United States District Court, W.D. Washington, Seattle
ORDER DISMISSING ACTION WITHOUT PREJUDICE FOR LACK OF
SUBJECT MATTER JURISDICTION
L. ROBART, United States District Judge
the court is Plaintiffs Donald Varney and Marie Varney's
(collectively, “Plaintiffs”) response to the
court's order to show cause regarding subject matter
jurisdiction. (OSC Resp. (Dkt. # 106); see also OSC
(Dkt. # 22).) The court issued the order to show cause
because Plaintiffs' complaint does not contain
allegations regarding the identity or citizenship of the
members of four Defendants, which are limited liability
companies. (OSC at 2-3.) Those Defendants are ITT, LLC
(“ITT”), McNally Industries, LLC
(“McNally”), Sterling Fluid Systems (USA), LLC
(“Sterling”), and Warren Pumps, LLC
(“Warren”). (Id. at 2 (citing Compl.
(Dkt. # 1) ¶¶ 31, 34, 39, 45).)
order to show cause, the court explained to Plaintiffs that a
court assessing diversity jurisdiction in a proceeding
involving a limited liability company must consider the
citizenship of all members of the limited liability company.
(See OSC at 2 (citing Johnson v. Columbia Props.
Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)
(“[A]n LLC is a citizen of every state of which its
owners/members are citizens.”)).) The court also
explained that if the members of a limited liability company
are in turn also limited liability companies, Plaintiffs must
allege the citizenship of those entities as well by
identifying the citizenship of their members. (See
Id. at 3 n.1 (citing Johnson, 437 F.3d at 899
(examining corporate citizenship of a limited partnership
whose partners included LLCs by looking to the citizenship of
the members/owners of those LLCs)).)
allege that the court's subject matter jurisdiction rests
on 28 U.S.C. § 1332. (Compl. ¶ 52.) This provision
requires compete diversity of citizenship between the
parties. “That is, diversity jurisdiction does not
exist unless each defendant is a citizen of a
different State from each plaintiff.” Owen
Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373
(1978) (italics in original). Plaintiffs allege that they are
citizens of Arizona. (Compl. ¶ 1.) In their response to
the court's order to show cause, Plaintiffs state that
they “have been able to determine that none of the LLC
Defendants have members that are citizens of Arizona.”
(OSC Resp. at 2.) The court has examined Plaintiffs'
counsel's declaration and its accompanying evidence
(see Adams Decl. (Dkt. # 106-1)), which Plaintiffs
submitted along with their response to the order to show
cause (see OSC Resp.), and concludes that the
evidence counsel submits does not support this statement.
Indeed, there is no evidence before the court from which it
could determine that the limited liability company Defendants
at issue are not citizens of Arizona. Thus, the court is
unable to determine that each Defendant is a citizen of a
different state from Plaintiffs. The court will discuss
Plaintiffs' submissions concerning each such limited
liability company Defendant in turn.
Plaintiffs' counsel submits that counsel for Warren
represented that Warren's only member is IMO Industries,
Inc. (“IMO”) and that IMO is a Delaware
corporation. (Adams Decl. ¶ 3.) This information is fine
as far as it goes, but it does not go far enough. A
corporation “shall be deemed to be a citizen of any
State by which it has been incorporated and of the State
where it has its principal place of business.” 28
U.S.C. § 1332(c)(1). Plaintiffs provide no information
concerning IMO's principal place of business, and so the
court has insufficient information concerning the citizenship
Plaintiffs assert that Arsenal HoldCo, LLC
(“Arsenal”), is the sole member of McNally.
(See OSC Resp. at 2.) Although the documentation
submitted by Plaintiffs appears to indicate that Arsenal is a
member of McNally, the court cannot conclude based on the
evidence before it that Arsenal is McNally's sole member.
(See Adams Decl. ¶ 6, Ex. 2 at Cm/ECF page 17.)
Furthermore, even if Arsenal is the sole member of McNally,
the court still would not know the citizenship of McNally
because it does not know the citizenship of Arsenal.
Plaintiffs state that Arsenal is a citizen of Delaware, but
the only evidence before the court is that Arsenal is a
limited liability company that was organized in Delaware.
(See Id. ¶ 7, Ex. 3.) The state of
Arsenal's organization does not establish its citizenship
for purposes of determining the court's subject matter
jurisdiction. As the court has already apprised Plaintiffs,
and as they should have so informed themselves prior to
filing suit in federal court, a limited liability company
“is a citizen of every state of which its
owners/members are citizens.” Johnson, 437
F.3d at 899. Further, if a member of a limited liability
company defendant is in turn another limited liability
company, Plaintiffs must allege the citizenship of that
entity by identifying the citizenship of its members as well.
