United States District Court, D. Colorado
ORDER
PHILIP
A. BRIMMER Chief United States District Judge
This
matter comes before the Court on defendants' Response to
Second Order to Show Cause [Docket No. 45]. Defendants assert
that this Court has subject matter jurisdiction pursuant to
28 U.S.C. § 1332. Docket No. 45 at 3-4; Docket No. 1 at
1, ¶ 3.
Defendants
removed this case from the District Court for Baca County,
Colorado on August 27, 2018. Docket No. 1. On February 11,
2019 and March 5, 2019, the Court ordered defendants to show
cause why this case should not be remanded to state court due
to the Court's lack of subject matter jurisdiction.
See Docket Nos. 36, 44. In the March 5, 2019 show
cause order, the Court noted that defendants' allegations
with respect to KeHE Distributors Holdings, LLC
(“KDH”), a member of defendant KeHE Distributors
a/k/a KeHE Enterprises, LLC, were insufficient to allow the
Court to determine whether the parties were completely
diverse. See Docket No. 44 at 2-3. Specifically,
defendants had failed to identify the partners/members of
Prudential Capital Partners III, L.P. (“PC
Partners”), PCP-III K-Food Distributions Holdings, L.P.
(“PCP-III”), Prudential Capital Partners
Management Fund III, L.P. (“PCPMF”), and KH Group
Investors, LLC (“KHGI”) - all members of KDH - or
the citizenship of those partners/members. Id.
Defendants
filed their response to the Court's March 5, 2019 show
cause order on March 13, 2019, see Docket No. 45,
along with an exhibit purporting to establish the citizenship
of the various members of KDH. Docket No. 46. The Court finds
defendants' response deficient in several respects.
First, the spreadsheet listing the partners of PC Partners,
PCP-III, and PCPMF only identifies the partners' states
of residence. See Docket No. 46 at 3-7. As noted in
the Court's previous order, residence is not the
equivalent of domicile for purposes of diversity
jurisdiction. See Docket No. 44 at 3.[1] Moreover, the
Court is unable to determine the citizenship of several of
the entity partners listed in the spreadsheet without further
information. For example, defendants identify 196 Investors,
LLC, AIMCO Private Fund I, LLC, and Hanging Valley
Investments, LLC as partners of PC Partners, see
Docket No. 46 at 3, but do not include any allegations or
evidence identifying the members of the limited liability
companies or the citizenship of those members. Because the
citizenship of an LLC depends on the citizenship of all of
its members, the Court is unable to determine whether PC
Partners is diverse from plaintiff. Cf. Fifth Third Bank
v. Flatrock 3, LLC, 2010 WL 2998305, at *3 (D.N.J. July
21, 2010) (concluding that an allegation that “upon
information and belief, the members of [an LLC] are citizens
of New York” was insufficient because plaintiff
“failed to identify or trace the citizenship of each
individual member” of the LLC (internal quotation marks
omitted)).
Finally,
defendants' evidence is not sufficient to establish the
citizenship of KHGI. Defendants have submitted a chart
showing that KHGI is owned by “individually named
owners, including the RDV Corporation, which are all
domiciled in Michigan.” Docket No. 45 at 3; see
also Docket No. 46 at 1. However, the chart does not
provide a clear basis for finding that the individually named
owners - who actually appear to be trusts - are domiciled in
Michigan. See Docket 46 at 1. The citizenship of
trusts is determined through a different set of rules that
defendants do not address. See generally Americold Realty
Trust v. Conagra Foods, Inc., 136 S.Ct. 1012 (2016). And
the printout regarding RDV Corporation states only that the
“firm was incorporated in 1991 and is based in Grand
Rapids, Michigan, ” id. at 8, which does not
foreclose the possibility that RDV Corporation was
incorporated in another state.
For the
foregoing reasons, defendants' response to the
Court's March 5, 2019 show cause order does not
sufficiently establish the citizenship of KDH for purposes of
showing diversity jurisdiction. While defendants state that
there are so many Prudential Capital entities “it would
be impossible to identify each owner beyond those
identified” in the response, Docket No. 45 at 3, the
fact that it may be difficult to determine the citizenship of
the parties does not absolve defendants of their
responsibility to allege a sufficient basis for jurisdiction
as a threshold matter. See Radil v. Sanborn W.
Camps, Inc., 384 F.3d 1220, 1224 (10th Cir.
2004) (“The party invoking federal jurisdiction bears
the burden of establishing such jurisdiction as a threshold
matter.”); United States ex rel. General Rock &
Sand Corp. v. Chuska Dev. Corp., 55 F.3d 1491, 1495
(10th Cir. 1995) (“The party seeking the exercise of
jurisdiction in his favor must allege in his pleading the
facts essential to show jurisdiction.” (internal
quotation marks omitted)). This is particularly true when, as
in this case, defendants are being asked to determine their
own citizenship. Because the Court is unable to determine
whether it has subject matter jurisdiction over this case, it
is
ORDERED
that this case is remanded to the District Court for Baca
County, Colorado, where it was filed as No. 2018CV30002. It
is further
ORDERED
that this case is closed.
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Notes:
[1]The Court also notes that a corporation
can be domiciled in two different states - the state in which
it is incorporated and the state in which it has its
principal place of business. 28 U.S.C. ยง 1332(c)(1). The
spreadsheet submitted by defendants lists only one state of
residence for each ...