Vilayvanh v. East 111th Street Properties, LLC.

Background

Soudavone Vilayvanh sued as administrator of the estate of Robert C. Smith and individually. The complaint asserted common-law negligence, wrongful death, loss of services, and a claim under New York Labor Law § 240(1). The case was initially filed in state court. East 111th Street Properties, LLC, Edison Parking Corporation, and Edison N.Y. Parking, LLC removed it to federal court based on diversity jurisdiction. F&E Services, Inc., was also named as a defendant, but it did not join in the removal.

Smith was employed as a Senior Mechanic Technician. The complaint alleged that, on December 21, 2019, he was repairing a Type 4 High Lift at a parking lot when an object fell and struck him, causing serious injuries and ultimately his death. The defendants’ submissions stated that Vilayvanh and Smith were Pennsylvania citizens. They also stated that Edison Parking and F&E were corporations incorporated and principally based in New Jersey.

Diversity Jurisdiction

Federal diversity jurisdiction requires more than $75,000 in controversy and complete diversity: every plaintiff must be a citizen of a different state from every defendant. The removing defendants had the burden of showing that federal jurisdiction existed.

The court explained that a limited liability company is a citizen of every state of citizenship of each of its members. If a member is itself an artificial entity, the court must examine that entity’s members as well. East 111th had Uptown DD Properties, LLC, as one of its members. Uptown DD had 29 members, including one individual whom the defendants described as a Pennsylvania resident. The court treated that description as meaning a Pennsylvania citizen for purposes of the motion.

Because that Pennsylvania member made Uptown DD a Pennsylvania citizen, Uptown DD’s citizenship also made East 111th a Pennsylvania citizen. The plaintiffs were Pennsylvania citizens, so complete diversity was absent. The court rejected the defendants’ argument that the Pennsylvania member should be disregarded because she held only a small, passive ownership interest. The court held that all members of an unincorporated entity must be considered when determining citizenship, regardless of ownership percentage or management authority.

The court also criticized the defendants’ incomplete and conclusory information about the citizenship of their entities and members. It stated that this lack of information independently could have supported remand, but it relied on the information provided to conclude that East 111th was at least a citizen of Nevada, New Jersey, and Pennsylvania.

Rule of Unanimity

The court did not need to decide whether the defendants violated the rule requiring all properly joined and served defendants to join in or consent to removal, because federal subject-matter jurisdiction was absent. The court nevertheless stated that, if federal jurisdiction had existed, it still would have granted remand because F&E did not participate in or consent to the removal. The court rejected the argument that F&E was merely a nominal defendant because the defendants had not shown that the plaintiffs had no possible state-law claim against F&E.

Ruling

Judge Valerie Caproni granted the plaintiffs’ motion to remand. She ordered the Clerk of Court to remand the case to the Supreme Court of the State of New York for New York County, terminate all open motions, and close the federal case.