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

Filing 29

MINUTE ORDER IN CHAMBERS: ORDER REMANDING ACTION TO STATE COURT by Judge George H. Wu. Case remanded to Los Angeles County Superior Court, Case number BC652135. Case Terminated. Made JS-6. (See document for details) (mrgo)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

REMAND/JS-6

CIVIL MINUTES - GENERAL

Case No.

CV 17-3130-GW (RAOx)

Date

July 26, 2017

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

Title

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 REMANDING ACTION TO STATE
COURT

On April 26, 2017, defendants J. Michael Dady and Dady & Gardner, P.A. (“Defendants”)
removed this matter to this Court from the Superior Court of the State of California in and for the
County of Los Angeles, asserting subject matter jurisdiction by way of complete diversity of citizenship
amongst the parties, pursuant to 28 U.S.C. § 1332. On June 7, 2017, this Court issued an Order to Show
Cause re Diversity Jurisdiction (“June 7 Order”) in light of questions it had about the sufficiency of
Defendants’ jurisdictional allegations and about the very existence of diversity jurisdiction over this
action. See Docket No. 16. Defendants’ then-pending motion to transfer venue, see Docket No. 10, was
first continued, and then taken off-calendar, pending resolution of this jurisdictional issue. See Docket
Nos. 18, 24.
As the Court noted in its June 7 Order, the burden of establishing jurisdiction here is on
Defendants. However, as the Court previously stated, one way in which Defendants could satisfy that
burden was by proffering a sufficient stipulation from the plaintiffs. On July 24, 2017, plaintiffs New
Amsterdam Coffee & Tea Co., LLC (“New Amsterdam LLC”), Jenmax Enterprises, LLC, NACT
Management Company, LLC, NACT Southern Connecticut, LLC, NACT Northern New Jersey, LLC,
NACT Boroughs, LLC, Ira Smedra, and Jeffrey Srulowitz (collectively, “Plaintiffs”) filed a Stipulation
of Citizenship in Response to the Court’s Order to Show Cause (“Stipulation”). See Docket Nos 25-1,
26-1.1 For the reasons addressed herein, that Stipulation is not sufficient to the task.
In a preliminary (unredacted, see Docket No. 25-1, at 2:11-13) section, the Stipulation states that
“Plaintiffs have obtained the requested citizenship information as set forth below, but are still working
on obtaining citizenship information from one member,” who they do not then identify. Then, in
redacted portions, the Stipulation indicates that, as to one limited liability company member of New
Amsterdam LLC, that limited liability company “[d]eclined to provide membership information; on

