Thor Equities, LLC v. Hiscox Insurance Company, Inc.

Background

Hiscox removed the action from the Supreme Court of New York, New York County, to the U.S. District Court for the Southern District of New York. The federal court previously found that Hiscox’s removal notice did not properly allege the citizenship of each party for purposes of diversity jurisdiction and ordered Hiscox to provide more information.

All plaintiffs were limited liability companies. For diversity jurisdiction, a limited liability company is a citizen of every state in which any of its members is a citizen. Hiscox alleged that Madison-Thor Manager LLC included 212 Fifth Avenue Partners LLC as a member. Hiscox further alleged that 212 Fifth Avenue Partners LLC had 14 individual members and Madison Equities LLC as members. But Hiscox did not establish that those were all of 212 Fifth Avenue Partners LLC’s members at the relevant times, did not provide the citizenship of six of the 14 individuals, and did not identify the complete membership of Madison Equities LLC. Hiscox acknowledged that it could not identify the citizenship of every person comprising 212 Fifth Avenue Partners LLC or the remaining members, if any, of Madison Equities LLC.

Jurisdictional Discovery

The court explained that the party invoking federal jurisdiction must prove that jurisdiction exists. Complete diversity requires that no plaintiff share a state of citizenship with the defendant. Because Hiscox had not supplied enough information to establish the citizenship of the plaintiff LLCs, it had not met its burden to establish diversity jurisdiction.

A federal district court may allow limited discovery about jurisdiction in a removal case when citizenship allegations are inadequate, although such discovery should be used cautiously. The court concluded that one additional opportunity was warranted because Hiscox had supplied some additional membership information but had also identified individuals and an LLC whose citizenship remained unknown.

Order and Effect

The court granted Hiscox’s request for limited jurisdictional discovery. The parties were ordered to complete discovery limited to document requests and interrogatories sufficient to show the citizenship of all members of each plaintiff LLC. Hiscox was ordered to file an amended Notice of Removal by October 19, 2022. The order addressed whether federal jurisdiction had been adequately established; it did not decide the underlying dispute or claims.

The opinion identifies the judge in its opening text as “JENNIFER L. ROCHON,” while the signature block reads “Lei L. ROCHON.” This summary uses the name in the signature block, as required for the judge’s name.