Chidester, Jeffrey et al v. Camp Douglas Farmers Cooperative et al

Filing 44

ORDER Requiring Proof of Diversity Citizenship. Proof of Diversity Citizenship due 11/25/2013. Signed by District Judge Barbara B. Crabb on 11/8/13. (rep)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

JEFFREY CHIDESTER and NICHOLE
CHIDESTER, Individually and as Parents and
Next Friends of SYDNEY CHIDESTER, a Minor,
Plaintiffs,

OPINION and ORDER

v.

13-cv-520-bbc

CAMP DOUGLAS FARMERS COOPERATIVE,
TRIANGLE INSURANCE COMPANY, INC.
and HEALTH CARE SERVICE CORPORATION
ILLINOIS STATE PAC, NFP, d/b/a BLUE
CROSS BLUE SHIELD OF ILLINOIS.
Defendants.
v.
CHS, INC. and ZURN PEX, INC.,
Third-Party Defendants.
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -Plaintiffs Jeffrey Chidester, Nichole Chidester and Sydney Chidester are suing
defendants Camp Douglas Farmers Cooperative and Triangle Insurance Company, Inc. for
injuries suffered by plaintiff Sydney Chidester, a minor, as a result of an explosion allegedly
caused by a propane tank installed by defendant Camp Douglas.
Plaintiffs have filed two motions that are now before the court: one to strike portions
of defendants’ answers, dkt. #19, and one to amend plaintiffs’ complaint, dkt. #36. Before

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I consider either motion, I must first address whether this court has subject matter
jurisdiction to hear this case. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83,
94-95 (1998) (jurisdiction is a threshold matter that must be established before resolving
issues on the merits). Although the parties have not raised this issue, I have an independent
obligation to insure that jurisdiction exists. DeBartolo v. Healthsouth Corp., 569 F.3d 736,
740 (7th Cir. 2009) (“The parties may be content to assume that the district court had
jurisdiction to resolve this dispute, but [the court is] not. Subject-matter jurisdiction is not
an issue that can be brushed aside or satisfied by agreement between the litigants.”).
Plaintiffs rely on 28 U.S.C. § 1332 as a basis for jurisdiction. This statute requires
that (1) plaintiffs and defendants are citizens of different states and (2) the amount in
controversy exceeds $75,000. Although plaintiffs’ complaint appears to satisfy the second
prong of these requirements, it does not show that plaintiffs’ citizenship is completely
diverse from that of defendants.
As individuals, plaintiffs are citizens of the state in which they are “domiciled,” that
is, “the state in which a person intends to live over the long run.” Heinen v. Northrop
Grumman Corp., 671 F.3d 669, 670 (7th Cir. 2012). Moreover, although plaintiffs Jeffrey
and Nichole Chidester are parties in their own right, to the extent that they act as legal
representatives of minor plaintiff Sydney Chidester, their citizenship is the same as Sydney’s.
28 U.S.C. § 1332(c)(2). In their complaint, plaintiffs state that Sydney “resided” in Illinois
and Jeffrey and Nichole are “adult residents” of Illinois.
However, this statement is insufficient to establish plaintiffs’ citizenship. In re Sprint

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Nextel Corp., 593 F.3d 669, 673-74 (7th Cir. 2010) (“[B]eing a resident isn’t the same thing
as being a citizen, that is to say, a domiciliary . . . . [A] court may not draw conclusions
about the citizenship of [parties] based on things like their phone numbers and mailing
addresses.”). See also Heinen, 671 F.3d at 670 (“‘[C]itizenship’ for the purpose of 28
U.S.C. § 1332 depends on domicile rather than residence.”); Macken ex rel. Macken v.
Jensen, 333 F.3d 797, 799 (7th Cir. 2003); McMahon v. Bunn-O-Matic Corp., 150 F.3d
651, 653 (7th Cir. 1998). Moreover,“it takes physical presence in a state, with intent to
remain there, to establish domicile.” Denlinger v. Brennan, 87 F.3d 214, 216 (7th Cir.
1996). Plaintiffs’ allegation about residency may show physical presence, but plaintiffs must
also say whether they intend to remain in the state in which they reside.
A second problem is that plaintiffs have failed to allege all the facts necessary to
determine the citizenship of defendants. A corporation is a citizen of the state in which it
is incorporated and the state in which it maintains its principal place of business, 28 U.S.C.
§ 1332(c)(1), which is its “main headquarters,” that is, “the place where a corporation’s
officers direct, control, and coordinate the corporation’s activities.” Hertz Corp. v. Friend,
559 U.S. 77, 92-93 (2010). Plaintiffs identify defendant Triangle Insurance Company,
Inc.’s principal place of business as Oklahoma, but they say simply that it is a “foreign
corporation” without identifying the state in which defendant is incorporated. Plaintiffs
must respond with this information in order to establish defendant Triangle Insurance
Company’s citizenship.
Similarly, plaintiffs fail to explain the citizenship of defendant Douglas Camp.