1

There is some reason to believe that docket number 25-1 may be the only one of these filings that is available for
review by Defendants, and it entirely redacts the identities and states of citizenship of the members of the various plaintiff
limited liability companies. According to the Court’s CM/ECF system, Docket No. 26-1 was filed ex parte and is restricted
to court users and the filing party, i.e. Plaintiffs. However, if the redacted information has merely been designated as
“Confidential” under the parties’ Stipulated Protective Order, that would not entirely prevent Plaintiffs or their legal
representatives from accessing the redacted information. See Docket No. 13, at 9:8-16.
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information and belief, none of the beneficiaries [sic] are Minnesota citizens,” and, as to one trust
member of New Amsterdam LLC, that trust “[d]eclined to provide membership [sic] information; on
information and belief, none of the beneficiaries are Minnesota citizens.” Docket No. 26-1, at 4:3-6,
5:20-23.2 Even if one of these two members is the “one member” Plaintiffs “are still working on
obtaining citizenship information from,” it would appear that at least one of the two simply refuses to
provide the necessary information. Thus, Plaintiffs apparently must resort to “information and belief”
citizenship assertions as to New Amsterdam LLC – the first-named plaintiff in this case.
The “general requirement” is that a party asserting jurisdiction “must plead diversity
affirmatively and on knowledge,” though “in ‘unusual circumstances’ a party need not affirmatively
allege the citizenship of an opposing party.” Carolina Cas. Ins. Co. v. Team Equip., Inc., 741 F.3d
1082, 1087 (9th Cir. 2014). But unlike Carolina Casualty, see id., this is not a situation where a party
has had to rely on “information and belief” citizenship allegations as to the opposing party or where
citizenship information was not reasonably available to it.3 This is a situation where Plaintiffs can offer
only “information and belief” citizenship allegations as to themselves because of the apparent refusal of
certain of the relevant “members” of one member limited liability company and one member trust to be
forthcoming with the necessary information. See O’Connell & Stevenson, California Practice Guide:
Federal Civil Procedure Before Trial (2017) § 2:2039.1, at 2C-120 (“Carolina Cas[ualty]...would seem
to be limited to situations where the jurisdictional facts are uniquely in the opposing party’s possession
and where there is a strong basis for believing that the jurisdictional facts will be forthcoming.”).
The question is whether Plaintiffs’ failure, in the Stipulation, should redound to Defendants with
respect to their obligation and attempt to satisfactorily demonstrate a basis for subject matter jurisdiction
in this Court. The Court believes that it should, for the following reason. Here, the Court has offered
Defendants – and by way of their limited cooperation, Plaintiffs – “chance after chance to establish
diversity of citizenship” by virtue of the continued extensions of time in which to provide the necessary
information. Carolina Cas., 741 F.3d at 1088 (omitting internal quotation marks) (quoting America’s
Best Inns, Inc. v. Best Inns of Abilene, L.P., 980 F.2d 1072, 1074 (7th Cir. 1992)). As an early
indication of its willingness to allow Defendants a sufficient opportunity to make the necessary
showing, in its June 7 Order, the Court indicated that if Defendants did not already possess information
regarding the identity of the plaintiff limited liability companies’ members and their citizenships, “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

2

This trust is not the only trust listed as a member of one of the plaintiff limited liability companies. It is not clear
from the Stipulation that Plaintiffs have applied the proper test for determining the citizenship of trusts for diversity
jurisdiction purposes. However, as is reflected herein, that is not the primary concern of the instant order.
3

Although Defendants’ original citizenship allegations regarding the limited liability company plaintiffs in their
Notice of Removal were also made on information and belief (specifically, information and belief allegations that none of the
members of those plaintiffs were citizens of Minnesota), see Notice of Removal ¶¶ 6-11, this Court tested those allegations in
its June 7 Order as part of its required effort to determine whether it, in fact, had subject matter jurisdiction. See Arbaugh v.
Y&H Corp., 546 U.S. 500, 514 (2006); see also Strotek Corp. v. Air Transport Ass’n of Am., 300 F.3d 1129, 1132 (9th Cir.
2002) (“Certainly a plaintiff can decide whom to sue, but jurisdictional facts, not fiction even if truly believed, are dispositive.
For example, had Strotek sued John Doe Corporation, alleging on information and belief that it is a citizen of Nevada, but it
turned out that the Corporation’s ‘nerve center’ is in Washington, D.C., the allegation would give way to the fact that the
parties are diverse. The same would be true if Strotek had sued John Doe, alleging that he was a citizen of Nevada but it
turned out that his permanent residence is in the District of Columbia.... In each instance, the result is the same: actual
citizenship controls – not the plaintiff’s mistaken allegations.”). Unlike Carolina Casualty, 741 F.3d at 1085, this Court did
not simply dismiss (or rather, remand) the case without offering the parties (in particular, Defendants) the opportunity to
address the issue the Court perceived.
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discovery on the issue.” Docket No. 16, at pg. 2. Despite that offer, Defendants have not made any
such request.
Thus, in light of the fact that Defendants have not been able to satisfactorily demonstrate the
complete diversity of citizenship necessary for subject matter jurisdiction pursuant to 28 U.S.C. §
1332(a), the Court remands this action to Los Angeles County Superior Court.

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