CollegeStreet Import & Export (Tianjin) Co. Ltd. v. XL x HF LLC

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 COLLEGESTREET IMPORT & EXPORT Case No. 23-cv-02303-AGT (TIANJIN) CO. LTD., 8 Plaintiff, ORDER REMANDING ACTION TO 9 STATE COURT v. 10 XL X HF LLC, et al., 11 Defendants.

12 13 On August 10, 2023, the Court ordered defendants to show cause why this breach-of- 14 contract action should not be remanded to Alameda County Superior Court for lack of subject- 15 matter jurisdiction. Dkt. 21. In the order to show cause (OSC), the Court noted that defendants’ 16 notice of removal “fails to allege any facts regarding the membership of the LLC parties or the 17 citizenship of those members—a failure which, on its own, ‘is enough to support remand.’” Id. at 18 2 (quoting Wagner v. Spire Vision LLC, 2013 WL 941383, at *1 (N.D. Cal. Mar. 8, 2013) 19 (explaining that for purposes of diversity jurisdiction, LLCs “are a citizen of every state where its 20 owners and members are citizens”)). The Court further observed that beyond the defective 21 allegations of citizenship in the notice of removal, “it appears that defendants cannot meet their 22 burden of establishing complete diversity” because “the complaint and other filings on the docket 23 indicate that [plaintiff limited company] College Street (and/or its sole owner, Jin Zhang) has been 24 a member of [defendant LLC] Loyalist since 2019.” Id. And the Court specifically explained that 25 “because an LLC is a citizen of every state of which its owners or members are a citizen, and 26 because complete diversity is required, if a plaintiff is an owner or member of a defendant LLC, 27 then diversity . . . cannot be satisfied.” Id. at 3 (quoting Shevick v. Zupon Ent., LLC, 2011 WL ] In their one-page response to the OSC, defendants do not address the apparent lack of 2 || complete diversity between the parties, nor do they dispute that plaintiff has been a member of 3 defendant Loyalist, LLC since before this case was filed and removed. Instead, defendants simply 4 |} assert that they “believe their unchallenged notice of removal of this case contains sufficient 5 allegations, which are undisputed, for this Court to maintain subject-matter jurisdiction over this 6 || proceeding.” Dkt. 22 at 2. Defendants then assert that they “do not otherwise oppose the Court’s 7 || remand to Alameda County superior court if the Court determines that it does not have subject- 8 || matter jurisdiction over these proceedings based on the record currently before it.” /d. The Court 9 || has already explained why the allegations of jurisdiction in defendants’ notice of removal are 10 || plainly insufficient to establish diversity jurisdiction—starting with defendants’ erroneous reliance 11 on the citizenship test for corporations, which is inapplicable to the LLC parties in this case—and 12 || the fact that plaintiff did not challenge defendants’ defective removal has no bearing on whether 13 || subject-matter jurisdiction exists over this action. See Cripps v. Life Ins. Co. of N. Am., 980 F.2d 14 1261, 1264 (9th Cir. 1992) (“Defects in subject matter jurisdiction may be raised at any time, by || the parties or by the court on its own motion, and may never be waived.”). a 16 Because the record demonstrates that complete diversity is lacking, the Court is without 2 17 || subject-matter jurisdiction to hear this case, and remand is required. See 28 U.S.C. § 1447(c) (Tf Z 18 at any time before final judgment it appears that the district court lacks subject matter jurisdiction, 19 || the case shall be remanded.”). The Clerk of Court is therefore directed to remand this action to 20 || Alameda County Superior Court for further proceedings. Plaintiff's pending motion for writ of 21 attachment (Dkt. 6) and defendants’ pending motion to dismiss (Dkt. 7) are terminated as moot. 22 IT IS SO ORDERED. 23 Dated: August 23, 2023 24 25 ALEX G. TSE 26 United States Magistrate Judge 27 28