Cheek et al v. Ritz Carlton Hotel Company LLC et al

Filing 14

ORDER TO SHOW CAUSE. ORDERED that, on or before 5:00 p.m. on June 6, 2017, defendant Ritz Carlton Hotel Company, LLC shall show cause why this case should not be remanded due to the Courts lack of subject matter jurisdiction. Signed by Judge Philip A. Brimmer on 05/25/17. (jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 17-cv-01201-PAB
CHRISANN CHEEK and
JOSEPH CHEEK,
Plaintiffs,
v.
WOLFGANG PUCK WORLDWIDE, INC., d/b/a Spago Restaurant, and
RITZ CARLTON HOTEL COMPANY, LLC,
Defendants.

ORDER TO SHOW CAUSE

The Court takes up this matter sua sponte on the notice of removal [Docket No.
1] filed by defendant “Ritz-Carlton Hotel Company, L.L.C.” (“Ritz-Carlton”). Ritz-Carlton
states that the Court has subject matter jurisdiction over this lawsuit pursuant to 28
U.S.C. § 1332. Docket No. 1 at 2, ¶ 3.
In every case and at every stage of the proceeding, a federal court must satisfy
itself as to its own jurisdiction, even if doing so requires sua sponte action. Citizens
Concerned for Separation of Church & State v. City & County of Denver , 628 F.2d
1289, 1297 (10th Cir. 1980). Absent an assurance that jurisdiction ex ists, a court may
not proceed in a case. See Cunningham v. BHP Petroleum Great Britain PLC, 427
F.3d 1238, 1245 (10th Cir. 2005). Courts are well-advised to raise the issue of
jurisdiction on their own, regardless of parties’ apparent acquiescence. First, it is the
Court’s duty to do so. Tuck v. United Servs. Auto. Ass’n, 859 F.2d 842, 844 (10th Cir.

1988). Second, regarding subject matter jurisdiction, “the consent of the parties is
irrelevant, principles of estoppel do not apply, and a party does not waive the
requirement by failing to challenge jurisdiction.” Ins. Corp. of Ireland v. Compagnie des
Bauxites de Guinee, 456 U.S. 694, 702 (1982) (internal citations omitted). Finally,
delay in addressing the issue only compounds the problem if it turns out that, despite
much time and expense having been dedicated to a case, a lack of jurisdiction causes it
to be dismissed or remanded regardless of the stage it has reached. See U.S. Fire Ins.
Co. v. Pinkard Constr. Co., No. 09-cv-00491-PAB-MJW, 2009 WL 2338116, at *3 (D.
Colo. July 28, 2009).
It is well established that “[t]he party invoking federal jurisdiction bears the
burden of establishing such jurisdiction as a threshold matter.” Radil v. Sanborn W.
Camps, Inc., 384 F.3d 1220, 1224 (10th Cir. 2004). Ritz-Carlton invokes 28 U.S.C.
§ 1332 as the basis for this Court’s diversity jurisdiction. Docket No. 1 at 2, ¶ 3.
Section 1332(a)(1) states: “The district courts shall have original jurisdiction of all civil
actions where the matter in controversy exceeds the sum or value of $75,000, exclusive
of interest and costs, and is between [] citizens of different States.” The facts as
presently averred, however, do not provide sufficient information regarding defendant
Ritz-Carlton’s citizenship or the citizenship of plaintiffs.
The notice of removal identifies Ritz-Carlton as a Delaware corporation with its
principal place of business in Maryland. Docket No. 1 at 2, ¶ 4; see also Docket No. 13
at 2, ¶ 4 (alleging the same in its answer). Notwithstanding Ritz-Carlton’s claim that it is
a corporation, the allegation is almost certainly incorrect. Compare Del. Code tit. 6,

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§ 18-102 (“The name of each limited liability company as set forth in its certificate of
formation: (1) Shall contain the words ‘Limited Liability Company’ or the abbreviation
‘L.L.C.’ or the designation ‘LLC’”); with Del. Code tit. 8, § 102(a)(1) (“The name of the
corporation, which (i) shall contain 1 of the words ‘association,’ ‘company,’ ‘corporation,’
‘club,’ ‘foundation,’ ‘fund,’ ‘incorporated,’ ‘institute,’ ‘society,’ ‘union,’ ‘syndicate,’ or
‘limited,’ (or abbreviations thereof, with or without punctuation)”). The Court will assume
that Ritz-Carlton is a limited liability company (“LLC”), not a corporation.
While, for diversity purposes, “a corporation shall be deemed to be a citizen of
every State and foreign state by which it has been incorporated and of the State or
foreign state where it has its principal place of business,” 28 U.S.C. § 1332(c)(1); see
Carden v. Arkoma Assocs., 494 U.S. 185, 196 (1990), 1 these considerations are
irrelevant to the determination of the citizenship of an LLC. See Siloam Springs Hotel,
L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1237-38 (10th Cir. 2015) (“[I]n determ ining
the citizenship of an unincorporated association for purposes of diversity, federal courts
must include all the entities’ members.”).
Furthermore, when an entity consists of multiple tiers of ownership and control,
the entire structure must be considered for diversity purposes. In other words, when an
entity is composed of multiple layers of constituent entities, the citizenship
determination requires an exploration of the citizenship of the constituent entities as far
down as necessary to unravel fully the citizenship of the entity before the court. See

