalitionóó€v.€òòTown€of€Houltonóó,€175Ð  &p!( ÐF.3d€178,€184€(1st€Cir.€1999).Ð Ì'#* Ðà ` àThe€district€court's€order€did€not€state€its€reason€forÐ x)È$, Ðdismissing€the€amended€complaint.€€The€defendants€labor€to€fillÐ $+t&. Ðthis€void,€offering€a€salmagundi€of€possible€reasons.€€We€think€itÐ ° Ðbest€to€cut€through€this€asseverational€array€and€focus€on€theirÐ \¬ Ðprincipal€argument:€€that€the€corporation€must€be€aligned€as€aÐ X Ðdefendant,€thereby€destroying€complete€diversity.Ð ´  Ðà ` àThe€parties€agree€that€this€case€is€controlled,€in€theÐ ` ° Ðfirst€instance,€by€the€substantive€law€of€Virginia.€€òòSeeóó€òòLexingtonÐ  \  ÐIns.€Co.óó€v.€òòGen.€Accid.€Ins.€Co.óó,€338€F.3d€42,€46€(1st€Cir.€2003)Ð ¸  Ð(noting€that€in€diversity€cases€a€district€court€must€apply€theÐ d´  Ðchoice€of€law€principles€of€the€forum€state);€òòHarrisonóó€v.Ð `  ÐòòNetCentric€Corp.óó,€744€N.E.2d€622,€628€(Mass.€2001)€(reaffirmingÐ ¼  Ðthat€Massachusetts€adheres€to€the€"internal€affairs€doctrine,"Ð h¸ Ðwhich€applies€the€law€of€the€state€of€incorporation€to€casesÐ d Ðinvolving€corporate€governance).€€The€parties€also€agree€thatÐ À ÐVirginia€law€requires€bringing€the€suit€as€a€shareholder€derivativeÐ l¼ Ðaction.׃×Ý ƒ#ÃÝòòÚ  Ú1Ú  ÚóóÝ  Ý×  ×€€òòSeeóó€òòSimmonsóó€v.€òòMilleróó,€544€S.E.2d€666,€675€(Va.€2001)Ð h Ð(holding€that,€under€Virginia€law,€a€shareholder€may€not€directlyÐ Ä Ðbring€suit€against€an€officer€or€director€for€breach€of€fiduciaryÐ pÀ  Ðduty).€€Thus,€the€plaintiff's€suit€is€properly€characterized€as€aÐ !l" Ðderivative€action.Ð È"$ Ðà ` àThis€characterization€has€consequences.€€Pertinently,€itÐ ° Ðmeans€that€the€corporation€is€an€indispensable€party€within€theÐ \¬ Ðmeaning€of€Fed.€R.€Civ.€P.€19€(which€requires€the€joinder€ofÐ X Ðparties€"needed€for€just€adjudication").€€òòSeeóó€òòKosteróó€v.€òò(Am.)Ð ´  ÐLumbermens€Mut.€Cas.€Co.óó,€330€U.S.€518,€522„23€&€n.2€(1947)Ð ` ° Ð(holding€that€the€corporation€is€a€necessary€party€in€a€derivativeÐ  \  Ðsuit).€€This€procedural€point€supplies€the€foundation€on€which€theÐ ¸  Ðdefendants€construct€their€principal€argument.Ð d´  Ðà ` àWe€assume€arguendo€that€Mrs.€Gabriel,€in€conformity€withÐ `  Ðthe€district€court's€ukase,€amended€her€complaint€to€reflect€thatÐ ¼  Ðshe€was€bringing€a€derivative€suit€on€behalf€of€Stratin.€€If€theÐ h¸ Ðcorporation€were€properly€positioned€as€a€plaintiff€(as€Mrs.Ð d ÐGabriel€contends),€this€would€arguably€be€a€sufficient,€ifÐ À Ðinelegant,€way€of€effecting€a€joinder.€€We€therefore€proceedÐ l¼ Ðdirectly€to€the€question€of€whether€the€district€court€hadÐ h Ðjurisdiction€over€the€suit€once€the€corporation€was€included€as€aÐ Ä Ðparty.