Fadal MacHining Centers, LLC v. Mid-Atlantic Cnc, Inc. , 464 F. App'x 672 ( 2012 )

FILED
NOT FOR PUBLICATION JAN 03 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
FADAL MACHINING CENTERS, LLC, No. 10-56494
Plaintiff-counter-defendant - D.C. No. 2:09-cv-09019-CAS-E
Appellant,
MAG INDUSTRIAL AUTOMATION ORDER *
SYSTEMS, LLC,
Counter-defendant -
Appellant,
v.
MID-ATLANTIC CNC, INC.,
Defendant-counter-claimant -
Appellee.
Appeal from the United States District Court
for the Central District of California
Christina A. Snyder, District Judge, Presiding
Submitted December 7, 2011 **
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: PREGERSON and PAEZ, Circuit Judges, and CONLON, District Judge.***
Fadal Machining Centers, LLC (“Fadal”) and MAG Industrial Automation
Systems, LLC (“MAG”) appeal from the district court’s judgment dismissing the
action because all claims are subject to arbitration. We are obligated to consider
sua sponte whether we have subject matter jurisdiction. See Allstate Ins. Co. v.
Hughes, 358 F.3d 1089, 1093 (9th Cir. 2004). Because Appellants cannot establish
diversity between the parties, we dismiss the appeal, vacate the district court’s
judgment, and remand for dismissal.
In response to this court’s order to submit supplemental briefs addressing the
citizenship of the parties,1 Appellants admitted that a Delaware limited liability
company called SP MAG Holdings, LLC owns 10% of MAG.2 SP MAG Holdings
has six members, including a Delaware limited partnership called Silver Point
Capital Fund, LP and a Delaware limited liability company called SPCP Group III,
***
The Honorable Suzanne B. Conlon, District Judge for the United
States District Court for the Northern District of Illinois, sitting by designation.
1
Because Appellants’ supplemental brief contained all of the additional facts
necessary to establish the complete citizenship of the parties, it is not necessary to
take judicial notice of any further facts or cases. Appellees’ December 2, 2012
motion to take judicial notice is therefore denied.
2
Both Fadal and MAG are part of the same structure of tiered limited
liability companies. Fadal is a limited liability company whose sole member is
G&L USA, LLC; MAG Industrial Automation Systems, LLC is the sole member
of G&L USA.
LLC. Robert J. O’Shea, a citizen of New Jersey, is a member of both SPCP Group
III and Silver Point Capital Fund. Appellee Mid-Atlantic CNC, Inc. is a New
Jersey corporation.
For purposes of diversity jurisdiction, a limited liability corporation is a
citizen of all states where its members are citizens. See Johnson v. Columbia
Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).
Appellants urge that “SP MAG Holdings, LLC’s Membership Interest
should be disregarded for purposes of determining citizenship,” because the
company holds “only a severely fractionalized interest with no control over the
day-to-day operations” of MAG. Appellants emphasize the fact that SP MAG
Holdings’ 10% minority interest is limited to “Class B membership,” which does
not entitle SP MAG Holdings to “vote on or otherwise dictate” the operations of
the company.
Because SP MAG Holdings is a member of MAG Industrial Automation
Systems, the character of its membership interest is irrelevant to the determination
of its citizenship. See Carden v. Arkoma Assocs., 494 U.S. 185, 192 (1990) (“We
have never held that an artificial entity, suing or being sued in its own name, can
invoke the diversity jurisdiction of the federal courts based on the citizenship of
some but not all of its members.”); see also Johnson, 437 F.3d at 899 (“[A]n
unincorporated association . . . has the citizenships of all of its members.”)
(emphasis added). Scant though Mr. O’Shea’s interest in the Appellants may be,
the rules governing subject matter jurisdiction are “inflexible and without
exception.” Carden, 494 U.S. at 195 (quoting Great Southern Fire Proof Hotel Co.
v. Jones, 177 U.S. 449, 453 (1900)). We therefore conclude that both Fadal and
MAG are citizens of New Jersey and that complete diversity of citizenship did not
exist when the complaint was filed.
In the absence of diversity of citizenship of the parties, the district court did
not have subject matter jurisdiction and should have dismissed the action. We
therefore dismiss the appeal, and remand to the district court with instructions to
vacate the judgment and orders and dismiss the case for lack of jurisdiction.
Appellee Mid-Atlantic shall recover its costs on appeal.
APPEAL DISMISSED and REMANDED.
The filing of this Order shall serve as the court’s mandate.