Misdirection From California Federal District Court with Respect to Citizenship of LLC

Misdirection From California Federal District Court with Respect to Citizenship of LLC

      In a recent decision, while dismissing a pro se complaint on a variety of reasons including failure to state a claim on which relief may be granted, it provided some unfortunate direction with respect to the citizenship, for purposes of diversity jurisdiction, of a limited liability company.  Shackleford v. Virtu Investments, LLC, No. 2:16-CV-1601-TLN-EFB. PS, 2017 WL 4410095 (E.D. Ca. October 4, 2017).

      In (gratuitously) finding that the plaintiff had failed to adequately plead diversity jurisdiction, the court wrote:

Further, plaintiff fails to establish diversity of citizenship that could support diversity jurisdiction over the state law claims. As noted above, to establish diversity jurisdiction plaintiff must allege diverse citizenship of all parties. Although the amended complaint does allege that plaintiff is a citizenship of California, it does not adequately allege Virtu Investments, LLC’s state of incorporation or principal place of business. 2017 WL 4410095, *2 (citation and footnote omitted; emphasis added).

      In a footnote to this paragraph, the court noted that the plaintiff had alleged that Virtue had principal places of business in several states. In response thereto, the court noted that under Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010), a corporation may have only one principal place of business.

      All that may be true, but it is as well irrelevant. A limited liability company is not, for purposes of diversity jurisdiction, analyzed in the same way as is a corporation. Specifically, what is the jurisdiction of organization of an LLC, and in what jurisdiction it maintains it’s principal place of business, are points that are entirely relevant to the citizenship of an LLC. Rather, an LLC’s citizenship is assessed based upon the citizenship of its members.