Martifer-Silverado Fund I, LLC v. Zhongli Science and Technology Group Co., Ltd

Background

Martifer-Silverado Fund I, LLC brought the action against Zhongli Science and Technology Group Co., Ltd., Suzhou Talesun Solar Technology Co., Ltd., and Taleson Solar USA, Ltd. The complaint alleged that Chinese-based parent companies orchestrated a conspiracy to use a U.S. subsidiary to commit fraud. The complaint asserted federal diversity jurisdiction under 28 U.S.C. § 1332.

The defendants moved to dismiss, arguing in part that the court lacked subject matter jurisdiction because the plaintiff had not established complete diversity. Complete diversity generally requires every plaintiff to be a citizen of a different state or foreign country from every defendant. For an LLC, citizenship is determined by the citizenship of each of its members, rather than by the LLC’s place of organization or principal place of business.

Citizenship information

The plaintiff alleged that it had two members: Silverado Power, LLC and Martifer Solar USA. The plaintiff submitted declarations showing that both members were themselves LLCs, but it did not provide evidence identifying the citizenship of their members. The court explained that this information was necessary to determine the citizenship of the plaintiff. The court also stated that the plaintiff had not alleged the citizenship of Taleson Solar USA. The defendants submitted evidence that Taleson Solar USA was a Delaware corporation that formerly had its principal place of business in California, and therefore allegedly was a citizen of Delaware and California. The complaint alleged that Zhongli and Suzhou Talesun were citizens of China.

Order

The court did not determine that diversity jurisdiction was absent. Instead, because the record did not provide sufficient evidence to determine the plaintiff’s citizenship, the court ordered the plaintiff to show cause—meaning to explain why the action should not be dismissed—for lack of subject matter jurisdiction. The plaintiff had to file a response by October 18, 2019, specifying the citizenship of the members of Silverado and Martifer and including declarations or affidavits supporting factual statements.

The court set a show-cause hearing for October 25, 2019, but stated that the hearing would be taken off the calendar and no appearance would be required if the plaintiff filed a timely response. The court warned that failing to respond on time could result in sanctions. It also vacated the October 15, 2019 hearing on the defendants’ motion to dismiss, stating that the hearing could be reset if necessary. Judge Yvonne Gonzalez Rogers signed the order.