Erie Insurance Exchange v. Harbor Freight Tools, USA Inc., 4:16-cv-02212

Erie Insurance Exchange (a reciprocal insurance exchange/unincorporated association) sued Harbor Freight Tools, USA, Inc. in Trumbull County, Ohio, seeking recovery of $360,891.47 for fire damage allegedly caused by a defective product.
Harbor Freight (a Delaware corporation with its principal place of business in California) removed the case to federal court on the basis of diversity jurisdiction.
Erie moved to remand, arguing that as a reciprocal exchange it takes the citizenship of its subscribers/policyholders, and that it has subscribers who are citizens of Delaware and California, destroying complete diversity.
The Court permitted Erie to amend its complaint to allege its status and principal place of business in Pennsylvania and required briefing on jurisdictional issues.
Erie submitted an affidavit from a vice president stating Erie has subscribers/policyholders who are citizens of Delaware and California; Harbor Freight argued (1) courts are split on whether subscribers count as members for citizenship and (2) Erie’s affidavit was insufficient proof.
The district court held that an insurance exchange is an unincorporated association whose citizenship includes its subscribers, found Erie’s affidavit sufficient, concluded complete diversity was lacking, and remanded the case to state court.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a reciprocal insurance exchange’s citizenship includes its subscribers/policyholders	Erie: yes; as an unincorporated association it bears the citizenship of its members, which include subscribers/policyholders	Harbor Freight: no; subscribers are mere customers and should not be counted as members for diversity purposes	Court: Erie is an unincorporated association and its subscribers/policyholders count for citizenship purposes
Whether Erie provided sufficient proof that it has subscribers who are citizens of Delaware and California	Erie: affidavit states it has subscribers/policyholders who are citizens of Delaware and California	Harbor Freight: affidavit is insufficient, lacks specific identities, addresses, or proof of domicile	Court: affidavit was sufficient; burden to prove diversity is on the removing party, not Erie
Whether complete diversity exists between the parties	Erie: diversity is lacking because Erie shares citizenship states with Harbor Freight	Harbor Freight: diversity exists or Erie failed to prove overlapping citizenship	Court: complete diversity lacking because both parties are citizens of Delaware and California
Whether the case must be remanded for lack of subject-matter jurisdiction	Erie: remand required under 28 U.S.C. § 1447(c) if diversity lacking	Harbor Freight: oppose remand; argue alternative legal view and insufficiency of proof	Court: granted remand; federal court lacks subject-matter jurisdiction

Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365 (diversity requires each defendant to be a citizen of a different state from each plaintiff)
Rogers v. Wal‑Mart Stores, Inc., 230 F.3d 868 (6th Cir.) (burden of establishing federal jurisdiction rests on the removing party)
Wilson v. Republic Iron & Steel Co., 257 U.S. 92 (early removal jurisprudence on jurisdictional burden)
James G. Davis Const. Corp. v. Erie Ins. Exch., 953 F. Supp. 2d 607 (D. Md.) (treating a reciprocal insurance exchange as bearing the citizenship of its policyholders/subscribers)