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Plaintiffs say that it is a “Wisconsin membership cooperative” with a principal place of
business in Wisconsin. If defendant Douglas Camp is a corporation, plaintiffs must provide
its state of incorporation. 28 U.S.C. § 1332(c)(1). However, if defendant Douglas Camp
is unincorporated, plaintiffs must provide evidence of the citizenship of each of defendant
Douglas Camp’s members. Indiana Gas Co., Inc. v. Home Insurance Co., 141 F.3d 314, 316
(7th Cir. 1998) (“Unincorporated business entities . . . are treated as citizens of every
jurisdiction in which any equity investor or member is a citizen . . . . Membership
associations such as labor unions, joint stock companies, and joint ventures take the
citizenship of each member.”).
Finally, plaintiffs’ allegations about defendant Health Care Service Corporation
Illinois, d/b/a Blue Cross Blue Shield of Illinois, raise other questions related to diversity
jurisdiction. First, plaintiffs do not allege sufficient information to determine the citizenship
of defendant Health Care Service Corporation Illinois. Second, plaintiffs may not be diverse
from this defendant. Plaintiffs have sought leave to amend their complaint to substitute this
party for Chicago Regional Council of Carpenters Health and Welfare Fund. Dkt. # 36.
The jurisdictional problems are the same for both parties, so the analysis is identical whether
or not plaintiffs’ complaint is amended. Consequently, I will analyze this court’s jurisdiction
as if Chicago Regional Council of Carpenters Health and Welfare Fund is the relevant
defendant.
Plaintiffs say only that the Health and Welfare Fund’s principal place of business is
in Illinois and that it has an Illinois agent for service of process. Since plaintiffs say that the

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Health and Welfare Fund is a “not-for-profit corporation,” its state of incorporation is also
necessary to determine its citizenship for jurisdiction. CCC Information Services, Inc. v.
American Salvage Pool Association, 230 F.3d 342, 346 (7th Cir. 2000) (“[A] corporation
is deemed a citizen of the State in which it was incorporated and of the State where it has
its principal place of business . . . . The fact that [a party] is a not-for-profit member
corporation

rather

than

a

corporation

with

shareholders

is

irrelevant

to

this

determination.”).
If it turns out that plaintiffs are Illinois citizens, their citizenship would not be diverse
from that of the Health and Welfare Fund. Owen Equipment & Erection Co. v. Kroger, 437
U.S. 365, 373 (1978). When there is no controversy between the plaintiff and a subrogated
insurer, such as the Health and Welfare Fund in this case, courts sometimes realign the
insurer as a plaintiff, which eliminates the requirement of diversity between those parties.
American Motorists Insurance Co. v. Trane Co., 657 F.2d 146, 149 (7th Cir. 1981)
(“Realignment is proper when the court finds that no actual, substantial controversy exists
between parties on one side of the dispute and their named opponents . . . .”). See also
Paulson v. Wisconsin Central, Ltd. No. 11-cv-303-bbc, slip op. at 3 (W.D. Wis. Jul. 19,
2011) (insurance company’s rights subrogated to those of plaintiff against defendant
properly aligned as plaintiff); Frahm v. Marshfield Clinic, 2007 WL 3287841, *2 (W.D.
Wis. Nov. 7, 2007) (realigning insurance company as plaintiff because its “only interest in
this lawsuit is in recovering money it has already paid to plaintiff; it may be entitled to do
so if plaintiff is successful in her claims against defendants”). If the only reason plaintiffs

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named Health and Welfare Fund is that this defendant may be entitled to reimbursement
from defendants for medical payments it made to plaintiffs, then it is possible that plaintiffs
and Health and Welfare Fund should be on the same side of this litigation.

ORDER
IT IS ORDERED that plaintiffs Jeffrey Chidester, Nichole Chidester and Sydney
Chidester may have until November 25, 2013 to show that this court may exercise subject
matter jurisdiction over this case. If plaintiffs do not respond by that date, I will dismiss the
case for lack of subject matter jurisdiction.
Entered this 8th day of November, 2013.
BY THE COURT:
/s/
BARBARA B. CRABB
District Judge

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