This
was an action by Plaintiff to vacate an arbitration award
against it. Plaintiff's original complaint asserted the
Court had subject matter jurisdiction over this case
“because this is an action brought pursuant to the
Federal Arbitration Act (‘FAA'), 9 U.S.C. §
10.” (ECF No. 2, ¶ 6). The original complaint also
asserted that jurisdiction was proper in this Court pursuant
to 28 U.S.C. § 1332 as “there is complete
diversity of citizenship and the amount in controversy
exceeds $75, 000, based on diversity of citizenship.”
(Id.)
On July
15, 2021, the Court on its own motion issued an Order
Concerning Jurisdiction (ECF No. 28) (the
“Order”) concerning the original complaint. The
Order is incorporated herein by this reference. The Court
concluded in the Order that Plaintiff's first stated
basis for the Court's exercise of subject matter
jurisdiction was insufficient because the Federal Arbitration
Act does not provide a basis for federal subject matter
jurisdiction. Order at 2 (citing Moses H. Cone Mem. Hosp
v. Mercury Constr. Corp., 460 U.S. 1, 25 n.32 (1983)
(discussing sections 3 and 4 of the FAA); UHC Mgmt. Co
Inc. v. Computer Sciences Corp., 148 F.3d 992, 995 (8th
Cir. 1998) (citation omitted) (requiring an independent
jurisdictional basis “when a party to an arbitration
agreement seeks to have a federal court enforce its
provisions.”); and Pinnavaia v. National Arb
Forum, Inc., 122 Fed.Appx. 862, 862 (8th Cir. 2004)
(unpublished per curiam) (“In keeping with the other
circuits that have addressed the issue, we hold that 9 U.S.C.
§ 10 does not provide an independent jurisdictional
basis for filing suit in federal court.”)). The Court
stated that there must exist either federal question or
diversity jurisdiction in order for it to hear this matter.
(ECF No. 28 at 2.)
The
original complaint did not allege another basis for federal
question jurisdiction, but alleged diversity of citizenship
jurisdiction under 28 U.S.C. § 1332. The Court
determined that Plaintiff's original complaint was
procedurally defective in that regard because it did not
contain sufficient allegations of jurisdictional facts
regarding the state(s) of Plaintiff's own citizenship,
and did not establish that the amount in controversy exceeded
$75, 000. Id. at 5. The Court's Order set forth
the relevant law concerning allegations of citizenship for
limited liability companies such as Plaintiff:
“An LLC's citizenship, for purposes of diversity
jurisdiction, is the citizenship of each of its
members.” E3 Biofuels, LLC v. Biothane, LLC,
781 F.3d 972, 975 (8th Cir. 2015) (quoted case omitted).
Thus, for limited liability companies, the Court must examine
the citizenship of each member of the limited liability
company to determine whether it has diversity jurisdiction.
See GMAC Commercial Credit, LLC v. Dillard Dep't
Stores, Inc., 357 F.3d 827, 829 (8th Cir. 2004)
(“GMAC”). For
any members of LLCs that are themselves limited liability
companies, partnerships or limited partnerships, information
concerning their underlying members or partners must be
alleged.
Here, the Complaint alleges that Plaintiff Senderra Rx
Partners, LLC, d/b/a Senderra Specialty Pharmacy
(“Senderra”) is a limited liability company with
its principal place of business in Dallas, Texas. (Complaint
¶ 4.) “[A]n LLC is not necessarily a citizen of
its state of organization but is a citizen of each state in
which its members are citizens.” GMAC, 357
F.3d at 829. The Complaint contains no allegations concerning
the relevant jurisdictional facts about Plaintiff's
citizenship: the identity of each of its members and the
state(s) of which each member was a citizen at the time the
complaint was filed, as required by GMAC.
Id. at 3.
The
Court granted Plaintiff seven (7) days to file an amended
complaint alleging facts to show (1) complete diversity of
citizenship between the parties, and (2) that the amount in
controversy exceeds $75, 000. Id. The Court
cautioned, “Plaintiff's failure to timely and fully
comply with this Order will result in the dismissal of this
case without prejudice for lack of subject matter
jurisdiction.” Id. The case was stayed pending
the Court's determination as to the existence of subject
matter jurisdiction.
Plaintiff
timely filed an amended complaint titled “Amended
Petition to Vacate Arbitrator's Award” (ECF No.
