Belleville Catering v. Champaign Market Place
| Decision Date | 01 December 2003 |
| Docket Number | No. 02-3975.,02-3975. |
| Citation | 350 F.3d 691 |
| Parties | BELLEVILLE CATERING CO., et al., Plaintiffs-Appellants, v. CHAMPAIGN MARKET PLACE, L.L.C., Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Stephen B. Evans, St. Louis, MO, (argued), Deeba Sauter Herd, for Plaintiffs-Appellants.
Jerome P. Lyke (argued), Flynn, Palmer & Tague, Champaign, IL, for Defendant-Appellee.
Before FLAUM, Chief Judge, and EASTERBROOK and WILLIAMS, Circuit Judges.
Once again litigants' insouciance toward the requirements of federal jurisdiction has caused a waste of time and money. See, e.g., Hart v. Terminex International, 336 F.3d 541 (7th Cir.2003); Meyerson v. Showboat Marina Casino Partnership, 312 F.3d 318 (7th Cir.2002); Meyerson v. Harrah's East Chicago Casino, 299 F.3d 616 (7th Cir.2002); Indiana Gas Co. v. Home Insurance Co., 141 F.3d 314 (7th Cir.1998); Guaranty National Title Co. v. J.E.G. Associates, 101 F.3d 57 (7th Cir. 1996); Kanzelberger v. Kanzelberger, 782 F.2d 774 (7th Cir.1986).
Invoking the diversity jurisdiction, see 28 U.S.C. § 1332, the complaint alleged that the corporate plaintiff is incorporated in Missouri and has its principal place of business there, and that the five individual plaintiffs (guarantors of the corporate plaintiff's obligations) are citizens of Missouri. It also alleged that the defendant is a "Delaware Limited Liability Company, with its principle [sic] place of business in the State of Illinois." Defendant agreed with these allegations and filed a counterclaim. The parties agreed that a magistrate judge could preside in lieu of a district judge, see 28 U.S.C. § 636(c), and the magistrate judge accepted these jurisdictional allegations at face value. A jury trial was held, ending in a verdict of $220,000 in defendant's favor on the counterclaim. Plaintiffs appealed; the jurisdictional statement of their appellate brief tracks the allegations of the complaint. Defendant's brief asserts that plaintiffs' jurisdictional summary is "complete and correct."
It is, however, transparently incomplete and incorrect. Counsel and the magistrate judge assumed that a limited liability company is treated like a corporation and thus is a citizen of its state of organization and its principal place of business. That is not right. Unincorporated enterprises are analogized to partnerships, which take the citizenship of every general and limited partner. See Carden v. Arkoma Associates, 494 U.S. 185, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990). In common with other courts of appeals, we have held that limited liability companies are citizens of every state of which any member is a citizen. See Cosgrove v. Bartolotta, 150 F.3d 729 (7th Cir.1998). So who are Champaign Market Place LLC's members, and of what states are they citizens? Our effort to explore jurisdiction before oral argument led to an unexpected discovery: Belleville Catering, the corporate plaintiff, appeared to be incorporated in Illinois rather than Missouri!
At oral argument we directed the parties to file supplemental memoranda addressing jurisdictional details. Plaintiffs' response concedes that Belleville Catering is (and always has been) incorporated in Illinois. Counsel tells us that, because the lease between Belleville Catering and Champaign Market Place refers to Belleville Catering as "a Missouri corporation," he assumed that it must be one. That confesses a violation of Fed R.Civ.P. 11. People do not draft leases with the requirements of § 1332 in mind — perhaps the lease meant only that Belleville Catering did business in Missouri — and counsel must secure jurisdictional details from original sources before making formal allegations. That would have been easy to do; the client's files doubtless contain the certificate of incorporation. Or counsel could have done what the court did: use the Internet. Both Illinois and Missouri make databases of incorporations readily available. Counsel for the defendant should have done the same, instead of agreeing with the complaint's unfounded allegation.
Both sides also must share the blame for assuming that a limited liability company is treated like a corporation. In the memorandum filed after oral argument, counsel for Champaign Market Place relate that several of its members are citizens of Illinois. Citizens of Illinois thus are on both sides of the suit, which therefore cannot proceed under § 1332. Moreover, for all we can tell, other members are citizens of Missouri. Champaign Market Place says that one of its members is another limited liability company that "is asserting confidentiality for the members of the L.L.C." It is not possible to litigate under the diversity jurisdiction with details kept confidential from the judiciary. So federal jurisdiction has not been established. The complaint should not have been filed in federal court (for Belleville Catering had to know its own state of incorporation), the answer should have pointed out a problem (for Champaign Market Place's lawyers had to ascertain the legal status of limited liability companies), and the magistrate judge should have checked all of this independently (for inquiring whether the court has...
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