The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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WHOLESALE AUTO TRADE, :
: MEMORANDUM DECISION AND
: ORDER
Plaintiff, :
: 23-cv-3383 (BMC)
- against - :
:
:
CARBINE MOTORCARS DIRECT LLC, :
CENTRAL DISPATCH, TG TRANSPORT :
LLC, and TERRION GREEN, :
:
:
Defendants. :
:
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COGAN, District Judge.
The Court issued an Order to Show Cause as to why this case should not be dismissed
because, among other reasons, plaintiff has failed to properly allege the citizenship of the limited
liability company defendants. Having been unaware until informed by the Court that the
citizenship of a limited liability company for purposes of diversity of citizenship is determined
by the imputed citizenship of each of its members, not its state of organization or its principal
place of business, plaintiff offers its belated, but only partially successful, due diligence in trying
to find out who the members of the LLCs in this case are as a substitute for the required
allegations of citizenship. Due diligence by a litigant, however, does not bear on the
fundamental obligation to actually identify, not guess at, the citizenship of each interest holder in
the LLC.
In response to this Court’s Order to Show Cause, plaintiff concedes that “after a diligent
search . . . TG Transport . . . could not be identified as a filed LLC.” In failing to allege whether
defendant TG Transport is an LLC, incorporated entity, or some other creature of state law,
plaintiff fails to allege its citizenship and therefore this Court lacks diversity jurisdiction. See
136-61 Roosevelt LLC v. Starbucks Corp., No. 21-cv-3560, 2021 WL 2779287, at *1 (E.D.N.Y.
July 2, 2021). That plaintiff was not able to obtain information necessary to properly allege
citizenship despite a “diligent search” is of no consequence. See Kenshoo, Inc. v. Aragon
Advert., LLC, 586 F. Supp. 3d 177, 181 (E.D.N.Y. 2022) (“A plaintiff’s lawyer must do the
research first and if she cannot find a definitive basis for alleging the citizenship of each
defendant, then the case belongs in state court.”).
Plaintiff has also made insufficient and contradictory allegations regarding the citizenship
of defendant Central Dispatch. Plaintiff claims that Central Dispatch is an LLC organized under
the laws of Illinois with “its manager and registered agent listed as Eugene Rapoport with an
address in [Illinois].” Plaintiff thus appears to be suggesting that Central Dispatch is a citizen of
Illinois. But plaintiff also alleges that Central Dispatch “is a subsidiary of Cox Automotive,
Inc.,” which plaintiff claims has a “physical address” in Georgia. Plaintiff does not specify the
organizational relationship between Central Dispatch and Cox, nor does plaintiff allege Cox’s
principal place of business or state of incorporation. For Central Dispatch to be a “subsidiary” of
Cox, Cox must have some ownership interest in Central Dispatch – presumably as a member of
the LLC. And there may be other members of the LLC if the subsidiary is not wholly owned.
Thus, in failing to allege the principal place of business or state of incorporation of Cox, as a
presumed member of the LLC based on plaintiff’s allegations, plaintiff has failed to adequately
allege the citizenship of Central Dispatch as well.
By seeking to substitute its due diligence efforts instead of actual knowledge of the
parties’ citizenship, plaintiff’s amended complaint runs afoul of authority both venerable and
modern. As Justice Marshall held nearly two hundred years ago, “[t]he decisions of [the
Supreme Court] require[] that the averment of jurisdiction shall be positive, that the declaration
shall state expressly the fact on which jurisdiction depends.” Brown v. Keene, 33 U.S. 112, 114
(1834). More recently, as the use of LLCs in lieu of the corporate form has greatly expanded,
the Supreme Court has acknowledged that from a business perspective, it may not make sense
for diversity of citizenship purposes to distinguish between LLCs, limited partnerships, and other
unincorporated entities, on the one hand, and corporations, on the other hand: “The resolutions
we have reached [regarding this distinction] can validly be characterized as technical, precedent-
bound, and unresponsive to policy considerations raised by the changing realities of business
organization.” Carden v. Arkoma Assocs., 494 U.S. 185, 196 (1990). Nevertheless, the
Supreme Court has concluded that any change is “‘properly a matter for legislative consideration
which cannot adequately or appropriately be dealt with by this Court.’ In other words . . . we
have left further adjustments to be made by Congress.” Id. (quoting United Steelworkers of
America, AFL-CIO v. R.H. Bouligny, Inc., 382 U.S. 145, 147 (1965)). Moreover, there have
been proposals to amend the Judicial Code to treat LLCs the same as incorporated entities for
purposes of diversity jurisdiction, but none have ever been adopted. See e.g., American Bar
Association, “Resolutions with Reports to the House of Delegates” (Aug. 2015),
https://www.americanbar.org/content/dam/aba/administrative/house_of_delegates/ebook-of-
resolutions-with-reports/2015_hod_annual_meeting_electronic_report_book.pdf.
Congress must, of course, be aware of the promulgation of LLCs as a desirable business
entity. It must also be aware that few, if any, states require under their limited liability company
statutes that organizers publicly file a list of their members, making it more difficult to allege
their citizenship in federal court. Some of the political pressures in any change are apparent: for
example, in many states, personal injury lawyers often prefer to be in state court because jury
verdicts may be perceived as generally coming in higher than in federal court, although business
entities often prefer to be in federal court for that and other reasons. The issue can present a tug-
of-war which, as the Supreme Court has pointed out, is properly fought in Congress, not by the
policy preferences of judges.
Congress has not changed the fact that the citizenship of each member of an LLC must be
identified for diversity to be invoked. Nor has Congress made the accommodation plaintiff puts
forward here — that if a litigant tries really, really hard to find out the citizenship of each member
of the LLC, that is good enough.
Accordingly, this case is DISMISSED for lack of subject matter jurisdiction.
SO ORDERED.
Brean We. Cogan
U.S.D.J.
Dated: Brooklyn, New York
May 11, 2023