Palm Street Capital LLC v. Xie
- Nathanael Cousins
- 5:22-cv-01932
- U.S. District Court · Northern District of California
- 2
In Palm Street Capital LLC v. Xie, Judge Cousins ordered briefing on whether diversity jurisdiction exists before trial.
Palm Street Capital LLC, the other plaintiffs, and Caixing Xie, because the court required briefing and evidence concerning whether federal diversity jurisdiction exists.
What happened
Palm Street Capital LLC and other plaintiffs sued Caixing Xie. Just before jury selection, Xie’s lawyer suggested that Xie might be a California citizen, which could eliminate the diversity of citizenship required for federal jurisdiction, but the lawyer did not file the proposed dismissal motion.
The court ordered the plaintiffs to provide evidence that complete diversity existed when they filed the case. The plaintiffs must address whether Xie was a permanent United States resident domiciled in California and must identify the citizenship of every Palm Street Capital LLC member.
Judge Nathanael Cousins ordered the plaintiffs to respond by June 19, 2024, and Xie to reply by June 22, 2024. The court did not decide whether it has subject-matter jurisdiction; it said an evidentiary hearing may be scheduled if necessary.
The detailed version
- Palm Street Capital LLC v. Xie · No. 5:22-cv-01932
- Nathanael Cousins
- June 17, 2024
Background
Palm Street Capital LLC and other plaintiffs brought this case against Caixing Xie. Minutes before jury selection, Xie’s counsel suggested that Xie might move to dismiss for lack of subject-matter jurisdiction. Counsel said that Xie might be a California citizen for purposes of diversity jurisdiction, which would destroy diversity in the case. Counsel later said that, after reviewing the relevant law, Xie would not bring the motion.
The court nevertheless explained that subject-matter jurisdiction—the court’s legal authority to hear the case—cannot be waived. The court also has an independent duty to determine whether that authority exists, even when no party challenges it.
Required jurisdictional showing
The court ordered further briefing because the plaintiffs bear the burden of proving diversity of citizenship. They must establish complete diversity—the requirement that all plaintiffs be citizens of different states or countries from the defendant—at the time the case was filed, April 26, 2022. Later changes in an existing party’s citizenship do not affect that determination.
The plaintiffs must provide evidence addressing the objective factors relevant to a person’s domicile, including residence, voting, property, financial accounts, family, organizations, employment or business, driver’s license and vehicle registration, and taxes. Because the issue is whether Xie is a citizen of California or China, the plaintiffs must address whether he was lawfully admitted for permanent residence in the United States and domiciled in California. The court stated that such a finding would defeat diversity under 28 U.S.C. § 1332(a)(2).
The plaintiffs must also provide the citizenship of Palm Street Capital LLC’s members. The court stated that, for diversity purposes, a limited liability company is a citizen of every state of which its members are citizens. Complete diversity therefore requires every member of Palm Street Capital LLC to be diverse from Xie.
Order
Judge Nathanael Cousins ordered the plaintiffs to respond in writing by Wednesday, June 19, 2024, at 5:00 p.m. Xie must reply by Saturday, June 22, 2024, at noon. The court warned that late submissions may result in sanctions and stated that it would schedule an evidentiary hearing if needed. The order did not determine whether subject-matter jurisdiction exists and did not dismiss the case.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.