Monday, March 14, 2022

FHFA v. Saticoy Bay (9th Cir. - March 14, 2022)

Usually, when the Ninth Circuit certifies a question of state law to a state supreme court, it makes sense (or at least arguable sense) to do so, because the law's unclear and it's an important issue. As a result, were I on the relevant state supreme court, I'd almost always agree to answer the certified question.

This, by contrast, is one of those rare cases in which I might be persuaded tell the Ninth Circuit to pound sand and answer the question itself.

The certified question is a concise one: "Under Nevada law, must a series LLC created pursuant to Nev. Rev. Stat. § 86.296 be sued in its own name for a court to obtain jurisdiction over it, or may the master LLC under which the series is created be sued instead?"

As far as I can tell: (1) There's no split in the Nevada appellate courts on this issue, which is one reason (at least traditionally) that state law questions get certified, and (2) The absence of that split -- or, indeed, any prior cases on this precise point -- suggests that this is not an issue that comes up at all frequently, and it's (most definitely) (3) Not a critically important one to the world at large in any event, and in this particular case, (4) As the Ninth Circuit panel admits, not only does the text of the underlying statute seem to give the answer itself, but there also seems to be a Nevada Supreme Court case from last year that already provides a pretty good hint as to what the answer should be. ("The district court held that appellees were not required to name the individual series LLCs as defendants, on the ground that Nev. Rev. Stat. § 86.296(2), by providing that series LLCs “may” be sued in their own name, uses permissive rather than mandatory language. . . . We note that the Nevada Supreme Court recently decided A Cab, LLC v. Murray, 501 P.3d 961 (2021). A Cab, LLC characterizes Nev. Rev. Stat. § 86.296(2) as “provid[ing] a list of optional, but not mandatory, attributes for a Series LLC.” Id. at 977. Although this statement suggests that series LLCs need not be sued in their own names, it does not directly answer the question before us."

I admit that, if the answer seems obvious, the Nevada Supreme Court could simply request briefing and rapidly decide the case in a page or two (or ten).

But I'd also totally understand it if the Nevada Supreme Court instead responded: "Hey, Ninth Circuit, do your own work; don't simply make us do it for you. Come to us with important cases, not penny ante stuff like this."