Auro Rehab Services LLC v. State Farm Mutual Automobile Insurance Co.
Filing
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ORDER for Defendant to Show Cause, (Show Cause Response due by 11/7/2024) Signed by District Judge Robert J. White. (TVil)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
AURO REHAB SERVICES LLC,
Plaintiff,
Case No. 23-cv-13047
v.
Honorable Robert J. White
STATE FARM MUTUAL
AUTOMOBILE INSURANCE CO.,
Defendant.
ORDER FOR DEFENDANT TO SHOW CAUSE
On July 20, 2023, Plaintiff, Auro Rehab Services LLC, filed a two-count
complaint against Defendant, State Farm Mutual Automobile Insurance Co., in
Wayne Circuit Court for nonpayment of no-fault insurance benefits and breach of
contract. (ECF No. 1-2, PageID.12-16). Defendant removed the case to federal
court, asserting that the Court has diversity jurisdiction over the case under 28 U.S.C.
§ 1332. (ECF No. 1, PageID.4-6). As discovery progressed, the case was reassigned
to the Court. The Court now raises some concerns over its jurisdiction to hear the
case. See Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010) (“Courts have an
independent obligation to determine whether subject-matter jurisdiction exists, even
when no party challenges it.”).
Since Defendant invokes diversity jurisdiction, it “bears the burden of
establishing the parties’ citizenships.” Akno 1010 Mkt. St. St. Louis Missouri LLC v.
Pourtaghi, 43 F.4th 624, 627 (6th Cir. 2022). Diversity jurisdiction exists where the
amount in controversy “exceeds the sum or value of $75,000, exclusive of interests
and costs” and the dispute is between citizens of different states. 28 U.S.C. § 1332(a).
Defendant is a corporation registered and with its principal place of business
in Illinois. (ECF No. 1, PageID.2). According to Defendant’s notice of removal,
Plaintiff is and was at all relevant times a “corporation” registered and with its
principal place of business in Michigan. (ECF No. 1, PageID.2). Despite Plaintiff
being named as an LLC, its complaint similarly refers to itself as a corporation
registered and located in Michigan. (ECF No. 1-2, PageID.13-14).
However, limited liability companies are not like corporations, whose
citizenship is determined by the state(s) where they are incorporated and maintain
their principal place of business. 28 U.S.C. § 1332(c)(1); see also Pourtaghi, 43 F.4th
at 627 (“LLCs are not corporations, and different pleading rules apply when these
entities are parties to a diversity suit.”) (emphasis in original). “Unlike a corporation,
an LLC’s state of organization does not establish its citizenship.” Id. at 626 (citing
28 U.S.C. § 1332(c)(1)). Rather, an LLC “has the citizenship of its members and
sub-members.” Id.
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Here, instead of naming and establishing “the citizenships of [Plaintiff’s]
members and sub-members,” id. at 627, Defendant asserts that Plaintiff, identified
by name as an LLC, is and was “a corporation licensed to conduct business under
the laws of the State of Michigan, and at all times was conducting business in the
State of Michigan, and was a resident of the City of Warren, County of Macomb,
State of Michigan with its principal place of business on 31904 Ryan Road, Warren,
Michigan.” (ECF No. 1, PageID.2). This is insufficient. See Pourtaghi, 43 F.4th at
626 (remanding for determination of subject-matter jurisdiction where the plaintiff
LLC “did not ... adequately allege its own citizenship—it merely asserted that it is
‘organized under the laws of Michigan’”).
Because the Court is unable to conclude whether it has federal subject matter
jurisdiction, it is hereby,
IT IS ORDERED that within 14 days of the date of this Order, Defendant shall
show cause as to why this action should not be remanded to state court for lack of
subject matter jurisdiction.
IT IS FURTHER ORDERED that Defendant must specify in its response to
this show cause order whether Plaintiff is actually a corporation or a limited liability
company. In the event Plaintiff is, in fact, a limited liability company, Defendant
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must sufficiently allege the citizenship of each of Plaintiff’s members and submembers.
IT IS FURTHER ORDERED that in the event Defendant decides that remand
is proper, it may forego briefing and instead notify the Court within 14 days of this
Order that it will be submitting a proposed stipulated order remanding the case to
state court.
Dated: October 24, 2024
s/Robert J. White
Robert J. White
United States District Judge
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