Fadal MacHining Centers, LLC v. Mid-Atlantic Cnc, Inc.
464 F. App'x 672
9th Cir.2012Background
- Fadal Machining Centers, LLC and MAG Industrial Automation Systems, LLC appeal a district court judgment dismissing their action as subject to arbitration.
- The court must sua sponte determine subject matter jurisdiction, including diversity of citizenship.
- Appellants concede SP MAG Holdings, LLC owns 10% of MAG and SP MAG has six members, including Silver Point Capital Fund, LP and SPCP Group III, LLC.
- Robert J. O’Shea, a New Jersey resident, is a member of both SPCP Group III and Silver Point Capital Fund.
- Mid-Atlantic CNC, Inc. is a New Jersey corporation; the parties dispute whether complete diversity exists.
- Under the diversity rule, an LLC is a citizen of all states where its members are citizens; thus SP MAG Holdings’ membership affects MAG’s citizenship.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complete diversity exists between the parties. | Fadal and MAG contend SP MAG Holdings’ limited role warrants disregarding its membership for diversity. | Diversity includes all members' citizenship; SP MAG Holdings' status matters regardless of control or Class B voting. | No complete diversity; dismissal appropriate. |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (unincorporated entity must rely on all members' citizenship)
- Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (unincorporated association has the citizenships of all members)
- Allstate Ins. Co. v. Hughes, 358 F.3d 1089 (9th Cir. 2004) (court must assess subject matter jurisdiction sua sponte)