Natural Proteins, LLC v. Ocean Protein, LLC

Filing 66

ORDER DISMISSING ACTION FOR LACK OF JURISDICTION. Signed by Judge Richard Seeborg on 09/08/2010.(rslc3, COURT STAFF) (Filed on 9/8/2010)

Natural Proteins, LLC v. Ocean Protein, LLC

Doc. 66

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*E-Filed 09/08/2010*

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

United States District Court

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For the Northern District of California

12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 OCEAN PROTEIN, LLC, Defendant. ____________________________________/ Plaintiff Natural Proteins, LLC, an Oregon limited liability company initiated this action in this court, asserting there was complete diversity of citizenship between it and defendant Ocean Protein, LLC, a Washington limited liability company, and that the amount in controversy exceeds $75,000. Apparently unbeknownst to Natural Protein, one of the members of Ocean Protein is Pacific Marketing Group, Inc. ("PMG"), an Oregon corporation. PMG's status as a member of Ocean Protein precludes diversity jurisdiction because the citizenship of a limited liability company is determined by looking to the citizenship of all of its members. See Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) ("We therefore join our sister circuits NATURAL PROTEINS, LLC, v. Plaintiff, No. C 09-01451 RS ORDER DISMISSING ACTION FOR LACK OF JURISDICTION

NO. C 0901451 RS ORDER
Dockets.Justia.com

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and hold that, like a partnership, an LLC is a citizen of every state of which its owners/members are citizens.) This jurisdictional defect did not appear until Natural Proteins sought leave to amend the complaint to name as additional defendants all of the members of Ocean Protein, including PMG. At that point, Ocean Protein first raised the fact that PMG is an Oregon corporation.1 An order to show cause issued directing Natural Proteins to demonstrate that jurisdiction exists. In response to the order to show cause, Natural Proteins submitted evidence that the online records of the Washington Secretary of State did not reflect PMG as a member of Ocean Protein. This showing was adequate to shift the burden to Ocean Protein to come forward with evidence to the contrary. Ocean Protein responded by submitting declarations that PMG in fact is a member of Ocean Protein, copies of annual reports submitted to the Washington Secretary of State so stating, a corporate document executed by PMG as an Ocean Protein member, and evidence that the Washington Secretary of State's online records now show PMG as one of Ocean Protein's members. Natural Proteins argues that Ocean Protein's evidence is insufficient to establish conclusively that PMG was either a founding member of the LLC or thereafter properly added as a member pursuant to the provisions of its operating agreement. Natural Proteins' speculation that there may have been some technical defect or failure to comply with the terms of the operating agreement when PMG became a member of Ocean Protein is insufficient to meet its burden of persuasion to show that jurisdiction is proper here. See Hertz Corp. v. Friend, 130 S.Ct. 1181 (2010) ("The burden of persuasion for establishing diversity jurisdiction, of course, remains on the party asserting it."). Ocean Protein has represented to the State of Washington that PMG is one of its members, and it has acted consistently with those representations, with PMG participating in the conduct of its corporate affairs. There is no indication that PMG was added as a sham member solely to defeat diversity jurisdiction in this or any other action. Natural Protein has offered no authority that the jurisdictional inquiry should entail a searching analysis of Washington corporate
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United States District Court

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For the Northern District of California

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Ocean Protein apparently did not realize that PMG's status as its member precludes diversity whether or not it were to be added as an additional defendant. 2
NO. C 0901451 RS ORDER

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law or the provisions of the operating agreement to determine whether there might be some technical formation defect, or that any such defect would create jurisdiction notwithstanding the evidence that Ocean Protein has conducted itself as if PMG is a member. Accordingly, this action is dismissed, without prejudice, for lack of subject matter jurisdiction.

IT IS SO ORDERED. Dated: 09/08/2010 RICHARD SEEBORG
UNITED STATES DISTRICT JUDGE

United States District Court

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For the Northern District of California

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NO. C 0901451 RS ORDER