Ludell Manufacturing Company v. Leisure Pools USA LLC

Filing 4

ORDER signed by Judge Rudolph T. Randa on 2/14/2013. On or before 3/30/2013 Plaintiff MUST FILE an amended Complaint properly alleging Defendant's citizenship; such amended Complaint MUST COMPLY with Civil L.R. 15(a). (cc: all counsel)(cb)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF WISCONSIN

LUDELL MANUFACTURING COMPANY,
Plaintiff,
v.
Case No. 13-C-133
LEISURE POOLS USA, LLC,
Defendant.

DECISION AND ORDER

In its routine review of the Complaint, the Court has noticed a threshold issue
of subject matter jurisdiction in this breach of contract and breach of warranty action that must
be resolved as quickly as possible. The Court is obligated to raise sua sponte whether it has
subject matter jurisdiction over this case. See Craig v. Ontario Corp., 543 F.3d 872, 875 (7th
Cir. 2008) (citing Sadat v. Mertes, 615 F.2d 1176, 1188 (7th Cir. 1980) (stating, “it has been
the virtually universally accepted practice of the federal courts to permit any party to challenge
or, indeed, raise sua sponte the subject-matter jurisdiction of the court at any time and at any
stage of the proceedings”)).
Jurisdiction over this action is predicated on diversity jurisdiction. Under
section 1332(a)(1) of Title 28 of the United States Code, federal district courts have original
jurisdiction to hear all civil actions between citizens of different States when the amount in

controversy exceeds $75,000, exclusive of interest or costs. “[D]iversity jurisdiction does not
exist unless each defendant is a citizen of a different State from each plaintiff.” Owen Equip.
& Erection Co. v. Kroger, 437 U.S. 365, 377 (1978).

The burden of persuasion for

establishing diversity jurisdiction is on the party asserting it. Hertz Corp. v. Friend, ____ U.S.
____, 130 S.Ct. 1181, 1194 (2010); see Muscarello v. Ogle Cnty. Bd. of Comm’rs, 610 F.3d
416, 425 (7th Cir. 2010).
The Plaintiff, Ludell Manufacturing Corporation (”Ludell”) has treated the
Defendant Leisure Pools USA, LLC (“Leisure”), a limited liability company, as if it were a
corporation. See Hukic v. Aurora Loan Servs., 588 F.3d 420, 427 (7th Cir. 2009) (“A
corporation is a citizen of the states of its incorporation and principal place of business.”)
However, for purposes of diversity jurisdiction, the citizenship of a limited liability company
is determined by the citizenship of all its members, not on its principal place of business or the
jurisdiction under whose laws it is organized. See Muscarello, 610 F.3d at 424; Thomas v.
Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir. 2007); Belleville Catering Co. v. Champaign
Mkt. Place, LLC, 350 F.3d 691, 692 (7th Cir. 2003). Members of an LLC may include
“partnerships, corporations, and other entities that have multiple citizenships.” Hicklin Eng'g,
L.C. v. Bartell, 439 F.3d 346, 347 (7th Cir. 2006). “A federal court thus needs to know each
member's citizenship, and if necessary each member's members’ citizenships.” Id. at 348. “If
even one investor in an LP or LLC has the same citizenship as any party on the other side of

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the litigation, complete diversity is missing and the suit must be dismissed.” White Pearl
Inversiones S.A. v. Cemusa, Inc., 647 F.3d 684, 686 (7th Cir. 2011).
Because the Complaint does not properly plead Leisure’s citizenship, it is
unclear whether the Court has diversity jurisdiction over this action. However, the Court of
Appeals for this Circuit has indicated that the Court’s discretion to dismiss for lack of subject
matter jurisdiction should be used sparingly when the plaintiff could have pleaded the
existence of jurisdiction and when such jurisdiction, in fact, exists. See Muscarello, 610 F.3d
at 425. Consequently, Ludell will be afforded the opportunity to amend its Complaint to cure
the defects in its jurisdictional allegations. Failure to file an amended Complaint consistent
with this Order by the stated deadline, will result in the dismissal of this action for lack of
jurisdiction.
NOW, THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY
ORDERED THAT:
On or before March 30, 2013, Ludell MUST FILE an amended Complaint
that properly alleges Leisure’s citizenship; and,

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Such amended Complaint MUST COMPLY with Civil Local Rule 15(a) (E.D.
Wis.)
Dated at Milwaukee, Wisconsin this 14th day of February, 2013.
BY THE COURT

_______________________
Hon. Rudolph T. Randa
U.S. District Judge

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