Marroquin v. Wells Fargo, LLC, No. 11CV163-L BLM, 2011 WL 476540 (S.D. Cal. Feb. 03, 2011).

 While dismissing the complaint without prejudice, a District Court in California held that in diversity cases, the complaint must affirmatively allege the state of citizenship of each party.

The plaintiff, Sergio R. Marroquin, filed a class action complaint against the defendant, Wells Fargo, LLC.  

The plaintiff had filed this state law class action directly in the federal court asserting federal diversity jurisdiction under CAFA, 28 U.S.C. §1332(d).  Upon examination of the complaint, the District Court found that based on the allegations in the complaint, it did not appear that the case met CAFA’s jurisdictional requirement of minimal diversity; in the alternative, the case fell within CAFA’s home-state controversy exception.  Accordingly, the Court dismissed the action without prejudice.

At the very outset, the Court stated that federal courts are courts of limited jurisdiction. Thus, federal courts are constitutionally required to raise issues related to federal subject matter jurisdiction before proceeding to the merits of the case and may do so sua sponte.  

The Court, relying on Bautista v. Pan Am. World Airlines, Inc., 828 F.2d 546, 551 (9th Cir. 1987); and Kanter v. Warner-Lambert, Co., 265 F.3d 853 (9th Cir. 2001), noted that in diversity cases, the complaint must affirmatively allege the state of citizenship of each party. Specifically, the plaintiff must establish that any member of a class of plaintiffs is a citizen of a state different from any defendant.

Here, the plaintiff alleged that he was a California resident.  For diversity purposes, a person is a citizen of a state in which he or she is domiciled. 

Although CAFA speaks of citizenship, not of residency, the place of residence is prima facie the domicile.  Thus, the Court concluded that the plaintiff most likely could cure this defective citizenship allegation by amendment.

The plaintiff also asserted that the complaint alleged a national class, which would result in at least one class member belonging to a different state than that of the defendant.  The Court observed that this allegation was negated by the allegations which defined the class as including only California residents.  Accordingly, the Court concluded that the plaintiff and the class members were alleged to be California citizens.

The Court then examined the defendants’ citizenship. The defendant, a limited liability company, is incorporated under Delaware law, with its principal place of business in California.  Under CAFA §1332(d)(10), an unincorporated association is deemed to be a citizen of the state where it has its principal place of business and the state under whose laws it is organized.  Accordingly, the Court concluded that the defendant is a citizen of Delaware and California.

Under these facts, the Court found that the plaintiff had not alleged minimal diversity under CAFA.  While holding so, the Court maintained that corporate dual citizenship is insufficient when a corporation or a limited liability company is citizen of same state as plaintiff and class.

In the alternative, the Court found that even if the case fell under CAFA, the home-state controversy exception under §1332(d)(4)(B) precluded diversity jurisdiction under CAFA because the plaintiff, the class members and the only named defendant were California citizens.