United States District Court, E.D. Virginia, Richmond Division
A. Gibney, Jr. united States District Judge.
jurisdiction requires complete diversity of the parties, and
the citizenship of a hybrid entity such as a limited
liability company is that of all of its members.
case, the plaintiff previously brought his state law claims
before this Court, which dismissed the complaint after three
futile attempts to establish the members of the defendant
LLC. Spurned by the cruel limits of federal jurisdiction, the
plaintiff brought his case in the Henrico County Circuit
Court in December 2017. A month later, however, the plaintiff
again found himself in federal court after the defendant
removed the case. Ultimately, the defendant acknowledged that
it could not, as required by law, provide the Court with the
membership of the various hybrid entities that make up the
defendant LLC. The Court then remanded, and the plaintiff
moved for attorneys' fees for the costs of filing the
motion to remand and the motion for attorneys' fees.
well established that an LLC's citizenship, for the
purpose of diversity jurisdiction, consists of the
citizenship of all of its members. Where an LLC's members
consist of other LLC's or other types of hybrid entities,
the parent-LLC's citizenship consists of all of the
members of its child-hybrids. The Court therefore grants the
motion for attorneys' fees.
plaintiff, Jeffrey Smiley, filed a complaint in federal court
on April 24, 2017, based on diversity
jurisdiction. The Court ordered Smiley to file an
amended complaint specifying the grounds for diversity.
Smiley filed an amended complaint, but the Court ordered him
to file a second amended complaint because he still did not
prove diversity. The Court dismissed Smiley's complaint
without prejudice when he failed to establish diversity in
his second amended complaint. Forcepoint admitted that
diversity existed in its answer, but it did not provide any
information to help Smiley prove diversity.
refiled his original complaint in state court on December 21,
2017. Despite the recent prolonged diversity debacle,
Forcepoint removed the case to this Court asserting diversity
jurisdiction. Smiley filed a motion to remand, and in
response, Forcepoint moved to consolidate the case with
another action properly before the Court that raised a
federal question. The Court denied the motion to consolidate
and the motion to remand, but ordered Forcepoint to provide
an affidavit with the complete citizenship of its members so
that the Court could determine Forcepoint's citizenship.
The Court then remanded the case to state court after
Forcepoint could not identify the citizenship of its members.
seeks to recover $6, 375.00 in costs associated with removal
under 28 U.S.C. § 1447(c), which reads:
A motion to remand the case on the basis of any defect other
than lack of subject matter jurisdiction must be made within
30 days after the filing of the notice of removal under
section 1446(a). If at any time before final judgment it
appears that the district court lacks subject matter
jurisdiction, the case shall be remanded. An order remanding
the case may require payment of just costs and any actual
expenses, including attorney fees, incurred as a result of
test for granting attorneys' fees turns on the
reasonableness of the removal. Martin v. Franklin Capital
Corp., 546 U.S. 132, 141 (2005). "Absent unusual
circumstances, courts may award attorney's fees under
§ 1447(c) only where the removing party lacked an
objectively reasonable basis for seeking removal. Conversely,
when an objectively reasonable basis exists, fees should be
denied." Id. For example, a party's
"failure to disclose facts necessary to determine
jurisdiction" constitutes an unusual circumstance.
Id. Ultimately, the district court has
"discretion to consider whether unusual circumstances
warrant a departure from the rule in a given case."
Forcepoint lacked an objectively reasonable basis for
removal. In Smiley's original case, the Court explained
on three occasions that the citizenship of LLC's depends
on the citizenship of its members. Smiley v. Forcepoint
Federal LLC, No. 3:17-cv-316 (Dk. Nos. 19, 22, 32.) This
explanation echoes the well-established principle that
LLC's derive their citizenship from their members.
Cent. W. Virginia Energy Co. v. Mountain State Carbon,
LLC, 636 F.3d 101, 103 (4th Cir. 2011). If one of the
LLC's members is itself another LLC or some other hybrid
entity, then the party needs to identify the second
entity's members until it reaches a person or
corporation. Nahigian v. Juno-Loudoun, LLC, 661
F.Supp.2d 563, 566 (E.D. Va. 2009) ("The law is clear,
however, that 4[a] limited liability company organized under
the laws of a state is not a corporation' and therefore,
its citizenship, for diversity purposes, is identical to that
of all of its members. Juno [LLC, whose sole member is
another LLC with members who reside in Florida and
Massachusetts, ] is therefore a citizen of Florida and
Massachusetts, for diversity purposes.") (quoting
Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d
114, 120 (4th Cir. 2004).
prior case before Judge Lauck, Smiley as the plaintiff
understandably could not prove the citizenship of
Forcepoint's sprawling ownership structure, which
required the Court to dismiss the case. En this instance,
however, Forcepoint had already seen that identical case
tossed from federal court and also stood in the best
position, as the hybrid entity in question, to provide its
own membership structure to the Court to establish
jurisdiction. When asked to do so, it simply failed. For that
reason. Forcepoint lacked an objectively reasonable basis for
removal, and attorneys' fees are appropriate.
plaintiff has provided an affidavit with the hours worked to
remand the case and file the present motion. The Court finds
these hours reasonable and ...