Motion to Dismiss in Marc Rotenberg v. Politico LLC

“For diversity jurisdiction to exist, no plaintiff may share state citizenship with any defendant," and "[u]nincorporated associations, including LLCs, have the citizenship of each of their members."

Just filed today; it's short, because it doesn't have to be long:

On April 2, 2021, Plaintiff Marc Rotenberg filed his original Complaint in this action. The initial pleading named four defendants: POLITICO LLC ("Politico"), Protocol Media, LLC ("Protocol"), Politico's and Protocol's Publisher Robert Allbritton, and Protocol's Executive Editor Tim Grieve. Plaintiff asserted claims for defamation (Counts I and II), false light invasion of privacy (Count III), public disclosure of private facts (Count IV), and unjust enrichment (Count V), and he argued that "[t]his Court has jurisdiction over the subject matter of this complaint pursuant to 28 U.S.C. § 1332, as the parties to this matter at [sic] citizens of different states, and the amount in controversy exceeds $75,000."

On April 29, 2021, this Court issued a Minute Order, sua sponte, stating that "the venue, jurisdiction and parties sections of the Complaint do not set forth the facts necessary to establish that this court has jurisdiction pursuant to 29 U.S.C. Section 1332." The Court noted, in particular, that "Plaintiff has not alleged the states where the individual defendants are citizens. Additionally, Defendant has not alleged where Politico LLC has its principal place[] of business, nor where Protocol Media, LLC is incorporated or has its principal place of business." The Court directed Plaintiff to "file an Amended Complaint that contains the facts necessary for this court to establish jurisdiction" by May 5, 2021.

On May 5, 2021, Plaintiff voluntarily dismissed Mr. Allbritton and Mr. Grieve from this action. That same day, Plaintiff filed an Amended Complaint against Politico and Protocol, including the same five claims as in the original Complaint and asserting again that "[t]his Court has jurisdiction over the subject matter of this complaint pursuant to 28 U.S.C. § 1332, as the parties to this matter at [sic] citizens of different states, and the amount in controversy exceeds $75,000." …

The Amended Complaint invokes federal diversity jurisdiction under 28 U.S.C. § 1332(a)(1), which provides that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between . . . [c]itizens of different States." While Plaintiff seeks sufficient damages to satisfy the amount-in- controversy requirement, he fails to establish complete diversity among the parties to this case.

"For purposes of diversity jurisdiction, a person is a 'citizen of the State' in which he is domiciled." Core VCT Plc v. Hensley (D.D.C. 2014) (citing Prakash v. Am. Univ. (D.C. Cir. 1984)). Here, Plaintiff alleges that he "is a resident of Washington, DC," and it is well-settled that "residency is indicative of domicile," even though "it is not determinative."

A limited liability company, however, has the citizenship of all of its members. See, e.g., Carden v. Arkoma Assocs. (1990); CostCommand, LLC v. WH Administrators, Inc. (D.C. Cir. 2016) ("Unincorporated associations, including LLCs, have the citizenship of each of their members."). Here, as set out in the attached First Declaration of Chao Liu, Politico is a limited liability company, and its members—now and at the time the Amended Complaint was filed—are citizens of Delaware, the District of Columbia, Maryland, Texas, and Virginia. Likewise, as set out in the attached Second Declaration of Chao Liu, Protocol is a limited liability company, and its members are citizens of those same five jurisdictions.

For diversity jurisdiction purposes, therefore, Plaintiff is presumably a citizen of the District of Columbia, and Politico and Protocol are citizens of Delaware, the District of Columbia, Maryland, Texas, and Virginia. Because Plaintiff and Defendants are each citizens of the District of Columbia, complete diversity does not exist among the parties. See, e.g., CostCommand, LLC ("For diversity jurisdiction to exist, no plaintiff may share state citizenship with any defendant."). As a result, pursuant to the Federal Rules this Court "must dismiss" this action for lack of subject-matter jurisdiction….

This is indeed what I expected, and I can't see how the plaintiff can get around this, though I look forward to seeing his response.

Comments

[rsteinmetz]

Is the court giving him another try? Could he change the complaint and plausabily assert he is a citizen of Maryland?

[Archibald Tuttle]

I'm surprised by this suit. Marc Rotenberg is not a novice. He should know better. Either he's just posturing, or emotional, or he had bad legal advice.

[ReaderY]

As I understand it, the question of whether an LLC should be treated as a corporation or a partnership is still an open one. While the DC Court of Appeals has held that they function as partnerships for federal diversity jurisdiction purposes, the Supreme Court hasn’t.

So it’s potentially open to a plaintiff to appeal dismissal for lack of complete diversity all the way to the Supreme Court and see if he can get it to take the case and overrule the DC Circuit.

[ReaderY]

If you look at things from a functional point of view, an LLC, with its limited liability, management separated from ownership, dostinct registration, and so forth, looks a lot more like a corporation than it does a partnership.

Only if you think that a corporation is somehow a constitutionally special creature, a living person, while all other forms of business organization are mere inert legalisms, would you take the corporation vs. anything else approach without attempting to classify an intermediate or different form based on some sort of functional criteria.

And I see nothing in the constitution whatsoever that makes a corporation uniquely special over all other forms of business organization, or creates a magic formula whereby only with the specific exact ingredients does it come to life and magically attain personhood; omit a single one or do anything different and it remains inert matter.

I don’t see any spells or incantations in the constitution’s text on this subject either.

[Eugene Volokh]

Well, have a look at Carden v. Arkoma Assocs. (1990), where the Court dealt with the issue (albeit by a 5-4 vote) as to LLPs, with logic that also seems to apply to LLCs. That opinion left any revision of the matter to Congress, and I doubt the Court would revisit that.

[Ridgeway]

It is hard to believe that Congress has not addressed this, because the present rule is highly unworkable.

There is no way for a non-insider to know who the members of an LLC are, absent discovery. So I don't see how a non-insider could plead diversity in any meaningful way.

Moreover, membership lists are often viewed as highly confidential, and not relevant to most litigations, and so many defendant LLCs would want to fight hard against disclosing them in discovery.

It seems like nearly everybody should be in favor of treating LLCs like corporations.

[rsteinmetz]

The IRS allows LLCs to elect to be treated a Partnerships or Corporations depending on the preference of teh Members.

[John F. Carr]

It's easy to be short when the judge is already on your side.

[MatthewSlyfield]

"I look forward to seeing his response."

#Table #Table #Table.