Absent a federal question, one can only sue in federal court if the disputants are citizens of different states and the amount in controversy is more than $75,000. Without a federal question or diversity, one must sue in state court. A limited partnership is a citizen of every state in which any of its partners is a citizen and the same rule applies to LLC members. In Delaware, LLC members are permitted anonymity. It therefore can be difficult for someone who wants to sue the LLC to discover its members. And if he or she can’t discover its members, how can one know whether the lawsuit can be filed in federal court? In Wisconsin Local Rule 8 of the Eastern District requires a plaintiff to identify the citizenship of each party to the litigation, including, for LLCs, the citizenship of all members. Plaintiff Quin wanted to sue in federal court, and thought he could, but didn’t know the LLC’s members and filed a petition under Rule 27 to get a deposition from the LLC in order to find out.  The court denied this because (1) he could not show that the federal court could hear the case, so it lacked the authority to help him find out whether it could hear the case, and (2) Rule 27 only allows for depositions to perpetuate testimony, not to discover the members of an LLC..  See Qin v. Deslongchamps, No. 21-1873 (April 14, 2022).

The remedy is to file in state court, get discovery of the LLC members, and then dismiss and refile the case in federal court. Once you file in state court, however, you are likely to find competent, hardworking, knowledgeable Judges who are perfectly capable of dispensing justice, and you will probably find that it is not so important to file in federal court.

For information on shareholder and LLC-member disputes, get in touch with Thomas Patterson at tpatterson@pattersonlawfirm.com.