Unreported / Non-Citable
Background
Defendant Hartzell Engine Technologies LLC moved for a protective order limiting the corporate-ownership information it was required to disclose under Federal Rule of Civil Procedure 7.1. Hartzell, a Delaware LLC, identified Tailwind Technologies LLC as its sole member and explained that Tailwind belonged to a chain of LLCs that ultimately included private investment funds with hundreds of passive investors.
Hartzell asked to disclose only Tailwind or, alternatively, the ownership chain only through the investment funds. It argued that identifying investors farther up the chain would be burdensome and irrelevant to the events underlying the lawsuit or the determination of subject-matter jurisdiction. Alternatively, Hartzell asked the court to review its complete disclosure in camera or permit it to be filed under seal.
Hartzell did not complete the meet-and-confer process required by the court’s local rules and failed to supplement its certificate of conference as promised. Although that failure could have justified denying the motion, the court addressed the merits. Because plaintiff Glen Pace filed no response, the court treated the motion as unopposed.
The Court’s Holding
The court denied Hartzell’s request to limit its Rule 7.1 disclosure. Rule 7.1(a)(2) requires an LLC in a diversity case to name every individual or entity whose citizenship is attributed to it, which requires identifying the LLC’s members and their citizenship. Although the rule’s advisory committee note permits courts to limit disclosure when substantial privacy interests exist and further disclosure is apparently unnecessary, Hartzell did not articulate a substantial privacy interest. Its assertion that tracing its membership would impose an undue burden was insufficient.
The court also refused to review the disclosure in camera or allow it to be filed under seal. Hartzell’s generalized claim that the relevant individuals and entities wished to protect their identities, finances, and business structures did not overcome the strong presumption of public access to judicial records. A preference for confidentiality, without a specific explanation of likely harm or another substantial privacy interest, was not enough.
The court denied Hartzell’s motion in full and ordered it to file its Rule 7.1 corporate disclosure statement within 14 days of the order.
Key Takeaways
- An LLC invoking or litigating under diversity jurisdiction generally must disclose every member whose citizenship is attributed to it, including ownership through layered LLC structures.
- Administrative burden, lack of relevance to the underlying dispute, and generalized confidentiality concerns do not establish the substantial privacy interest needed to limit a Rule 7.1 disclosure.
- A party seeking in-camera review or sealing must provide specific reasons sufficient to overcome the presumption that judicial records are publicly accessible.
Why It Matters
The decision underscores that Rule 7.1’s diversity-jurisdiction disclosure requirement can reach through multiple layers of LLC ownership, potentially extending to individuals and entities associated with private investment funds. Courts need that information to verify their subject-matter jurisdiction, even when the ownership details have no connection to the merits of the case.
Businesses seeking confidentiality must identify a concrete, substantial privacy interest and explain the harm public disclosure would cause. Conclusory references to personal finances, confidential structures, or investor preferences are unlikely to justify either limiting the disclosure or sealing it.