Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_12-cv-02209/USCOURTS-casd-3_12-cv-02209-0/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 28:1332 Diversity-Other Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

ARLENE KALEOPA,

Plaintiff,

v.

THRESHOLD ENTERPRISES LTD, 

et al.,

Defendants.

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Case No. 12-cv-2209-L(KSC)

ORDER DISMISSING ACTION

WITHOUT PREJUDICE FOR LACK

OF SUBJECT MATTER

JURISDICTION

On September 11, 2012, Plaintiff Arlene Kaleopa commenced this class action against

Defendants Threshold Enterprises LTD and Source Naturals, Inc., asserting causes of action for

violations of California’s False Advertising Laws, Unfair Competitions Laws, and Consumer

Legal Remedies Act. Plaintiff filed this action based upon federal diversity jurisdiction under 28

U.S.C. § 1332(d). 

For the following reasons, the Court finds that Plaintiff’s complaint is facially deficient

and DISMISSES WITHOUT PREJUDICE this class action in its entirety for lack of subject

matter jurisdiction.

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I. LEGAL STANDARD

“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of

Am., 511 U.S. 375, 377 (1994). “They possess only that power authorized by Constitution or a

statute, which is not to be expanded by judicial decree.” Id. (internal citations omitted). “It is to

be presumed that a cause lies outside this limited jurisdiction and the burden of establishing the

contrary rests upon the party asserting jurisdiction.” Id. (internal citations omitted); see also

Abrego Abrego v. The Dow Chem. Co., 443 F.3d 676, 684 (9th Cir. 2006). 

“Subject matter jurisdiction based upon diversity of citizenship requires that no defendant

have the same citizenship as any plaintiff.” Tosco Corp. v. Communities for a Better Env’t, 236

F.3d 495, 499 (9th Cir. 2001) (per curiam), abrogated on other grounds by Hertz Corp v. Friend,

130 S. Ct. 1181 (2010). “The citizenship of an LLC is the citizenship of its members.” Garcia

v. Specialized Express, LLC, No. ED CV 10-729, 2010 WL 2402889, at *1 (C.D. Cal. June 8,

2010). “[L]ike a partnership, an LLC is a citizen of every state of which its owners/members are

citizens.” Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). “A

plaintiff suing in federal court must show in his pleading, affirmatively and distinctly, the

existence of whatever is essential to federal jurisdiction, and, if he does not do so, the court, on

having the defect called to its attention or on discovering the same, must dismiss the case, unless

the defect be corrected by amendment.” Tosco, 236 F.3d at 499 (quoting Smith v. McCullough,

270 U.S. 456, 459 (1926)).

Although there has not been a request for dismissal, it is well-established that “a district

court’s duty to establish subject matter jurisdiction is not contingent upon the parties’

arguments.” See United Investors Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960, 966 (9th

Cir. 2004). Courts may consider the issue sua sponte. Demery v. Kupperman, 735 F.2d 1139,

1149 n.8 (9th Cir. 1984). Indeed, the Supreme Court has emphasized that “district courts have

an ‘independent obligation to address subject-matter jurisdiction sua sponte.’” Grupo Dataflux v.

Atlas Global Grp., L.P., 541 U.S. 567, 593 (2004) (quoting United States v. S. Cal. Edison Co.,

300 F. Supp. 2d 964, 972 (E.D. Cal. 2004)).

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II. ANALYSIS

In order to invoke this Court’s diversity jurisdiction for a class action, the Class Action

Fairness Act (“CAFA”) requires that at least one plaintiff is diverse from at least one defendant,

and that the amount in controversy exceeds $5,000,000. Luther v. Countrywide Home Loans

Servicing, 533 F.3d 1031, 1033-34 (9th Cir. 2008) (citing 28 U.S.C. § 1332(d)(2)). For the

purposes of CAFA, “a corporation shall be deemed to be a citizen of every State and foreign

state by which it has been incorporated and of the State or foreign state where it has its principal

place of business.” 28 U.S.C. § 1332(c)(1). The issue here is whether Plaintiff satisfies the

diversity-of-citizenship requirement under CAFA. She does not.

In the complaint, Plaintiff alleges that she is “a citizen of California and resident of San

Diego County.” (Compl. ¶ 3.) She also alleges on information and belief that Threshold

Enterprises is “a Delaware corporation with its principal place of business in Scotts Valley,

California,” and that Source Naturals is “a California corporation with its principal place of

business in Scotts Valley, California.” (Id. ¶ 4.) To summarize, every party involved in this

action at this time is a citizen of California. See 28 U.S.C. § 1332(c)(1). Consequently, there is

no diversity of citizenship. See id. Therefore, Plaintiff fails to satisfy the citizenship

requirement under the CAFA. See 42 U.S.C. § 1332(d)(2). 1

III. CONCLUSION & ORDER

Accordingly, because the complaint does not allege facts necessary to establish diversity

jurisdiction as required by 28 U.S.C. § 1332, the Court DISMISSES WITHOUT PREJUDICE

this class action in its entirety for lack of subject matter jurisdiction. See Tosco, 236 F.3d at 499. 

 CAFA also includes a “home state controversy exception” and “local controversy 1

exception,” which requires district courts to decline to exercise jurisdiction. 28 U.S.C. §

1332(d)(4); see also Romo v. Panda Restaurant Grp., Inc., No. CV 12-00996, 2012 WL

2564718, at *1 (C.D. Cal. June 29, 2012) (discussing the requirements of the “home state

controversy exception”); Lyddy v. World of Jeans & Tops, No. 11cv2658, 2012 WL 760570, at

*3-4 (S.D. Cal. Mar. 7, 2012) (Miller, J.) (discussing the requirements of the “local controversy

exception”). Based on the allegations in the complaint, it also appears that Plaintiff’s complaint

may fall under one of these exceptions.

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If Plaintiff can correct this deficiency in the complaint, she may file an amended complaint by

September 27, 2012. See 28 U.S.C. § 1653.

IT IS SO ORDERED.

DATED: September 12, 2012

M. James Lorenz

United States District Court Judge

COPY TO: 

HON. KAREN S. CRAWFORD

UNITED STATES MAGISTRATE JUDGE

ALL PARTIES/COUNSEL

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