Hooks v. Spire Hospitality LLC

• Court: District Court, W.D. Washington
• Decided: March 23, 2023
• Docket: 2:23-cv-00389
• Status: Unknown

Opinion

5 UNITED STATES DISTRICT COURT 6 WESTERN DISTRICT OF WASHINGTON 7 AT SEATTLE 8 IDA P. HOOKS, Case No. C23-389RSL 9

10 Plaintiff, ORDER TO SHOW CAUSE 11 v. 12 SPIRE HOSPITALITY, LLC, 13 Defendant. 14 15 This matter comes before the Court on plaintiff’s complaint (Dkt. # 1-1) and defendant’s 16 “Notice of Removal” (Dkt. # 1). Having reviewed both filings, the court finds that defendant has 17 failed to allege an adequate basis for subject matter jurisdiction. The court therefore orders Spire 18 Hospitality, LLC, within seven (7) days of the date of this Order, to serve and file a submission 19 that includes information sufficient to establish the court’s jurisdiction. 20 Spire asserts that the court’s jurisdiction is based on diversity of citizenship. Dkt. # 1 at 2. 21 To analyze diversity jurisdiction, the court must consider the domicile of all members of a 22 limited liability company (“LLC”). Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 23 899 (9th Cir. 2006); see also Local Rules W.D. Wash. LCR 8(a) (“If plaintiff is asserting that 24 this court has jurisdiction based on diversity, the complaint must identify the citizenship of the 25 parties, and, if any of the parties is a limited liability corporation (LLC) . . . identify the 26 citizenship of the . . . members of those entities to establish the court’s jurisdiction.”); Fed. R. 27 Civ. P. 7.1(a) advisory committee’s note to 2022 amendment (explaining that the rule has been 28 “amended to require a party or intervenor in an action in which jurisdiction is based on diversity 1 under 28 U.S.C. § 1332(a) to name and disclose the citizenship of every individual or entity 2 whose citizenship is attributed to that party or intervenor”). Here, Spire alleges that plaintiff is a 3 citizen of Washington, and it is a citizen of Texas and Delaware. Dkt. # 1 at 2-3. 4 Spire alleges that it is a citizen of Texas under the “nerve center test” because that is 5 where it has its principal place of business. Id. at 3. It further alleges that it is a citizen of 6 Delaware because it is “organized under the laws of Delaware.” Id. at 3. However, as discussed 7 above, LLCs are treated like partnerships rather than corporations and are deemed “a citizen of 8 every state of which its owners/members are citizens.” Johnson, 437 F.3d at 899. Thus, “[a]n 9 LLC’s principal place of business [or] state of organization is irrelevant” for purposes of 10 diversity jurisdiction. See Buschman v. Anesthesia Business Consultants LLC, 42 F. Supp. 3d 11 1244, 1248 (N.D. Cal. 2014). 12 Relevant to the diversity jurisdiction analysis, Spire also alleges that “[t]he members of 13 Spire’s LLC are organized under the laws of Delaware and are citizens of the State of 14 Delaware.” Dkt. # 1 at 3. Spire identifies these members as “AWH Management, LLC and 15 TABLE Lane, LLC” in its corporate disclosure statement. Dkt. # 2. Because members of Spire 16 Hospitality LLC are themselves limited liability companies, Spire must provide information 17 about the citizenship of the members of those limited liability companies as well, which is 18 determined in the same manner described above—namely, by establishing the citizenship of 19 each member. See Johnson, 437 F.3d at 899 (examining the citizenship of a limited partnership 20 whose partners included limited liability companies by looking to the citizenship of the 21 members of those limited liability companies). This process continues until every layer of 22 limited liability company membership has been reduced to the citizenship of its individual 23 members. 24 Accordingly, the Court ORDERS defendant to show cause why this case should not be 25 remanded for lack of federal subject matter jurisdiction. See Martin v. Franklin Capital Corp., 26 546 U.S. 132, 143 (2005) (“If it appears that the federal court lacks jurisdiction, however, ‘the 27 case shall be remanded.’” (quoting 28 U.S.C. § 1447(c))). If defendant fails to provide the court 28 1 with the information described above within seven (7) days of the date of this order, the court 2 will remand this case. 3 4 DATED this 23rd day of March, 2023. 5 6 A

7 Robert S. Lasnik 8 United States District Judge

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