€€We€conclude€that€it€did€not.Ð pÀ  Ðà ` àThe€only€colorable€basis€for€federal€jurisdiction€overÐ !l" Ðthis€case€is€diversity.€€òòSeeóó€28€U.S.C.€ðð€1332(a)€(conferringÐ È"$ Ðjurisdiction€on€federal€courts€to€hear€and€determine€suits€betweenÐ t$Ä& Ðcitizens€of€different€states,€as€long€as€the€amount€in€controversyÐ  &p!( Ðexceeds€$75,000).€€Diversity€jurisdiction€exists€only€when€there€isÐ Ì'#* Ðòòcompleteóó€diversity,€that€is,€when€no€plaintiff€is€a€citizen€of€theÐ x)È$, Ðsame€state€as€any€defendant.€€òòStrawbridgeóó€v.€òòCurtissóó,€7€U.S.€(3Ð $+t&. ÐCranch)€267,€267€(1806);€òòAm.€Fiber€&€Finishing,€Inc.óó€v.€òòTycoÐ ° ÐHealthcare€Group,€LPóó,€362€F.3d€136,€139€(1st€Cir.€2004).€€Here,€theÐ \¬ Ðplaintiff€is€a€citizen€of€Virginia.€€The€defendants€Preble€andÐ X ÐAckerman€are€citizens€of€New€Hampshire€and€Massachusetts,Ð ´  Ðrespectively.€€There€is€thus€complete€diversity€among€theseÐ ` ° Ðlitigants.Ð  \  Ðà ` àBut€the€case€encompasses€more€than€these€threeÐ ¸  Ðindividuals;€the€corporation€is€an€indispensable€party.€€òòSeeóóÐ d´  ÐòòKosteróó,€330€U.S.€at€522„23€&€n.2;€òòseeóó€òòalsoóó€Fed.€R.€Civ.€P.€19.€€ItÐ `  Ðtherefore€must€be€aligned€on€one€side€or€the€other.€€This€additionÐ ¼  Ðthreatens€to€unbalance€the€jurisdictional€equation€because€Stratin,Ð h¸ Ðwhich€is€incorporated€under€the€laws€of€Virginia,€is€deemed€aÐ d Ðcitizen€of€that€state€for€diversity€purposes.€€òòSeeóó€28€U.S.C.€ððÐ À Ð1332(c)€(ordaining€that,€for€jurisdictional€purposes,€"aÐ l¼ Ðcorporation€shall€be€deemed€to€be€a€citizen€of€any€State€by€whichÐ h Ðit€has€been€incorporated").׃×Ý ƒ#ÃÝòòÚ  Ú2Ú  ÚóóÝ  Ý×  ×€€Consequently,€the€existence€ofÐ Ä Ðcomplete€diversity€(and,€thus,€of€federal€jurisdiction)€depends,€inÐ ° Ðthe€first€instance,€on€whether€the€corporation€should€properly€beÐ \¬ Ðaligned€as€a€plaintiff€or€a€defendant:€€if€as€a€plaintiff,€completeÐ X Ðdiversity€exists€(subject,€however,€to€the€caveat€limned€in€note€2,Ð ´  Ðòòsupraóó);€if€as€a€defendant,€there€will€be€Virginia€citizens€onÐ ` ° Ðopposing€sides€of€the€case€and,€thus,€incomplete€diversity.Ð  \  Ðà ` àAs€a€formal€matter,€corporations€generally€are€styled€asÐ ¸  Ðdefendants€in€derivative€suits.€€òòSeeóó€7C€Charles€Alan€Wright,€ArthurÐ d´  ÐR.€Miller€&€Mary€K.€Kane,€Federal€Practice€and€Procedure€ðð€1822Ð `  Ð(1986)€(collecting€cases).€€When€determining€whether€diversityÐ ¼  Ðjurisdiction€exists,€however,€courts€are€not€bound€either€byÐ h¸ Ðformalistic€styling€or€by€the€alignment€specified€in€the€pleadings.€Ð d ÐRather,€an€inquiring€court€should€look€beyond€these€formalities€andÐ À Ðattempt€to€determine,€to€the€extent€practicable,€the€actualÐ l¼ Ðinterests€of€the€parties.