Kash Capital v. Arauco North America, Inc.

Background

Arauco North America, Inc. removed the action from New York Supreme Court to the U.S. District Court for the Southern District of New York. The notice of removal invoked diversity jurisdiction, which generally requires the parties to be citizens of different states and the amount in controversy to meet the statutory requirement. The order addresses only whether the notice adequately alleged the parties’ citizenship.

The notice alleged that Arauco is incorporated in Delaware and has its principal place of business in Georgia. It alleged, on information and belief, that Kash Capital’s principal place of business is in New York, but stated that Arauco was not aware of Kash Capital’s corporate form or state of incorporation.

Court’s Analysis

The court explained that it has an independent duty to determine whether subject-matter jurisdiction exists. For a corporation, citizenship includes both the state of incorporation and the state of its principal place of business. Because Arauco’s notice did not identify both components of Kash Capital’s citizenship, the court required more information before allowing the case to proceed on the asserted basis of diversity jurisdiction.

Order

The court ordered Arauco to amend its notice of removal within ten days of the order’s date to allege Kash Capital’s state of incorporation and principal place of business. The court stated that, if Arauco could not truthfully allege complete diversity by that deadline, the case would be dismissed for lack of subject-matter jurisdiction without further notice to any party. The order did not itself dismiss the case.