Health and Happiness International Holdings Limited v. Stoltze Specialty…
Health and Happiness International Holdings Limited v. Stoltze Specialty Processing, LLC
- Rochon
- 1:22-cv-10380
- U.S. District Court · Southern District of New York
- 3
In Health and Happiness v. Stoltze, Judge Rochon ordered citizenship disclosures to support diversity jurisdiction, warning the action would be dismissed if complete diversity could not be shown.
Health and Happiness International Holdings Limited must provide the missing citizenship information and amend its Rule 7.1 disclosure. The action may be dismissed for lack of subject-matter jurisdiction if complete diversity cannot be shown.
What happened
Health and Happiness International Holdings Limited sued Stoltze Specialty Processing, LLC and others, claiming federal court jurisdiction based on the parties’ citizenship. The plaintiff said it was organized under Hong Kong law, while it said Stoltze and Maple Island, Inc. were organized under Minnesota law.
The court explained that an LLC’s citizenship depends on the citizenship of all its members, including members further up the ownership chain. It also explained that a corporation’s citizenship includes its state of incorporation and principal place of business. The plaintiff had not provided all of this information or fully completed the required disclosure statement.
Judge Jennifer L. Rochon ordered the plaintiff to file, by December 16, 2022, a letter supported by sworn affidavits identifying each party’s citizenship and showing complete diversity. The plaintiff must also file an amended disclosure statement. The court stated that the action will be dismissed for lack of subject-matter jurisdiction if the plaintiff cannot provide a good-faith basis for complete diversity.
The detailed version
- Health and Happiness International Holdings Limited v. Stoltze Specialty… · No. 1:22-cv-10380
- Rochon
- Dec. 9, 2022
Background
Health and Happiness International Holdings Limited commenced the action based on diversity jurisdiction. The plaintiff alleged that it was a limited liability company organized under Hong Kong law. It alleged that Stoltze Specialty Processing, LLC was a limited liability company organized under Minnesota law and that Maple Island, Inc. was a corporation organized under Minnesota law.
Jurisdictional requirements
The party invoking federal jurisdiction has the burden of establishing it. Diversity jurisdiction requires complete diversity, meaning that no plaintiff may share state citizenship with any defendant.
An LLC is a citizen of every state of which its members are citizens. The citizenship of each LLC member must be alleged, and if a member is another non-corporate entity, the parties must identify and trace the citizenship of that entity’s members through the ownership chain. A corporation is a citizen of its state of incorporation and the state where it has its principal place of business. Federal Rule of Civil Procedure 7.1(a)(2) also requires a corporate party to disclose each individual or entity whose citizenship is attributed to it and to identify that citizenship.
Court’s order
The court found that the plaintiff had not properly alleged the citizenship of each party. In particular, the plaintiff had not identified the members of the LLC parties or the members further up the ownership chain, had not alleged the corporate party’s principal place of business, and had not fully and properly completed the required Rule 7.1 disclosure statement.
Judge Jennifer L. Rochon ordered the plaintiff to file, no later than December 16, 2022, a letter supported by one or more sworn affidavits alleging the citizenship of each party and showing that complete diversity exists. The plaintiff must also file an amended Rule 7.1 disclosure. The court stated that if the plaintiff cannot allege a good-faith basis for complete diversity, the action will be dismissed for lack of subject-matter jurisdiction without further notice.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.