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Jurisdictional fail: Company didn’t prove citizenship

A Florida-based company’s general assertions that none of its members were citizens of South Carolina failed to convince a federal judge that subject matter jurisdiction existed in a case that highlights the difficulties modern, complex businesses face in proving residency.

Based on uncertainty about the citizenship of RSC Lexington, LLC, which operates a residential care facility in Lexington County, Senior U.S. District Judge Cameron Currie remanded the case to state court.

The matter centers on Jessica Vest, a former medical technician at RSC’s Oakleaf Village care facility, and her allegation that she was fired for notifying law enforcement that a nurse was stealing patients’ pain medication while a supervisor turned a blind eye to the behavior. The nurse and supervisor have been indicted on criminal charges in connection with the case.

Vest’s attorney, R. David Proffitt of Proffitt & Cox in Columbia, initially brought the suit in federal court, but Currie dismissed the complaint after finding that Vest was unable to prove that none of RSC’s members were Palmetto State citizens.

RSC took a crack at succeeding where Vest had failed after she filed the suit in state court. RSC had the case removed to federal court, where Currie found that the company also was unable to establish diversity – or that it didn’t have any members living in the Palmetto State.

Currie’s finding underscored the multilayered complexity of RSC’s structure and its many holdings. Her analysis of the case in her Nov. 10 remand order included a chart of several strands and levels of upstream members and partners, some of whom, RSC noted, were not identified.

“It’s really a complicated nightmare of a corporate structure,” Proffitt said. “At the end of the day, they were unable to identify the individual human beings at those corporate entities.”

RSC’s attorneys, Sheila Bias and Stephen Mitchell of Fisher & Phillips in Columbia, said their client’s policy prevented them from discussing the ongoing litigation. They had argued, based on “information and belief,” that none of their client’s members were Palmetto State citizens. They also were given two opportunities to provide additional information to prove their argument.

Currie wrote in her order that at least five of the company’s assertions of non-citizenship were “worded in a manner that suggests only an absence of knowledge of actual South Carolina citizenship rather than a basis for believing no member of the group is a citizen of South Carolina.”

She concluded that RSC had failed to “trace its upstream membership to a point where its citizenship may be determined with any degree of certainty.” She added that it “remains possible that complete diversity exists,” but at this point in the case “the preponderance of the evidence does not support such a finding.”

The 16-page opinion is Vest v. RSC Lexington, LLC (Lawyers Weekly No. 002-218-16). A digest of the case is available at sclawyersweekly.com.

Follow Phillip Bantz on Twitter @SCLWBantz


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