Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_17-cv-00572/USCOURTS-cand-5_17-cv-00572-1/pdf.json

Nature of Suit Code: 140
Nature of Suit: Negotiable Instruments
Cause of Action: 28:1330 Breach of Contract

---

Case No. 17-cv-00572 NC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

PEROGEUX, LLC,

Plaintiff,

v.

PAUL WINKLER, et al.,

Defendants.

Case No. 17-cv-00572 NC 

ORDER TO PLAINTIFF TO SHOW 

CAUSE RE: FEDERAL SUBJECT 

MATTER JURISDICTION

Federal courts are courts of limited jurisdiction and have power to adjudicate only 

those cases authorized by the Constitution and Congress. The burden of establishing 

subject matter jurisdiction rests with the party asserting jurisdiction. Kokkonen v. 

Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). Here, plaintiff Perogeux, 

LLC must establish subject matter jurisdiction. 

In the complaint, plaintiff alleges that subject matter jurisdiction is satisfied through 

diversity of citizenship under 28 U.S.C. § 1332, because plaintiff is a Texas Limited 

Liability Company and defendant KMC Partners LLC is a California Limited Liability 

Company. ECF 1. Yet for purposes of diversity, the Court must consider the citizenship 

of all members of the LLC, and if any member of the LLC is itself a partnership, 

association, or another LLC, the Court needs to know the citizenship of each “submember” as well. Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th 

Case 5:17-cv-00572-NC Document 37 Filed 03/15/17 Page 1 of 2
Case No. 17-cv-00572 NC 2

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

United States District Court

Northern District of California

Cir. 2006) (“an LLC is a citizen of every state of which its owners/members are citizens”); 

V&M Star, LP v. Centimark Corp., 596 F.3d 354, 356 (6th Cir. 2010) (the court should 

insist that plaintiff establish citizenship of all LLC sub-members). Furthermore, the party 

invoking federal diversity jurisdiction must distinctly and affirmatively allege the 

citizenship of LLC members. D.B. Zwirn Special Opp. Fund, LP v. Mehrotra, 661 F.3d 

124, 16-27 (1st Cir. 2011) (requiring filing of affidavits to establish diversity). No party 

can waive a defect in diversity jurisdiction. See Wis. Dep’t of Corrs. v. Schacht, 524 U.S. 

381, 389 (1998). And the Court must determine whether it has subject matter jurisdiction 

before it may consider the merits of the dispute. Steel Co. v. Citizens for a Better 

Environment, 523 U.S. 83, 94 (1998). Finally, the Court may sanction counsel under Fed. 

R. Civ. P. 11 for diversity allegations that are not well-grounded in fact after a reasonable 

inquiry. Hendrix v. Naphtal, 971 F.2d 398, 400 (9th Cir. 1992).

In this case, plaintiff’s allegations of diversity jurisdiction are insufficient. Thus, by 

March 17, 2017, plaintiff must file a declaration attesting to the citizenship of its members

and sub-members and to the citizenship of the members and sub-members of defendant 

KMC Partners LLC, as of the date of the filing of the complaint. Grupo Dataflux v. Atlas 

Global Group, LP, 541 U.S. 567, 571 (2004) (diversity must exist at the time lawsuit 

filed). By March 20, KMC Partners may file a response to the plaintiff’s jurisdictional 

assertions. If the Court lacks subject matter jurisdiction, it will dismiss the case without 

prejudice. 

IT IS SO ORDERED.

Dated: March 15, 2017 _____________________________________

NATHANAEL M. COUSINS

United States Magistrate Judge

Case 5:17-cv-00572-NC Document 37 Filed 03/15/17 Page 2 of 2