Nelson v. Robinhood Financial LLC
- Jesse Furman
- 1:21-cv-00777
- U.S. District Court · Southern District of New York
- 2
In Nelson v. Robinhood, Judge Furman ordered Plaintiff to clarify the citizenship of Robinhood’s limited liability company members.
Brandon Nelson and the Robinhood entities named as defendants, particularly Robinhood Financial LLC and Robinhood Securities, LLC, because the order required clarification of the defendants’ citizenship allegations for federal jurisdiction.
What happened
Nelson v. Robinhood Financial LLC is a proposed class action in which Brandon Nelson seeks to represent Robinhood customers in the United States. He invoked a federal law allowing certain large class actions involving citizens of different states.
Nelson alleged that Robinhood Financial LLC, Robinhood Securities, LLC, and Robinhood Markets, Inc. were corporations, identifying Delaware and principal-business locations for them. The court noted that Robinhood Financial LLC and Robinhood Securities, LLC appeared to be limited liability companies, whose citizenship depends on the citizenship of each member.
Judge Jesse M. Furman ordered Nelson to amend the complaint by February 24, 2021, to allege the citizenship of every person or entity making up the defendant limited liability companies. If all defendants were actually corporations, the court ordered Nelson to file a letter saying so by that date.
The detailed version
- Nelson v. Robinhood Financial LLC · No. 1:21-cv-00777
- Jesse Furman
- Feb. 10, 2021
Background
Brandon Nelson brought a proposed class action against Robinhood Financial LLC, Robinhood Securities, LLC, and Robinhood Markets, Inc. He proposed a class of Robinhood customers within the United States, subject to stated exclusions. Nelson invoked federal jurisdiction under 28 U.S.C. § 1332(d)(2), which covers certain class actions involving more than $5 million and differing citizenship among the parties.
Jurisdictional pleading issue
The court explained that a limited liability company is considered a citizen of every state where its members are citizens. A complaint relying on diversity jurisdiction must therefore identify the citizenship of the natural persons or entities that make up an LLC, including the citizenship of members that are themselves LLCs. Nelson’s complaint alleged that the named defendants were corporations and identified their alleged states of incorporation and principal places of business. The court stated that Robinhood Financial LLC and Robinhood Securities, LLC appeared to be LLCs despite the complaint’s description of the defendants as corporations.
Order
The court ordered Nelson to amend his complaint by February 24, 2021, to allege the citizenship of each person or entity comprising the defendant LLCs. The court also ordered that, if Nelson determined all defendants were actually corporations, he must file a letter stating that by the same date. The opinion does not state a final ruling on subject-matter jurisdiction or the merits of Nelson’s claims.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.