UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Alan F. Beane and

Mii Technologies, LLC,

Plaintiff and 

Nominal Plaintiff

v. Civil No. 06-cv-446-SM

Opinion No. 2008 DNH 082

Glenn L. Beane and

Glenn Beane, LLC,

Defendants and 

Third-Party Plaintiffs

v.

Alan F. Beane; Mii

Technologies, LLC;

and Sara E. Beane,

Counterdefendants and

Third-Party Defendants

O R D E R

In an order dated January 15, 2008 (document no. 90), the

court advised plaintiffs that they could either seek voluntary

dismissal of their complaint, or show cause on or before February

10, 2008, why their Lanham Act claim should not be dismissed. On

February 11, plaintiffs filed a purportedly assented-to motion

for voluntary dismissal of all their claims, without prejudice

(document no. 99), pursuant to Rule 41 of the Federal Rules of

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1 Hereinafter, Alan Beane is referred to as “Alan.”

2 That argument is also presented in document no. 107.

2

Civil Procedure (“FRCP”). That motion was denied by endorsed

order dated February 12, 2008, given defendants’ assertion that

they did not fully assent. Subsequently, plaintiffs filed two

documents: (1) a memorandum of law in support of their response

to the order dated January 15, 2008, and in support of a motion

to permit Alan Beane1 to pursue the litigation in the absence of

Mii Technologies (document no. 105); and (2) “Plaintiffs’ Motion

for Order Determining that Mii Technologies, LLC is Not an

Indispensable Party under FRCP 19 and Granting Mii Leave to

Dismiss Civil Action Without Prejudice to Continuation of Action

by Alan Beane” (document no. 107). 

In response to the court’s show-cause order, plaintiffs

argue that: (1) Mii is a nominal plaintiff whose citizenship is

irrelevant in determining the existence of complete diversity;

(2) if Mii is not a nominal party, it is at least not a necessary

party, so it is entitled to dismiss this action – or be dropped

from it – without prejudice;2 and (3) federal-question

jurisdiction exists by virtue of both the claims raised in Count

Case 1:06-cv-00446-SM Document 123 Filed 04/18/08 Page 2 of 21
3 Hereinafter, Glenn Beane is referred to as “Glenn.”

4 Defendants’ characterization is incorrect. Document no.

99 sought voluntary dismissal of the entire action while document

no. 107 seeks only dismissal of Mii as a party.

3

VIII, which involve uniquely federal questions regarding the

ownership of and rights under patents developed for Mii, and the

federal ERISA and tax issues raised in defendants’ counterclaims. 

Defendants counter that: (1) there is complete diversity

because Mii is only a nominal party; (2) Glenn Beane’s3

counterclaims present federal questions sufficient to support

supplemental jurisdiction under 28 U.S.C. § 1367(a); (3) Count

IX, the Lanham Act claim, should be dismissed pursuant to Rule

12(b)(6) of the FRCP; and (4) the court was correct in denying

plaintiffs’ motion for voluntary dismissal without prejudice

(document no. 99). In response to document no. 107, which seeks

dismissal of Mii as a party, defendants raise various procedural

objections, characterize document no. 107 as a second attempt to

obtain the relief plaintiffs sought in their previously denied

motion for voluntary dismissal,4 and contend that Mii is a

necessary and indispensable party, which precludes its dismissal.

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Discussion

A. Plaintiffs’ Lanham Act Claim

As a preliminary matter, it appears that plaintiffs concede

that the Lanham Act claim should be dismissed. Accordingly,

Count IX of plaintiffs’ amended verified complaint (document no.

14) is dismissed for failure to state a claim. See FED. R. CIV.

P. 12(b)(6); Digigan, Inc. v. iValidate, Inc., No. 02 Civ.

420(RCC), 2004 WL 203010, at *5 (S.D.N.Y. Feb. 3, 2004)

(misrepresentation concerning ownership of a patent does not

violate the Lanham Act because a patent is not a “good or

service” for purposes of trademark law). 

