586 F.Supp.3d 177
E.D.N.Y2022Background
- Plaintiff filed in federal court asserting diversity jurisdiction against Aragon LLC but initially pleaded only the LLC's state of formation and principal place of business.
- Court issued an Order to Show Cause directing plaintiff to identify each LLC member and plead each member's citizenship because an LLC's citizenship is the citizenship of its members.
- Plaintiff filed an amended complaint alleging, on information and belief, Aragon has two members (one named, one unnamed) and that no member is domiciled in California; counsel submitted an affidavit recounting defense counsel’s statement that both members are New York citizens.
- The court found those allegations conclusory and insufficient to establish diversity jurisdiction.
- The court emphasized that jurisdictional allegations must be pleaded with particularity and meet the plausibility standard; guessing or relying on sparse assertions is inadequate.
- The action was dismissed for failure to properly plead subject matter jurisdiction; the court declined to expand federal jurisdiction in light of statutory text and Congress’s choices.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiff properly pleaded LLC citizenship for diversity jurisdiction | Plaintiff alleged Aragon has two members and none are domiciled in California (alleged "on information and belief") | Allegations are conclusory and do not identify members or their citizenship | Court: Insufficient—must identify each member and plead each member's citizenship |
| Whether counsel's affidavit recounting defense counsel's statement can establish citizenship | Counsel averred defense counsel informed her both members are New York citizens | Reliance on opposing counsel's statement is not a substitute for proper jurisdictional pleading | Court: Insufficient—such statements are conclusory and do not satisfy pleading requirements |
| Whether "information and belief" allegations meet plausibility for jurisdictional facts | Plaintiff relied on "information and belief" to allege members' citizenship and lack of California domicile | Such speculative averments fail under plausibility standards from Iqbal/Twombly | Court: Insufficient—jurisdictional facts must be pleaded with factual specificity |
Key Cases Cited
- Bayerische Landesbank v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir. 2012) (an LLC's citizenship is the citizenship of each of its members)
- Carter v. HealthPort Techs., LLC, 822 F.3d 47 (2d Cir. 2016) (conclusory assertions about an LLC's state citizenship are insufficient)
- Brown v. Keene, 8 Pet. 112 (U.S. 1834) (jurisdictional averments must be positive and expressly stated)
- Belleville Catering Co. v. Champaign Market Place, L.L.C., 350 F.3d 691 (7th Cir. 2003) (counsel must verify jurisdictional facts from reliable sources before pleading)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim; conclusory allegations insufficient)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading standard governs federal pleadings)