Unreported / Non-Citable
Background
Theodore Nelson sued Textron Ground Support Equipment, Tug Technologies Corporation, Airport Terminal Services, and Alliance Ground International in California Superior Court. Textron removed the case to federal court asserting diversity jurisdiction. The Notice of Removal alleged that “Alliance Ground International, Inc.” was a Delaware corporation with its principal place of business in Florida.
However, in its joinder in Textron’s opposition to the plaintiff’s motion to remand, Alliance Ground International referred to itself inconsistently as both “AGI Cargo, LLC, f/k/a Alliance Ground International, LLC” and “Alliance Ground International, Inc.” This created uncertainty as to whether Alliance Ground International was actually a corporation or a limited liability company — a critical distinction for diversity analysis because the citizenship rules differ dramatically between the two forms.
The Court’s Holding
Judge John F. Walter sua sponte ordered the defendants to show cause why diversity jurisdiction exists and the case should not be remanded. The court explained that under Johnson v. Columbia Properties Anchorage (9th Cir. 2006), an LLC is a citizen of every state of which its members are citizens — meaning to plead an LLC’s citizenship, a removing party must identify each member and that member’s citizenship. By contrast, under 28 U.S.C. § 1332(c) and Hertz Corp. v. Friend, 559 U.S. 77 (2010), a corporation is a citizen only of its state of incorporation and the state of its principal place of business.
Because Alliance Ground International’s self-references suggested it might be an LLC rather than a corporation — and because Textron’s notice of removal had not pleaded the citizenship of any LLC members — the defendants had failed to demonstrate that the court has subject-matter jurisdiction. The court ordered the defendants to file a response by January 8, 2026, explaining the entity’s actual form and properly pleading its citizenship. Failure to respond would result in remand.
Key Takeaways
- For diversity jurisdiction, the citizenship pleading rules for LLCs and corporations are fundamentally different: an LLC takes the citizenship of every member; a corporation has only two states of citizenship (incorporation and principal place of business).
- Removing defendants must identify the entity form correctly in the notice of removal and plead citizenship under the rule applicable to that form.
- Inconsistent or ambiguous self-descriptions of the entity (e.g., “LLC” in some filings and “Inc.” in others) can defeat federal jurisdiction by leaving the court unable to verify complete diversity.
- Federal courts may sua sponte remand for failure to plead jurisdictional facts adequately, and any doubt about the right to remove must be resolved in favor of remand.
- Diversity citizenship is about citizenship, not residency: a person residing in a state is not necessarily domiciled (and therefore a citizen) there (Kanter v. Warner-Lambert Co.).
Why It Matters
This OSC is a useful reminder for removal defendants to verify the corporate form of every entity in the case before filing a Notice of Removal. Mistakenly pleading an LLC as a corporation — or failing to plead the citizenship of the LLC’s members — is one of the most common technical defects that triggers sua sponte remand orders.
For plaintiffs’ counsel facing removal, scrutinizing the defendants’ entity descriptions in the case caption, in the notice of removal, and in the defendants’ subsequent filings is often the easiest path to demonstrate that diversity jurisdiction has not been adequately pleaded.