Platinum-Montaur Life Sciences, LLC v. Navidea Biopharmaceuticals, Inc.
943 F.3d 613
| 2d Cir. | 2019Background
- Platinum‑Montaur (an LLC) sued Navidea in New York state court to collect a debt; Navidea removed to federal court asserting diversity jurisdiction under 28 U.S.C. § 1332.
- Navidea’s notice of removal identified Navidea as a Delaware corporation with a principal place of business in Ohio, but did not fully identify Platinum‑Montaur’s citizenship.
- Platinum‑Montaur is an LLC whose citizenship depends on the citizenship of all its members; one member was PPVA, a Cayman LP with downstream entities including PPVA Onshore (a U.S. feeder fund with ~220 limited partners), creating a complex ownership chain. Navidea did not identify the partners’ citizenships.
- The district court ordered limited informal jurisdictional discovery; the parties found the ownership chain complex and incomplete, then the district court declined to order further discovery, stating it had no "good faith basis to believe" diversity was lacking and proceeded.
- The district court granted Navidea’s motion to dismiss on the merits (concluding Platinum‑Montaur had assigned away its contractual right to recover). The Second Circuit vacated and remanded, holding the district court erred by not resolving whether complete diversity existed before reaching the merits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a district court may assume diversity jurisdiction when the record does not establish complete diversity | Court must determine citizenship before adjudicating merits; removal defective without full member/partner citizenship info | No "good faith basis" to believe diversity lacking; court may proceed without further discovery | Court erred in assuming jurisdiction; must determine diversity first (vacated and remanded) |
| Who bears the burden to establish diversity in a removal case | Navidea (removing party) failed to identify all members/partners so removal was not supported | Removal was adequate; further inquiry unnecessary | Removing party bears burden; Navidea did not establish complete diversity |
| Appropriate procedure when citizenship is unclear after initial discovery | District court should remand or order additional jurisdictional discovery to determine citizenship | Court may decline further discovery and proceed if no reason to doubt diversity | District court must either remand or, in its discretion, order further jurisdictional discovery (discretion exercised with caution) |
| Whether the district court’s dismissal was an Article III standing ruling or a merits ruling | Platinum‑Montaur argued it had Article III standing to sue for breach; court had erred on standing grounds | Navidea argued lack of standing due to assignment | Second Circuit treated district court’s assignment ruling as a merits decision, not an Article III standing dismissal; it did not resolve standing on jurisdictional grounds |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (a partnership takes the citizenship of all its partners for diversity purposes)
- Bayerische Landesbank v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir. 2012) (an LLC is a citizen of each state of which its members are citizens)
- United Food & Commercial Workers Union, Local 919 v. Centermark Properties Meriden Square, Inc., 30 F.3d 298 (2d Cir. 1994) (remand required where removal record contains no evidence to determine membership/citizenship)
- Durant, Nichols, Houston, Hodgson & Cortese‑Costa P.C. v. Dupont, 565 F.3d 56 (2d Cir. 2009) (remand or supplementation of record may be necessary to resolve citizenship disputes)
- Lupo v. Human Affairs Intern., 28 F.3d 269 (2d Cir. 1994) (caution against prolonged preliminary litigation over removal; removal procedures favor quick forum determination)
- Wis. Dep’t of Corr. v. Schacht, 524 U.S. 381 (1998) (complete diversity requirement: no plaintiff and no defendant may share citizenship)
- United States v. Cotton, 535 U.S. 625 (2002) (subject‑matter jurisdiction cannot be waived or conferred by consent)
- Somlyo v. J. Lu‑Rob Enters., Inc., 932 F.2d 1043 (2d Cir. 1991) (removal statute is construed narrowly; doubts resolved against removability)