(See OSC at 3 n.1.) Thus, if Arsenal is the sole
member of McNally, then Plaintiffs also need to allege the
citizenship of each of Arsenal's members in order to
establish the citizenship of McNally, which Plaintiffs have
not done. Thus, Plaintiffs have failed to provide any proper
averment or evidence concerning the citizenship of McNally.
Plaintiffs have not established the citizenship of Sterling.
Again, because Sterling is a limited liability company, its
citizenship is determined by the citizenship of its members
or owners. See Johnson, 437 F.3d at 899. Although
Plaintiffs provide information concerning the
“principals” of Sterling, they provide no
information concerning Sterling's members. (See OSC
Resp. at 2.) Further, the information Plaintiffs provide
concerning Sterling's state of organization and principle
place of business is irrelevant. (See id.) As noted
above, this type of information applies when establishing the
citizenship of a corporation for purposes of diversity
jurisdiction, see 28 U.S.C. § 1332(c)(1), not a
limited liability company, see Derosier v. Glob. Hawk
Ins. Co. (RRG), No. 4:16-CV-06069-KAW, 2017 WL 1133411,
at *3 (N.D. Cal. Mar. 27, 2017) (“[A]n LLC is not
defined by its principal place of business, and thus the
location of its nerve center is not at issue for purposes for
establishing diversity jurisdiction.” (internal
citation and quotation marks omitted)). Thus, Plaintiffs fail
to establish the citizenship of Sterling.
Plaintiffs fail to establish the citizenship of ITT. As noted
above, the fact that ITT is a limited liability company
organized in Indiana is irrelevant. (See OSC Resp.
at 2.) Further, as discussed above, the citizenship of
ITT's principals is also irrelevant. (See supra
n.1.) Plaintiffs provide no information concerning the
citizenship of ITT's members. (See OSC Resp. at
2; Adams Decl. ¶¶ 2, 5, Ex. 1.) Thus, Plaintiffs
have failed to provide any of the information requested by
the court with respect to any of the limited liability
on the foregoing review of the information Plaintiffs provide
in response to the court's order to show cause, there is
no evidence to substantiate Plaintiffs' assertion that
“none of the LLC Defendants have members that are
citizens of Arizona.” (See OSC Resp. at 2.)
Thus, the court cannot determine if there is complete
diversity of citizenship between the parties as required to
support federal subject matter jurisdiction under 28 U.S.C.
court is a court of limited jurisdiction. Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
It possesses only that power authorized by the Constitution
and statute. Id. It cannot gloss over the existence
of subject matter jurisdiction. Indeed, the Supreme Court
instructs that “[i]t is to be presumed that a cause
lies outside [the court's] limited jurisdiction, ”
and “the burden of establishing the contrary rests upon
the party asserting jurisdiction.” Id. The
court provided Plaintiffs with an opportunity to demonstrate
the court's subject matter jurisdiction (see
OSC), but Plaintiffs failed to do so. If a federal court
determines that it lacks subject matter jurisdiction at any
time during a dispute, the court must dismiss the action.
See Fed. R. Civ. P. 12(h)(3); Hertz Corp. v.
Friend, 559 U.S. 77, 94 (2010) (“Courts have an
independent obligation to determine whether subject-matter
jurisdiction exists, even when no party challenges
it.”); Rosales v. United States, 824 F.2d 799,
803 n.4 (9th Cir. 1987). Accordingly, the court DISMISSES
this action WITHOUT PREJUDICE for lack of subject matter
jurisdiction. Plaintiffs are free, if appropriate, to refile
this action in a court of general jurisdiction.
 Further, the notion that the terms
“principal” and “member” of a limited
liability company are “most likely synonymous”-as
Plaintiffs suggest-borders on the specious. (See OSC
Resp. at 2.) Delaware's Limited Liability Company Act
(“LLC Act”) “defines a member as ‘a
person who is admitted to a limited liability company as a
member as provided in [6 Del. C.] § 18-301, '”
which in turn pertains to the admission of members.
Hampton v. Turner, No. CV 8963-VCN, 2015 WL 1947067,
at *5 (Del. Ch. Apr. 29, 2015); see also OPERATING
AGREEMENT, Black's Law Dictionary (10th ed. 2014)
(“A limited-liability company's governing document
that sets out the financial and managerial rights of the
company's members.”). A “principal” is
“[s]omeone who authorizes another to act on his or her
behalf as an agent.” PRINCIPAL, Black's Law