Heckmann Water Resources Corp v. J C Fodale Energy Services L L C
5:14-cv-03490
W.D. La.Jan 6, 2015Background
- Plaintiff Heckmann Water Resources, Inc. filed suit invoking diversity jurisdiction and described itself as a Texas corporation but did not allege its principal place of business.
- Defendant is JC Fodale Energy Services, LLC, which Plaintiff described as a Louisiana LLC with its principal place of business in Louisiana and alleged (generally) that no member is a Texas citizen.
- The court noted the plaintiff bears the burden to plead facts establishing diversity jurisdiction and must allege corporate citizenship with specificity.
- The court explained that an LLC’s citizenship is determined by the citizenship of all of its members, and membership may need to be traced through multiple organizational layers.
- The court directed Plaintiff to file an amended complaint with the required specificity or seek leave to conduct discovery into Fodale’s membership and citizenship if the information cannot be obtained voluntarily.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency of jurisdictional allegations for corporate plaintiff | Heckmann alleged it is a Texas corporation (implicitly asserting diversity) | No specific argument recorded from defendant on this point | Court held Heckmann must allege both state of incorporation and principal place of business with specificity to establish diversity jurisdiction |
| Sufficiency of LLC citizenship allegations | Heckmann alleged Fodale is a Louisiana LLC and generally stated no member is a Texas citizen | No detailed membership/citizenship facts provided by Fodale in the record | Court held general assertions are insufficient; citizenship of every LLC member must be alleged and traced through any entity layers |
| Whether principal place of business or state of organization controls for LLC citizenship | Heckmann treated Fodale’s organization/principal place as dispositive | Court (citing precedent) rejected using state of organization or principal place for LLC citizenship | Court held LLC citizenship depends on citizenship of all members, not state of organization or principal place |
| Procedure to obtain missing citizenship information | Heckmann may lack access to membership details | Fodale encouraged to voluntarily provide citizenship info; otherwise Plaintiff may seek discovery | Court permitted Plaintiff to amend complaint and, if necessary, request leave to conduct discovery into citizenship matters |
Key Cases Cited
- Joiner v. Diamond M Drilling Co., 677 F.2d 1035 (5th Cir. 1982) (corporate citizenship must be pleaded with specificity)
- Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254 (5th Cir. 1988) (complaint must state corporation’s incorporation and principal place of business)
- Howery v. Allstate Ins. Co., 243 F.3d 912 (5th Cir. 2001) (strict adherence to pleading requirements for diversity jurisdiction)
- Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008) (LLC citizenship determined by citizenship of all members)
- Mullins v. TestAmerica Inc., 564 F.3d 386 (5th Cir. 2009) (court must trace and affirmatively allege citizenship through organizational layers before reaching merits)