Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-02692/USCOURTS-cand-3_06-cv-02692-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Contract Dispute

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United States District Court

For the Northern District of California

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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

IMAGINE, INC., a Nevada 

corporation,

Plaintiff,

 v.

SPI/SEMICON, INC., a California

corporation; SPI/SEMICON PHILS.

INC., a Philippines corporation;

SPI/SEMICON EUROPE GmbH, INC., 

an Austrian corporation; DML, INC.,

a Nevada corporation; DAVID

KIETZKE, an individual; LARRY

KIETZKE, an individual; MICHAEL

KIETZKE, an individual; and 

DOES 1-50, inclusive, 

Defendants. 

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No. C-06-2692 SC

ORDER TO SHOW CAUSE

WHY THE ACTION SHOULD

NOT BE REMANDED TO

STATE COURT 

I. INTRODUCTION

Imagine Inc. ("Plaintiff" or "Imagine") brought this action

against SPI/Semicon, Inc., et al. ("Defendants") in the Superior

Court for the County of Alameda, California, alleging causes of

action for, inter alia, breach of contract and fraud. Defendant

DML, Inc. is incoporated in Nevada, as is Plaintiff. 

Defendants timely removed the action to this Court based on

diversity of the parties, alleging that the non-diverse defendant,

DML, Inc., is a "sham defendant who must be disregarded in

determining diversity." Defendants have also filed a motion to

dismiss certain defendants for lack of personal jurisdiction and

to dismiss certain causes of action for failure to state a claim

upon which relief can be granted. 

The Court, for the reasons contained herein, ORDERS

Case 3:06-cv-02692-SC Document 29 Filed 06/08/06 Page 1 of 4
United States District Court

For the Northern District of California

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Defendants to show cause why the case should not be remanded to

state court for want of subject matter jurisdiction. Submissions

on this issue must be filed with the Court within thirty days from

the date of this Order. 

If, after full and timely briefing on the issue, the Court

finds that it has subject matter jurisdiction over this action,

the Court will then rule on Defendants' motion to dismiss certain

defendants and causes of action. If, however, the Court finds

that it lacks subject matter jurisdiction, the case will be

remanded to state court.

II. BACKGROUND

Plaintiff Imagine Inc. is a corporation organized under the

laws of Nevada. See Complaint ¶ 1 ("Compl."); Notice of Removal 

¶ 7 ("NR"). Defendant DML, Inc. is also a Nevada corporation. 

See Compl. ¶ 5; NR ¶ 8. 

III. DISCUSSION

On the face of the Complaint, it appears that complete

diversity is lacking.

Yet, Defendants removed to this Court alleging that diversity

jurisdiction exists. To this end, Defendants contend that "DML is

a sham defendant who must be disregarded in determining diversity"

because "DML is not alleged to be the alter ego of SPI Asia or of

SPI Europe, the only Defendants with whom Plaintiff alleges it

contracted. As DML is not alleged to be the alter ego of SPI Asia

or SPI Europe, and is further not alleged to be the agent of

either, as a matter of law, it cannot be liable for their

actions." NR ¶ 17. 

Case 3:06-cv-02692-SC Document 29 Filed 06/08/06 Page 2 of 4
United States District Court

For the Northern District of California

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A federal court may examine the question of subject matter

jurisdiction sua sponte. See Steel Company v. Citizens for a

Better Environment, 523 U.S. 83, 94 (1998). When a court lacks

jurisdiction, the "only function remaining to the court is that of

announcing the fact and dismissing the cause." Id., quoting Ex

parte McCardle, 7 Wall. 506, 514 (1868). 

Suits filed in state court may be removed to federal court

where the federal court would have had original jurisdiction over

the action in the first instance. 28 U.S.C. § 1441(a). The

federal courts have "original jurisdiction over all civil

actions arising under the Constitution, laws or treaties of the

United States." 28 U.S.C. § 1331. The federal courts have

original jurisdiction over all civil actions where the matter is

between citizens of different states and where the amount in

controversy exceeds the sum or value of $75,000, exclusive of

interests and costs. 28 U.S.C. § 1332.

The Court reminds the parties that the removal statute is

strictly construed against removal. See Boggs v. Lewis, 863 F.2d

662, 663 (9th Cir. 1988). The defendant seeking removal of an

action to federal court has the burden of establishing grounds for

federal jurisdiction in the case. See Gaus v. Miles, Inc. 980

F.2d 564, 566 (9th Cir. 1992). 

As to the instant case, although Defendants partially

addressed this issue in the Notice of Removal, the Court orders

Defendants, who have the burden of establishing that the Court has

removal jurisdiction, to submit further briefing to show cause why

the case should not be remanded for want of jurisdiction. 

Case 3:06-cv-02692-SC Document 29 Filed 06/08/06 Page 3 of 4
United States District Court

For the Northern District of California

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Plaintiff is, of course, entitled to file briefing on this issue

within thirty days from the date of this Order. 

If Defendants fail to file within thirty days from the date

of this Order, the Court will remand the action to state court.

IV. CONCLUSION

 The Court ORDERS Defendants TO SHOW CAUSE why this action

should not be dismissed for lack of subject matter jurisdiction. 

If Defendants fail to file within thirty days from the date of

this Order, the Court will remand the action to the California

state court from whence it came. 

IT IS SO ORDERED.

Dated: June 8, 2006

 

UNITED STATES DISTRICT JUDGE

Case 3:06-cv-02692-SC Document 29 Filed 06/08/06 Page 4 of 4