Stathis v. United States Trotting Association

Background

Sam Stathis and Celebrity Farms, LLC sued the United States Trotting Association and Lexington Selected Yearling Sales Co., identified in the caption as a necessary and indispensable party. The complaint invoked the Declaratory Judgment Act, federal-question jurisdiction under 28 U.S.C. § 1331, and diversity jurisdiction under 28 U.S.C. § 1332. The complaint concerned a racehorse named “Mettle,” which it alleged was located in the Southern District of New York.

Subject-Matter Jurisdiction

The court explained that the Declaratory Judgment Act is procedural and does not itself create an independent cause of action. For diversity jurisdiction, there must be complete diversity: every plaintiff must be a citizen of a different state from every defendant.

The court found that the complaint did not adequately allege the parties’ citizenship. It alleged that Celebrity Farms, LLC was a New York limited liability company but did not identify the citizenship of its members. It similarly alleged that Lexington Selected Yearling Sales Co., LLC was a Kentucky limited liability company without identifying the citizenship of its members. The court explained that an LLC’s citizenship depends on the citizenship of each member, not merely on the LLC’s location. The complaint also described Stathis as a New York resident, but residence alone does not establish citizenship for diversity purposes.

Assignment to White Plains

The court also addressed Rule 18 of the Southern District of New York’s rules concerning assignment of cases to White Plains. Depending on where the claims arose and where the parties reside, the rule may require or permit assignment there. Because the complaint did not specify where within the Southern District the property was located, the court directed plaintiffs to explain why the case was properly designated for assignment to White Plains, assuming federal subject-matter jurisdiction existed.

Temporary Relief and Directives

The court declined to sign the requested order to show cause or issue a temporary restraining order. It directed plaintiffs’ counsel to submit a letter by April 17, 2020, detailing every party’s citizenship and addressing the White Plains assignment issue. In the meantime, plaintiffs were directed to serve the summons and complaint, along with the proposed order to show cause and supporting papers, on the defendants as promptly as possible. Judge Vincent L. Briccetti stated that the court would decide how to proceed after receiving plaintiffs’ response. The order did not decide the underlying claims.