Background
Laura Hammett, an Arkansas resident and member of Silver Strand Plaza LLC, sued various defendants in federal court seeking specific performance of inspection rights and dissolution of the LLC. She had previously voluntarily dismissed claims against the attorney defendants. The district court dismissed the remaining claims for failure to state a claim and denied leave to amend, while also awarding attorneys’ fees to the attorney defendants under California’s anti-SLAPP statute.
The court’s reasoning
The panel reviewed jurisdiction de novo and found that complete diversity was not satisfied because the plaintiff and the limited liability company defendant were both citizens of Arkansas. The court held that the district court lacked subject-matter jurisdiction and must vacate all orders on the merits. However, the court retained jurisdiction to review the attorneys’ fees award because it is collateral to the merits. The court affirmed the fee award, noting that Hammett failed to rebut the presumption that the attorney defendants were prevailing parties following her voluntary dismissal.
What it means going forward
Federal courts must strictly verify citizenship of limited liability company defendants to ensure complete diversity. Plaintiffs who voluntarily dismiss claims against attorney defendants may still face fee awards under anti-SLAPP statutes unless they can rebut the presumption of prevailing party status.
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