United States District Court, N.D. Georgia, Atlanta Division
OPINION AND ORDER
WILLIAM S. DUFFEY, Jr., District Judge.
This matter is before the Court on remand  ("Remand Order") from the Eleventh Circuit Court of Appeals "for the limited purpose of making a factual determination as to whether diversity jurisdiction exists in this case and to permit further proceedings to address jurisdictional deficiencies, as deemed necessary by the district court." (Remand Order at 1). In its Remand Order, the Eleventh Court noted: "The notice of removal did not adequately allege the citizenship of Purchasing Power, LLC, and the responses to [the Eleventh Court's] jurisdictional question indicated that a remand is necessary." Id . The Eleventh Court asks this Court to determine whether any of Plaintiff Purchasing Power, LLC's ("Plaintiff") members are citizens of Minnesota or Delaware. The Court concludes, for the reasons explained in this Order, that diversity jurisdiction does not exist in this case, because one of the members of Purchasing Power Holdings, LLC - the sole member of Plaintiff - is determined for the purpose of diversity jurisdiction to be a Delaware citizen.
This is an acrimonious and inefficiently litigated commercial dispute between companies that compete in the business of "payroll deduction" sales, or the sale of goods to employees by allowing deductions from employees' pay. Plaintiff alleges that Defendant Bluestem Brands, Inc. ("Defendant, " together, "Parties") misappropriated Plaintiff's trade secrets, violated provisions of a confidentiality agreement between the Parties, and engaged in fraud.
On December 21, 2011, Plaintiff filed this action against Defendant in the Superior Court of Fulton County, Georgia. On January 25, 2012, Defendant filed its Notice of Removal  ("Notice"), removing the action to this Court on the basis of diversity jurisdiction. Defendant stated it was "a Delaware corporation with its principal place of business in Eden Prairie, Minnesota, and thus a citizen of Delaware and Minnesota." (Notice at 2). Defendant stated also that Plaintiff, "a Georgia limited liability company, has no members that are citizens of either Minnesota or Delaware." ( Id., citing Exhibit B to the Notice [1-3]). Exhibit B to the Notice is an e-mail dated January 20, 2012, from Mr. Joe Letzer - counsel for Plaintiff - to Mr. Randall Kahnke - counsel for Defendant - in which Mr. Letzer states:
we are informed by our client that none of the members of the LLC are resident citizens of either the states of Minnesota or Delaware. We trust this gives you the essential information you requested to assess removability on diversity grounds.
([1-3] at 2) (the "January 20, 2012, Email"). Thus, Plaintiff undertook to provide the information it and its counsel knew was necessary to invoke this Court's subject matter jurisdiction.
In addition to Plaintiff's representations to the Defendant regarding jurisdiction, counsel for Plaintiff represented to the Court on four separate occasions that the Court had jurisdiction over this case. On March 2, 2012, in the Joint Preliminary Report and Discovery Plan , Plaintiff represented that there was no question regarding the Court's jurisdiction. (Joint Preliminary Report and Discovery Plan at 15). On August 16, 2012, Plaintiff filed its Amended Complaint , in which Plaintiff alleged that the "Court has subject matter jurisdiction over the claims at issue in this action." (Amended Complaint ¶ 3). On October 5, 2012, Plaintiff filed its Motion for Leave to File Second Amended Complaint . Plaintiff's Proposed Second Amended Complaint [49-1] expressly alleged that the "Court has original subject matter jurisdiction over the claims in this action pursuant to 28 U.S.C. § 1332, because there is complete diversity of citizenship between the parties, and the amount in controversy exceeds the $75, 000 statutory minimum, exclusive of interest and costs." (Proposed Second Amended Complaint ¶ 4). On January 18, 2013, Plaintiff filed its Motion for Leave to File Revised Second Amended Complaint . Plaintiff's Revised Second Amended Complaint [66-1] again expressly alleged that the "Court has subject matter jurisdiction over the claims at issue in this action." (Revised Second Amended Complaint ¶ 3).
This case was contentious and the litigation tactics employed were often troubling. The time required to manage this litigation involved substantial and often unnecessary expenditure of judicial resources. Judicial activities included considering motions filed by the Parties and the review of hundreds of documents filed, without justification, under seal. On May 9, 2014, the Court granted  summary judgment in favor of Defendant on the claims that remained in the case, and the case was concluded.
