Kelly v. American Foods Group, LLC et al

Filing 16

MEMORANDUM OPINION AND ORDER by Judge William O. Bertelsman on 4/4/2017 granting 7 Motion to Remand. This case is REMANDED to the Jefferson County Circuit Court. cc: Counsel; Jefferson Circuit Court 16-CI-005335 (certified) (CDR)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION

CIVIL ACTION NO. 3:16-CV-757 (WOB)
DARLENE KELLY
VS.

PLAINTIFF
MEMORANDUM OPINION AND ORDER

AMERICAN FOODS GROUP,
ET AL.

DEFENDANTS

This matter is before the Court on Plaintiff’s motion to
remand. (Doc. 7). Having reviewed this matter, the Court concludes
that oral argument is unnecessary.

The Court now issues the

following Memorandum and Order.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Darlene Kelly brings this action against defendants
American Food Groups, LLC (“AFG”), America’s Service Line, LLC
(“ASL”), and Luis Alvarado.

Plaintiff alleges a semi-truck driven

by Alvarado collided with her vehicle, causing injuries to her
neck, shoulders, and back.
14).

(Doc. 1-1, Complaint, at 2, PageID #:

Plaintiff alleges the accident was a result of Alvarado’s

“negligence and/or gross negligence” and negligence per se. (Id.
at 5-6, PageID #: 17-18).

Plaintiff also alleges that AFG and ASL

are vicariously liable for the damages caused by Alvarado.
at 7, PageID #: 19).

(Id.

Additionally, Plaintiff contends that AFG

“and/or” ASL were negligent in their hiring, supervision, and
training of Alvarado. (Id.)
Plaintiff filed her complaint in the Jefferson County Circuit
Court on October 26, 2016.
PageID #: 1).

(Doc. 1, Notice of Removal, at 1,

On November 30, 2016, Defendants removed the case

to the District Court for the Western District of Kentucky.

(Id.)

Due to Plaintiff’s employment with the Clerk’s office in that
Court, the case was reassigned to the undersigned.
Defendant’s Response, at 2, PageID #: 114).

(Doc. 11,

Defendant invokes

federal jurisdiction under 28 U.S.C. § 1332, alleging that the
parties have complete diversity and the amount in controversy
exceeds $75,000.

(Doc. 1, Not. of Rem. at 2, PageID #: 2).

ASL employed Alvarado at the time of the accident, and ASL
also owned the semi-truck.

(Doc. 11-1, Affidavit of Dominick

Driano, Jr., at 1, PageID #: 124).
(Id.)

AFG owned the truck’s cargo.

ASL is also the in-house carrier of AFG, which AFG has

described as a “division” of the company in past judicial filings.
See Kirkvold v. Dakota Pork Indus., Inc., Civ. No. 97–4166, 1997
WL 34862262, at *3 (D.S.D. Dec. 15, 1997).

Furthermore, AFG has

more than a 10 percent ownership interest in ASL. (Doc. 7-1, Pl.’s
Memo. in Supp., at 6, PageID #: 77).

AFG’s general counsel avers

that AFG did not personally “hire, train, supervise, or control
Mr. Alvarado” at the time the accident occurred, and that ASL was

2

Alvarado’s sole employer.

(Doc. 11-1, Driano Aff., at 2, PageID

#: 125).
Plaintiff is and was at all relevant times a citizen of
Kentucky.

(Doc. 1-1, Compl., at 2, PageID #: 14).

Alvarado is and was a citizen of Pennsylvania.
#: 15).

Defendant

(Id. at 3, PageID

ASL is a limited liability company with its principal

place of business in Wisconsin, registered in Delaware.
2, PageID #14).

(Id. at

Like ASL, AFG is a limited liability company

with its principal place of business in Wisconsin, registered in
Delaware. (Id.)

AFG has two members, Rosen’s Diversified, Inc.,

and RDI Shareholder, LLC. RDI Shareholder is a limited liability
company whose members consist of sixteen (16) trusts, with at least
one trustee being a citizen of Kentucky.

(Id. at 3, PageID #:15).

Plaintiff also asserts that ASL is citizen of Kentucky through
AFG, as ASL is a “division” of AFG, and additionally AFG is a
“principal member” of ASL.

(Doc. 13, Pl.’s Repl., at 2, PageID #:

129).
ANALYSIS
A. AFG is not a “Nominal Party” for Diversity Purposes
Defendants argue that AFG should not be relevant for diversity
purposes because it is a “nominal party”.
at 4, PageID #: 116).

(Doc.11, Def.’s Resp.,

In support, defendant relies on Mortenson

Fam. Dental Ctr. v. Heartland Dental Care, Inc. 526 F. App’x 506
(6th Cir. 2013).
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In Mortenson, the Sixth Circuit held, in a dispute between
two parties over ownership rights in an LLC, that the citizenship
of the LLC should not be considered for diversity purposes.
at

509.

The

Court

stated

that

“[w]hen

determining

Id.

whether

diversity jurisdiction exists, a federal court must disregard
nominal parties and decide jurisdiction only on the citizenship of
the real parties in interest.”

Id. at 508.

The Sixth Circuit

defines “a real party in interest [a]s one who is entitled to
enforce the right asserted in the suit, that in turn depends on
whether the party could actually obtain substantive relief.”

Id.

at 508 (quoting Certain Interested Underwriters at Lloyd’s v.
Layne, 26 F.3d, 39, 42-43 (6th Cir. 1994)).

“In contrast, a

nominal party has no interest in the result of the suit and need
not be a made a party.”

Id. at 508 (citing Maiden v. N. Am.

