The citizenship of an LLC is the citizenship of each of its members. It can be difficult to find out who the members are in an LLC, much less find out where they are “citizens.” And if LLC members are, themselves, LLCs, one must figure out the “citizenship” of the members of THAT LLC, etc., etc.
What happens if an LLC member sues the LLC? In that case, there can be no diversity jurisdiction because the plaintiff LLC member is effectively “on each side of the case” and there cannot be the required “complete diversity of citizenship” between the plaintiff and defendant.
This little hitch blew up the federal lawsuit of Little Otters of Love, LLC (“LOL”) against Kailen Rosenberg, Global Love Mergers, Inc. d/b/a Kailen Love and Life Architects, and The Lodge. LOL had tried to argue that it successfully pulled out of membership in The Lodge LLC and, therefore, was not accurately viewed as an LLC member. Sr. U.S. District Court Judge Richard J. Kyle, Sr. (D. Minn.) rejected this argument and, this week, the Eighth Circuit affirmed Judge Kyle’s decision.
Thus, the case may be of interest to Minnesota Litigator readers who are interested in (1) pleading federal diversity jurisdiction, and (2) contract formation under Minnesota.
But, also, aren’t you a little curious about Little Otters of Love?
Lying beneath this dry tale of civil procedure, there is a sadder, more human story.
Plaintiff and Little Otters of Love principal, E. Hammond Meredith sought the match-making services of Ms. Rosenberg through her company, Life Architects in 2012 without success. He signed up with Ms. Rosenberg’s outfit again in 2014 and, when his contract expired, Rosenberg “demanded an additional $100,000 fee to arrange a meeting” between Mr. Meredith and a match ($100,000 for a meeting?!).
When Mr. Meredith balked, Ms. Rosenberg suggested that maybe Mr. Meredith could invest in The Lodge, her newest “upscale online singles dating club,” and, in return, Ms. Rosenberg would introduce Mr. Meredith “to the match.”
This, then, was the transaction that was derailed mid-stream and which cannot be resolved in federal court. It seems that both justice and love have been elusive for the owner of Little Otters of Love.