Wykanush Ventures LLC v. Walker

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE WYKANUSH VENTURES LLC, et al., 9 Plaintiffs, Case No. C21-5710-DGE-MLP 10 v. ORDER KARSTAN WALKER, et al., 12 Defendants.

14 On January 12, 2023, the Court issued a minute order directing all parties to file disclosure statements in compliance with newly amended Federal Rule of Civil Procedure 7.1.

16 (Dkt. # 44.) On January 23, 2023, Plaintiffs Wykanush Ventures LLC (“Wykanush”) and TCAIXP LLC (“Eden”) filed disclosures. (Dkt. ## 45-46.)

18 An unincorporated entity, such as an LLC, “‘is a citizen of every state of which its owners/members are citizens,’ not the state in which it was formed or does business.” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 612 (9th Cir. 2016) (quoting Johnson v. Columbia Props.

21 Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)). Moreover, courts must look beyond the first layer of LLC members to determine citizenship, as it is common for an LLC to be a member of another LLC. Johnson, 437 F.3d at 894. When an LLC’s members include other unincorporated entities, such as additional LLCs or partnerships, “a [party] must trace through however many layers of partners or members there may be until the underlying party’s citizenship is established.” Asana Partners Fund II REIT 14 LLC v. Heath Family I LLC, 2020 WL 7241449, at *2 (W.D. Wash. Dec. 9, 2020).

5 “Diversity jurisdiction requires complete diversity between the parties[.]” In re Digimarc Corp. Derivative Litig., 549 F.3d 1223, 1234 (9th Cir. 2008); see also Carden v. Arkoma Assoc., 494 U.S. 185, 189, 192–197 (1990) (to meet the complete diversity requirement, all partners of an entity must be diverse from all parties on the opposing side).

9 Wykanush disclosed that it has four members, two of whom are Colorado residents. (Dkt.

10 # 46 at 2.) Eden disclosed that its sole member is an LLC with two members, one of whom is a Colorado resident. (Dkt. # 45 at 2.) In their complaint, Plaintiffs alleged that “Defendant Ronald Yauchzee is a resident of Weld County, Colorado.” (Dkt. # 1 at ¶ 1.6.) Plaintiffs alleged the Court had “subject matter jurisdiction under 28 U.S.C. § 1332 because there is complete diversity between the parties[.]” (Id. at ¶ 2.1.)

15 Based on the record before the Court, it appears diversity jurisdiction is lacking and no other basis for jurisdiction has been alleged. Accordingly, Plaintiffs are ORDERED to show cause by February 3, 2023, why this case should not be dismissed for lack of subject matter jurisdiction.

19 Dated this 24th day of January, 2023.

A 21 MICHELLE L. PETERSON United States Magistrate Judge