€€òòSeeóó€òòCity€of€Indianapolisóó€v.€òòChase€Nat'lÐ h ÐBankóó,€314€U.S.€63,€69„70€(1941).€€Only€after€the€parties€have€beenÐ Ä Ðrealigned€to€match€their€actual€interests€can€a€decision€be€made€asÐ pÀ  Ðto€whether€complete€diversity€exists.€€òòId.óóÐ !l" Ðà ` àAgainst€this€backdrop,€the€plaintiff€argues€that€becauseÐ È"$ Ða€derivative€suit€is€prosecuted€on€behalf€of€the€corporation€andÐ t$Ä& Ðany€recovery€will€accrue€to€it,€the€corporation€should€be€deemed€aÐ  &p!( Ðplaintiff.€€The€general€rule€is€to€this€effect.€€òòSeeóó€òòKosteróó,€330Ð Ì'#* Ðâ âU.S.€at€522„23.Ð x)È$, Ðà ` àLike€almost€every€general€rule,€this€rule€is€litteredÐ ° Ðâ âwith€caveats.€€A€century€ago,€the€Supreme€Court€created€a€prominentÐ \¬ Ðexception.€€The€Court€held€that€when€the€corporation€is€adverse€toÐ X Ðthe€plaintiff's€derivative€suit,€the€ordinary€presumption€burstsÐ ´  Ðand€the€corporation€should€be€aligned€as€a€party€defendant.€€òòSeeóóÐ ` ° ÐòòDoctoróó€v.€òòHarringtonóó,€196€U.S.€579,€587€(1905).€€A€corporation€isÐ  \  Ðdeemed€adverse€to€a€derivative€suit€when,€regardless€of€the€reason,Ð ¸  Ðthe€corporation's€management€opposes€the€maintenance€of€the€action.€Ð d´  ÐòòSmithóó€v.€òòSperlingóó,€354€U.S.€91,€96„97€(1957).Ð `  Ðà ` àThis€prominent€exception€has€both€theoretical€andÐ ¼  Ðpractical€implications.€€Conceptually,€it€will€often€be€the€caseÐ h¸ Ðthat€management€does€not€believe€a€derivative€suit€is€in€theÐ d Ðcorporation's€best€interests€and,€therefore,€chooses€to€resist€it.€Ð À ÐWhen€management€takes€such€a€tack,€the€corporation€and€theÐ l¼ Ðplaintiff€are€actually€adverse.€€òòId.óó€at€97„98;€òòDoctoróó,€196€U.S.€atÐ h Ð587„88.€€After€all,€it€is€the€prerogative€of€management€ð"ð€the€boardÐ Ä Ðof€directors€and€the€ranking€officers€ð"ð€to€set€policy€for€theÐ pÀ  Ðcorporation.Ð !l" Ðà ` àFrom€a€pragmatic€standpoint,€the€exception€frequently€hasÐ È"$ Ðthe€effect€of€preserving€diversity€jurisdiction.€€More€often€thanÐ t$Ä& Ðnot,€the€directors€and€ranking€officers€(who€are€the€realÐ  &p!( Ðdefendants€in€a€derivative€suit)€will€be€citizens€of€the€same€stateÐ Ì'#* Ðas€the€corporation.€€If€corporations€were€invariably€aligned€asÐ x)È$, Ðplaintiffs€in€derivative€suits,€complete€diversity€would€evaporateÐ $+t&. Ðin€a€large€number€of€cases€and€federal€courts€would€be€inaccessibleÐ ° Ðin€those€situations.€€òòSeeóó€òòDoctoróó,€196€U.S.€at€587;€òòseeóó€òòalsoóó€7CÐ \¬ ÐWright,€Miller€&€Kane,€òòsupraóó€ðð€1822.Ð X Ðà ` àThe€Supreme€Court€has€admonished€courts€to€attempt€toÐ ´  Ðdetermine€whether€the€corporation€is€adverse€from€the€face€of€theÐ ` ° Ðpleadings,€as€opposed€to€launching€an€extended€evidentiary€inquiry.