Protecting The Identity Of Your LLC Members & LP Partners In Litigation, Part I: Motions To Remand

The situation is familiar: You represent a LLC or LP and file suit in state court to avoid disclosing the identity of your members/partners. But then the identity of those members/partners becomes an issue when the defendant removes your state court case to federal court claiming diversity jurisdiction. The contentions of the removal petition may allege diversity of the parties "upon information and belief" and then you are left to admit or refute the allegations and/or address the issue in the jurisdictional statement of your counterclaim. For privacy reasons though, your LLC or LP may not want to divulge the identity of its members/partners.

In this situation, the best way to protect the identity of your entity's owners may be through a motion to remand. When an LLC or an LP is a party to a case, here are some common defects with removal petitions that may get your case remanded back to state court where the ownership of your LLC or LP may not be an issue (or at least a public one):

Complete diversity between the plaintiff(s), on the one hand, and defendant(s), on the other hand is required and it is the removing party's burden to establish this. If the opposing party fails to sufficiently allege complete diversity due to lack of information, point that out in the motion to remand. The burden rests with the party alleging federal court jurisdiction to establish jurisdiction. "[I]t is not enough to file a pleading and leave it to the court or the adverse party to negate jurisdiction." Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 447 (7th Cir. 2005). Frame the discussion in terms of whether the opposing party has met its burden. If the opposing party alleges diversity jurisdiction using "upon information and belief" allegations, those may not be sufficient. Courts are hesitant to assert federal court jurisdiction based on "upon information and belief" allegations. Glisson v. Matrixx Initiatives, Inc., No. 10-76-GPM, 2010 WL 685894, at * 3 (S.D. Ill. Feb. 22, 2010). Address common defects with the citizenship allegations. If any of the parties to the case is a corporation, did the opposing party identify the corporation's state of incorporation and principal place of business? For any individuals, did the opposing party allege where that individual is "domiciled"? It generally takes physical presence with an intent to remain there indefinitely to establish domicile...