Chicago Male Medical Clinic, LLC v. Ultimate Management, Inc.
5:13-cv-00199
C.D. Cal.Jul 11, 2014Background
- Plaintiff Chicago Male Medical Clinic, LLC (CMMC) sued Defendants Ultimate Management, Inc. (UMI) and Jeffrey Fromberg in Illinois state court on August 15, 2011.
- Defendants removed to federal court on July 13, 2012, invoking diversity jurisdiction under 28 U.S.C. § 1332(a).
- Defendants are citizens of California; CMMC is an LLC whose citizenship depends on the citizenship of its members.
- Discovery responses dated February 17, 2012 identified five CMMC members, including Fred Martori, listed as a San Diego, California resident—suggesting lack of diversity at the time the complaint was filed.
- A June 13, 2012 deposition of CMMC’s manager, Todd Wheatcraft, indicated Martori was no longer (or perhaps never was) a member, supporting diversity at the time of removal but leaving unclear CMMC’s citizenship at the time of the original filing.
- Because diversity must exist both when the complaint is filed and when removal is effected, the court ordered Defendants to show cause why federal diversity jurisdiction is proper, giving both parties limited briefing time.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal diversity jurisdiction existed at time of filing and removal | CMMC impliedly contends Plaintiff’s membership list controlling; disputes not addressed in detail in order | Defendants argue Martori ceased being a member before removal, so diversity existed at removal and possibly at filing | Court found Defendants failed to show diversity existed at time of filing; ordered Defendants to show cause why jurisdiction is proper |
| Citizenship of an LLC—does Martori’s status defeat diversity | Plaintiff’s prior interrogatory responses identified Martori as a member and California resident | Defendants contend deposition evidence shows Martori was not a member at removal (or never acquired membership) | Court concluded evidence ambiguous as to Martori’s status at filing; cannot assume diversity on that date |
| Burden to establish proper removal | Plaintiff relies on documentary and deposition evidence to challenge removal | Defendants bear burden to establish existence of diversity at both relevant times | Court reiterated defendant’s burden and ordered Defendants to submit written showing of proper diversity jurisdiction |
| Court’s authority to raise jurisdictional defects sua sponte | Plaintiff relies on removal defenses presented | Defendants did not contest court’s authority | Court confirmed it may raise subject-matter jurisdiction issues at any time and did so here |
Key Cases Cited
- Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (LLC takes citizenship of all its members)
- IP of A W. 86th St. 1, LLC v. Morgan Stanley Mortgage Capital Holdings, LLC, 686 F.3d 361 (7th Cir. 2012) (LLC citizenship equals citizenship of members)
- Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001) (individual is citizen of state of domicile)
- Snell v. Cleveland, Inc., 316 F.3d 822 (9th Cir. 2002) (court may raise subject-matter jurisdiction sua sponte)
- Thomas v. Guardsmark, Inc., 381 F.3d 701 (7th Cir. 2004) (diversity must exist at filing and removal)
- Kanzelberger v. Kanzelberger, 782 F.2d 774 (7th Cir. 1986) (same principle regarding timing for diversity)
- Strotek Corp. v. Air Transp. Ass'n. of Am., 300 F.3d 1129 (9th Cir. 2002) (diversity determined at complaint filing and removal)