€Ð  \  ÐòòSperlingóó,€354€U.S.€at€95„97.€€Limiting€the€adversity€inquiry€to€theÐ ¸  Ðpleadings€has€the€salutary€effect€of€ensuring€predictability€andÐ d´  Ðefficiency€in€jurisdictional€determinations.€€It€simultaneouslyÐ `  Ðrelieves€district€courts€of€the€burden€of€engaging€in€prolongedÐ ¼  Ðproceedings€ð"ð€oftentimes€necessarily€touching€on€the€merits€of€theÐ h¸ Ðdispute€ð"ð€merely€to€determine€whether€federal€jurisdiction€exists.€Ð d ÐòòId.óó€at€97.Ð À Ðà ` àIn€most€cases,€it€will€be€possible€to€heed€the€òòSperlingóóÐ l¼ ÐCourt's€admonition€because€the€Civil€Rules€require€a€derivativeÐ h Ðsuit€plaintiff€to€describe€what€efforts€she€has€made€"to€obtain€theÐ Ä Ðaction€the€plaintiff€desires€from€the€directors€.€.€.€and€theÐ pÀ  Ðreasons€for€the€plaintiff's€failure€to€obtain€the€action€or€for€notÐ !l" Ðmaking€the€effort."€€Fed.€R.€Civ.€P.€23.1.€€This€case€is€wellÐ È"$ Ðwithin€the€mine„run.€€Based€on€the€facts€contained€in€theÐ t$Ä& Ðpleadings,€we€conclude,€without€serious€question,€thatòòóó€theÐ  &p!( Ðcorporation€must€be€aligned€as€a€party€defendant.Ð Ì'#* Ðà ` àThe€two€named€defendants,€Preble€and€Ackerman,€are€theÐ x)È$, Ðonly€officers€and€effectively€control€the€operation€of€theÐ $+t&. Ðbusiness.€€Preble€and€an€ally€are€the€sole€directors.€€And€theÐ ° Ðplaintiff,€in€an€apparent€effort€to€fulfil€her€obligations€underÐ \¬ ÐRule€23.1,€has€attested€that€she€did€not€ask€either€the€defendantsÐ X Ðor€Stratin's€board€of€directors€to€take€any€ameliorative€actionÐ ´  Ðbefore€filing€suit€because€she€realized€that€any€attempt€to€do€soÐ ` ° Ðwould€be€futile.Ð  \  Ðà ` àTo€cinch€matters,€Preble€and€Ackerman€have,€from€theÐ ¸  Ðinception€of€the€litigation,€fought€the€suit€tooth€and€nail.€€TheÐ d´  Ðreason€is€not€hard€to€fathom:€€the€entire€theory€of€the€plaintiff'sÐ `  Ðcase€is€that€these€two€men€have€acted€wrongfully€to€minimize€theÐ ¼  Ðplaintiff's€role€in€the€corporation's€activities€and€to€devalue€herÐ h¸ Ðequity€interest.€€Under€these€circumstances,€we€are€constrained€toÐ d Ðconclude€that€Stratin€is€hostile€to€the€suit.€€It€must,€therefore,Ð À Ðbe€aligned€as€a€party€defendant.Ð l¼ Ðà ` àThe€plaintiff's€only€response€to€this€reasoning€is€thatÐ h Ðthe€usual€rules€for€aligning€corporations€in€derivative€suitsÐ Ä Ðshould€not€be€given€effect€in€a€case€involving€a€close€corporationÐ pÀ  Ðwith€two€fifty€percent€shareholders.€€It€would€be€"highlyÐ !l" Ðartificial,"€she€argues,€to€apply€these€rules€to€what€isÐ È"$ Ðessentially€a€contretemps€between€two€equal€partners.€€TheÐ t$Ä& Ðplaintiff's€argument€founders€on€three€shoals.Ð  &p!