QEMQ, Inc. v. Geekland USA ( 2022 )

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 11 QEMQ, INC. d/b/a KELKOM, No. 2:20-cv-02013-MCE-JDP 12 Plaintiff, 13 v. ORDER 14 GEEKLAND USA LLC, 15 Defendant. 16 17 Through this action, Plaintiff Qemq, Inc. (“Plaintiff”) seeks relief from Defendant 18 Geekland USA LLC (“Defendant”) arising from a business agreement between the 19 parties. Defendant previously filed a Motion to Dismiss, or in the alternative, Motion to 20 Change Venue, and Plaintiff requested leave to amend to address any jurisdictional 21 defects. ECF Nos. 5, 8. This Court granted Plaintiff’s request for leave to amend and 22 denied Defendant’s Motion as moot. ECF No. 11. On March 23, 2021, Plaintiff filed a 23 First Amended Complaint (“FAC”), with federal jurisdiction premised on diversity of 24 citizenship. ECF No. 13. Presently before the Court is Defendant’s Amended Motion to 25 Dismiss for Lack of Jurisdiction or, in the alternative, to Transfer Venue, which has been 26 fully briefed.1 ECF Nos. 15, 17, 18. 27 1 Because oral argument would not be of material assistance, the Court ordered this matter 28 submitted on the briefs. E.D. Local Rule 230(g). 1 Diversity jurisdiction requires complete diversity of citizenship, with each plaintiff 2 being a citizen of a different state from each defendant. 28 U.S.C. § 1332(a)(1); 3 Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 (1996). Although the parties do not dispute 4 whether there is complete diversity between them, there is nonetheless a discrepancy 5 between the pleadings. The FAC alleges that Plaintiff is a “Delaware corporation doing 6 business in Sacramento County, California,” whereas Defendant is a “limited liability 7 corporation of unknown origin, duly organized and existing in the State of California, 8 doing business in Sacramento County, California.” FAC ¶¶ 1–2. However, according to 9 the declaration from Defendant’s chief executive officer and owner, as well as a record 10 from the Georgia Secretary of State website, Defendant is a Georgia-based company. 11 See Ex. A, Gudipalley Decl., ECF No. 15-2, at 5. 12 There are two issues, the first one being that Plaintiff’s allegations in the FAC that 13 Plaintiff and Defendant do business in California suggest that complete diversity may be 14 lacking. Second, for purposes of diversity jurisdiction, a limited liability company “is a 15 citizen of every state of which its owners/members are citizens.” Johnson v. Columbia 16 Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006) (citations omitted). Both 17 Plaintiff and Defendant have provided insufficient information to establish Defendant’s 18 citizenship, as the Court must know the citizenship of its member(s) and not its principal 19 place of business or state of incorporation. 20 Next, to satisfy jurisdiction based on diversity of citizenship, the amount in 21 controversy must exceed $75,000. See 28 U.S.C. § 1332. If the amount is unclear, the 22 party invoking jurisdiction must demonstrate, by a preponderance of the evidence, that 23 the jurisdictional threshold is in fact met. Valdez v. Allstate Ins. Co., 372 F.3d 1115, 24 1118 (9th Cir. 2004) (citing Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 25 1090 (9th Cir. 2003)); see Gaus v. Miles Inc., 980 F.2d 564, 567 (9th Cir. 1992) (holding 26 the plaintiff’s conclusory request for the jurisdictional requirement was insufficient 27 because the plaintiff “offered no facts whatsoever to support the court’s jurisdiction”). If it 28 appears with “legal certainty” that the amount in controversy is less than $75,000, the 1 court must dismiss the case. St. Paul Mercury Indem. Co. v. Red Cab. Co., 303 U.S. 2 283, 289 (1938). 3 Here, Plaintiff’s FAC only alleges that its “damages/losses/claims are well in 4 excess of $75,000” and that it has suffered general and special damages “in an amount 5 within the jurisdictional limit of this Court.” FAC ¶¶ 7, 13, 16, 20, 27. No specific amount 6 is stated in Plaintiff’s Prayer for Relief, which lists general and special damages, pre- 7 judgment interest, punitive damages, attorneys’ fees, and reasonable costs of suit. Id. at 8 7. Because it is not facially apparent from the FAC that the amount in controversy 9 exceeds $75,000, Plaintiff has the burden of demonstrating otherwise. See Valdez, 10 372 F.3d at 1118. However, Plaintiff has not provided any evidence whatsoever 11 whereas Defendant has provided a declaration and exhibits in support of its argument 12 that the amount in controversy requirement is not satisfied. See generally Gudipalley 13 Decl., ECF No. 15-2 (declaration from Defendant’s chief executive officer and owner) 14 (stating that, between 2016 and 2019, “Plaintiff purchased $58,014 worth of Android 15 equipment from [Defendant], through 15 purchase orders,” and that “Plaintiff still owes 16 [Defendant] $10,980 to date,” having only paid $47,034). 17 Plaintiff contends in its Opposition brief that Defendant improperly relies on 18 “materials outside the pleadings, specifically the Declaration of Chandu Gudipalley, with 19 exhibits attached,” and that if the Court does not exclude those materials, Defendant’s 20 Motion should be treated as one for summary judgment. Pl.’s Opp’n at 1–2. However, 21 in determining whether subject matter jurisdiction exists, the Court “may review evidence 22 beyond the complaint without converting the motion to dismiss into a motion for 23 summary judgment.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 24 2004); see also McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (stating 25 that the district court may review any evidence necessary, including affidavits and 26 testimony, in order to determine whether subject matter jurisdiction exists). 27 In its prior Order, this Court accepted Plaintiff’s assurance “that it will provide an 28 adequate factual basis to demonstrate subject matter jurisdiction under 28 U.S.C. 1 | § 1332(a).” ECF No. 11, at 3-4 (“The alleged existence of a business agreement 2 || spanning several years would tend to suggest that Plaintiff can plausibly reach the 3 || required amount in controversy.”). Despite this, the FAC only includes conclusory 4 | allegations that Plaintiff's damages exceed $75,000, and it is unclear whether the parties 5 | are diverse. See FAC §§ 1-2, 7. However, out of an abundance of caution, the Court 6 | will allow Plaintiff one final opportunity to establish whether subject matter jurisdiction 7 || exists in this case. 8 For the reasons set forth above, Defendant's Amended Motion to Dismiss for 9 || Lack of Jurisdiction, ECF No. 15, is GRANTED with final leave to amend. Plaintiff shall 10 | file a Second Amended Complaint within twenty (20) days from the date this Order is 11 || electronically filed. If no amended complaint is timely filed, this action will be dismissed 12 || with prejudice pursuant to Federal Rule of Civil Procedure 41(b) upon no further notice to 13 | the parties. 14 IT |S SO ORDERED. 15 | Dated: January 27, 2022 Mater LEK Whig { AX Xo - SENIOR UNITED STATES DISTRICT JUDGE 18 19 20 21 22 23 24 25 26 27 28