Verax Commodities, LLC v. Blackhive Corporation

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
VERAX COMMODITIES, LLC, 	§
§
Plaintiff, 	§
§
V. 	§ 	No. 3:26-cv-409-L
§
BLACKHIVE CORPORATION, INC., 	§
§
Defendant. 	§
MEMORANDUM OPINION AND ORDER SETTING BRIEFING SCHEDULE
United States District Judge Sam A. Lindsay referred Defendant Blackhive
Corporation, Inc.’s Motion to Dismiss and Brief in Support [Dkt. No. 2] (the “Motion”)
to the undersigned United States magistrate judge for findings, conclusions, and
recommendations under 28 U.S.C. § 636(b), see Dkt. No. 6.
But first, the undersigned must consider the Court’s power to rule on the
Motion, filed in a lawsuit that Blackhive removed under the Court’s diversity subject
matter jurisdiction. “Jurisdiction is power to declare the law, and when it ceases to
exist, the only function remaining to the court is that of announcing the fact and
dismissing the cause.” Ex parte McCardle, 74 U.S. 506, 514 (1868); accord 28 U.S.C.
§ 1447(c) (“If at any time before final judgment it appears that the district court lacks
subject matter jurisdiction, the case shall be remanded.”); Int’l Primate Prot. League
v. Adm’rs of Tulane Educ. Fund, 500 U.S. 72, 89 (1991). And, so, a court “must
examine the basis of its jurisdiction, on its own motion if necessary.” Green Tree
Servicing, L.L.C. v. Charles, 872 F.3d 637, 639 (5th Cir. 2017) (citation omitted).
Blackhive’s allegations in support of the Court’s power to hear this case include
Case 3:26-cv-00409-L Document 7 Filed 02/21/26 Page 1 of 4 PageID <pageID>

- 2 -
that,
[i]n Plaintiff’s Petition, it asserts that “Verax is a Delaware limited
liability 	company 	that 	is 	headquartered 	in 	Shenandoah, 	Texas.”
Plaintiff’s Orig. Pet., ¶ 3. Upon information and belief, there are no
members of Plaintiff that are citizens of Arkansas, Arkansas is not
Plaintiff’s principal place of business, and as such, Plaintiff is not
domiciled or a citizen of Arkansas. See 28 U.S.C. § 1332(c)(1).
Defendant 	Blackhive 	Corporation, 	Inc. 	is 	an 	Arkansas
corporation with its principal place of business in Washington County,
Arkansas. Defendant Blackhive Corporation, Inc. is not a citizen of
Texas or Delaware.
Because Plaintiff is a Delaware LLC with no Arkansas citizen
members and is alleged to be headquartered in Texas, and Defendant is
a citizen of the State of Arkansas, complete diversity of citizenship exists
pursuant to 28 U.S.C. § 1332.
Dkt. No. 1, ¶¶ 10-12.
As these allegations reflect, jurisdiction under Section 1332 requires that each
plaintiff’s citizenship be diverse from each defendant’s citizenship. See 28 U.S.C. §
1332(a).
“[W]hen jurisdiction depends on citizenship, citizenship must be ‘distinctly and
affirmatively alleged.’” Smith v. Bank of Am. Corp., 605 F. App’x 311, 314 (5th Cir.
2015) (per curiam) (cleaned up; quoting McGovern v. Am. Airlines, Inc., 511 F.2d 653,
654 (5th Cir. 1975)).
And, 	because 	the 	citizenship 	of 	a 	limited 	liability 	company 	(“LLC”) 	is
determined by the citizenship of each of its members, see Carden v. Arkoma Assocs.,
494 U.S. 185, 196 (1990), “[a]t the pleading stage, the party invoking [a federal]
court’s jurisdiction must [distinctly and affirmatively] allege the citizenship of each
LLC’s members,” Storey Mountain, L.L.C. v. JPMorgan Chase Bank, N.A., 159 F.4th
294, 296 (5th Cir. 2025) (published order) (citations omitted).
Case 3:26-cv-00409-L Document 7 Filed 02/21/26 Page 2 of 4 PageID <pageID>