B. Other Bases for Federal-Question Jurisdiction

While they were not directed to do so by the court’s

previous order, plaintiffs advance two other grounds for

exercising federal-question jurisdiction — the federal question

purportedly posed in Count VIII, which seeks a declaratory

judgment of ownership of intellectual property rights — and the

federal questions assertedly raised in defendants’ counterclaim. 

Neither argument is persuasive. 

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5 Count I is captioned “For Declaratory Judgment,” and it

seeks declarations that: (1) Glenn ceased being a member of Mii

no later than February 4, 2004; (2) Mii ceased to exist as an LLC

no later than February 4, 2004; (3) Alan’s October 19, 2006,

bankruptcy filing terminated his membership in Mii; and (4) Mii’s

informational tax returns for 2004, 2005, and 2006, and the

associated K-1s issued to Glenn were improper. 

6 Count IV is captioned “For Reimbursement of Payments Made/

Expenses Incurred, or Which Could be Incurred in the Future, by

Glenn on Behalf of Mii, Alan and/or Sara [Beane],” and it asks

the court, among other things, to:

Order[ ] Alan and Mii to take action to terminate

any exposure Glenn may have to the Department of Labor

and plan participants in the Mii profit sharing plan,

including but not limited to (1) assembling and filing

employee information so that annual ERISA reports can

be made for all the years Mii filed no annual reports;

(2) paying any fees, fines, penalties or other payments

to Summit Financial Corporation, the plan

administrator, the U.S. Department of Labor, and any

other third parties, as are necessary to administer the

plan to the present, terminate it, and pay out the plan

amounts to participants, and enable Glenn’s trustee

status, if it is still in effect, to be terminated; (3)

paying any amounts due to plan participants.

(Answer, at 50).

5

1. Defendants’ Counterclaims

Plaintiffs contend, and defendants agree, that federalquestion jurisdiction properly rests upon the Internal Revenue

Code and ERISA issues raised in Counts I5 and IV6 of defendants’

counterclaim (document no. 28). But that argument is squarely

foreclosed by the well-pleaded complaint rule. The statute

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6

pertaining to federal-question jurisdiction provides: “The

district courts shall have original jurisdiction of all civil

actions arising under the Constitution, laws, or treaties of the

United States.” 28 U.S.C. § 1331 (emphasis added). The term

“arising under” has been explained by the Supreme Court:

Admittedly, our prior cases have only required us

to address whether a federal defense, rather than a

federal counterclaim, can establish “arising under”

jurisdiction. Nevertheless, those cases were decided

on the principle that federal jurisdiction generally

exists “only when a federal question is presented on

the face of the plaintiff’s properly pleaded

complaint.” Caterpillar Inc. v. Williams, 482 U.S.

386, 392 (1987) (emphasis added). As we said in The

Fair v. Kohler Die & Specialty Co., 228 U.S. 22, 25

(1913), whether a case arises under federal patent law

“cannot depend upon the answer.” Moreover, we have

declined to adopt proposals that “the answer as well as

the complaint . . . be consulted before a determination

[is] made whether the case ‘ar[ises] under’ federal law

. . . .” Franchise Tax Bd. of Cal. v. Construction

Laborers Vacation Trust for Southern Cal., 463 U.S. 1,

10-11, n.9 (1983) (citing American Law Institute, Study

of the Division of Jurisdiction Between State and

Federal Courts § 1312, pp. 188-194 (1969)). It follows

that a counterclaim—which appears as part of the

defendant’s answer, not as part of the plaintiff’s

complaint—cannot serve as the basis for “arising under”

jurisdiction. See, e.g., In re Adams, 809 F.2d 1187,

1188, n.1 ([5th Cir.] 1987); FDIC v. Elefant, 790 F.2d

661, 667 ([7th Cir.] 1986); Takeda v. Northwestern

National Life Ins. Co., 765 F.2d 815, 822 ([9th Cir.]

