UDG Management, LLC v. Ironshore Indemnity Corp.

Background

Ironshore removed the action from the Supreme Court of New York, New York County, on April 12, 2024. The federal court then found that Ironshore’s notice of removal did not properly allege the citizenship of each party for purposes of diversity jurisdiction. The court ordered Ironshore to provide additional support showing that the federal court had subject-matter jurisdiction.

Ironshore submitted an affidavit and declaration stating, on information and belief, that Jeong Hoon Kim was the sole member of UDG Management, LLC and UDG Holdings, LLC and was a New York resident. The submissions did not address the principal place of business of UDG Holdings, LLC. The public-record material showed that Kim was a member of UDG Management, LLC but did not establish that he was its only member. The tax returns showed that Kim was an officer of UDG Holdings, LLC but did not show that he was a member or its only member.

The court therefore gave Ironshore one more opportunity to establish the basis for federal jurisdiction through brief jurisdictional discovery. It warned that, absent adequate additional support, the case would be remanded to New York Supreme Court. Ironshore moved for permission to conduct jurisdictional discovery concerning UDG Management, LLC and UDG Holdings, LLC.

Legal standard

The party asserting federal jurisdiction bears the burden of proving it by a preponderance of the evidence. Diversity jurisdiction requires complete diversity, meaning that no plaintiff and defendant may be citizens of the same state. An individual’s citizenship is based on domicile. A limited liability company is a citizen of every state in which any of its members is a citizen.

A district court has discretion to order jurisdictional discovery in a removal case when citizenship allegations are inadequate. Here, Ironshore had not identified all members of the two plaintiff LLCs or established their citizenships. Ironshore acknowledged that its records did not establish that Kim was the sole member of the LLCs or establish UDG Holdings’ principal place of business. The court held that Ironshore therefore had not yet met its burden of establishing diversity jurisdiction.

Ruling

The court granted Ironshore’s motion. The parties were directed to promptly complete discovery limited to document requests, interrogatories sufficient to show the citizenship of all members of each plaintiff LLC, and, if necessary, a limited deposition of a plaintiffs’ corporate representative. The discovery had to be completed by June 3, 2024. Ironshore had to file an amended notice of removal by June 7, 2024. The Clerk of Court was directed to close the motion at Docket 12.