Phoenix Packaging Operations, LLC v. Dahlicious Holdings, LLC
- Rearden
- 1:23-cv-07079
- U.S. District Court · Southern District of New York
- 3
In Phoenix Packaging v. Dahlicious Holdings, Judge Rearden ordered Phoenix to clarify the LLCs’ citizenship or face dismissal for lack of jurisdiction.
Phoenix Packaging Operations, LLC must amend its complaint to allege the citizenship of the members of both LLCs, serve the order on Dahlicious Holdings, LLC, and file proof of service. The case could be dismissed for lack of subject matter jurisdiction if Phoenix does not provide the required allegations by February 7, 2024.
What happened
Phoenix Packaging Operations, LLC sued Dahlicious Holdings, LLC for breach of contract, claiming federal jurisdiction because the parties were citizens of different states. The complaint identified each LLC’s organization and principal business location but did not identify the members whose citizenship determines an LLC’s citizenship.
Judge Rearden found that the complaint did not adequately establish complete diversity or explain the basis for allegations made on information and belief. The court ordered Phoenix to amend the complaint by February 7, 2024, and warned that the case would be dismissed for lack of subject matter jurisdiction if Phoenix failed to do so.
Judge Rearden also ordered Phoenix to serve the order on Dahlicious and file proof of service. The court noted that Phoenix had obtained a default certificate and proposed a default judgment but had not filed the required motion, and that default judgment generally cannot proceed without adequately pleaded diversity.
The detailed version
- Phoenix Packaging Operations, LLC v. Dahlicious Holdings, LLC · No. 1:23-cv-07079
- Rearden
- Jan. 24, 2024
Background
Phoenix Packaging Operations, LLC brought a breach-of-contract action against Dahlicious Holdings, LLC. Phoenix invoked diversity jurisdiction under 28 U.S.C. § 1332, which requires complete diversity of citizenship between the parties and more than $75,000 in controversy.
The complaint alleged that Phoenix was a limited liability company organized under Delaware law with its principal place of business in Dublin, Virginia. It alleged, on information and belief, that Dahlicious was a limited liability company organized under Massachusetts law with its principal place of business in Leominster, Massachusetts.
Jurisdictional Deficiency
The court explained that an LLC has the citizenship of all its members. The complaint did not identify any member of either LLC or allege the citizenship of those members. The complaint also did not provide the factual basis for its allegations about Dahlicious’s citizenship that were made on information and belief. The court therefore found that Phoenix had not adequately pleaded the facts necessary to establish complete diversity.
Order
The court ordered Phoenix to amend its complaint by Wednesday, February 7, 2024, to allege the citizenship of every person or entity comprising both LLCs. Phoenix also had to include a redline showing the differences between the current complaint and the proposed amended complaint. The court stated that if Phoenix failed to allege the required diversity by that date, it would dismiss the case for lack of subject matter jurisdiction without further notice.
The court separately ordered Phoenix to serve a copy of the order on Dahlicious by overnight courier by Monday, January 29, 2024, and to file proof of service within two business days after service.
The court also noted that Phoenix had obtained a Clerk’s Certificate of Default and filed a proposed default judgment, but had not filed the motion required for a default judgment. The court further stated that courts in the circuit generally do not allow a case to proceed to default judgment when the pleadings do not demonstrate complete diversity. The opinion did not decide the breach-of-contract claim or enter a default judgment.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.