Label Health, LLC v. Haywire Consulting, Inc.
- Vernon Broderick
- 1:20-cv-05640
- U.S. District Court · Southern District of New York
- 3
In Label Health v. Haywire Consulting, Judge Aaron required proof of the LLC’s members’ citizenship before considering default judgment because diversity jurisdiction was not established.
Label Health, LLC was required to provide information about the citizenship of each of its members before the court could consider entering a default judgment. The defendants were not awarded a default judgment against them in this order.
What happened
In Label Health, LLC v. Haywire Consulting, Inc., the plaintiff sought a default judgment against defendants who had not defended the case. The court first had to confirm that it had authority to hear the dispute.
The plaintiff relied on diversity jurisdiction, which generally requires more than $75,000 in dispute and complete citizenship differences between the parties. Because Label Health is a limited liability company, its citizenship depends on the citizenship of all its members. The complaint did not identify those members’ citizenship.
The court therefore said the case could not currently continue in that court and that it could not enter a default judgment. Judge Stewart D. Aaron ordered Label Health to file an affidavit or declaration identifying the citizenship of each member by March 25, 2021.
The detailed version
- Label Health, LLC v. Haywire Consulting, Inc. · No. 1:20-cv-05640
- Vernon Broderick
- Mar. 18, 2021
Background
Label Health, LLC sought a default judgment against Haywire Consulting, Inc. and other defendants. A default judgment is a judgment entered when a party fails to plead or otherwise defend. Before entering one, the court explained that it must independently determine whether it has subject-matter jurisdiction, meaning legal authority over the type of dispute.
Jurisdictional issue
Label Health invoked diversity jurisdiction under 28 U.S.C. § 1332(a)(1). That form of jurisdiction generally requires that the amount in controversy exceed $75,000, excluding interest and costs, and that the parties be completely diverse—that is, no plaintiff and defendant may be citizens of the same state.
For diversity purposes, a limited liability company has the citizenship of each of its members. A complaint must therefore identify the citizenship of the LLC’s members, including the relevant entity information for any corporate members. The court found that the complaint did not state the citizenship of Label Health’s members and therefore did not properly allege Label Health’s own citizenship.
Ruling
The court held that Label Health had not met its burden of establishing subject-matter jurisdiction. It stated that the action could not presently be maintained in the court and that no default judgment could be entered at that time. The court ordered Label Health to file, no later than March 25, 2021, an affidavit or declaration setting forth the citizenship of each member of Label Health, LLC.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.