Shareholder Representative Services LLC v. Orchard Technologies, Inc.

Background

Shareholder Representative Services LLC filed a complaint against Orchard Technologies, Inc. The complaint alleged that federal subject-matter jurisdiction—the court’s legal authority to hear the case—was based on diversity of citizenship.

The court explained that diversity jurisdiction requires complete diversity, meaning that all plaintiffs must be citizens of states different from all defendants. For this purpose, a corporation is a citizen of its state of incorporation and principal place of business. A limited liability company is a citizen of every state where its members are citizens. A complaint relying on diversity jurisdiction must therefore identify the citizenship of an LLC’s members and, when applicable, the citizenship of entities further up the ownership chain.

Jurisdictional Deficiency

Because the original complaint did not allege the citizenships of Shareholder Representative Services LLC’s members, the court ordered Plaintiff to amend the complaint. The Amended Complaint stated that Plaintiff’s sole member was an LLC owned wholly by “SRS Acquicom Inc., a Delaware corporation.” It also stated that Orchard Technologies, Inc. was a Delaware corporation.

Ruling

The court ordered that both parties were citizens of Delaware and that Plaintiff therefore had failed to allege diversity of citizenship. The court concluded that it lacked subject-matter jurisdiction, dismissed the case without prejudice, and directed the Clerk of Court to close the case.