TLF CBRL LLC v. Societe Generale
- P. Castel
- 1:20-cv-02367
- U.S. District Court · Southern District of New York
- 3
In TLF CBRL LLC v. Societe Generale, Judge Castel allowed a jurisdictional amendment but declined the proposed temporary restraining order.
TLF CBRL LLC and The Lion Fund IL, LP were allowed to amend their complaint to provide member-citizenship information, but their proposed temporary restraining order was not entered. Societe Generale was the defendant.
What happened
TLF CBRL LLC and The Lion Fund IL, LP sued Societe Generale. The opinion addresses whether the court had authority to hear the case and whether to issue a temporary restraining order involving a margin call and the sale of more than 5% of an issuer’s common stock.
The court explained that limited liability companies and limited partnerships must identify the citizenship of all their members for diversity jurisdiction. It also noted that foreign citizens on both sides of a case can defeat diversity jurisdiction. The plaintiffs were allowed to amend their complaint to provide that information.
Judge P. Kevin Castel declined to enter the proposed temporary restraining order. He cited the unresolved jurisdiction issue and serious doubt that the alleged reputational and tax-related injuries could not be compensated with money damages, noting that the shares might be repurchased on the open market.
The detailed version
- TLF CBRL LLC v. Societe Generale · No. 1:20-cv-02367
- P. Castel
- Mar. 17, 2020
Background
TLF CBRL LLC and The Lion Fund IL, LP brought an action against Societe Generale. The opinion does not describe the underlying claims in detail. It states that the plaintiffs sought a proposed temporary restraining order concerning a margin call that resulted in the sale of a position exceeding 5% of an issuer’s common stock. The plaintiffs identified reputational harm and adverse tax consequences as injuries.
Subject-Matter Jurisdiction
The court addressed subject-matter jurisdiction—the court’s legal authority to hear the case—at the outset. The plaintiffs apparently relied on diversity jurisdiction under 28 U.S.C. § 1332. For a limited liability company and a limited partnership, diversity jurisdiction requires allegations identifying the citizenship of each member, including the citizenship and business information of corporate members.
The complaint alleged that Societe Generale was a citizen of France. The court explained that if any member of the plaintiff LLC or LP were also a foreign citizen, foreign parties would be present on both sides of the case, which could eliminate diversity jurisdiction. The court also stated that complete diversity requires no plaintiff and defendant to be citizens of the same state or, in an alienage case, to create the circumstances that defeat jurisdiction under the applicable rules.
The court gave the plaintiffs permission to amend their complaint by March 20, 2020, to state the citizenship of the LLC’s and LP’s members. The opinion did not dismiss the action for lack of jurisdiction.
Temporary Restraining Order
The court declined to enter the proposed temporary restraining order. It gave two reasons: subject-matter jurisdiction had not been demonstrated, and the court had serious doubt whether reputational harm from the margin-call sale, together with adverse tax consequences, was an injury that could not be compensated with money damages. The court also noted that there had been no showing that the shares could not be repurchased on the open market and that Societe Generale could not be held responsible for any resulting loss.
Disposition
The court permitted amendment of the complaint by the stated deadline and declined to enter the proposed temporary restraining order. The order was signed by Judge P. Kevin Castel on March 17, 2020.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.