FPACP4 LEX, LLC v. Stantec, Inc.

586 F.Supp.3d 824

FPACP4 LEX, LLC, Plaintiff,

v.STANTEC, INC. and Harmon, Inc., Defendants.

No. 21 C 6028

United States District Court, N.D. Illinois, Eastern Division.

Signed February 22, 2022

Aron J. Frakes, Fredrikson & Byron, P.A., Minneapolis, MN, for Plaintiff.

Justin L. Weisberg, Ryan T. Johnson, Robbins DiMonte, Ltd., Chicago, IL, Lyndsay Ileana Ignasiak, Reminger Co., L.P.A., Indianapolis, IN, for Defendant Harmon Inc.

Lyndsay Ileana Ignasiak, Logan Courtney Hughes, Reminger Co., L.P.A., Indianapolis, IN, for Defendant Stantec Inc.

Memorandum Opinion and Order

Elaine E. Bucklo, United States District Judge

On September 29, 2021, plaintiff—a limited liability company ("LLC") with a complex organizational structure—filed this action in the Circuit Court of Cook County asserting negligence claims against several companies involved in the design and construction of a luxury apartment building in Chicago. One of those companies, defendant Harmon, Inc., removed the case to this court on November 11, 2011, asserting diversity jurisdiction. Plaintiff moved for remand on the ground that the opposing parties are not completely diverse.¹ Although the question is less clear than one might expect, I agree with plaintiff's interpretation of the relevant authorities and conclude that I lack subject matter jurisdiction.

As an LLC, plaintiff's citizenship is that of each of its members. Thomas v. Guardsmark, LLC , 487 F.3d 531, 534 (7th Cir. 2007). Although plaintiff has not identified each of the membership in its organizational structure, defendant appears to concede that at least one of plaintiff's "terminal" members (i.e., a member at the end of the ownership chain after "trac[ing] through ... all the layers" of ownership, Meyerson v. Harrah's E. Chicago Casino , 299 F.3d 616, 617 (7th Cir. 2002) ), is a foreign citizen: NAIS (GP), a corporation organized and incorporated in the Cayman Islands, which is a British Overseas Territory. Defendant Hanson—a corporation incorporated and headquartered² in the state of Minnesota—is a citizen of Minnesota, while Defendant Stantec—a Canadian corporation headquartered in Canada—is a Canadian citizen.

All agree that "there is no diversity jurisdiction over a case in which there are foreign parties on both sides of the suit and a U.S. citizen on only one side," Salton, Inc. v. Philips Domestic Appliances & Pers. Care B.V. , 391 F.3d 871, 875 (7th Cir. 2004), i.e., a suit "between foreigners and a mixture of citizens and foreigners"), Allendale Mut. Ins. Co. v. Bull Data Sys., Inc. , 10 F.3d 425, 428 (7th Cir. 1993). See also Baylay v. Etihad Airways P.J.S.C., 881 F.3d 1032, 1041 (7th Cir. 2018) (no diversity over action brought by foreign plaintiff against both foreign and domestic defendants). That is how plaintiff characterizes the jurisdictional situation here, attributing foreign citizenship to itself (based on the alien status of its Cayman Islands partner), while all agree that defendants include both foreign and domestic citizens.

Defendants view matters differently. They characterize the case as one in which there are (or, to be precise, in which they expect jurisdictional discovery to establish that there are) citizens of diverse states on both sides, as well as citizens of foreign states. On that interpretation of the jurisdictional situation, the case falls within the scope of 28 U.S.C. § 1332(a)(3), which creates diversity jurisdiction in cases between "citizens of different States and in which citizens or subjects of a foreign state are additional parties," so long as one or more terminal members of plaintiff is a citizen of any domestic state other than Minnesota, and no member is a citizen of Minnesota. If that is the case, defendants contend, the scenario would fit the one contemplated by § 1332(a)(3), as there would be citizens of diverse states on both sides of the litigation, as well as foreign citizens—the Cayman Islands corporation on plaintiff's side and the Canadian corporation on defendants’—as "additional parties."

There is indeed some authority for defendants’ view, see Tango Music, LLC v. DeadQuick Music, Inc. , 348 F.3d 244, 245 (7th Cir. 2003), but the Tango court's passing comment on this issue—which was not the focus of its decision, as the question presented was whether the presence of citizens of the same foreign state on both sides of the litigation destroyed the diversity that otherwise existed between the completely diverse domestic citizens—it is inconsistent with the Supreme Court's jurisdictional analysis in Grupo Dataflux v. Atlas Glob. Grp., L.P. , 541 U.S. 567, 569, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004), which held a partnership...