Update (February 28, 2014): In the original post, below, I covered (AGAIN) the subject of the importance, the subtlety, and the challenge of pleading diversity jurisdiction when your adversary is a business entity such as an LLC, a partnership, or association.

Getting information about the citizenship of all of the members of these entities (which might be partnerships within partnerships, within LLCs, and so on), which must be plead to establish the existence of diversity jurisdiction, can be daunting to say the least. In the original post, I wrote,

Our judges frequently find fault with lawyers for failing to investigate the citizenship of LLCs.  But one wonders how many times they have tried to ferret out this information.  Google is not up to the task.  On the other hand, plainly the fact that this information can be obscure or hard to find does not absolve lawyers from the obligation of undertaking an investigation.  Anyone want to comment and advise on the quickest cheapest means for determining the citizenship of all of an LLC’s “members and ‘sub-members’ and ‘sub-sub-members'”?

I bear some good news on this score. I had the good fortune of crossing paths with U.S. District Court Judge Joan N. Ericksen (D. Minn.) at a CLE this week and she suggested that a litigant pleading diversity of citizenship in these complex circumstances does not have to have these sometimes impossible to discover inter-relationships and sub-relationships hammered out before filing suit (particularly impossible when the defendants are not interested in cooperating with any investigation of course). Judge Ericksen’s upshot: Minnesota litigators must, however, be aware of the issue, must take steps to meet the requirements of diversity jurisdiction and, if there are open questions, there is always the later possibility of jurisdictional discovery (where defendants will not have the luxury of being able to refuse to cooperate).

The point is that federal civil litigators need to be aware of the issue, not omniscient. (Otherwise, a case can be litigated for years in federal court for nothing when the case was dead from the start due to lack of subject matter jurisdiction (as in this case). No one wants that.).

Original post (January 30, 2013): I might start another entire blog called, “Pleading Diversity Jurisdiction With a Limited Liability Company As a Party.”   It will just be an on-line repository of relentless reminders from our federal judges of this threshold requirement.  I would have to spice the blog up with suggestive pictures to attract and keep readers, I guess.  Otherwise, it would probably be kind of boring.  It will have a pay-wall for sure.

But seriously, here is the latest “bench slap” in which U.S. District Court Judge Patrick J. Schiltz (D. Minn.) reminds us all that lawyers cannot insulate themselves from punishment simply with the magic preface, “on information and belief,” before making factual statements without any factual basis and without even a good faith effort to find one.

Our judges frequently find fault with lawyers for failing to investigate the citizenship of LLCs.  But one wonders how many times they have tried to ferret out this information.  Google is not up to the task.  On the other hand, plainly the fact that this information can be obscure or hard to find does not absolve lawyers from the obligation of undertaking an investigation.  Anyone want to comment and advise on the quickest cheapest means for determining the citizenship of all of an LLC’s “members and ‘sub-members’ and ‘sub-sub-members'”?

One thought on “C’mon Minnesota Litigators, the Federal Bench Is Losing Its Patience

  1. Bart Torvik

    In the states I’m familiar with, membership simply isn’t public information. That is, it is not ever reported to the state, and even it is there is no requirement to report changes. This is particularly if it is a “manager-managed” LLC. So it is often nearly impossible to determine an LLC’s membership without discovery—which makes this threshold jurisdiction rule somewhat problematic, and arguably stupid.

    Reply

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