Parler LLC v. Amazon Web Services Inc
2:21-cv-00270
W.D. Wash.Sep 30, 2021Background
- Parler previously sued AWS in federal court (Parler I) and lost a preliminary injunction; Parler voluntarily dismissed that case and filed a new state-court complaint (Parler II) asserting only state-law claims against AWS and Amazon.com.
- Defendants removed Parler II to federal court on diversity grounds using "snap removal"—filing a notice before formal service—asserting complete diversity and the amount-in-controversy requirement.
- Parler argued it shares Delaware citizenship with Amazon because one of Parler’s indirect members is an irrevocable trust whose trustee is J.P. Morgan Trust Company, Inc. (a Delaware citizen); the parties litigated limited jurisdictional discovery about the trust.
- The central legal question became whether the Rebekah Mercer 2020 Irrevocable Trust is a "traditional" trust—whose citizenship is that of its trustees—or a business/artificial trust whose membership must be traced differently.
- The court concluded the Trust is a traditional trust and therefore takes the citizenship of its trustees (including J.P. Morgan Trust Company, Inc., Delaware), meaning Parler is a Delaware citizen and complete diversity is lacking.
- The court granted Parler’s motion to remand for lack of subject-matter jurisdiction, denied Rule 11 sanctions, and denied as moot Defendants’ motion to amend the notice of removal; the case was remanded to King County Superior Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court has diversity jurisdiction (complete diversity) | Parler: an indirect member is a trust whose trustee is a Delaware corporation, so Parler is a Delaware citizen and diversity fails | Amazon: Parler is not a Delaware citizen; removal was proper and jurisdiction exists | Court: No complete diversity—Trust is traditional and trustee J.P. Morgan (Delaware) imparts Delaware citizenship to Parler; remand granted |
| Whether the Rebekah Mercer 2020 Trust is a "traditional" trust or a business/artificial trust | Parler: Trust is traditional (donative/fiduciary), lacks juridical personhood, cannot sue in its own name | Amazon: Trust may be a business-like entity or otherwise not treated as traditional for jurisdictional purposes | Court: Trust is traditional (no juridical status; donative purpose) so trustee citizenship controls |
| Whether an "administrative" trustee’s citizenship may be ignored | Parler: Trustee citizenship counts regardless of whether trustee’s role is largely administrative | Amazon: J.P. Morgan is nominal/administrative and its citizenship should be disregarded | Court: Declined to adopt a rule disregarding administrative trustees; no authority to ignore J.P. Morgan’s citizenship here |
| Sanctions and amendment of notice of removal | Parler: Defendants’ incorrect allegations about Parler’s citizenship warrant Rule 11 sanctions | Amazon: Error was careless and based on Parler’s earlier filings; sanctions not warranted; seeks to amend notice | Court: Denied sanctions (issues debatable and error traceable); denied amendment as moot given lack of jurisdiction |
Key Cases Cited
- Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S. 378 (Sup. Ct. 2016) (distinguishes traditional trusts from business trusts for diversity purposes)
- Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (an LLC is a citizen of every state of which its members are citizens)
- GBForefront, L.P. v. Forefront Mgmt. Grp., LLC, 888 F.3d 29 (3d Cir. 2018) (analysis for distinguishing traditional trusts from business or entity-like trusts)
- Carden v. Arkoma Assocs., 494 U.S. 185 (Sup. Ct. 1990) (complete diversity requires tracing citizenship of all entity members)
- Hertz Corp. v. Friend, 559 U.S. 77 (Sup. Ct. 2010) (party asserting federal jurisdiction bears burden of proof)