Sprout Mortgage, LLC v. Consolidated Analytics, Inc., 2:21-cv-04415

Sprout Mortgage, LLC (plaintiff) sued Consolidated Analytics, Inc. in New York state court for breach of contract and declaratory relief.
Defendant removed to federal court invoking diversity jurisdiction but acknowledged it did not know the citizenship of Plaintiff’s LLC members.
The Court ordered Plaintiff to identify its members; Plaintiff replied the membership chain includes up to 30 entities (LLCs, individuals, corporations, trusts, a pension plan) and moved for jurisdictional discovery and a 45‑day stay.
Defendant filed a pre‑motion letter seeking dismissal for lack of personal jurisdiction or improper venue, or transfer to the Central District of California.
The Magistrate Judge granted limited jurisdictional discovery: Plaintiff must produce known upstream LLCs/members by August 25, 2021; Defendant must complete jurisdictional discovery by September 30, 2021.
The Court stayed other discovery until a status conference on October 13, 2021, and recommended holding Defendant’s pre‑motion letter in abeyance pending the jurisdictional discovery outcome.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal subject‑matter jurisdiction exists (complete diversity)	Plaintiff lacks records of all members and seeks limited jurisdictional discovery to identify citizenship	Defendant removed to federal court but conceded it does not know Plaintiff’s members; removal burden rests on Defendant to prove diversity	Court granted limited jurisdictional discovery and set production/discovery deadlines; remand remains possible if diversity not established
Whether to permit Defendant’s pre‑motion to dismiss/transfer before resolving jurisdiction	Plaintiff asked to stay other proceedings until jurisdiction is resolved	Defendant sought permission to file a motion to dismiss or transfer promptly	Court recommended holding Defendant’s pre‑motion letter in abeyance until jurisdictional discovery concludes;

Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371 (1940) (federal courts must dismiss actions when subject‑matter jurisdiction is lacking)
Mehlenbacher v. Akzo Nobel Salt, Inc., 216 F.3d 291 (2d Cir. 2000) (removing party bears burden to establish diversity jurisdiction)
United Food & Comm’l Workers Union v. CenterMark Props., 30 F.3d 298 (2d Cir. 1994) (removal burden principles and procedural posture guidance)
Platinum‑Montaur Life Scis., LLC v. Navidea Biopharm., Inc., 943 F.3d 613 (2d Cir. 2019) (district court may remand or order jurisdictional discovery when diversity is unclear)
Lupo v. Human Affairs Int’l, Inc., 28 F.3d 269 (2d Cir. 1994) (removal procedures seek rapid forum determination)