New Amsterdam Coffee and Tea Co., LLC et al v. Dady et al

Filing 16

(IN CHAMBERS) ORDER TO SHOW CAUSE RE DIVERSITY JURISDICTION by Judge George H. Wu: If Defendants wish to have their pending motion remain on calendar for July 10, 2017, they have until June 14, 2017 to present the Court with evidence in the form of a stipulation from Plaintiffs. Please refer to the Court's order for specifics. (cr)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL

Case No.
Title

CV 17-3130-GW (RAOx)

Date

June 7, 2017

New Amsterdam Coffee & Tea Co., LLC, et al. v. Dady, et al.

Present: The
Honorable

GEORGE H. WU, United States District Judge
Javier Gonzalez

Not Present

Deputy Clerk

Court Reporter

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants:

None Present

None Present

Proceedings:

(IN CHAMBERS): ORDER TO SHOW CAUSE RE DIVERSITY
JURISDICTION

On February 28, 2017, New Amsterdam Coffee & Tea Co., LLC, Jenmax Enterprises, LLC,
NACT Management Company, LLC, NACT Southern Connecticut, LLC, NACT Northern New Jersey,
LLC, NACT Boroughs, LLC, Ira Smedra, and Jeffery Srulowitz (collectively, “Plaintiffs”) sued J.
Michael Dady and Dady & Gardner, P.A. (together, “Defendants”) in Los Angeles County Superior
Court, asserting claims for legal malpractice, breach of fiduciary duty, breach of contract, and breach of
the implied covenant of good faith and fair dealing. Defendants removed the matter to this Court on
April 26, 2017, asserting diversity jurisdiction pursuant to 28 U.S.C. § 1332. See Docket No. 1 at 4:4-8.
Defendants filed a Motion to Transfer Venue on June 1, 2017, and set it for hearing on July 10, 2017.
See Docket No. 10. In addition, a Scheduling Conference is set in this matter for June 22, 2017. See
Docket No. 9.
This Court has an obligation to ensure that subject matter jurisdiction exists before proceeding.
See Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006) (indicating that courts must assure themselves of
the existence of subject matter jurisdiction before proceeding); Valdez v. Allstate Ins. Co., 372 F.3d
1115, 1116 (9th Cir. 2004) (same). “The party asserting federal jurisdiction has the burden of showing
the case meets the statutory requirements for the exercise of federal jurisdiction and therefore belongs in
federal court.” Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 399 (9th Cir. 2010).
Defendants claim that this Court has original jurisdiction based on the parties’ complete diversity
of citizenship. See Docket No. 1 at 4:4-8. However, unlike standard corporations, the citizenship of a
limited liability company (“LLC”) is based on the citizenship of all members in the LLC – a rule that
Defendants appear to recognize in their Notice of Removal. See Johnson v. Columbia Props.
Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006); Platoon Invs., LLC v. Zapata, No. CV 14-477-GW
(MANx), 2014 WL 12695570, *1 (C.D. Cal. Feb. 14, 2014) (quoting Johnson); see generally Docket
No. 1 at 2:23-3:28. “If any member of a limited liability company . . . is itself a partnership or
association (or another LLC), the federal court needs to know the citizenship of each submember as
well.” Lafountain v. Meridian Senior Living, LLC, No. CV 15-03297-RGK (PJWx), 2015 WL 3948842,
*2 (C.D. Cal. June 29, 2015).
In their removal papers, Defendants assert that this Court has subject matter jurisdiction over the
action because: (1) the case presents claims totaling more than the $75,000 minimum; (2) Defendant J.
Michael Dady is an individual domiciled in Minnesota; (3) Defendant Dady & Gardner, P.A. is a
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Minnesota corporation with its principal executive office in Minnesota; and (4) no member of any
plaintiff LLC is domiciled in Minnesota. See Docket No. 1 at 2:23-3:28. Yet Defendants have failed to
identify the members – and submembers, if any – of the plaintiff LLCs. Id. Defendants merely allege
that Plaintiffs are limited liability companies with principal places of business outside of the State of
Minnesota, and, on information and belief, that none of Plaintiffs’ members are domiciled in Minnesota.
Id. at 3:1-3:24.
At this stage, the diversity of citizenship allegations are deficient. See generally Lindley
Contours, LLC v. AABB Fitness Holdings, Inc., 414 Fed. App’x 62, 64-65 (9th Cir. 2011) (finding
defendant LLCs failed to satisfy their burden to show complete diversity of citizenship, where they
failed to state citizenship of LLC members and instead simply asserted that none of the members were
citizens of the same state as the plaintiff, Oregon);1 Satarco Kish Trading, LLC v. Wamar Int’l Grp.,
LLC, No. CV 15-05206 BRO (JCx), 2015 WL 12656920, *1 (C.D. Cal. Jul. 16, 2015) (noting that
proper pleading of LLC citizenship requires identification of LLC’s owners or members, and allegation
of every state of which every owner or member is a citizen); Airtex Prods., L.P. v. Am. Home Assur.
Co., No. ED CV 11-01198 SJO (DTBx), 2011 WL 4527436, *2 (C.D. Cal. Sept. 16, 2011) (“Without
knowing the identity or citizenship of the members and partners of the Plaintiff companies, the Court
cannot possibly determine whether complete diversity exists in this case.”); accord Teleflora LLC v. WB
Commerce LLC, No. CV 15-07176 SJO (SHx), 2015 WL 6951707, *1 n.2 (C.D. Cal. Nov. 10, 2015)
(citing Lindley, 414 Fed. App’x at 64).
If Defendants wish to have their pending motion remain on calendar for July 10, 2017, they have
until June 14, 2017 to present the Court with evidence – in the form of a stipulation from Plaintiffs or
otherwise – setting forth: (1) the identity of the plaintiff LLCs’ members, and (2) their citizenship(s)
(not merely where they are not citizens). If Defendants (who, according to the allegations of the
Complaint, see Docket No. 1-2 ¶¶ 2, 32, were once Plaintiffs’ legal counsel) do not already possess that
information, and Plaintiffs are unwilling to voluntarily provide the necessary information or to stipulate
to it, the Court will entertain a request at the June 22 Scheduling Conference for Defendants to take
jurisdictional discovery on the issue.
The Court further orders the Court Clerk promptly to serve this order on all parties who have
appeared in this action.

Deputy Clerk - JG

1

The Court recognizes that Lindley is not binding precedent. Instead, this case is cited only for its strong persuasive
value with respect to proper pleading of diversity for LLCs. See 9th Cir. R. 36-3(a)-(b); Fed. R. App. P. 32.1(a).
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