35). The Court carefully reviewed the amended complaint's
jurisdictional allegations and found that Plaintiff failed to
set forth facts as to its citizenship in numerous respects,
after having been given notice that its jurisdictional
allegations were deficient and an opportunity to cure them,
as follows:
The amended complaint alleges that Defendant Express Scripts
Inc. is a Delaware corporation with its principal place of
business in Missouri (id. ¶ 5), and that Plaintiff is a
limited liability company incorporated under the laws of
Texas with its principal place of business in Texas (id.
¶¶ 4, 8.) It further alleges, “The complete
ownership of Petitioner is as listed in Exhibit A.”
(Id. ¶ 8.)
As the Court stated in the Order, for purposes of diversity
jurisdiction the citizenship of a limited liability company
such as Plaintiff is the “citizenship of each of its
members.” E3 Biofuels, LLC v. Biothane, LLC,
781 F.3d 972, 975 (8th Cir. 2015) (quoted case omitted).
Thus, the Court must examine the citizenship of each of
Plaintiff's members to determine whether it has diversity
jurisdiction.
See GMAC Commercial Credit, LLC v. Dillard Dep't
Stores, Inc., 357 F.3d 827, 829 (8th Cir. 2004). For
members of LLCs that are themselves limited liability
companies, partnerships, limited partnerships, or trusts,
information concerning their underlying members, partners,
and trustees or trust beneficiaries must be alleged. “A
federal court . . . needs to know each member's
citizenship, and if necessary each member's members'
citizenships.” Hicklin Eng'g, L.C. v.
Bartell, 439 F.3d 346, 348 (7th Cir. 2006),
abrogated on other grounds by RTP LLC v. ORIX Real Estate
Capital, 827 F.3d 689 (7th Cir. 2016).
The amended complaint's Exhibit A (ECF No. 33-2) is a
nine-page series of tables without any accompanying
explanatory text. Per the statement in the amended complaint,
Exhibit A is intended to document Plaintiff's complete
ownership structure. Exhibit A does not serve to allege
specific jurisdictional facts as to Plaintiff's
citizenship, however, or establish complete diversity of
citizenship for purposes of federal diversity jurisdiction,
as the information contained therein is deficient in the
following respects.
In most instances where Plaintiff lists an individual person
on Exhibit A as a member, partner, or percentage owner of
itself or one of its member entities, Plaintiff provides the
person's name and an address only. In other instances,
Plaintiff provides only the individual's name. To
establish complete diversity of citizenship, a complaint must
include factual allegations of each party's state of
citizenship. Sanders v. Clemco Indus., 823 F.2d 214,
216 (8th Cir. 1987); see 28 U.S.C. § 1332(a).
Plaintiff's listing of a person's name and an address
does not set forth with specificity that person's state
of citizenship for purposes of federal diversity
jurisdiction. Thus, Plaintiff fails to allege the citizenship
of each of the individuals identified in Exhibit A. In its
discussion of the other defects in Plaintiff's
jurisdictional allegations, the Court does not repeat as to
each entity that Plaintiff's allegations as to any
individuals' citizenships are also defective.
Plaintiff identifies “TMC, LLC” as its
“Sole Class A Member” in the chart showing
Plaintiff's ownership (ECF No. 33-2 at 10), but
subsequently provides ownership information for The Moody
Company, LLC (id. at 11-12), and not TMC, LLC.
Plaintiff does not allege that TMC, LLC and The Moody
Company, LLC are the same entity. This discrepancy creates
doubt as to whether Plaintiff has alleged the members of TMC,
LLC at all.[1] Even if the Court assumes that TMC, LLC
and The Moody Company, LLC are the same entity and
Plaintiff's use of two different names to describe it on
Exhibit A is the result of carelessness, Plaintiff fails to
allege facts sufficient to establish its citizenship because,
among other things, Plaintiff does not allege facts to
establish the citizenship of TMC, LLC's members.
Plaintiff identifies Cibolo Capital Partners I, LLC, and
Grayhawk Advisers, LP as two of its “Founding
Members.” (ECF No. 33-2 at 10.) Plaintiff lists three
members of Cibolo Capital Partners I, LLC, including
“Grayhawk Advisors, ” with
Winston R. Purifoy as 100% “underlying owner” of
Grayhawk Advisors (id. at 13). Plaintiff does not
identify what kind of entity Grayhawk Advisors is. Assuming
that Grayhawk Advisers, LP and Grayhawk Advisers are the
...
