Disclosure of LLC’s Membership in Diversity Cases

Disclosure of LLC’s Membership in Diversity Cases

       In order to determine whether a lawsuit may be in Federal court under diversity jurisdiction, the court must know the citizenship of the LLC. That citizenship is, in turn, determined by reference to the citizenship of the LLC's members. A recent decision out of the Federal District Court for Maryland rejected efforts to keep that information out of the public record. Smith v. Westminster Management, LLC, Civ. No. JKB-17-3282, 2018 WL 572867 (D. Md. January 26, 2018).

     This suit, filed originally in state court, alleged that the defendants “engaged in various practices to wring fees from these tenants, including baselessly threatening eviction, charging various late fees and legal fees, and misallocated rent payments to pay for these fees, causing the tenants to come up short on their rent.” Those defendants included Westminster Management LLC and JK2 Westminster LLC, companies whose membership included Jared Kushner, son-in-law of the current president, as well as other members of the Kushner family. After removing the action to Federal court on the basis of diversity jurisdiction, they sought, in effect, to file disclosure as to the membership of these LLCs under seal on the basis that otherwise they could be deprived of the right to an impartial decision and that there needed to be protected the privacy of “remote to disinterested investors/families.” 2018 WL 572867, *5.

       These efforts were rejected. The court found that the information with respect to the members of the LLC used to determine whether diversity jurisdiction exists constitute a judicial records that, presumably, are to be of public record. The court found as well that the claimed privacy interests were not sufficient to overcome the presumption of public availability. In doing so, the court cited additional cases from Florida and Wisconsin.