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Seibel v. Frederick

LLC Is Indispensable Party Whose Presence in Litigation Destroys Diversity Jurisdiction

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OPINION & ORDER   Plaintiff Rowen Seibel believes that his alleged business partners, defendants Jude Jeffrey Frederick and Jennifer Frederick, have “pillaged” and “divested” their joint endeavor, Rare Partnership LLC (“Rare”), a Nevada limited liability company in the food service business. He first turned to New York state courts for relief, initiating a derivative action on behalf of Rare against defendants on February 3, 2020 (the “State Court Action”). On March 27, 2020, Seibel filed a substantially similar derivative action in this Court; however, Seibel’s federal court complaint focused on defendants’ use of Rare’s funds to defend and indemnify themselves in the State Court Action and sought emergency injunctive relief to prevent continued use of Rare’s funds for such purposes. On April 2, 2020 — after defense counsel alerted plaintiff’s counsel, via email, that Rare’s presence as a party would prevent this Court from exercising jurisdiction — Seibel filed an amended complaint, purporting to remove Rare as a party and to bring direct claims against the Fredericks only, while continuing to seek the same preliminary injunctive relief. Dkt. 29 (“AC”). Before the Court is Seibel’s motion for a temporary restraining order and preliminary injunction pursuant to Federal Rule of Civil Procedure 65. Because the Court lacks subject matter jurisdiction, it must deny Seibel’s motion and dismiss this case at the threshold, without substantively resolving Seibel’s request for emergency injunctive relief. I. Background1 A. The Parties Seibel is a citizen of New York, with his business offices in New York, New York. AC 5. Jude Jeffrey Frederick and Jennifer Frederick are citizens and residents of Nevada. AC

6-7. The Fredericks are a married couple. AC 7. Non-party Rare is a Nevada limited liability company with a principal place of business in Las Vegas, Nevada. Seibel alleges that Rare’s two members are Seibel and Jude Jeffrey Frederick. AC, Ex. A (state court complaint)

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