The Volokh Conspiracy
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Judge Demands List of All Indirect Co-Owners of OpenAI, in Libel Lawsuit Against OpenAI
In Walters v. OpenAI, LLC, plaintiff sued OpenAI [link fixed] after it hallucinated false statements about plaintiff (in response to a query by a third party). Plaintiff sued in Georgia state court, and OpenAI removed the case to federal court, on the theory that this is a lawsuit between citizens of different states and has at least $75,000 at issue (so-called "diversity jurisdiction"). But OpenAI, LLC is a "limited liability company," and under federal law an LLC is the citizen of all the states where its members (i.e., co-owners) are citizens; and if the members are LLCs, then the LLC is the citizen of all the states where its members' members are citizens, and so on, indefinitely.
OpenAI therefore had to file a declaration discussing the citizenship of its members, which it did. But Friday's order from Judge Michael L. Brown (N.D. Ga.) says that's not enough:
Defendant still has not shown the Court has diversity jurisdiction because it has not yet established the citizenship of OpenAI Holdings, LLC and Aestas Management Company, LLC (both of which are entities in Defendant's membership structure). Defendant claims (1) OpenAI Holdings, LLC has "[m]embers who are citizens of California and Michigan, or are citizens of other countries"; and (2) "Aestas Management Company, LLC's members are citizens of Alaska, Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Illinois, Massachusetts, Maryland, Michigan, North Dakota, New Jersey, Nevada, New York, Oregon, Pennsylvania, Texas, Virginia and Washington, or are citizens of other countries, but not Georgia." (Dkt. 22 paras. 13c, 14.) These allegations are insufficient. Defendant must affirmatively identify by name each member of an LLC and then allege whatever specific facts are necessary to establish the citizenship of that member. The Court will give Defendant one last chance to do so. Defendant must file, no later than October 6, 2023, a single consolidated document showing the Court has subject matter jurisdiction over this action. Failure to do so will result in remand [to state court].
I expect that OpenAI will indeed file this comprehensive list, that its lawyers have confirmed that none of the indirect members are citizens of Georgia (where Walters is a citizen), and the case will thus stay in federal court. Still, I expect that some businesspeople and journalists will find it interesting to have this whole ownership structure revealed in one handy document.
