Will Sylianteng of Wes Litigation Group. Are Federal Courts Trying to Kill Off Diversity Jurisdiction by Using LLCs?
Recently, several district courts around the country have, upon the filing of a new complaint (or removal action), been issuing sua sponte orders requiring diversity plaintiffs (or removal defendants) to amend their complaints to specifically identify the citizenship of each member of any limited liability company named in their pleading.
May 19, 2022 at 02:20 PM
9 minute read
Litigation
According to Internal Revenue Service (IRS) statistics, since 2004, the limited liability company (LLC) has steadily become America's favorite business entity. As the number of LLCs grow, so do the number of LLC litigants in our courts. Recently, several district courts around the country have, upon the filing of a new complaint (or removal action), been issuing sua sponte orders requiring diversity plaintiffs (or removal defendants) to amend their complaints to specifically identify the citizenship of each member of any limited liability company named in their pleading. Moreover, if a member of an LLC is another LLC or partnership, the citizenship of those members or partners must also be identified. Whether this is an intentional maneuver to deal with case backlogs, without the need for Congressional action, or just simply the innocent and unintended byproduct of an attempt to strictly police its jurisdictional borders, it has in effect, thrown an almost insurmountable hurdle in the path of many of the litigants who would prefer their cases heard in federal court.
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