ORCHID QUAY LLC v. SUNCOR BRISTOL BAY LLC
2:15-cv-14109
S.D. Fla.Apr 11, 2016Background
- Orchid Quay, LLC sued Suncor Bristol Bay, LLC and Malbec Investments, LLC in the Southern District of Florida on state-law claims.
- The Court previously dismissed Orchid’s amended complaint for lack of subject-matter jurisdiction due to insufficient diversity invocation.
- Orchid’s second amended complaint traced citizenship through multiple layers of membership in an LLC chain, including CalPERS as a submember.
- CalPERS’s status as a member of Orchid raised whether CalPERS is an arm of California and thus destroys complete diversity.
- The Court held CalPERS’s membership destroys complete diversity and dismissed the case without prejudice for lack of jurisdiction, with related sealing motions denied as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does CalPERS’s membership destroy complete diversity | Orchid argues CalPERS’s lack of citizenship should be disregarded | Suncor treats CalPERS as an arm of the state that destroys diversity | Yes, CalPERS destroys complete diversity and jurisdiction is lacking |
| Can a stateless member be disregarded under Carden Grupo Dataflux | Orchid seeks to disregard CalPERS as a noncitizen | Citizenship must be traced to all members; cannot disregard stateless member | No; citizenship of all members must be considered; CalPERS cannot be disregarded |
| Is Orchid a citizen for diversity purposes given unincorporated membership | Orchid gains citizenship through its members | Unincorporated associations’ citizenship is the citizenship of their members | Orchid’s stateless member defeats complete diversity; diversity not established |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (unincorporated entity citizenship determined by all members; entity treated as single party)
- Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567 (2004) (dispensable party rule does not apply to unincorporated entities; look to all members)
- Navarro Sav. Ass’n v. Lee, 446 U.S. 458 (1980) (look to members to determine citizenship of entity for diversity)
- Univ. of S. Ala. v. Am. Tobacco Co., 168 F.3d 405 (11th Cir. 1999) (arm-of-the-state destroys complete diversity when a state is a party)
- Moor v. Alameda Cty., 411 U.S. 693 (1973) (state is not a citizen for diversity purposes)