Palm Street Capital LLC v. Xie

Opinion

1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3

4 PALM STREET CAPITAL LLC, et al., Case No. 22-cv-01932-NC 5 Plaintiffs, ORDER TO SHOW CAUSE RE 6 SUBJECT MATTER v. JURISDICTION 7 CAIXING XIE, 8 Defendant. 9

10 Minutes before starting jury selection for trial in this matter, counsel for defendant 11 Caixing Xie suggested he would move for dismissal for lack of subject matter jurisdiction. 12 Xie’s counsel suggested Xie was a citizen of California for the purposes of diversity 13 jurisdiction, which would destroy diversity in this matter. Later, Xie’s counsel indicated 14 he had reviewed the relevant law and decided against bringing the motion. 15 Still, the Court is concerned because “[s]ubject-matter jurisdiction can never be 16 waived or forfeited.” Gonzalez v. Thaler, 565 U.S. 134, 141 (2012). And the Court has 17 “an independent obligation to determine whether subject-matter jurisdiction exists, even in 18 the absence of a challenge from any party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 19 (2006). 20 Concerned by Xie’s counsel’s suggestion, the Court orders further briefing. 21 Because plaintiffs have the burden of proof on diversity of citizenship, Lew v. Moss, 797 22 F.2d 747, 751 (9th Cir. 1986), the Court orders as follow: 23 Plaintiffs must establish complete diversity at the time of filing. Diversity 24 jurisdiction must “exist[] at the time of filing—whether the challenge be brought shortly 25 after filing, after the trial, or even for the first time on appeal.” Grupo Dataflux v. Atlas 26 Glob. Grp., L.P., 541 U.S. 567, 571 (2004). “[S]ubsequent changes in the citizenship of an 27 existing party do not affect the determination of jurisdiction.” In re Hawaii Fed. Asbestos 1 || 26,2022. ECF 1. Therefore, Plaintiffs must provide evidence of complete diversity at that 2 || time. See id. Plaintiffs should present evidence of the various objective factors courts 3 || consider when determining domiciliary intent, including: “current residence, voting 4 || registration and voting practices, location of personal and real property, location of 5 || brokerage and bank accounts, location of spouse and family, membership in unions and 6 || other organizations, place of employment or business, driver's license and automobile 7 || registration, and payment of taxes.” Lew v. Moss, 797 F.2d 747, 750 (9th Cir. 1986). 8 || Because the issue here is whether Xie is a citizen of California or China, Plaintiffs should 9 || address whether he is a permanent resident of the United Stated and domiciled in 10 || California. See 28 U.S.C.§ 1332(a)(2). Such a finding would defeat diversity. See id. 11 |} (precluding diversity “between citizens of a State and citizens or subjects of a foreign state 12 || who are lawfully admitted for permanent residence in the United States and are domiciled 13 || in the same State’). 14 Plaintiffs must include the citizenship of Palm Street Capital LLC’s members. 15 || Palm Street Capital is an LLC. For the purposes of diversity, “an LLC 1s a citizen of every 16 || state of which its owners/members are citizens.” Johnson v. Columbia Properties 5 17 || Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Here, for complete diversity to exist, 5 18 || all member of Palm Steet Capital LLC must be diverse from Xie. See id. Thus, Plaintiffs 19 ||} must provide proof of the citizenship of the members of Palm Street Capital LLC. 20 Plaintiffs must respond to this order in writing by Wednesday, June 19, 2024, at 21 |} 5:00 p.m. Xie must reply by Saturday, June 22, 2024, at 12:00 p.m. Late submissions may 22 || result in sanctions. An evidentiary hearing will be scheduled if one is needed. 23 24 IT IS SO ORDERED. 25 26 || Dated: June 17, 2024 27 Cinited States Magistrate Judge 28