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Clark v. SL Western Lounge, LLC

United States District Court, E.D. Missouri, Eastern Division

February 11, 2019

MARCIA CLARK Plaintiff,
v.
SL WESTERN LOUNGE, LLC Defendant.

          MEMORANDUM AND ORDER

          JEAN C. HAMILTON UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff's Motion to Remand, filed August, 20, 2018, (ECF No. 10). The matter is fully briefed and ready for disposition.

         BACKGROUND

         On July 25, 2018, this case was removed from the Circuit Court of St. Louis City to the Eastern District of Missouri by Defendant SL Western Lounge, LLC, on the basis of diversity jurisdiction. (ECF Nos. 1, 2). On August 20, 2018, Plaintiff filed a Motion to Remand arguing that Defendant SL Western Lounge, LLC is prevented from Removal as a forum defendant. (ECF No. 10). On September 5, 2018, Plaintiff requested oral argument and testimony on the Motion to Remand. (ECF No. 15). On September 17, 2018, the Court denied Plaintiff's motion for oral argument and testimony and ordered the Plaintiff to conduct discovery as to the issue of diversity jurisdiction and citizenship in support of her Motion to Remand. (ECF No. 19). On November 5, 2018, Plaintiff was ordered to provide the results of this discovery. (ECF No. 21). Plaintiff then filed a Motion to Compel Discovery regarding the financial accounts of the sub-members of SL Western Lounge, LLC, and other information pertinent to the citizenship of the sub-members. (ECF No. 22).

         On November 29, 2018, the Court issued a Memorandum and Order granting Plaintiff's motion to Compel and instructed the Defendant to state the locations of the financial accounts owned by the members and sub-members of SL Western Lounge, LLC. (ECF No. 25). On December 18, 2018, the parties filed a Joint Motion for Entry of an Agreed Protective Order which was entered by the Court on January 4, 2019. (ECF Nos. 26, 27). On January 14, 2019, the Court held a telephone conference with the parties and determined that the parties had ten (10) days to confirm and resolve the outstanding matters regarding the Motion to Remand. (ECF Nos. 32, 33).

         On January 25, 2019, the Plaintiff filed a Supplemental Memorandum in this case with regard to the Motion to Remand. (ECF No. 38). In her Supplemental Memorandum, Plaintiff argues that because additional discovery indicates that SL Western Lounge, LLC has a financial account in Missouri, Missouri citizenship should be conferred on Defendant. Id. On February 4, 2019, Defendant filed its Sur-reply to the Motion to Remand, arguing that Plaintiff has not made a proper argument to show that removal was improper in this case, and on February 6, 2019, Defendant filed its discovery responses with the Court. (ECF No. 41).

         LEGAL STANDARD

         I. Diversity Jurisdiction

         Pursuant to 28 U.S.C. § 1332(a)(1), “[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between-citizens of different States.” “The removing party bears the burden of establishing federal jurisdiction by a preponderance of the evidence.” Boschert v. Wright Medical Group, Inc., 2015 WL 1006482, at *2 (E.D. Mo. Mar. 6, 2015) (citing Altimore v. Mount Mercy College, 420 F.3d 763, 768 (8th Cir. 2005)). Removal statutes are strictly construed, and “any doubts about the propriety of removal must be resolved in favor of remand.” Green v. Arizona Cardinals Football Club LLC, 21 F.Supp.3d 1020, 1025 (E.D. Mo. 2014) (citing In re Bus. Men's Assurance Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993)). Diversity jurisdiction requires complete diversity between citizens; therefore the Defendant cannot hold the same citizenship as the Plaintiff. Eckerberg v. Inter-State Studio Publishing Co., 860 F.3d 1079, 1084 (8th Cir. 2017).

         II. Forum Defendant Rule

         Although a defendant generally may remove a case to federal court when the federal court would have original jurisdiction over the action, “there is a restriction on the removal of diversity cases known as the ‘forum defendant rule.'” Perez v. Forest Laboratories, Inc., 902 F.Supp.2d 1238, 1241 (E.D. Mo. 2012). This rule, set forth in 28 U.S.C. § 1441(b), “makes diversity jurisdiction in a removal case narrower than if the case was originally filed in federal court by the plaintiff.” Johnson v. Emerson Elec. Co., 2013 WL 5442752, at *1 (E.D. Mo. Sep. 30, 2013) (citations omitted). “Under § 1441(b), a defendant can remove a case based on diversity jurisdiction ‘only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.'” Id. (citing Lincoln Prop. Co. v. Roche, 546 U.S. 81, 90 (2005); Horton v. Conklin, 431 F.3d 602, 604 (8th Cir. 2005) (quoting 28 U.S.C. § 1441(b)); Pecherski v. General Motors Corp., 636 F.2d 1156, 1160 (8th Cir. 1981)). Federal courts thus lack diversity jurisdiction over a removed case in which one or more of the defendants is a citizen of the forum state, see Perez, 902 F.Supp.2d at 1241, and “the violation of the forum defendant rule is a jurisdictional defect and not a mere procedural irregularity capable of being waived.” Horton, 431 F.3d at 605 (internal quotations and citation omitted).

         III. Citizenship of Limited Liability Companies

          The Eighth Circuit has been clear that for the purpose of diversity jurisdiction, a limited liability company takes the citizenship of each of its members. See E3 Biofules, LLC v. Biothane, LLC,781 F.3d 972, 975 (8th Cir. 2015). Although the Court of Appeals has not specifically addressed whether the citizenship of sub-members is relevant to establishing diversity citizenship, other courts have written on this issue. In this circuit, the United States District Court for the District of Minnesota has stated that, “[w]hen diversity jurisdiction is invoked in a case in which a limited liability company is a party, the court needs to know the citizenship of each member of the company… [b]ecause a member of a limited liability company may itself have multiple members - and thus may itself have multiple citizenships - the federal court needs to know the citizenship of each ...


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