United States District Court, M.D. Georgia, Macon Division
For GREG KILGORE, HOPE KILGORE, Plaintiffs: CRAIG N COWART, LEAD ATTORNEY, MACON, GA.
For ACADEMY LTD, Defendant: BISHOP A BARTONI, LEAD ATTORNEY, PRO HAC VICE, DETROIT, MI; MILTON S KARFIS, LEAD ATTORNEY, DETROIT, MI; MARY M KATZ, WENDELL KERRY HOWELL, MACON, GA.
MARC T. TREADWELL, UNITED STATES DISTRICT JUDGE.
Although the Court dismissed this case on October 17, 2014, the Court retained jurisdiction for the determination of whether Defendant Academy Ltd. should be sanctioned. After careful review, the Court enters this Order.
Plaintiffs Greg and Hope Kilgore filed a complaint against Defendant Academy Ltd. in this Court on January 7, 2014, asserting claims based on the alleged malfunction of a " Game Winner Climbing Stick" purchased from one of the Defendant's stores. (Doc. 1). On July 2, 2014, the Court Ordered the Plaintiffs to show cause why their complaint should not be dismissed for lack of subject matter jurisdiction because, though the Plaintiffs alleged the basis for the Court's jurisdiction was diversity of citizenship, they did not properly plead Academy's citizenship. (Doc. 17). Specifically, the Plaintiffs alleged Academy was a limited partnership and that both its general and limited partners were limited liability companies but did not allege the citizenship of each member of the LLCs as required to show diversity.
In response to the Court's Order, the Plaintiffs moved to dismiss their complaint on September 16 pursuant to Fed.R.Civ.P. 41(a)(2). (Doc. 21). The Plaintiffs explained that they had propounded interrogatories in an attempt to discover Academy's ownership structure and respond to the Court's Order, but they received answers that were clearly unresponsive:
INTERROGATORY NO. 1
Please identify the members of Academy Managing Co., LLC. Also identify each such member[']s citizenship by identifying: (1) any individual member's state of citizenship and residence; (2) any corporate member's state of incorporation and principal place of business; (3) any LLC member's members; and (4) any partnership member's partners.
Defendant is a Texas limited partnership. The sole limited partner of Defendant is Associated Investors, L.L.C., a Texas limited liability company, and the sole general partner of Defendant is Academy Managing Co., L.L.C., a Texas limited liability company, neither of which is publicly traded. Each of Associated Investors, L.L.C. and Academy Managing Co., L.L.C. is indirectly controlled by an affiliate of Kohlberg Kravis Roberts & Co. L.P. (NYSE: KKR), which is publicly traded.
Defendant's subsidiaries include Academy Finance Corporation, a Delaware corporation, Academy.com, LLC, a Texas limited liability company, Academy Administrative Services LLC, a Virginia limited liability company, Brazos Sports Retail Management, LLC, a Delaware limited liability company, and Academy International Limited, a Hong Kong limited liability company.
(Doc. 21 at 5-6). Because the statute of limitations was about to run, the Plaintiffs' counsel was understandably concerned about being able to timely file the action in state court if diversity of citizenship was lacking and thus moved to dismiss the case without prejudice.
The Court, however, was not willing to let Academy's apparent nose-thumbing pass so easily. On September 17, the Court ordered Academy to submit the information the Plaintiffs requested in their interrogatories within seven days, citing Bouvier v. Academy Ltd., 2:13-cv-3002 (E.D. La.), a case Academy removed to federal court on the basis of diversity jurisdiction. (Doc. 22). Academy requested a telephone conference, which was held on September 24. During the conference, Milton Karfis, then the attorney for Academy, informed the Court that Academy does not have access to its entire ownership structure due to the confidential nature of its private equity ownership. Karfis said the best Academy could do--and what it did in this case--was ask the four primary companies that own Academy whether any of their members are citizens of Georgia. According to Karfis, there was a Georgia corporation with an indirect ownership interest in Academy, and thus, complete diversity did not exist. However, Karfis said he could provide neither the name of the corporation nor the date on which it acquired its ownership interest. Karfis never removed a case to federal court on behalf of Academy, but it was his understanding that if Academy wanted to remove a case it would ask its investment groups whether any of their owners were citizens of the particular state where Academy was trying to remove the case.
The Court then ordered Academy to inform the Court by September 26: (1) when the Georgia corporation obtained its ownership interest and (2) the basis for keeping the identity of ...