Tuesday, October 30, 2012

Diversity Jurisdiction – The Amount in Controversy and Complete Diversity

Diversity Jurisdiction – The Amount in Controversy and Complete Diversity

            A recent decision of the Western District of Kentucky has addressed in detail the issue of showing that the amount in controversy exceeds the jurisdictional threshold of $75,000, but the decision is perhaps misleading as to the requirement of diversity.  Warren v. Mac’s Convenience Stores, LLC, 2012 WL 5077669 (W.D. Ky Oct. 18, 2012).

            Warren sued Mac’s in a slip and fall case.  Based upon Warren’s refusal to stipulate that here damages were less than $75,000, Mac’s removed the case to federal court, alleging that the amount is controversy requirement was satisfied.  The case was remanded on the basis that a refusal to stipulate was of itself insufficient to satisfy Mac’s obligation to demonstrate that the requirements of 28 USC 1332 were satisfied.

            What I found curious is a pair of statements in the decision.  First, the court observed that “Mac’s in a Delaware limited liability company with its principal place of business in Columbus, Indiana.”  Second, it observed that “All agree that the parties are diverse.”  What is curious is that neither the jurisdiction of organization nor the location of the principal place of business have any bearing upon the citizenship, for purposes of diversity, of an LLC. See, e.g., Citizens Bank v. Plasticware, LLC, 2011 WL 5598883 (E.D. Ky. 2001) (principal place of business not relevant to LLC’s citizenship); Master v. Quiznos Franchise Co., 2007 WL 419287 (D. N.J. 2007) (neither jurisdiction of organization nor location of principal place of business determine LLC’s citizenship).
            Now perhaps the two statements are unrelated. The court in the former could have been simply describing Mac’s while in the second indicating that the necessary diversity had been determined on facts not relevant to this opinion.  On the other hand, if diversity was determined based upon Mac’s being a Delaware LLC with its principal place of business in Indiana and Warren being a citizen of Kentucky, then something may well be off.

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