American Energy-Permian Basin LLC v. ETS Oilfield Services LP

Filing 21

ORDER granting 9 Motion to Remand to District Court Oklahoma County case number CF-2016-3914. Signed by Honorable David L. Russell on 12/19/16. (jw)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF OKLAHOMA
AMERICAN ENERGY- PERMIAN
BASIN, LLC,
Plaintiff,
v.
ETS OILFIELD SERVICES, LP,
Defendants.

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CIV-16-1024-R

ORDER
On November 22, 2016, the Court entered an Order holding Plaintiff’s Motion to
Remand in abeyance while simultaneously granting a Motion to Amend filed by Defendant
ETS Oilfield Services, LP. The amendment was to permit Defendant to attempt to cure a
defect in its Notice of Removal. Specifically, Defendant failed to establish the existence of
diversity jurisdiction because it failed to identify the citizenship of the limited liability
company Plaintiff by identifying the citizenship of its various members. As recently stated
by the United States District Court for the District of Colorado:
[W]hen 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.
Villanuevo v. Lowe’s Home Centers, LLC, 2016 WL 7320393 (D.Colo. Dec. 16, 2016).
Defendant’s Amended Notice of Removal fails to establish the existence of diversity,

because Defendant is apparently unable to fully unravel the citizenship of Plaintiff’s
member entities. The Amended Notice of Removal states:
5.
Plaintiff American Energy-Permian Basin, LLC, n/k/a Permian
Resources, LLC, is a limited liability company organized under the laws of
the State of Oklahoma, has its principal place of business in Oklahoma and
upon information and belief is a citizen of the State of Oklahoma and the
State of Delaware. Upon information and belief, Plaintiff’s sole and
managing member is Permian Resources Holdings, LLC, a Delaware
Limited Liability Company. Given the information currently available,
Defendant is unable to identify a single member of any of the members of
Permian Resources Holdings, LLC as being a citizen of Defendant’s alleged
state of citizenship.
6.
In Plaintiff’s Disclosure Statement (Dkt. # 18), Plaintiff has confirmed
that Permian Resources Holdings, LLC is the sole member of Permian
Resources, LLC and that it is a Delaware limited liability company. Plaintiff
further confirmed that the members of Permian Resources Holdings, LLC
are all either Delaware or Oklahoma limited liability companies. Plaintiff
further vaguely provided:
After an investigation, at least one of the members of the
underlying LLCs is a citizen of Defendant’s alleged state of
citizenship, the State of Texas. Due to the complicated funding
structures for the numerous LLCs, it would be extremely
difficult to list all underlying members of the individual LLCs.
[Dkt. # 18]. Plaintiff has refused (or is unable) to identify the constituent
entity allegedly sharing citizenship with Defendant.
Amended Notice of Removal (Dkt. No. 20). Despite its inability to provide the requisite
information regarding the identity of Plaintiff’s member entities, Defendant nevertheless
maintains in the Amended Notice of Removal that “Complete diversity between the parties
exists and Plaintiff’s claims for relief exceeds $75,000.” Doc. No. 20.
Because this Court is one of limited jurisdiction, it must refrain from exercising
jurisdiction unless it is certain that such jurisdiction has been granted by Congress. See
Adams v. Reliance Standard Life Ins. Co., 225 F.3d 1179, 1182 (10th Cir. 2000) (“In light
of the limited subject matter jurisdiction granted to the federal courts by Congress, we have
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a duty to satisfy ourselves that jurisdiction is appropriate.”). Defendant, as the party
invoking federal jurisdiction, bears the burden of establishing the existence thereof. Radil
v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224 (10th Cir. 2004). Federal removal
jurisdiction is statutory in nature, and the governing statutes are to be strictly construed.
Shamrock Oil & Gas v. Sheets, 313 U.S. 100, 108–09 (1941); Merrell Dow Pharm., Inc. v.
Thompson, 478 U.S. 804, 814 (1986). Finally, it is well-settled that the presumption is
against removal jurisdiction. Coca-Cola Bottling of Emporia, Inc. v. S. Beach Beverage
Co., 198 F. Supp. 2d 1280, 1285 (D. Kan. 2002). Where removability is in question, any
doubt must be resolved in favor of remand. Fajen v. Found. Reserve Ins. Co., 683 F.2d
331, 333 (10th Cir. 1982).
The Court finds that as set forth above, Defendant has failed to establish the
existence of diversity jurisdiction, because it has failed to provide the requisite information
regarding the citizenship of Plaintiff’s members, tracing those back as far as necessary to
establish complete diversity. Because it is incumbent upon Defendant to do so, and because
it is apparent that it cannot establish that diversity existed at the time of the filing of the
Amended Notice of Removal, the Plaintiff’s Motion to Remand (Doc. No. 9) is hereby
GRANTED.
IT IS SO ORDERED this 19th day of December, 2016.

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