950 F. Supp. 2d 544
S.D.N.Y.2013Background
- ICON MW, LLC is a Delaware LLC with principal place of business in New York; ICON’s membership comprises two funds with a combined 17,317 members, including 159 Kentucky citizens; Hofineister is a Kentucky citizen who guaranteed an ICON lease; removal to federal court was based on diversity; ICON challenged removal as improper for lack of complete diversity; district court granted remand after examining citizenship of ICON’s members and Hofineister.
- ICON’s members’ citizenship drives ICON’s domicile for diversity; Kentucky members and Hofineister’s Kentucky citizenship defeat complete diversity.
- Hofineister urged disregarding Kentucky members or treating ICON as a non-diverse entity, arguing only a minority of members are Kentucky citizens.
- Court applied corporate-like rule: LLC citizenship is the citizenship of all members, not a subset; Cardena-type rule governs LLC citizenship.
- Court concluded complete diversity does not exist because Kentucky members of ICON and Hofineister share Kentucky citizenship; removal based on diversity therefore improper.
- ORDER: ICON’s motion to remand granted; case remanded to New York State Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is there complete diversity between ICON and Hofineister? | ICON asserts Kentucky members negate diversity since Hofineister is Kentucky. | Hofineister argues Kentucky members should be disregarded due to minority status. | No; complete diversity lacking; all members considered. |
| How is ICON’s citizenship determined for diversity? | ICON relies on member-based citizenship for LLC. | Disregarding some members would create diversity. | LLC citizenship requires citizenship of all members, not partial. |
| Does Cardene-type rule apply to deny removal based on LLC membership? | Carden controls to require treating LLCs by member citizenship. | N/A or minimal. | Carden applies; all members must be evaluated; diversity not achieved. |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (LLC citizenship rests on the citizenship of all members)
- Wisconsin Dept. of Corrs. v. Schacht, 524 U.S. 381 (1998) (diversity must exist; treat doubts against removability)
- Strawbridge v. Curtiss, 7 U.S. 267 (1806) (all members must be citizens of different states)
- Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir. 2012) (LLC citizenship depends on all members)
- Handelsman v. Bedford Vill. Assocs. Ltd. P’ship, 213 F.3d 48 (2d Cir. 2000) (membership determines citizenship for diversity)