Diversity of citizenship cannot be asserted merely on information and belief when it comes to the members of a Limited Liability Company (LLC). For diversity jurisdiction purposes, the citizenship of an LLC is determined by the citizenship of each of its members. A simple declaration of diversity of citizenship is not enough. The court needs to understand the identity and citizenship of each member. In case any member is an unincorporated association, such as an LLC or partnership, the citizenship must be traced through all layers of ownership to ensure no member shares a common citizenship with the opposing party.
Merely claiming that all members are citizens of a certain state or that no members are citizens of a certain state is insufficient. It is also not enough to claim that an LLC was organized under a specific state’s laws, maintains its principal place of business in a certain state, or that an LLC has a parent corporation. The citizenship of an LLC must be proven by underlying facts, not merely alleged on information and belief. If the members of an LLC have members, the citizenship of all those members must also be set forth.
Lawyers are required to conduct a reasonable inquiry under the circumstances to ensure the claims or other legal contentions regarding the identities and citizenship of the members of the LLCs are warranted by existing law. The Seventh Circuit has emphasized the need to properly assert the jurisdiction of LLCs and the need for counsel to carry out the necessary research to make such assertions. Asserting confidentiality for its members’ identities and citizenships is not suited to claiming that complete diversity has been established.
Lastly, please note that the residence of an LLC’s members is not the same as their citizenship. For diversity purposes, citizenship is determined by domicile, not residence. Thus, simply stating the residence of the LLC’s members without clarifying their domicile is not enough. In accordance with Federal Rules of Civil Procedure Rule 7.1, in an action where jurisdiction is based on diversity, a party or intervenor must file a disclosure statement that names and identifies the citizenship of every individual or entity whose citizenship is attributed to that party or intervenor.
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