Tuesday, August 13, 2019

Court Orders Limited Discovery with Respect to Diversity of Citizenship

Court Orders Limited Discovery with Respect to Diversity of Citizenship

In a recent decision from a federal district court in New Mexico, a defendant in an action was ordered to produce discovery that would either confirm or reject the availability of diversity jurisdiction. Fullerton v. Southland  Royalty Company, LLC, Civ. No. 19-415 WJ/CY, 2019 WL 3304799 (D. N. Mex. July 23, 2019).

The Fullerton's filed this action in federal district court on the basis of diversity jurisdiction, asserting that they are citizens of Colorado and “on information and belief” that the members of the defendant LLC are not citizens of Colorado. In response, the defendant Southland Royalty Company, LLC submitted an affidavit that one of its members is a limited partnership, MorningStar Partners, LP, and that it has as one of its limited partners is a Colorado citizen. On that basis, Southland asserted that diversity jurisdiction was lacking and the suit needed to be dismissed. In support of that motion, it submitted an affidavit providing in part that “at least one limited partner of MorningStar resides in the State of Colorado.” In opposition to this affidavit, the Fullerton's sought discovery as to the membership of Southland.

Initially, the court pointed out that the tendered affidavit was insufficient to address the question. While it set forth the residence of one of the limited partners, it was silent as to citizenship. Residence and citizenship, while related, are distinct concepts. From there:

Plaintiffs are entitled to an opportunity to rebut Defendant’s argument. Without discovery of certain information in Defendant’ possession about the alleged non-diverse member’s citizenship, Plaintiffs will have no meaningful opportunity to do so.” 2019 WL 3304799, *2

Still, while the plaintiffs had sought discovery as to the citizenship of all members of Southland, the court ordered that the discovery be limited to those with citizenship in Colorado as it is that citizenship that, if demonstrated, would destroy diversity jurisdiction.
The defendant’s request that any produced information be subject to a protective order was granted.

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