OnePoint Solutions, LLC v. MPay, Inc.

Background

OnePoint Solutions, LLC sued MPay, Inc. over alleged breaches of agreements involving software source code for payroll systems. The claims arose under state law. The opinion states that MPay and other entities formed OnePoint about twenty years earlier to license payroll software called Millenium from MPay.

MPay was both a member of OnePoint and the defendant in the lawsuit. The opinion states that MPay was a Massachusetts corporation with its principal place of business in North Carolina. Because a limited-liability company has the citizenship of each of its members, OnePoint had Massachusetts and North Carolina citizenship through MPay, among the citizenships of its other members.

Jurisdiction

OnePoint relied on diversity jurisdiction under 28 U.S.C. § 1332(a). Diversity jurisdiction generally requires complete diversity: all plaintiffs must be citizens of different states from all defendants. The court concluded that complete diversity was absent because MPay’s citizenship as a OnePoint member was also the citizenship of the defendant MPay.

OnePoint argued that the court should nevertheless find diversity jurisdiction because otherwise an LLC member could never sue the LLC, or the LLC could never sue that member, in federal court. OnePoint conceded that complete diversity did not exist. The court rejected the argument, explaining that state-law lawsuits without complete diversity belong in state court.

Ruling

Judge Paul A. Magnuson held that the court lacked subject-matter jurisdiction. The court therefore granted Defendant MPay, Inc.’s Motion to Dismiss and dismissed the matter without prejudice for lack of subject-matter jurisdiction. The court ordered that judgment be entered accordingly.