1985); 14B C. Wright, A. Miller, & E. Cooper, Federal

Practice and Procedure § 3722, pp. 402-414 (3d ed.

1998).

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Allowing a counterclaim to establish “arising

under” jurisdiction would also contravene the

longstanding policies underlying our precedents. 

First, since the plaintiff is “the master of the

complaint,” the well-pleaded-complaint rule enables

him, “by eschewing claims based on federal law, . . .

to have the cause heard in state court.” Caterpillar

Inc., supra, at 398-399. The rule proposed by

respondent, in contrast, would leave acceptance or

rejection of a state forum to the master of the

counterclaim. It would allow a defendant to remove a

case brought in state court under state law, thereby

defeating a plaintiff’s choice of forum, simply by

raising a federal counterclaim. Second, conferring

this power upon the defendant would radically expand

the class of removable cases, contrary to the “[d]ue

regard for the rightful independence of state

governments” that our cases addressing removal require. 

See Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100,

109 (1941) (internal quotation marks omitted). And

finally, allowing responsive pleadings by the defendant

to establish “arising under” jurisdiction would

undermine the clarity and ease of administration of the

well-pleaded-complaint doctrine, which serves as a

“quick rule of thumb” for resolving jurisdictional

conflicts. See Franchise Tax Bd., supra, at 11, 103

S.Ct. 2841.

For these reasons, we decline to transform the

longstanding well-pleaded-complaint rule into the

“well-pleaded-complaint-or-counterclaim rule” urged by

respondent.

Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535

U.S. 826, 831-32 (2002) (parallel citations omitted). Not all of

the issues discussed in Holmes are present in this case,

especially given the apparent preference of both parties to

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7 The court notes the apparent preference of both parties to

litigate in this forum, but it is well established that “[a]

court without subject-matter jurisdiction may not acquire it by

consent of the parties.” Fafel v. DiPaola, 399 F.3d 403, 410

(1st Cir. 2005); Espinal-Dominguez v. P.R., 352 F.3d 490, 495

(1st Cir. 2003) (“litigants cannot confer subject matter

jurisdiction on a federal court by ‘indolence, oversight,

acquiescence, or consent’”) (quoting United States v. Horn, 29

F.3d 754, 768 (1st Cir. 1994)).

8 Because federal-question jurisdiction cannot be

established by a counterclaim, as a matter of law, it is not

necessary to determine whether any of defendants’ counterclaims

would invoke the court’s federal-question jurisdiction if brought

by Glenn as a plaintiff. However, for the guidance of the

parties, the court notes that while Count I mentions the Internal

Revenue Code, and Count IV mentions ERISA, it does not appear

that either Count I or Count IV asserts a claim under either

statutory scheme. See Grable & Sons Metal Prods., Inc. v. Darue

Eng’g & Mfg., 125 S. Ct. 2363, 2366-68 (2005); Templeton Bd. of

Sewer Comm’rs v. Am. Tissue Mills of Mass., Inc., 352 F.3d 33,

37-41 (1st Cir. 2003); Penobscot Nation v. Ga.-Pac. Corp., 254

F.3d 317, 321 (1st Cir. 2001).

8

litigate in this forum.7 But, even so, Holmes requires rejection

of the argument that defendants’ counterclaims establish federalquestion jurisdiction.8

2. Plaintiffs’ Count VIII

Similarly unavailing is plaintiffs’ argument that federalquestion jurisdiction is established by the claim they describe

in Count VIII. As noted above, under the well-pleaded complaint

rule, “federal jurisdiction generally exists only when a federal

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9

question is presented on the face of the plaintiff’s properly

pleaded complaint.” Holmes, 535 U.S. at 831 (citation and

internal quotation marks omitted). As the court of appeals for

this circuit has explained:

Whether a claim arises under federal law is determined

under the well-pleaded complaint rule. Franchise Tax

Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 10,

(1983); see also Louisville & Nashville R.R. Co. v.

