The Federal-Court Preference and the LLC’s Member Citizenship
Your firm is asked to file a personal-injury complaint for Priya Nandakumar, a citizen of State B. She slipped on a wet floor at the Grand Arbor Hotel in State A and broke her wrist; her medical bills are $22,000, and she claims $85,000 in total damages. The hotel is operated by Grand Arbor Hospitality LLC, organized in State C with its principal place of business in State A. Its two members are citizens of State A and State B. Priya wants to sue in federal court in State A because she believes federal juries are “more sophisticated.” The hotel’s registered agent is in State A, and the incident occurred in State A. The statute of limitations is two years; the incident was 20 months ago. The supervising attorney asks you to prepare a court-selection memo and a draft complaint caption. No complaint has been filed yet.
1. Does federal diversity jurisdiction exist? Explain the citizenship analysis and the correct court.
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Federal diversity jurisdiction requires complete diversity and an amount in controversy exceeding $75,000. 28 U.S.C. § 1332. The amount is satisfied: $85,000. Diversity is not.
An LLC takes the citizenship of every member, not its state of organization or principal place of business. Grand Arbor Hospitality LLC has members in State A and State B. Priya is a citizen of State B. Because one LLC member is also a State B citizen, the parties are not completely diverse. The State C organization and State A principal place of business do not cure that. There is no federal question either; this is a state-law negligence case.
Conclusion: Priya cannot sue in federal court based on diversity. The complaint should be filed in State A state court. The caption should name the LLC and any individual owner only after confirming citizenship and liability; adding a nondiverse defendant would not create jurisdiction.
2. What must be checked before filing in State A, and what deadlines and service facts matter?
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Venue in State A is proper because the injury occurred there and the hotel’s principal place of business and registered agent are there. The practical questions are which state trial court has authority over an $85,000 personal-injury claim and whether local rules require a particular division or filing fee.
Before filing, confirm:
- The state court’s jurisdictional limit; an $85,000 claim may exceed a limited-jurisdiction or small-claims ceiling.
- The correct county and division for the hotel’s location.
- The registered agent’s current name and address for service.
- Whether the LLC must be named exactly as registered and whether the individual members are proper defendants.
- The two-year limitations date: 20 months have passed, so roughly four months remain. Do not let the federal-court detour consume that time.
File in the proper State A court and serve the registered agent. A paralegal may prepare the caption and civil cover sheet but should have the attorney confirm the court and parties.
3. How should the firm explain the court choice to Priya and respond to her insistence on federal court?
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Priya’s preference does not create jurisdiction. The attorney should explain, in plain language, that federal courts are not available for this case because the hotel LLC shares her State B citizenship through one of its members, and because the claim arises only under state law.
Document the explanation and the client’s decision. Do not file a federal complaint to placate her; it will be dismissed and may waste the limitations period. Do not omit the State B member from the LLC to manufacture diversity if the member is a real party in interest; that could be fraudulent joinder or misrepresentation.
If the hotel later removes, the firm can challenge removal for lack of complete diversity. But removal is the defendant’s choice, not the plaintiff’s. The immediate priority is a timely, correct State A filing. If Priya insists on a federal forum, the attorney should decline to file there and confirm her instructions in writing.