Wednesday, April 23, 2014

Discovery in Support of Jurisdiction Denied

Discovery in Support of Jurisdiction Denied
       In a recent trial court decision from New Jersey, a life insurance company brought suit against certain parties including LLCs, seeking a determination that two life insurance policies were invalid.  While the amount in controversy was certainly not at issue, each policy being in the amount of $6.67 million, the plaintiff did not plead the domicile of any of the members of the LLC.  The LLCs in turn moved to dismiss for the plaintiff’s failure to meet its requirements to demonstrate the existence of diversity jurisdiction.  Rejecting the plaintiff’s request for jurisdictional discovery in order to support its complaint, the court wrote:
For the foregoing reasons, this Court finds that the Complaint, on its face, does not assert the complete diversity of Plaintiff and Defendants required to establish the subject matter jurisdiction of the federal courts under 28 U.S.C. § 1332. Defendants ALS and AEI are limited liability companies, whose citizenship is established by the domiciles of their members. The Complaint fails to include any such information about the members, and the Plaintiff, in briefing, admits that it brought the action without knowing any such information. While Plaintiff has requested jurisdictional discovery as an alternative to dismissal, the Court finds that in the context of subject matter jurisdiction, factors of judicial economy and the Federal Rules’ allocation to Plaintiff of the burden for establishing the court’s jurisdiction counsel in favor of dismissal.
Lincoln Benefit Life Co. v. AEI Life LLC, __ F.Supp.2d __, 2014 WL 1343266, *8 (D. N.J. April 4, 2014)
    A similar ruling was issued in Osborn & Barr Commc’ns, Inc. v. EMC Corp., 2008 U.S. Dist. LEXIS 8430, 2008 WL 341664 (E.D. Mo. Feb. 5, 2008).  There is however authority to the contrary.  See, e.g., Carolina Casualty Ins. Co. v. Team Equipment, Inc., 741 F.3d 1082 (9th Cir. 2014).

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