Super Products, LLC v. Hydro-Exc. Inc.

Filing 8

ORDER directing defendant to submit a jurisdictional briefaddressing the issue of the citizenship of plaintiff. The brief is due by 4/20/2012. Signed by Chief Judge David R. Herndon on 4/4/2012. (msdi)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
SUPER PRODUCTS, LLC,
Plaintiff,
v.
HYDRO-EXC. INC.,
Defendant.

Case No. 12-cv-272-DRH
ORDER

HERNDON, Chief Judge:
In this Order the Court sua sponte raises the issue of whether it has subject
matter jurisdiction over this case. See Wis. Knife Works v. Nat’l Metal Crafters, 781
F.2d 1280, 1282 (7th Cir. 1986) (“The first thing a federal judge should do when a
complaint is filed is check to see that federal jurisdiction is properly alleged.”);
McCready v. White, 417 F.3d 700, 702 (7th Cir. 2005)(“Ensuring the existence of
subject matter jurisdiction is the court’s first duty in every lawsuit.”). This case was
removed here from state court by defendant Hydo-Exc., Inc. (Doc. 3) on the basis of
diversity jurisdiction, pursuant to 28 U.S.C. § 1332. Upon a threshold review, the
Court observes what may be a potential jurisdictional problem. “Without jurisdiction
the court cannot proceed at all in any cause. Jurisdiction is power to declare the law,
and when it ceases to exist, the only function remaining to the court is that of
announcing the fact and dismissing the cause.” Ex parte McCardle, 74 U.S. 506,
514 (1868); Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998). In fact,
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federal courts are “obliged to police the constitutional and statutory limitations on
their jurisdiction” and should raise and consider jurisdictional issues regardless of
whether the matter is ever addressed by the parties to the suit. See Kreuger v.
Cartwright, 996 F.2d 928, 930-31 (7th Cir. 1993); Kanzelberger v. Kanzelberger,
782 F.2d 774, 777 (7th Cir. 1986). Moreover, the party invoking federal jurisdiction
bears the burden of demonstrating that the jurisdictional requirements have been
met. Chase v. Shop ‘N Save Warehouse Foods, Inc., 110 F.3d 424, 427 (7th Cir.
1997).
The statute regarding diversity jurisdiction, 28 U.S.C. § 1332, requires
complete diversity between the parties plus an amount in controversy exceeding
$75,000, exclusive of interest and costs. Complete diversity means that “none of the
parties on either side of the litigation may be a citizen of the state of which a party on
the other side is a citizen.” Howell v. Tribune Entm’t Co., 106 F.3d 215, 217 (7th
Cir. 1997) (citations omitted). Under 28 U.S.C. § 1332(c), for the purpose of federal
diversity jurisdiction, a corporation is deemed a citizen of both the state in which it
is incorporated and the state where its principal place of business is located. Casio,
Inc. v. S.M. & R. Co., 755 F.2d 528, 529 (7th Cir.1985). “The citizenship for
diversity purposes of a limited liability company, however, despite the resemblance
of such a company to a corporation (the hallmark of both being limited liability), is
the citizenship of each of its members.” Wise v. Wachovia Sec., LLC, 450 F.3d 265,
267 (7th Cir. 2006)(collecting cases); see also Commonwealth Ins. Co. v. Titan Tire

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Corp., 398 F.3d 879, 881 n.1 (7th Cir. 2004) (citing Belleville Catering Co. v.
Champaign Market Place, LLC, 350 F.3d 691, 692 (7th Cir. 2003)). As such,
unincorporated business entities, such as limited partnerships (“LP”) or limited
liability companies (“LLC”) “are [more appropriately] analogized to partnerships . .
. .” Belleville Catering Co., 350 F.3d at 692 (citing Carden v. Arkoma Assocs., 494
U.S. 185, 110 S. Ct. 1015 (1990)). Thus, the Seventh Circuit deems an LLC a citizen
“of every state of which any member is a citizen.” Id. (citing Cosgrove v. Bartolotta,
150 F.3d 729 (7th Cir.1998)). “Consequently, an LLC’s jurisdictional statement
must identify the citizenship of each of its members as of the date the complaint or
notice of removal was filed, and, if those members have members, the citizenship of
those members as well.” Thomas v. Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir.
2007).
In this suit, it appears that plaintiff is alleged to be an LLC. Yet, in his
complaint (initially filed in the Circuit Court of Madison County, Illinois) plaintiff
alleged that plaintiff was a Delaware corporation with its principle place of business
in Wisconsin. Thereafter, in the notice of removal based upon diversity jurisdiction,
defendant alleges that “[u]pon information and belief, [p]laintiff is a Delaware
corporation in good standing with its principal place of business in Wisconsin and
none of its members is a citizen of the State of Indiana.”

A court of limited

jurisdiction, nor any court for that matter, does not accept speculation in order to
establish its jurisdiction. Defendants failed to properly plead the citizenship of all
the members comprising the existing LLC. Instead, they merely state none of
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plaintiff’s members is a citizen of the State of Indiana based on information and
belief, which it chooses to refrain from sharing with the Court. This is not enough:
“[A]n LLC’s jurisdictional statement must identify the citizenship of each of its
members as of the date the complaint or notice of removal was filed, and, if those
members have members, the citizenship of those members as well.” Thomas, 487
F.3d at 534. Defendant’s failure to properly plead the citizenship of the LLC places
into question whether the citizenship between the parties is completely diverse. Until
this has been properly plead, the Court must approach this case as if jurisdiction
does not exist. Consequently, the Court does not have the authority to “consider the
merits of a case over which it is without jurisdiction.” Firestone Tire & Rubber Co.
v. Risjord, 449 U.S. 368, 379 (1981).
While the Court does not affirmatively find that diversity jurisdiction between
the parties does not exist, because it remains uncertain, it has not properly been
established. As a result, defendant is hereby ordered to submit a jurisdictional brief
addressing the issue of the citizenship of plaintiff. This brief shall be filed by April
20, 2012. Further, should defendant fail to timely file its jurisdictional brief or fail
to seek an extension of time, the Court will then instruct the Clerk to remand the
case for lack of subject matter jurisdiction.
IT IS SO ORDERED.
Signed this 4th day of April, 2012.

David R. Herndon
2012.04.04
09:46:44 -05'00'
Chief Judge
United States District Court

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