On June 6, 2014, Plaintiff appealed . On June 27, 2014, the Eleventh Circuit docketed its "Jurisdictional Question, " noting that the pleadings did not sufficiently allege Plaintiff's citizenship, and asked the Parties if the record adequately proved Plaintiff's citizenship or if a formal amendment to the pleadings was necessary.
On July 11, 2014, Defendant filed its Response to the Jurisdictional Question ("Defendant's Response"), citing the January 20, 2012, Email. (Defendant's Response at 3). In its response, Defendant stated that it had requested in 2012 the production of documents from Plaintiff concerning Plaintiff's members and their citizenship, and that Plaintiff had objected to producing these documents on the basis of relevancy. (Id. at 4-5). The response noted further that on November 12, 2012, counsel for Defendant sent counsel for Plaintiff a letter regarding Plaintiff's objections to producing the documents, noting that the documents were relevant "because they relate to jurisdiction...." (Id. at 5). Aware that Defendant wanted to investigate federal jurisdiction, on November 19, 2012, counsel for Plaintiff responded by referencing the January 20, 2012, Email, noting that they had identified the citizenship and residence information requested by Defendant, that counsel for Plaintiff had provided the information necessary to determine the existence of federal subject matter jurisdiction and, for those reasons, reiterated their objection to these document requests. (Id.). Based on this case history, Defendant stated in its response that it lacked access to information that would identify Plaintiff's members and their respective citizenships, and that the record does not contain this information.
On July 11, 2014, Plaintiff filed its Response to the Jurisdictional Question ("Plaintiff's Response"), now stating, almost two and a half years after Mr. Letzer's January 20, 2012, Email, and after all of Plaintiff's claims had been dismissed, that the evidence showed that the Court lacks jurisdiction over this case. (Plaintiff's Response at 1). Plaintiff argued in its response that the Notice failed to allege Plaintiff's members and their respective citizenships. (Id. at 8-9). Disturbingly, this representation was made despite the fact that Plaintiff had given its assurances to Defendant and the Court that there was diversity between the Parties; representations upon which Plaintiff knew the Defendant and the Court relied. Plaintiff did not reference the January 20, 2012, Email, where counsel for Plaintiff informed counsel for Defendant that none of Plaintiff's members are citizens of either the states of Minnesota or Delaware, in Plaintiff's Response. Plaintiff stated also that the record showed that one of Plaintiff's members, FSP III Kendrick Purchasing Power Holdings, Inc. ("FSP III"), is a citizen of Delaware, and that complete diversity does not exist and did not exist when this case was removed, information it did not previously disclose. (Id. at 10-11).
On July 14, 2014, the Parties filed their Joint Motion for Remand, requesting that the Eleventh Circuit remand this case to the Court so the Parties could supplement the record and the Court could make appropriate findings regarding its jurisdiction. On August 4, 2014, the Eleventh Circuit entered its Remand Order, remanding the case to the Court "for the limited purpose of making a factual determination as to whether diversity jurisdiction exists in this case and to permit further proceedings to address jurisdictional deficiencies, as deemed necessary by the district court." (Remand Order at 1).
On August 20, 2014, the Court held an evidentiary hearing for the Parties to present evidence of Plaintiff's citizenship at the time of removal (the "August 20, 2014, Hearing"). At the August 20, 2014, Hearing, Mr. Richard Alfred Carrano, II ("Carrano"), the President and Chief Executive Officer of Plaintiff since October 14, 2011, testified that Mr. Letzer forwarded the January 20, 2012, Email to him, and that in response he prepared a list of Plaintiff's members with the states of residence for those members (the "Member List"). (Transcript of August 20, 2014, Hearing at 8-9). The Member List contained the names of nine (9) individuals who were all listed as residents of Georgia, and three limited liability companies: 1) Purchasing Power Investors, LLC; 2), FSP III Kendrick Purchasing Power Holdings, LLC.; and 3) Stephens Capital Partners, LLC. The Member List stated that Purchasing Power Investors, LLC was a resident of Michigan, that FSP III Kendrick Purchasing Power Holdings, LLC was a resident of Massachusetts, and that ...