in Walters v. OpenAI, LLC, the plaintiff sued OpenAI after it made false statements about him (in response to a third-party inquiry). The plaintiff filed suit in Georgia state court, and OpenAI transferred the case to federal court, on the theory that it was a lawsuit between citizens of different states and involved potential damages of at least $75,000 (so-called “diversity jurisdiction”). But OpenAI, LLC is a “limited liability company,” and under federal law, an LLC is considered a citizen of all states in which its members (i.e., co-owners) are citizens; If the members are LLCs, the LLC is a citizen of all states of which its members are citizens, and so on, indefinitely.
So OpenAI had to run an ad discussing the nationality of its members, which it did. But Judge Michael L. Brown (N.D. Ga.) concluded It wasn’t enough:
Defendant has not yet shown that the court has diversity jurisdiction because it has not yet determined the citizenship of OpenAI Holdings, LLC and Aestas Management Company, LLC (both entities in Defendant’s membership structure). Defendant (1) alleges that OpenAI Holdings, LLC has “[m]embers are citizens of California, Michigan, or citizens of other countries” and (2) “members of Aestas Management Company, LLC are citizens of Alaska, Arizona, California, Colorado, Connecticut, the District of Columbia, Delaware, Florida, Illinois, Massachusetts, Maryland, Michigan, North Dakota, New Jersey, Nevada, New York, Oregon, Pennsylvania, Texas, Virginia and Washington, or are citizens of other countries, but not Georgia.” These claims are insufficient.
The defendant must identify by name each member of the LLC and then allege any specific facts necessary to prove that member’s citizenship. The court will give the defendant one last opportunity to do so. The defendant must file, no later than October 6, 2023, a consolidated document demonstrating that the court has subject matter jurisdiction over this action. Failure to do so will result in pretrial detention [to state court].
Friday, OpenII He responded:
OpenAI is withdrawing the takedown notice, as OpenAI is not in a position to provide additional information beyond its previous filings.
The case will then be pursued again in Georgia state court (presumably based on… First amended complaint), although the Federal Court is supposed to continue hearing Walters requested $8,400 in attorney fees Based on OpenAI’s failed attempt to take the case to federal court. (the Legal standard To award post-remand attorney fees after a failed attempt to bring a case to federal court, revolves around whether “the party requesting the removal lacks an objectively reasonable basis for seeking the removal.”)
For more information on the core issue – when AI companies can be sued for defamation based on the output of their software – see Big defamation models? Responsibility for artificial intelligence outputs.