( Ðà ` àFirst,€even€if€we€were€to€view€this€case€as€a€disputeÐ Ì'#* Ðbetween€the€two€shareholders,€the€corporation€is€an€indispensableÐ x)È$, Ðparty€and,€given€its€separate€legal€personality,€must€be€treatedÐ $+t&. Ðindependently€from€the€two€shareholders.€€Consequently,€theÐ ° Ðcorporation€must€be€aligned€somewhere.€€Yet€the€plaintiff€neverÐ \¬ Ðsatisfactorily€explains€why€we€should€align€the€corporation€on€herÐ X Ðside€of€that€dispute€rather€than€on€Preble's.Ð ´  Ðà ` àSecond,€the€plaintiff€overlooks€the€fact€that,€althoughÐ ` ° Ðshe€owns€half€of€Stratin,€its€management€is€firmly€in€theÐ  \  Ðopposition€camp.€€While€we€have€no€reason€to€doubt€the€sincerity€ofÐ ¸  Ðthe€plaintiff's€claim€that€she€is€looking€out€for€the€corporation'sÐ d´  Ðbest€interests,€we€are€similarly€without€reason€to€doubt€theÐ `  Ðdefendants'€claim€that€it€is€they,€rather€than€the€plaintiff,€whoÐ ¼  Ðhave€the€welfare€of€the€corporation€at€heart.€€And€it€is€theÐ h¸ Ðindividual€defendants€who,€as€the€current€management,€enjoy€theÐ d Ðprerogative€of€deciding€what€is€in€the€best€interests€of€theÐ À Ðcompany€at€the€moment.€€òòSeeóó€òòSperlingóó,€354€U.S.€at€96„97.€€So€longÐ l¼ Ðas€they€consider€the€plaintiff's€suit€contrary€to€those€interests,Ð h Ðthe€plaintiff€and€the€corporation€are€adverse€for€the€purposes€ofÐ Ä Ðdetermining€the€existence€vel€non€of€diversity€jurisdiction.€€òòId.óóÐ pÀ  Ðà ` àLast€ð"ð€but€far€from€least€ð"ð€the€òòSperlingóó€Court€gave€noÐ !l" Ðindication€that€it€might€be€willing€to€carve€out€a€separateÐ È"$ Ðjurisprudence€for€close€corporations.€€Other€courts€have€refused€toÐ t$Ä& Ðdo€so,€òòseeóó,€òòe.g.óó,ò òó ó€òòFrankóó€v.€òòHadesman€&€Frank,€Inc.óó,€83€F.3d€158,Ð  &p!( Ð161„62€(7th€Cir.€1996);€òòOnoóó€v.€òòItoyamaóó,€884€F.€Supp.€892,€900„01Ð Ì'#* Ð(D.N.J.€1995),€òòaff'dóó€79€F.3d€1138€(3d€Cir.€1996),€and€we€deemÐ x)È$, Ðourselves€bound€by€òòSperlingóó.€€A€straightforward€application€of€theÐ $+t&. Ðprinciples€set€forth€therein€requires€that€Stratin€be€aligned€as€aÐ ° Ðparty€defendant.׃×Ý ƒ#ÃÝòòÚ  Ú3Ú  ÚóóÝ  Ý×  ×ò òòòóóó óÐ \¬ Ðà ` àWe€need€go€no€further.€€It€is€incumbent€on€the€federalÐ X Ðcourts,€as€courts€of€limited€jurisdiction,€to€be€scrupulous€inÐ ´  Ðapplying€the€tenets€that€define€the€limits€of€their€subject€matterÐ ` ° Ðjurisdiction.€€This€suit€falls€outside€those€boundaries.€Ð  \  ÐAccordingly,€given€the€want€of€federal€subject€matter€jurisdiction,Ð ¸  Ðwe€affirm€the€district€court's€dismissal€of€the€case.€€ThatÐ d´  Ðdismissal€operates,€of€course,€without€prejudice€to€the€plaintiff'sÐ `  Ðright€to€pursue€her€action€in€a€state€court€of€competentÐ ¼  Ðjurisdiction.Ð h¸ ÐÌò òòòAffirmedóó.ó ó