Gilbert Rangel v. Bridgestone Retail Operations, LLC et al

Filing 11

ORDER TO SHOW CAUSE RE: SUBJECT MATTER JURISDICTION by Judge Beverly Reid O'Connell. The Court ORDERS Defendants to show cause as to why this caseshould not be dismissed for lack of subject matter jurisdiction. Defendants shall file their respon se to this Court's Order no later than Friday, June 10, 2016, at 4:00 p.m. An appropriate response will: (1) clarify the citizenship of each of Defendant BSRO's members, and (2) clarify why Defendant Stylianoudakis is a sham defendant. (rfi)

LINK:
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-03743-BRO (FFMx)

Title

GILBERTO RANGEL V. BRIDGESTONE RETAIL OPERATIONS, LLC ET AL

Date

June 6, 2016

Present: The Honorable

BEVERLY REID O’CONNELL, United States District Judge

Renee A. Fisher

Not Present

N/A

Deputy Clerk

Court Reporter

Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

Not Present

Not Present

Proceedings:

(IN CHAMBERS)

ORDER TO SHOW CAUSE RE: SUBJECT MATTER JURISDICTION
A federal court must determine its own jurisdiction, even where there is no
objection to it. Rains v. Criterion Sys., Inc., 80 F.3d 339, 342 (9th Cir. 1996). Because
federal courts are of limited jurisdiction, they possess original jurisdiction only as
authorized by the Constitution and federal statute. See Kokkonen v. Guardian Life Ins.
Co. of Am., 511 U.S. 375, 377 (1994). Original jurisdiction may be established pursuant
to 28 U.S.C. § 1332, which provides that a federal district court has jurisdiction over a
civil action between citizens of different states where the amount in controversy exceeds
$75,000. 28 U.S.C. § 1332. The United States Supreme Court has interpreted the
diversity statute to require “complete diversity of citizenship,” meaning that each plaintiff
must be diverse from each defendant.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 67–68
(1996).
In their Notice of Removal, Defendants Bridgestone Retail Operations, LLC
(“BSRO”) and George Stylianoudakis1 (collectively, “Defendants”) allege that there is
complete diversity between Plaintiff Gilberto Rangel (“Plaintiff”) and Defendant BRSO,
and that Defendant Stylianoudakis is a “sham” defendant whose citizenship may be
disregarded for the purpose of removal.2 (Dkt. No. 1 (hereinafter, “Removal”) ¶¶ 4–5.)

1

Plaintiff’s Complaint erroneously names George Stylianoudakis as “George S. Stylianoudak.” (See
Dkt. No. 1.)
2

The Court notes that Defendants aver that, given the nature of Plaintiff’s claims, damages will exceed
$75,000, thereby satisfying the amount in controversy requirement. (Removal ¶¶ 29–37.)
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LINK:
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-03743-BRO (FFMx)

Title

GILBERTO RANGEL V. BRIDGESTONE RETAIL OPERATIONS, LLC ET AL

Date

June 6, 2016

A.

Citizenship of a Limited Liability Corporation

Defendants claim that Defendant BRSO is a limited liability company organized in
Delaware with its “principal place of business” in Illinois. (Removal ¶ 8.) Under
§ 1332(c), a corporation is a citizen of each state in which it is incorporated and in the
state where it has its principal place of business. 28 U.S.C. § 1332(c). With regard to
limited liability companies, however, the rules defining “citizenship” are different. A
limited liability company is considered to be a citizen of every state of which its members
are citizens. See Johnson v. Columbia Props. Anchorage, 437 F.3d 894, 899 (9th Cir.
2006) (“We therefore join our sister circuits and hold that, like a partnership, an LLC is a
citizen of every state of which its owners/members are citizens.”).
Defendants do not provide adequate information regarding the citizenship of
Defendant BRSO’s members, which is necessary to determine whether complete
diversity in fact exists in this case. See Johnson, 437 F.3d at 899. In their Corporate
Disclosure Statement, Defendants claim that BSRO is a privately held limited liability
company with a sole member, Bridgestone Americas, Inc. (“BSAM”). (Dkt. No. 4.)
Defendants, however, do not elaborate on the citizenship of BSAM. Should BSAM, as a
member of Defendant BSRO, be a citizen of California, complete diversity would be
destroyed, and the court would lack subject matter jurisdiction under 28 U.S.C. § 1332.
B.

“Sham” Defendant

Defendants claim that Defendant George Stylianoudakis is a citizen of California,
but that his citizenship should disregarded for the purposes of removal because he is a
“sham” defendant. (Removal ¶¶ 4, 9.) A non-diverse defendant who has been
fraudulently joined may be disregarded for diversity jurisdiction purposes. Hunter v.
Philip Morris USA, 582 F.3d 1039, 1043 (9th Cir. 2009). A fraudulently joined
defendant is frequently referred to as a “sham” defendant. Fraudulent joinder exists—
and the non-diverse defendant is ignored for purposes of determining diversity of the
parties—if the plaintiff “fails to state a cause of action against a resident defendant, and
the failure is obvious according to the settled rules of the state.” McCabe v. Gen. Foods
Corp., 811 F.2d 1336, 1339 (9th Cir. 1987). A defendant is deemed a “sham” defendant
if, after all disputed questions of fact and ambiguities in the controlling law are resolved
in the plaintiff’s favor, the plaintiff could not possibly recover against the party whose
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LINK:
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.

CV 16-03743-BRO (FFMx)

Title

GILBERTO RANGEL V. BRIDGESTONE RETAIL OPERATIONS, LLC ET AL

Date

June 6, 2016

joinder is questioned. Krusco v. Int’l Tel. & Tel. Corp., 872 F.2d 1416, 1426 (9th Cir.
1989).
Defendants allege that although Defendant Stylianoudakis is non-diverse, he is a
fraudulently joined, “sham” defendant. (Removal ¶ 5.) According to Defendants,
Plaintiff fails to state a claim against Defendant Stylianoudakis under well-stated law and
that no amendment to the pleadings would cure the deficiency. (Removal ¶ 13.)
However, Defendants’ statements are conclusory; Defendants do not adequately explain
why, under California law, Plaintiff would not be able to amend the complaint to cure the
supposed deficiency. See Burris v. AT & T Wireless, Inc., No. C 06-02904 JSW, 2006
WL 2038040, at *2 (N.D. Cal. July, 19 2006). If Defendant Stylianoudakis is not a
“sham” defendant, complete diversity is destroyed under 28 U.S.C. § 1332, as Defendant
Stylianoudakis is a citizen of California. Thus, without more information, it remains
unclear whether the Court possesses subject matter jurisdiction over this case pursuant to
28 U.S.C. § 1332.
The Court therefore ORDERS Defendants to show cause as to why this case
should not be dismissed for lack of subject matter jurisdiction. Defendants shall file their
response to this Court’s Order no later than Friday, June 10, 2016, at 4:00 p.m. An
appropriate response will: (1) clarify the citizenship of each of Defendant BSRO’s
members, and (2) clarify why Defendant Stylianoudakis is a “sham” defendant.
:

IT IS SO ORDERED.
Initials of Preparer

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