## Facts

- Lincoln Benefit Life Company issued two $6.65 million life insurance policies and later sought declaratory relief to void them as allegedly procured through a “stranger originated life insurance” (STOLI) scheme that violated insurable-interest rules and public policy.
- The policies were held by two limited liability companies, AEI Life, LLC and ALS Capital Ventures, LLC, as record owners/beneficiaries.
- Lincoln alleged it was a citizen of Nebraska.
- Because an LLC’s citizenship depends on the citizenship of all its members, Lincoln attempted to identify AEI’s and ALS’s members and their citizenship through public-record searches before filing suit but could not determine the members’ identities.
- Lincoln pleaded, on information and belief and based on its investigation, that complete diversity existed because no defendant (including the LLCs’ members) was a citizen of Nebraska.

## Issues

1. In a diversity action, must a plaintiff plead the citizenship of each member of an LLC to survive a facial challenge to subject-matter jurisdiction?
2. If the plaintiff cannot identify LLC members despite reasonable efforts, may it plead diversity in good faith on information and belief?
3. If defendants later factually contest diversity, is the plaintiff entitled to limited jurisdictional discovery to establish complete diversity?

## Decision

- The Third Circuit vacated the dismissal and remanded.
- The court held a plaintiff need not plead the citizenship of each LLC member to survive a facial jurisdictional challenge.
- A complaint is sufficient if, after a reasonable attempt to identify the LLC’s members, the plaintiff alleges in good faith that it is diverse from all members.
- If defendants later mount a factual challenge to diversity, the plaintiff is entitled to limited discovery directed to establishing complete diversity.

## Legal Principles

- An unincorporated association (including an LLC) has the citizenship of each of its members for purposes of 28 U.S.C. § 1332.
- Under Rule 8(a), jurisdictional allegations must be plausibly pleaded, but the pleading standard does not require facts that are not reasonably available to the pleader.
- When LLC membership information is not reasonably ascertainable pre-suit, a plaintiff may plead diversity on information and belief if supported by a reasonable pre-filing inquiry and made in good faith.
- A facial jurisdictional challenge tests pleading sufficiency and assumes the pleaded jurisdictional facts are true; a factual challenge disputes jurisdictional facts and may require evidence beyond the pleadings.
- Upon a factual challenge to diversity involving opaque LLC membership, limited jurisdictional discovery may be warranted to determine citizenship.

## Conclusion

The Third Circuit held that a diversity plaintiff suing an LLC may proceed past the pleading stage without identifying each member’s citizenship where the plaintiff reasonably investigated and alleged in good faith that complete diversity exists, with limited discovery available if defendants later contest diversity factually.


Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99 (3d Cir. 2015)