Raymond v. Franklin BH LLC

Background

Stephanie Raymond originally brought this action in New York state court. Fewer than all defendants removed it to the U.S. District Court for the Southern District of New York, claiming that the federal court had diversity jurisdiction. Diversity jurisdiction generally requires the parties to be citizens of different states and requires the amount-in-controversy and other statutory requirements to be satisfied. The court examined the removal papers and pleadings for jurisdictional defects.

Jurisdictional problems

First, the complaint described Franklin BH, LLC as a New York limited liability company but the removal notice described it as a Delaware corporation with its principal place of business in New York. The court explained that an LLC has the citizenship of each of its members, so the papers needed to identify every member and that member’s citizenship. If Franklin BH, LLC is actually a corporation, it must provide an affidavit and documents establishing that fact.

Second, the complaint alleged that Raymond resided in South Carolina, but residence does not necessarily establish citizenship. The court said the papers did not adequately allege her citizenship or domicile, meaning her true fixed home and principal place of establishment.

Third, not all defendants had joined in or consented to removal. Federal law generally requires all properly joined and served defendants to join in or consent to removal when removal is based solely on diversity jurisdiction. Fourth, the court said removal could be improper if any member of Franklin BH, LLC is a citizen of New York, because a diversity case generally cannot be removed when a properly joined and served defendant is a citizen of the state where the action was filed.

Order

Within seven days, Franklin BH, LLC could serve Raymond with one written question about her citizenship, and Raymond had seven days to respond. Within 30 days, Franklin BH, LLC had to amend the removal petition to correct the jurisdictional deficiencies or omissions. The court stated that if Franklin BH, LLC failed to amend or could not truthfully allege complete diversity of citizenship, the action would be remanded to state court for lack of subject-matter jurisdiction without further notice. Franklin BH, LLC also had five days to serve the order on Raymond’s counsel and file proof of service. Judge Castel further stated that the objections concerning the failure of all defendants to consent and the potentially improper removal by an in-state defendant would be waived unless Raymond timely raised them in a proper motion to remand.