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Cumulus Radio Corporation v. Olson

United States District Court, C.D. Illinois, Peoria Division

March 13, 2015

CUMULUS RADIO CORPORATION f/k/a CITADEL BROADCASTING CO., Plaintiff,
v.
JOSEPH OLSON and ALPHA MEDIA LLC, Defendants.

ORDER & OPINION

JOE BILLY McDADE, Senior District Judge.

This matter is before the Court on Defendants' Second Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. 58), and Plaintiff's oral motion to voluntarily dismiss claims against Defendant Alpha Media LLC ("Alpha Media"). In their motion, Defendants renew their argument that there is not complete diversity in this action because Alpha Media and Plaintiff Cumulus Radio Corporation are both citizens of Georgia for the purposes of 28 U.S.C. § 1332. At a status hearing in which this motion was discussed, Plaintiff moved to voluntarily dismiss without prejudice Alpha Media. The Court indicated it would do so, but reserved consideration on whether any conditions would attach to the voluntary dismissal.

BACKGROUND

Alpha Media is a limited liability company. As explained in the Court's Order and Opinion denying Defendants' First Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. 55), limited liability companies take on the citizenship of their members for the purpose of diversity jurisdiction. Things get complicated when, as here, a limited liability company has other limited liability companies as members. "The citizenship of a limited liability company is that of its members, and its members may include partnerships, corporations, and other entities that have multiple citizenships." Hicklin Eng'g, L.C. v. Bartell, 439 F.3d 346, 347 (7th Cir. 2006) (citation omitted). When an LLC is made up of other entities that have multiple citizenships, "[a] federal court... needs to know each member's citizenship, and if necessary each member's members' citizenships." Id. at 348.

In support of its second motion to dismiss, Alpha Media filed a declaration that lends support to the idea that it is a citizen of Georgia. ( See Decl. of Jackson Farrow, Jr., Doc. 59-3, at 9-10). The declaration claims that (1) five men who are citizens of Georgia are members of Stephens Investment Partners 2014 LLC, (2) which is a member of SIA Radio, LLC, (3) which is a member of Stephens Radio LLC, (4) which is a member of Alpha Media Holdings LLC, (5) which is the sole member of Alpha Media. ( See id. ). If all of this is true, the Georgia citizenship of the five members of Stephens Investment Partners 2014 LLC is imputed to Alpha Media. See Hicklin Eg'g, L.C., 439 F.3d at 347-48.

Defendants filed the pending Motion to Dismiss two days ago, on March 11, 2015. The matter is set for a trial on the merits and a hearing on a preliminary injunction today. Today also happens to be the day on which the temporary restraining order that the Court entered on February 13, 2015 (Doc. 11) is set to expire.

The Court addressed questions raised by this pending Motion during a Status Hearing held at 10:30 a.m. on March 12, 2015. Plaintiff objected to the declaration as solely containing a legal conclusion, and initially requested additional discovery on the question of subject-matter jurisdiction. It suggested that Alpha Media's public filings with the Federal Communications Commission call into question whether SIA Radio, LLC is actually a member of Stephens Radio, LLC. If there is, in fact, such a break in the chain of membership, the citizenship of the five Georgians would make it no further than SIA Radio, LLC and would not make it up to Alpha Media Holdings LLC or Alpha Media.

The Court informed the parties that it would not hold a trial on the merits or hear a motion for a preliminary injunction until it resolved the issue of subject-matter jurisdiction. It further informed the parties that the temporary restraining order that it issued against Defendant Joseph Olson would expire today.

Plaintiff then moved, pursuant to Federal Rule of Civil Procedure 41(a)(2), to dismiss without prejudice Alpha Media from the action, and to therefore also dismiss Count II of the Complaint without prejudice. The Court granted Plaintiff's motion over Defendant's objection. Defendant argued that it had expended considerable amounts of money to defend the action, and requested that dismissal be contingent upon Plaintiff paying its legal costs and fees.

During the hearing, the Court instructed the parties to brief the issues of fees and costs and informed them that it would determine any conditions on Alpha Media's dismissal following the briefing. It also informed the parties that the hearing and trial scheduled for today would proceed as scheduled against Defendant Olson. At this point, the only claim remaining is a claim that Olson breached his contract with Plaintiff. Defendant Olson objected to holding the trial and hearing on the ground that the Court lacked subject-matter jurisdiction over the matter because there was not a complete diversity of parties at the time the Complaint was filed.

DISCUSSION

Two questions require decision. First, does the Court have jurisdiction to hear Plaintiff's claim against Defendant Olson? Second, what conditions, if any, will the Court impose on Plaintiff's dismissal of Alpha Media and Count II of the Complaint? Although the Court indicated to the parties that it would defer its consideration of the second question until after briefing, it determines that the question is now ripe for consideration.

I. The Court's Jurisdiction to Hear the Claim Against Defendant Olson

First, the Court must determine whether it can proceed against Defendant Olson. Because it has dismissed Alpha Media from the action, there is no question that there is complete diversity between the remaining parties. Plaintiff is a corporation. It is incorporated in Nevada and has a principal place of business in Georgia. ( See Ver. Compl., Doc. 1, at ¶9).Therefore, for the purposes of diversity jurisdiction, it is a citizen of both Nevada and Georgia. See 28 U.S.C. § 1332(c)(1). ...


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