River Wuhai, LLC v. E.O.A Management Group, LLC
2:22-cv-02727
C.D. Cal.Oct 11, 2022Background
- Plaintiffs River Wuhai LLC and 9 Kings Creative Capital Ltd filed suit in federal court asserting diversity jurisdiction under 28 U.S.C. § 1332(a).
- Plaintiffs allege River Wuhai, Aequitas Healthcare, LLC, and E.O.A. Management Group, LLC are LLCs, and 9 Kings is a trust domiciled in Hong Kong.
- Plaintiffs did not identify the members of the alleged LLCs or the ownership/members of 9 Kings, so citizenship of those entities was not pleaded.
- Plaintiffs alleged the citizenship of Parke, E.O.A., Aequitas, and Tejuja "on information and belief."
- The Court found the jurisdictional allegations insufficient to establish complete diversity and ordered Plaintiffs to show cause (or file an amended complaint) by October 14, 2022, or face dismissal for lack of subject matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs adequately pleaded citizenship of LLC parties | Alleged entities are LLCs and asserted diversity jurisdiction | Defendants did not separately contest in the order; court required factual allegations | Court: Insufficient — must allege each LLC member and their citizenship |
| Whether plaintiffs adequately pleaded citizenship of 9 Kings (a trust) | Alleged 9 Kings is a trust domiciled in Hong Kong with a principal place of business | N/A (court analyzed applicable law) | Court: Insufficient — for business/trust entities must plead the citizenship of its "members" (owners/shareholders) |
| Whether allegations "on information and belief" suffice for jurisdictional facts | Plaintiffs pleaded some defendants' citizenship on information and belief | N/A | Court: Insufficient — jurisdictional facts must be alleged affirmatively, not on information and belief, absent unusual circumstances |
| Remedy for deficient jurisdictional allegations | Plaintiffs requested to proceed in federal court | Defendants did not move to dismiss on these grounds in the order | Court: Ordered plaintiffs to show cause (or file amended complaint correcting defects) by Oct 14, 2022, or action will be dismissed for lack of subject matter jurisdiction |
Key Cases Cited
- Tosco Corp. v. Communities for a Better Environment, 236 F.3d 495 (9th Cir. 2001) (plaintiff must affirmatively plead facts essential to federal jurisdiction)
- Smith v. McCullough, 270 U.S. 456 (U.S. 1926) (pleading requirement for jurisdictional facts)
- Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (an LLC is a citizen of every state of which its members are citizens)
- Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (U.S. 2004) (partnerships take citizenship of their partners)
- Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S. 378 (U.S. 2016) (business-trust entities' citizenship depends on the citizenship of their members/owners)
- Carden v. Arkoma Assocs., 494 U.S. 185 (U.S. 1990) (citizenship of unincorporated associations depends on citizenship of its members)
- Kanter v. Warner-Lambert Co., 265 F.3d 853 (9th Cir. 2001) (allegations based on information and belief are generally insufficient for diversity jurisdiction)
- Bradford v. Mitchell Bros. Truck Lines, 217 F. Supp. 525 (N.D. Cal. 1963) (same principle regarding insufficiency of conclusory jurisdictional allegations)