Unreported / Non-Citable
Background
Kate Koeller, Jeff Koeller, Matt Davidson, and later Amy Boleski filed a putative class action in Santa Clara County Superior Court against Nixplay, Inc. and Creedon Technologies USA, LLC, asserting California Consumer Legal Remedies Act, False Advertising Law, and Unfair Competition Law claims, plus breach of contract and misrepresentation theories arising from the marketing of Nixplay’s digital photo frames. The defendants removed under 28 U.S.C. § 1332, asserting in their initial May 29, 2025 notice that Nixplay was a citizen of Delaware (state of incorporation) and Colorado (principal place of business), and that Creedon Technologies USA, LLC was a Minnesota LLC with offices in Minnesota and Colorado.
Plaintiffs amended their complaint to add Ms. Boleski (a citizen of Colorado) as a plaintiff and to add intentional and negligent misrepresentation claims. Defendants then filed an amended notice of removal that no longer claimed any Colorado connection. Plaintiffs moved to remand, arguing that defendants were judicially estopped from changing their citizenship allegations and that, even if not, Nixplay’s subsidiary Nixplay Cayman’s citizenship should be imputed to Nixplay, Inc., putting it in California (where Davidson resides) and destroying diversity. After oral argument, the court permitted limited jurisdictional discovery and supplemental briefing.
The Court’s Holding
Magistrate Judge Virginia K. DeMarchi denied the motion to remand. Following Strotek Corp. v. Air Transport Ass’n and Royal Canin U.S.A. v. Wullschleger, the court emphasized that the “actual state of things” — the facts on the ground — controls citizenship for diversity purposes, and that jurisdictional facts cannot be manufactured by what a party initially alleged.
On Nixplay, Inc.’s citizenship, the court found Nixplay was incorporated in Delaware and had its principal place of business in the United Kingdom (not Colorado, as the original notice had said). Defendants were not judicially estopped from correcting that defective allegation. Under Dart Cherokee Basin Operating Co. v. Owens and Barrow Development Co. v. Fulton Insurance Co., removing parties may amend their notice to clarify defective jurisdictional allegations even after the 30-day removal window. The court rejected the contention that Nixplay Cayman’s citizenship should be imputed to Nixplay, Inc.; subsidiaries do not automatically share their parent’s citizenship for diversity purposes absent a basis to disregard corporate separateness.
On Creedon Technologies USA, LLC’s citizenship, the court applied the rule that an LLC takes the citizenship of every one of its members. Creedon USA had only one member, Creedon Technologies HK Limited, which is a Hong Kong corporation. Creedon USA was therefore a citizen of Hong Kong, not Minnesota or Colorado.
With both defendants now properly characterized as a Delaware/U.K. corporation and a Hong Kong LLC, complete diversity existed between defendants and the plaintiffs (citizens of Illinois, California, and Colorado). The court did not reach defendants’ alternative fraudulent-joinder argument concerning Ms. Boleski. The motion to remand was denied.
Key Takeaways
- Citizenship for diversity purposes turns on actual facts, not the labels in a removal notice. Initial errors in identifying corporate citizenship can be corrected through amendment of the notice without triggering judicial estoppel.
- An LLC takes the citizenship of every one of its members. When the only member is a Hong Kong corporation, the LLC itself is a foreign citizen.
- Subsidiary citizenship does not automatically attach to the parent for diversity purposes. Plaintiffs invoking subsidiary citizenship must support a basis for disregarding corporate separateness.
- Plaintiffs cannot defeat removal by pointing to the original notice of removal’s factually incorrect statements; the court will look at the underlying corporate facts.
- Adding a plaintiff to destroy diversity may attract a fraudulent-joinder challenge, but courts often decide diversity based on the actual citizenship analysis rather than reaching the joinder question.
Why It Matters
Removal practice in the Northern District is increasingly affected by the citizenship complexities of multinational consumer-product companies whose corporate structures cross state and national borders. This decision is a useful reminder that the actual corporate facts — incorporation, principal place of business, LLC member tracing — are what matter for diversity, and that initial removal-notice errors can be cured.
For plaintiffs’ counsel, the practical lessons are to test corporate citizenship through targeted Rule 7.1 motions and limited jurisdictional discovery, and to focus subsidiary-imputation arguments on real corporate-separateness theories. For defendants, the case is a clean modern example of how to recover from defective initial removal allegations through Rule 7.1 disclosures, an amended notice, and supplemental briefing supported by jurisdictional discovery.