Rabalais, Cody et al v. Domtar A.W. LLC

Filing 5

ORDER Regarding Jurisdiction. Proof of Diversity Citizenship due 11/20/2014. Signed by District Judge William M. Conley on 11/6/2014. (voc)

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

CODY RABALAIS, WISCONSIN
DEPARTMENT OF HEALTH SERVICES
and TRAVELERS CASUALTY & SURETY
COMPANY,
Plaintiffs,

OPINION AND ORDER

v.

14-cv-643-wmc

DOMTAR A.W. LLC,
Defendant.

In this civil action, plaintiff Cody Rabalais seeks damages for injuries he suffered
when a ladder at his workplace broke during use.

Defendant Domtar A.W. LLC

(“Domtar”) removed the case from the Circuit Court of Wood County pursuant to 28
U.S.C. § 1441(b), alleging that this court can exercise diversity jurisdiction under 28
U.S.C. § 1332. (See Notice of Removal (dkt. #1).) Because the allegations in the notice
of removal are insufficient to determine if this is so, Domtar will be given an opportunity
to file an amended notice of removal containing the necessary factual allegations to
establish diversity jurisdiction.1

The court is especially disappointed to note the number and variety of pleading deficiencies
here, since this is now the second time defendant’s law firm has had to be reminded of the proper
standard for establishing complete diversity. See Batten v. Solid Carbon Prods., LLC, No. 12-cv211-wmc, dkt. #14. While otherwise uncharacteristic, this law firm is, therefore, strongly
encouraged to ensure that going forward all lawyers practicing before this and other federal courts
are educated on the requirements for properly pleading subject matter jurisdiction, especially in
diversity cases.
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OPINION
“Federal courts are courts of limited jurisdiction.” Int’l Union of Operating Eng’r,
Local 150, AFL-CIO v. Ward, 563 F.3d 276, 280 (7th Cir. 2009) (citation omitted).
Unless a complaint alleges complete diversity of citizenship among the parties and an
amount in controversy exceeding $75,000, or raises a federal question, the case must be
dismissed for want of jurisdiction. Smart v. Local 702 Int’l Bhd. of Elec. Workers, 562 F.3d
798, 802 (7th Cir. 2009).

Because jurisdiction is limited, federal courts “have an

independent obligation to determine whether subject-matter jurisdiction exists, even
when no party challenges it.” Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010). The party
seeking to invoke federal jurisdiction bears the burden of establishing that jurisdiction is
present. Smart, 562 F.3d at 802-03.
Here, defendant contends that diversity jurisdiction exists because (1) the amount
in controversy exceeds $75,000 and (2) the parties are diverse. (Notice of Removal (dkt.
#1) ¶¶ 3-7.) For the latter to be true, however, there must be complete diversity, meaning
plaintiff cannot be a citizen of the same state as any defendant. Smart, 562 F.3d at 803.
Unfortunately, defendant’s allegations as to the parties in this suit preclude the court
from determining whether complete diversity exists.
First, defendant alleges that plaintiff Cody Rabalais “resides in Palmetto,
Louisiana.”

(Notice of Removal (dkt. #1) ¶ 3.)

“But residence may or may not

demonstrate citizenship, which depends on domicile—that is to say, the state in which a
person intends to live over the long run. An allegation of ‘residence’ is therefore
deficient.” Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir. 2012).
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Second, defendant alleges that it is “a foreign corporation incorporated in the
State of Delaware and with its principal place of business in Fort Mill, South Carolina
and Montreal, Canada.” (Notice of Removal (dkt. #1) ¶ 4.) As the Seventh Circuit has
repeatedly instructed, however, this information is wholly irrelevant in deciding the
citizenship of a limited liability company like Domtar. Hukic v. Aurora Loan Serv., 588
F.3d 420, 429 (7th Cir. 2009). “The citizenship of an LLC is the citizenship of each of
its members,” yet plaintiff has not alleged the citizenship of defendant’s members,
making it impossible to determine whether complete diversity exists here. Camico Mut.
Ins. Co. v. Citizens Bank, 474 F.3d 989, 992 (7th Cir. 2007).
Third, defendant has not alleged anything with respect to the citizenship of either
involuntary plaintiff. Both the Wisconsin Department of Health Services and Travelers
Casualty & Surety Company are alleged in the complaint to have a possible subrogation
interest for medical bills paid. (See Compl. (dkt. #1-1) ¶¶ 2-3.) “The Supreme Court has
determined that an insurer-subrogee qualifies as . . . a real party in interest,” whose
citizenship may affect diversity. Bosse v. Pitts, 455 F. Supp. 2d 868, 873 (W.D. Wis.
2006) (citing United States v. Aetna Cas. & Sur. Co., 338 U.S. 366, 380 (1949)). Thus,
defendant must either properly plead both involuntary plaintiffs’ citizenship or explain
why their citizenship is irrelevant for diversity jurisdiction purposes.
Before dismissing this action for lack of subject matter jurisdiction, Domtar will be
given leave to file within 14 days an amended notice of removal that establishes subject
matter jurisdiction by alleging the domicile of plaintiff Rabalais; the names and
citizenship of each of Domtar’s members; and the citizenship of each involuntary
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plaintiff (or explains why their citizenship does not affect diversity).

In alleging the

LLC’s citizenship in particular, plaintiff should be aware that if the member or members
of the LLCs are themselves a limited liability company, partnership, or other similar
entity, then the citizenship of those members and partners must also be alleged as well.
See Meyerson v. Harrah’s E. Chi. Casino, 299 F.3d 616, 617 (7th Cir. 2002) (“the
citizenship of unincorporated associations must be traced through however many layers
of partners or members there may be”).

ORDER
IT IS ORDERED that:
1) plaintiff shall have until November 20, 2014, to file and serve an amended
complaint containing good faith allegations sufficient to establish complete
diversity of citizenship for purposes of determining subject matter jurisdiction
under 28 U.S.C. § 1332; and
2) failure to amend timely shall result in prompt dismissal of this matter for lack
of subject matter jurisdiction.
Entered this 6th day of November, 2014.
BY THE COURT:
/s/
__________________________________
WILLIAM M. CONLEY
District Judge

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