On February 4, 2014, in Carolina Casualty Insurance Co. v. Team Equipment, Inc., the US Court of Appeals for the Ninth Circuit held that a plaintiff may plead jurisdictional allegations on information and belief if information regarding the defendant's citizenship is not reasonably available to the plaintiff (No. 12-56203, (9th Cir. Feb. 4, 2014)).

The plaintiff, Carolina Casualty Company, is an insurance company incorporated in Iowa with its principal place of business in Florida. The plaintiff issued an insurance policy to US Dry Cleaning Corporation, which purchased dry cleaning stores from the defendant Team Equipment, Inc. and affiliated entities, paying in part with notes. Team Equipment later sued US Dry Cleaning to enforce the notes. The parties reached a settlement under which Team Equipment would only recover the proceeds of US Dry Cleaning's insurance policy. Carolina Casualty then filed a complaint in the US District Court for the Central District of California against Team Equipment seeking a declaratory judgment that it would not be liable under the insurance policy because the settlement was outside the scope of its coverage. The asserted basis of jurisdiction was diversity of citizenship under 28 U.S.C. § 1332.

The Central District of California dismissed the complaint, without leave to amend, because the plaintiff:

The plaintiff filed a motion to alter or amend the judgment under FRCP 59(e), with a proposed amended complaint. The plaintiff advised the court that it was unable to determine the citizenship of the LLCs' members because their organizational filings did not list their members. As a result, the plaintiff simply alleged that the members were citizens of neither Iowa nor Florida. As to the individual defendants, the plaintiff alleged that four of them were citizens of California and four of them were citizens of neither Iowa nor Florida. The plaintiff continued to make its allegations on information and belief.

The district court denied the motion and held the proposed amended complaint continued to suffer from jurisdictional defects. In part, the court based its decision on the plaintiff's failure to specify the citizenship of the members of the LLC defendants. The court also rejected the plaintiff's attempt to plead jurisdictional allegations on information and belief.

On appeal, the Ninth Circuit held that the district court should not have dismissed the plaintiff's original complaint without leave to amend and it should have permitted the plaintiff to plead its jurisdictional allegations on information and belief. The court found that information necessary to establish the parties' citizenship was not available publicly or in the underlying court filings. The court ruled that under these circumstances, where the plaintiff has made some showing that the information necessary to establish diversity jurisdiction is within in the defendants' control, the plaintiff should be excused from the general requirement that diversity be pled affirmatively and on knowledge. Instead, the court held that it was sufficient for the plaintiff simply to plead:

The court concluded that it would be better able to consider the issue of diversity after the defendants were served and had an opportunity to respond. In holding that a plaintiff should not necessarily be required to plead jurisdiction affirmatively based on actual knowledge at the commencement of proceedings, the Ninth Circuit joined the US Courts of Appeals for the Third and Seventh Circuits (Medical Assurance Co. v. Hellman, 610 F.3d 371, 376 (7th Cir. 2010); Lewis v. Rego Co., 757 F.2d 66 (3d Cir. 1985)).

Where the plaintiff may not be able to reasonably ascertain information supporting jurisdictional allegations at the pleading stage, it may be possible to make these allegations on information and belief in the Third, Seventh and Ninth Circuits. Counsel should be prepared to make at least some showing that the necessary information is within the defendants' control at the initial stages of the litigation.