Unreported / Non-Citable
Background
Carolyn Jane Blakely underwent spinal surgery in La Jolla in April 2023. During the surgery she was implanted with a bone allograft product called ViBone — a human tissue product processed from donor bone — that was later recalled. She subsequently tested positive for tuberculosis. She filed a state-court complaint in San Diego Superior Court asserting California product-liability and negligence claims against three defendants connected to the manufacturing and distribution of the product: Elutia, Inc. (formerly known as Aziyo Biologics), DCI Donor Services, Inc., and Berkeley Biologics, LLC, the company that purchased Aziyo’s orthobiologics business and is its direct successor.
Elutia removed the case to federal court based on diversity of citizenship. Blakely moved to remand, arguing that complete diversity was missing because she and Berkeley were both California citizens. Berkeley is a Delaware LLC with offices in Richmond, California, and its California Statement of Information lists two “Manager(s) or Member(s)” with California addresses. Elutia argued that Berkeley is actually a citizen of Japan because it is a wholly owned subsidiary of GNI Group Ltd., a Japanese corporation headquartered in Tokyo.
The Court’s Holding
The court denied remand. The decision turned on a precise application of LLC citizenship rules.
Federal diversity jurisdiction requires complete diversity (no plaintiff sharing citizenship with any defendant) and more than $75,000 in controversy. The amount in controversy was easily satisfied. The closer question was Berkeley’s citizenship. Under Johnson v. Columbia Properties, an LLC is a citizen of every state of which its owners or members are citizens. The Statement of Information identifying two California-based individuals as “Manager(s) or Member(s)” was ambiguous: managers run an LLC’s operations but do not necessarily own membership interests, and only members confer citizenship.
Plaintiff did not affirmatively show that the listed individuals were members rather than managers. Defendants, by contrast, supported their assertion that Berkeley is a wholly owned subsidiary of GNI Group Ltd. with documentary evidence (and Plaintiff’s own exhibit confirmed the wholly-owned-subsidiary relationship). Because GNI Group is a Japanese corporation headquartered in Tokyo, GNI is a citizen of Japan. And because Berkeley as an LLC takes the citizenship of its sole owner, Berkeley is also a citizen of Japan — not of California.
The court rejected Plaintiff’s argument that her reasonable belief at the time of filing should control. Citing the Supreme Court’s Grupo Dataflux, the court explained that subject-matter jurisdiction is determined by the actual state of facts at the time of filing, not by what the plaintiff reasonably believed. The court also held that a plaintiff cannot stipulate to a citizenship that is not in fact accurate. Because the parties were diverse and the amount-in-controversy was met, federal jurisdiction existed and remand was inappropriate.
Key Takeaways
- An LLC’s citizenship is the citizenship of its members, not its managers. Plaintiffs challenging removal on LLC-citizenship grounds must establish member identity, not just California office locations or named manager addresses.
- An LLC that is a wholly owned subsidiary of a single corporate parent takes the citizenship of that parent. A foreign-parent LLC therefore has foreign citizenship.
- California Secretary of State Statements of Information often list “Manager(s) or Member(s)” without distinguishing the two categories. That ambiguity favors the removing party because the burden is on the removal opponent to show non-diversity for purposes of remand.
- Citizenship for diversity purposes is determined by the actual facts at the time of filing, not by what a plaintiff reasonably believed about citizenship at the pleading stage.
Why It Matters
Product-liability cases involving recalled medical products often involve a chain of manufacturers, suppliers, and successor entities. Plaintiffs who want to keep their cases in California state court may try to identify a California-based defendant in that chain to defeat diversity. This decision is a useful reminder that for LLCs, surface indicators like California offices or California-resident managers may not suffice. The actual member structure — and any foreign parent that owns the LLC — controls.
For California product-liability and personal-injury counsel, the case suggests doing meaningful pre-filing diligence on each defendant’s corporate structure. For removal counsel, the case provides authority for relying on documentary evidence of corporate structure (annual reports, parent-company filings) to support the diversity allegation in a notice of removal.