KIN & Company Inc. v. Matte Projects LLC

Background

KIN & Company Inc. filed the action and alleged that the court had subject-matter jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332(a). Federal Rule of Civil Procedure 7.1 requires parties in diversity cases to file disclosure statements naming and identifying the citizenship of every individual or entity whose citizenship is attributed to that party.

The court’s first order required both parties to submit Rule 7.1 disclosure statements. It explained that a limited liability company is a citizen of every state in which its members are citizens, so identifying only an LLC’s principal place of business is not enough.

Defendant’s disclosures

Matte Projects LLC initially disclosed that it had one member, Matte LLC, which it described as a New York domestic limited liability company with its principal place of business in New York. The court directed Matte Projects to file an amended statement because this disclosure did not identify the relevant citizenship.

In its amended statement, Matte Projects said that both Matte Projects LLC and Matte LLC were New York limited liability companies with principal places of business in New York and therefore were New York citizens. The court found that this still did not satisfy Rule 7.1 because Matte LLC was itself an LLC. The citizenship of Matte LLC depended on the citizenship of its members, and those members had not been named or identified.

Court’s action

The court explained that the ownership inquiry must continue through each level of LLC ownership until the disclosure identifies every individual or entity whose citizenship is attributed to Matte Projects. It gave an example in which the members of an LLC could cause the LLCs above them to have citizenship in multiple states.

The court ordered Matte Projects to file a completed Rule 7.1 disclosure statement by May 31, 2023. The statement had to name and identify the citizenship of every individual or entity whose citizenship was attributable to Matte Projects. This order concerned the parties’ jurisdictional disclosures and did not decide the underlying merits of the case.