Michael Friedman Group Inc. v. Digital Media Solutions, LLC

Background

Michael Friedman Group Inc. filed the action on April 8, 2021. The court’s jurisdiction was based on diversity jurisdiction under 28 U.S.C. § 1332, which requires adequately pleading the citizenship of the parties and facts showing that more than $75,000 is in dispute.

On April 9, the court ordered Michael Friedman Group to amend its complaint. The court specifically required the plaintiff to allege the citizenship of each person or entity comprising Digital Media Solutions, LLC and to plead facts showing a reasonable probability that the amount in controversy exceeded $75,000.

Jurisdictional Allegations

The amended complaint filed April 16 alleged that Digital Media Solutions, LLC’s sole member was Digital Media Solutions Holding, LLC. It further alleged that the holding company’s majority member was a “Delaware resident” named CEP V DMS US Blocker Company and that the holding company had various minority members, none of whom was a New York resident.

The court held that these allegations were insufficient because residency alone cannot establish citizenship. For a limited liability company, the complaint needed to properly allege the citizenship of each and every member. The opinion also stated that the court had previously warned that failure to properly allege subject-matter jurisdiction would result in dismissal.

Ruling

The court did not dismiss the case in this order. Instead, it gave Michael Friedman Group one final opportunity to amend its complaint. The plaintiff was ordered to file another amended complaint by April 23, 2021, properly alleging the citizenship of each party, including every member of any limited liability company or limited partnership.

The order stated that if the plaintiff failed to file an amended complaint actually establishing subject-matter jurisdiction by that date, the court would dismiss the case without prejudice and without further notice to any party.