- 3 -
To do so requires identifying each member and sub-member and, as to each of
those, identifying that member’s or sub-member’s identity and citizenship. See, e.g.,
Phillips N. Am. LLC v. U.S. Auto. Ass’n, No. 3:25-cv-1210-BN, 2025 WL 1828523, at
*2 (N.D. Tex. July 2, 2025) (“For all LLCs in this action, Phillips must identify each
member and their citizenship, through every layer. The Court reminds Phillips that,
if any LLC member is a natural person, ‘citizenship and residence, as often declared
by this court, are not synonymous terms.’ Robertson v. Cease, 97 U.S. 646, 648 (1878).
‘For natural persons, § 1332 citizenship is determined by domicile, which requires
residency plus an intent to make the place of residency one’s permanent home.’
SXSW, L.L.C. v. Fed. Ins. Co., 83 F.4th 405, 407 (5th Cir. 2023) (citing Gilbert v.
David, 235 U.S. 561, 568-69 (1915)); accord Preston v. Tenet Healthsystem Mem’l Med.
Ctr., Inc., 485 F.3d 793, 799 (5th Cir. 2007) (‘Domicile requires the demonstration of
two factors: residence and the intention to remain.’).”).
Blackhive has not done that – but has instead alleged that, “[u]pon information
and belief,” “no members of [Plaintiff Verax Commodities, LLC] are citizens of” the
state where Blackhive alleges it is a citizen – a manner of pleading that courts have
repeatedly 	held 	does 	not 	allege 	citizenship 	under 	Section 	1332 	distinctly 	and
affirmatively. See, e.g., Birdow v. State Farm Mut. Auto. Ins. Co., No. 3:21-cv-2165-B,
2021 WL 5448973, at *4 (N.D. Tex. Nov. 22, 2021) (“[T]he Court disagrees that State
Farm has distinctly and affirmatively alleged its citizenship under the appropriate
test. Specifically, State Farm’s negative allegation that its underwriters are not
Texas citizens does not qualify as a distinct and affirmative allegation of citizenship.”
Case 3:26-cv-00409-L Document 7 Filed 02/21/26 Page 3 of 4 PageID <pageID>

- 4 -
(cleaned up; collecting cases)).
And, so, the undersigned questions whether the Court possesses subject matter
jurisdiction (or the power) to rule on the Blackhive’s motion to dismiss referred to the
undersigned – or at least Blackhive has yet to carry its burden to show so.
But remand is not required if Blackhive is able to amend its notice of removal
“to set forth more specifically the jurisdictional grounds for removal.” A & C Disc.
Pharmacy L.L.C. v. Prime Therapeutics LLC, No. 3:16-cv-429-D, 2016 WL 3194332,
at *4 (N.D. Tex. June 9, 2016) (“A defendant may freely amend a notice of removal
within the 30-day period set out in 28 U.S.C. § 1446(b). Thereafter, a defendant may
amend only to set forth more specifically the jurisdictional grounds for removal that
were imperfectly stated in the original notice.” (citations omitted)).
In 	the 	meantime, 	Verax 	must 	file 	a 	written 	response 	to 	the 	Motion
accompanied by or incorporating a brief that together does exceed 30 pages in length,
excluding any table of contents and table of authorities, by March 25, 2026. And
Blackhive may reply brief not exceeding 15 pages in length by April 9, 2026.
But no supplemental pleadings, briefs, or evidence or other documents may be
filed in connection with the Motion or the response thereto without leave of court.
The failure to comply with any part of this order may result in the imposition
of sanctions. See FED . R. CIV. P. 16(f).
SO ORDERED.
DATE: February 21, 2026
_________________________________________
DAVID L. HORAN
UNITED STATES MAGISTRATE JUDGE
Case 3:26-cv-00409-L Document 7 Filed 02/21/26 Page 4 of 4 PageID <pageID>