Cox et al v. H&R Block, Inc. et al

Filing 6

MEMORANDUM re 5 Amended Complaint filed by Raymond Rapko, Cameron Cox Signed by Honorable A. Richard Caputo on 5/14/13. (jam)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
CAMERON COX and RAYMOND
RAPKO, on behalf of themselves and all
others similarly situated,

CIVIL ACTION NO. 3:CV-13-1101

Plaintiffs,
(JUDGE CAPUTO)
v.
H&R BLOCK, INC., HRB TAX GROUP,
INC., and HRB TECHNOLOGY, LLC,
Defendants.
MEMORANDUM
Presently before the Court is the First Amended Class Action Complaint filed by
Plaintiffs Cameron Cox and Raymond Rapko on behalf of themselves and all other persons
similarly situated. (Doc. 5.) Because the First Amended Complaint fails to establish that the
Court has subject matter jurisdiction over this action, it will be dismissed unless Plaintiffs can
show that diversity jurisdiction is proper.
I. Background
Plaintiffs commenced this action on or about April 25, 2013. On April 30, 2013, the
Court, sua sponte, ordered Plaintiffs to file an amended complaint to cure the defects with
respect to the Complaint’s averments as to the citizenship of Plaintiffs, corporate
Defendants, and the limited liability company Defendant. (Docs. 3; 4.)
On May 2, 2013, Plaintiffs filed the First Amended Complaint. (First Am. Compl.)
Plaintiffs allege that this Court has jurisdiction over the action pursuant to diversity of
citizenship, 28 U.S.C. § 1332(d), and the Class Action Fairness Act. (Id. at ¶ 2.) With
respect to Plaintiffs and corporate Defendants, the First Amended Complaint adequately

alleges the citizenship of these parties. (Id. at ¶¶ 6-9.) The limited liability company
Defendant, HRB Technology, LLC, however, is alleged to be “a limited liability company
organized and existing under the laws of the State of Missouri, and its sole member is a
citizen of Kansas City, Missouri.” (Id. at ¶ 10.)
II. Analysis
Federal courts have an obligation to address issues of subject matter jurisdiction sua
sponte. Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir. 1999).
Plaintiffs allege that the Court’s basis for jurisdiction is pursuant to 28 U.S.C. § 1332(d).
Section 1332(d)(2) gives district courts original jurisdiction to hear civil actions where the
matter in controversy exceeds the sum or value of five million dollars ($5,000,000.00), and,
as alleged in this case, is a class action in which “any member of a class of plaintiffs is a
citizen of a State different from any defendant.” 28 U.S.C. § 1332(d)(2)(A). Of course, “[t]he
person asserting jurisdiction bears the burden of showing that the case is properly before the
court at all stages of the litigation.” Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1045
(3d Cir. 1993).
“It is . . . well established that when jurisdiction depends upon diverse citizenship the
absence of sufficient averments or of facts in the record showing such required diversity of
citizenship is fatal and cannot be overlooked by the court, even if the parties fail to call
attention to the defect, or consent that it may be waived.” Thomas v. Bd. of Trs., 195 U.S.
207, 211, 25 S. Ct. 24, 49 L. Ed. 160 (1904). Moreover, “[w]hen the foundation of federal
authority is, in a particular instance, open to question, it is incumbent upon the courts to
resolve such doubts, one way or the other, before proceeding to a disposition of the merits.”

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Carlsberg Res. Corp. v. Cambria Sav. & Loan Ass’n, 554 F.2d 1254, 1256 (3d Cir. 1977);
see also Fed R. Civ. P. 12(h)(3).
Here, the First Amended Complaint alleges that HRB Technology, LLC’s “sole
member is a citizen of Kansas City, Missouri.” (First Am. Compl., ¶ 10.) “The citizenship
of an LLC is determined by the citizenship of its members.” Zambelli Fireworks Mfg. Co.
v. Wood, 592 F.3d 412, 420 (3d Cir. 2010); see also Carden v. Arkoma Assocs., 494 U.S.
185, 195 (1990) (affirming that the citizenship of an artificial entity depends on the
citizenship of all its members); 1 Federal Procedure, Lawyers Edition § 1:176 (2011).
Where one or more of an LLC's members is itself another LLC, the citizenship of each
LLC must be determined by “trac[ing] through however many layers of partners or
members there may be.” Zambelli Fireworks, 592 F.3d at 420. In this case, Plaintiffs
have failed to identify by name HRB Technology, LLC’s sole member. And, without the
identity of the member, the Court is unable to determine whether HRB Techology, LLC’s
citizenship has been sufficiently alleged. See, e.g., World Wide Plumbing Supply Inc. v.
DDI Sys. LLC, No. 11 Civ. 5091, 2011 WL 5024377, at *2 (E.D.N.Y. Oct. 20, 2011)
(“[plaintiff] is required to plead the identity and citizenship of each member of the LLC as
each of their citizenships is imputed to the LLC.”); D.A. Opportunity Fund, LLC v. Rehm,
No. 10-cv-260, 2010 WL 5092246, at *1 (W.D. Wis. Dec. 8, 2010) (requiring plaintiff to
allege the names of each member of the LLC).
III. Conclusion
Because the Court cannot determine whether subject matter jurisdiction exists, the
matter is subject to dismissal under Federal Rule of Civil Procedure Rule 12(h)(3). However,

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pursuant to 28 U.S.C. § 1653, Plaintiffs will be given the opportunity to demonstrate that
diversity jurisdiction exists. See USX Corp. v. Adriatic Ins. Co., 345 F.3d 190, 204 (3d Cir.
2003) (noting that Section 1653 gives district courts “the power to remedy inadequate
jurisdictional allegations, but not defective jurisdictional facts”). As such, Plaintiffs will have
twenty-one (21) days in which to file a second amended complaint. Failure to do so will
result in the action being dismissed. An appropriate order follows.

May 14, 2013
Date

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

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