PMX Agency LLC v. Blackstreet Capital Holdings, LLC
1:16-cv-03849
S.D.N.Y.Aug 21, 2017Background
- PMX Agency LLC (successor to Paradyz, Inc.) sued Blackstreet Capital Holdings, LLC and related defendants in federal court alleging state-law claims.
- Defendants moved to dismiss for lack of subject matter and personal jurisdiction; two defendants also moved under Rule 12(b)(6).
- The complaint alleged diversity jurisdiction but failed to identify the citizenship of Blackstreet's members (an LLC), a defect for diversity purposes.
- Blackstreet submitted declarations stating at least two of its members were domiciled in New York, suggesting lack of complete diversity with PMX (a New York citizen).
- The Court found PMX’s pleadings insufficient to establish diversity and concluded subject matter jurisdiction was likely lacking absent further factual support.
- The Court required PMX to amend its complaint and submit a short letter and any affidavits showing a good-faith basis for diversity before permitting jurisdictional discovery; other motions to dismiss were denied as moot pending resolution of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the court has diversity subject-matter jurisdiction | PMX: Complaint alleges complete diversity | Defendants: Complaint fails to allege citizenship of members of Blackstreet; declarations show at least two members domiciled in NY | Court: PMX failed to establish diversity; jurisdiction likely lacking without amendment |
| Whether an LLC’s members’ citizenship must be pleaded | PMX: did not plead members' citizenship | Defendants: LLC takes citizenship of each member; omission fatal | Court: Pleading must allege each natural-person member’s citizenship for diversity |
| Whether jurisdictional discovery should be allowed | PMX: seeks discovery to test accuracy of Blackstreet declarations | Defendants: declarations suffice; no threshold showing for discovery | Court: Denied discovery for now; plaintiff must first amend and show colorable basis for jurisdiction |
| Disposition of pending Rule 12(b) motions (personal jurisdiction / Rule 12(b)(6)) | PMX: opposed | Defendants: sought dismissal on various grounds | Court: Denied as moot without prejudice pending resolution of subject-matter jurisdiction |
Key Cases Cited
- Gunn v. Minton, 568 U.S. 251 (federal courts have limited jurisdiction)
- Durant, Nichols, Houston, Hodgson & Cortese-Costa P.C. v. Dupont, 565 F.3d 56 (2d Cir.) (diversity jurisdiction principles)
- Airlines Reporting Corp. v. S & N Travel, 58 F.3d 857 (2d Cir.) (complete diversity required)
- Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt., LLC, 692 F.3d 42 (2d Cir.) (LLC assumes citizenship of each member)
- Handelsman v. Bedford Vill. Assocs. Ltd. P'ship, 213 F.3d 48 (2d Cir.) (LLC citizenship rules)
- Makarova v. United States, 201 F.3d 110 (2d Cir.) (plaintiff bears burden to prove jurisdiction)
- Carter v. HealthPort Technologies, 822 F.3d 47 (2d Cir.) (pleading deficiencies re jurisdiction)
- Maryland Cas. Co. v. W.R. Grace & Co., 23 F.3d 617 (2d Cir.) (diversity determined at commencement of suit)
- Cantor Fitzgerald, L.P. v. Peaslee, 88 F.3d 152 (2d Cir.) (jurisdictional doubts resolved before merits)
- Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (courts should decide jurisdiction before merits)
- J.S. ex rel. N.S. v. Attica Cent. Schs., 386 F.3d 107 (2d Cir.) (courts may consider affidavits on jurisdictional issues but not conclusory/hearsay)