Stainless, L.P., 125 F. App’x. 1, 3 (6th Cir. 2004)).
The LLC in Mortenson was only relevant because the dispute
concerned

ownership

agreement.

Id.

at

in

it

508.

under

the

Neither

of

terms
the

of

an

parties

operating
contesting

ownership claimed the LLC itself had engaged in any improper
conduct, nor was the LLC even a party to the operating agreement.
Id.

The LLC “[did not assert] any rights and [would] not get any

relief from the outcome of the suit.”

Id.

Put another way, “The

LLC is only a spectator on the sideline.

That it will give a

trophy to the winner does not make it a player in the game.” Id.
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at 509.

The Court thus determined the LLC was not a “real party

in interest” and excluded it for diversity purposes.
The present case is fundamentally different.

Plaintiff is

asserting multiple causes of action against AFG, with some direct
claims and some vicarious liability claims.
7-8, PageID #: 19-20).

(Doc. 1-1, Compl., at

In Mortenson, neither party asserted any

claim against the LLC.

Here, Defendants argue that a “plain

reading”

complaint

of

Plaintiff’s

shows

“the

only

theory

of

liability against both ASL and AFG is the allegation that both
Defendants

hired,

trained,

supervised,

and/or

Alvarado at the time of the subject accident.”

employed

Luis

(Doc. 11, Def.’s

Resp., at 3, PageID #: 115).
This is incorrect.

A plain reading of Plaintiff’s complaint

shows that Plaintiff is also alleging that, “as a result of the
managerial control American Foods Group exercises of America’s
Service Line and its employees, it is jointly and severally
liable.”

(Doc. 1-1, Compl., at 7, PageID #: 19).

Plaintiff

further alleges that “America’s Service Line and/or American Food
Groups selected and required Alvarado to take an unsafe route.”
(Id.)

The affidavit of AFG’s general counsel states only that ASL

was the sole employer of Alvarado at the time of the accident, but
it is silent on these other claims against AFG. (Doc. 11-1, Driano
Aff., at 1-2, PageID #: 124-125).

If the allegations against AFG

have any substance, they will assuredly have an interest in the
5

outcome of the suit.

AFG thus is not merely “a spectator on the

sidelines” of this litigation.

Mortenson, 526 F. App’x at 509.

For these reasons, AFG is not a “nominal party” and its
citizenship is relevant in determining diversity.
“The general rule is that all unincorporated entities — of
which a limited liability company is one — have the citizenship of
each partner or member.”

Delay v. Rosenthal Collins Grp., LLC,

585 F.3d 1003, 1005 (6th Cir. 2009) (citing Carden v. Arkoma
Assocs., 494 U.S. 185, 187-92 (1990)).
The Supreme Court also regards the citizenship of all trustees
as relevant in determining a trust’s citizenship. Americold Realty
Trust v. Conagra Foods, Inc., 136 S. Ct. 1012, 1016 (2016).
Here, AFG is a limited liability company with two members:
Rosen’s Diversified LLC and RDI Shareholder LLC.
Resp., at 2, PageID #: 114).

(Doc. 11, Def.’s

RDI Shareholder is composed of

sixteen (16) trusts, one of which has a trustee with Kentucky
citizenship. (Id.) Therefore, AFG itself has Kentucky citizenship
for 28 U.S.C. § 1332 purposes.

Delay, 585 F.3d at 1005.

AFG’s

Kentucky

and

Plaintiff’s

shared

citizenship,

Due to

diversity

jurisdiction is lacking.
B. AFG is also a “Primary Member” of ASL
ASL

is

a

“division”

of

AFG

Kirkvold, 1997 WL 34862262, at *3.

and

its

in-house

carrier.

Plaintiff asserts AFG owns

more than a 10 percent interest in ASL as a “primary member,” based
6

on Rule 7.1 disclosures.
PageID #: 77).

(Doc. 7-1, Pl.’s Memo. in Supp., at 6,

Therefore, ASL has the same citizenship as AFG

for diversity purposes.

“[L]imited liability companies share the

citizenship of each partner or member.”

Watkins v. Trust Under

Will of Bullit, Civ. No. 3:13–CV–01113–TBR, 2014 WL 2981016, at 2*
(W.D. Ky. July 1, 2014).

“[T]he Supreme Court has consistently

required consideration of the citizenship of all members of such
associations

when

determining

diversity

jurisdiction.”

SHR

Limited Partnership. v. Braun, 888 F.2d 455, 459 (6th Cir. 1989).
“[B]ecause a member of a limited liability company may itself have
multiple members — and thus may itself have multiple citizenships
— the federal court needs to know the citizenship of each ‘submember’ as well.”

Delay, 585 F.3d at 1005 (citing Hicklin Eng’g

L.C. v. Bartell, 439 F.3d 346, 347-348 (7th Cir. 2006)).
ASL’s primary member is apparently AFG.
AFG

has

two

members

itself,

Rosen’s

As discussed above,

Diversified

and

RDI

Shareholder, with RDI Shareholder having sixteen (16) trusts, one
of which has a Kentucky trustee. ASL therefore has Kentucky
citizenship for diversity purposes.
Because diversity jurisdiction is not present in this matter,
the Court must remand the case to state court.
Therefore, having reviewed this matter, and being otherwise
sufficiently advised

7

IT IS ORDERED that Plaintiff’s motion to remand to Jefferson
Circuit Court (Doc. 7) be, and is hereby, GRANTED, and this case
is hereby REMANDED to the Jefferson County Circuit Court from
whence it was removed.
This 4th day of April, 2017.

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