Ferrado US LLC v. Westport Insurance Company, 2:17-cv-07112

Plaintiffs Ferrado U.S. LLC and Ferrado L.A. LLC sued several insurers in Los Angeles County Superior Court; defendants removed the case to federal court on diversity grounds.
Defendants asserted diversity jurisdiction under 28 U.S.C. § 1332, alleging plaintiffs are foreign citizens (Spain) based on publicly available information about LLC ownership.
Removal was filed by Westport Insurance Company, Swiss Re, Indian Harbor Insurance Company, XL Group Insurance, X.L. America, Inc., and XL Insurance.
Defendants bore the burden to demonstrate complete diversity and that the amount in controversy exceeded $75,000.
The Notice of Removal alleged plaintiffs’ citizenship only “on information and belief,” asserting LLC membership and ownership traces to Spanish entities/individuals.
The court found the factual allegations on information and belief insufficient to establish plaintiffs’ actual citizenship for diversity purposes and therefore concluded it lacked subject matter jurisdiction.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal diversity jurisdiction exists	Plaintiffs (implicitly) are non-U.S. citizens/members such that diversity exists	Defendants: plaintiffs are Spanish-owned LLCs (based on public records and information and belief), so diversity exists	No — defendants failed to plead plaintiffs’ actual citizenship; allegations on information and belief insufficient; remand ordered
Who determines LLC citizenship for diversity	N/A	Defendants relied on rule that LLC citizenship equals citizenship of its members	Court applied the rule but required factual pleading of members’ citizenship; defendants did not meet that burden
Burden of proof for removal jurisdiction	N/A	Defendants must establish federal jurisdiction by a preponderance; removal statute strictly construed	Court reaffirmed burden is on removing party and that doubts are resolved against removal
Sufficiency of allegations based on information and belief	N/A	Defendants argued publicly available info justified allegations on information and belief	Court held such allegations insufficient absent more concrete, affirmative pleading of actual citizenship

Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994) (federal courts are courts of limited jurisdiction).
Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d 1261 (9th Cir. 1999) (burden of establishing federal jurisdiction is on the party seeking removal; removal statute strictly construed).
Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (federal jurisdiction rejected if any doubt as to right of removal).
Kantor v. Wellesley Galleries, Ltd., 704 F.2d 1088 (9th Cir. 1983) (individual domicile rules for diversity).
Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001) (allegations of citizenship should be affirmative; domicile standard).
Indus. Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090 (9th Cir. 1990) (corporation citizenship: state of incorporation and principal place of business).
Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (LLC treated like partnership — citizenship of every member).
Marseilles Hydro Power, LLC v. Marseilles Land & Water Co., 299 F.3d 643 (7th Cir. 2002) (LLC citizenship is citizenship of its members).
Handelsman v. Bedford Village Assocs., Ltd. P’ship, 213 F.3d 48 (2d Cir. 2000) (LLC has citizenship of its membership).
Cosgrove v. Bartolotta, 150 F.3d 729 (7th Cir. 1998) (same principle for LLC citizenship).
Bradford v. Mitchell Bros. Truck Lines, 217 F. Supp. 525 (N.D. Cal. 1963) (alleging diversity on information and belief is insufficient).