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A corporation’s “principal place of business” is “the place where a corporation’s
officers direct, control, and coordinate the corporation’s activities.” Hertz Corp. v.
Friend, 559 U.S. 77, 92-93 (2010).
3

U.S. Advisor, LLC v. Berkshire Prop. Advisors, No. 09-cv-00697-PAB-CBS, 2009 WL
2055206, at *2 (D. Colo. July 10, 2009); SREI-Miami, LLC v. Thomas, No. 08-cv-00730MSK-BNB, 2008 WL 1944322, at *1 (D. Colo. May 2, 2008); see also Hicklin Eng’g,
L.C. v. Bartell, 439 F.3d 346, 347 (7th Cir. 2006); Turner Bros. Crane & Rigging, LLC v.
Kingboard Chem. Holding Ltd., 2007 WL 2848154, at *4-5 (M.D. La. Sept. 24, 2007); cf.
Carden, 494 U.S. at 195 (“[W]e reject the contention that to determine, for diversity
purposes, the citizenship of an artificial entity, the court may consult the citizenship of
less than all of the entity’s members.”).
Ritz-Carlton has not identified its members or the citizenship of those members.
Cf. Fifth Third Bank v. Flatrock 3, LLC, 2010 WL 2998305, at *3 (D.N.J. July 21, 2010)
(concluding that an allegation that “upon information and belief, the members of [an
LLC] are citizens of New York” was insufficient because plaintiff “failed to identify or
trace the citizenship of each individual member” of the LLC (internal quotation marks
omitted)).2 The Court is therefore unable to determine the citizenship of Ritz-Carlton
and whether the Court has jurisdiction. See United States ex rel. General Rock & Sand
Corp. v. Chuska Dev. Corp., 55 F.3d 1491, 1495 (10th Cir. 1995) (“The party seeking
the exercise of jurisdiction in his favor must allege in his pleading the facts essential to
show jurisdiction.”) (citations and internal quotation marks omitted).
Additionally, Ritz-Carlton does not show the citizenship of plaintiffs. The notice

2

This Court has previously noted that, “[w]hile various state legislatures have
decided to permit the members of LLCs to remain anonymous to the public at large,
Congress has not created an exception to the requirements of diversity jurisdiction
which would allow the members of LLCs to remain anonymous in federal court.” U.S.
Advisor, LLC, 2009 WL 2055206, at *3 (citing Carden, 494 U.S. at 196).
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of removal states that, “upon information and belief,” plaintiffs are citizens of Florida
based on their address listed on the last page of the second amended complaint.
Docket No. 1 at 2, ¶ 4; see also Docket No. 1-3 at 5. However, domicile, not residency
or mailing address, is determinative of citizenship. Whitelock v. Leatherman, 460 F.2d
507, 514 (10th Cir. 1972) (“[A]llegations of mere ‘residence’ may not be equated with
‘citizenship’ for the purposes of establishing diversity.”); see also Mississippi Band of
Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989) (“‘Domicile’ is not necessarily
synonymous with ‘residence,’ and one can reside in one place but be dom iciled in
another.” (citations omitted)). Moreover, the Court reads Ritz-Carlton’s averment of the
citizenship of plaintiffs, made “upon information and belief,” to mean that Ritz-Carlton
does not have affirmative knowledge of plaintiffs’ citizenship. Such unsupported
allegations do not confer subject matter jurisdiction over this case. See Yates v.
Portofino Real Estate Props. Co., LLC, No. 08-cv-00324-PAB-MJW, 2009 WL 2588833,
at *3 (D. Colo. Aug. 17, 2009) (requiring plaintiff to “address the citizenship of each of
[defendant's] members without resorting merely to their ‘information and belief’ as to the
same”); Pinkard Constr. Co., 2009 WL 2338116, at *3 (allegations made on information
and belief “mean that plaintiffs have no affirmative knowledge of a lack of diversity”).
For the foregoing reasons, it is
ORDERED that, on or before 5:00 p.m. on June 6, 2017, defendant Ritz Carlton
Hotel Company, LLC shall show cause why this case should not be remanded due to
the Court’s lack of subject matter jurisdiction.

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DATED May 25, 2017.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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