Mottley, 211 U.S. 149 (1908). Under that rule, “[the

jurisdictional question] must be determined from what

necessarily appears in the plaintiff’s statement of his

own claim in the bill or declaration,” without

reference to any other pleadings. Franchise Tax Bd.,

463 U.S. at 10 (internal quotations omitted). In other

words, “a right or immunity created by the Constitution

or laws of the United States must be an element, and an

essential one, of the plaintiff’s cause of action.” 

Id. at 1011 (quoting Gully v. First Nat’l Bank, 299

U.S. 109, 112 (1936)). 

Templeton Bd. of Sewer Comm’rs. v. Am. Tissue Mills of Mass.,

Inc., 352 F.3d 33, 36-37 (1st Cir. 2003) (parallel citations

omitted).

The claim presented in plaintiffs’ Count VIII does not

assert, as an essential element, a right or immunity created by

the Constitution or the laws of the United States. Count VIII is

captioned “Declaratory Judgment of Ownership of Intellectual

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Property Rights.” More specifically, it asserts: “Glenn Beane

had both contractual and equitable obligations to assign rights

to inventions invented during the course of his performance of

work for Mii to Mii.” (Am. Compl. ¶ 105 (emphasis added).) The

complaint further asserts that: (1) Glenn developed Mii’s press

technology while working for Mii (¶ 106); (2) all the inventions

Glenn invented before February 4, 2004, are subject to an

obligation to assign intellectual property rights to Mii (¶ 107

(emphasis added)); (3) Glenn represented to potential customers

that he owned the intellectual property on which Mii’s press

systems were based (¶ 108); and (4) Glenn represented to the

Patent and Trademark Office that he had not assigned his right to

prosecute patent applications to Mii (¶ 109 (emphasis added)). 

According to plaintiffs, Count VIII presents a federal

question because in it they seek a determination and declaration

of the nature and extent of their ownership rights in various

patents, and federal law authoritatively governs the issuance,

scope, and enforcement of patents and rights arising under

patents.

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Plaintiffs’ position is undermined by the language of the

complaint itself, which speaks of “contractual and equitable

obligations to assign rights to inventions” (emphasis added), but

refers to no basis in federal law for the relief plaintiffs seek. 

Moreover, plaintiffs cite no authority for the proposition that a

dispute over patent ownership arises under federal law and,

indeed, the Court of Appeals for the Federal Circuit has

repeatedly held that such causes of action do not arise under

federal law:

State statutory and common law have long been

recognized as governing the ownership of patent

property. See, e.g., Jim Arnold Corp. v. Hydrotech

Sys., Inc., 109 F.3d 1567, 1572 (Fed. Cir. 1997)

(“[T]he question of who owns the patent right and on

what terms typically is a question exclusively for

state courts.”); Roach v. Crouch, 524 N.W.2d 400, 403

(Iowa 1994) (question of patent ownership is properly

triable in state court). There is no conflict between

the creation of the patent as a creature of federal

law, and ownership of patent property governed by state

law.

DDB Techs., L.L.C. v. MLB Advanced Media, L.P., 517 F.3d 1284,

___, 2008 WL 375202, at *9 (Fed. Cir. 2008) (Newman, J.,

dissenting in part, concurring in part); see also Xechem Int’l,

Inc. v. Univ. of Tex. M.D. Anderson Cancer Ctr., 382 F.3d 1324,

1332 (Fed. Cir. 2004) (“Federal preemption of causes arising

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12

under the Patent Act does not include matters of ownership or

license.”); Prize Frize, Inc. v. Matrix (U.S.) Inc., 167 F.3d

1261, 1264 (9th Cir. 1999), superseded by statute on other

grounds (“The fact that the state law remedies that Prize Frize

seeks for alleged trade secret infringement may tangentially

involve issues of patent ownership does not convert the state

causes of action into federal law claims.”) (citations omitted). 

In sum, as with the claim stated in Count IX, the claim stated in

Count VIII does not arise under federal law and, as a

consequence, provides this court with no basis for exercising its

federal-question jurisdiction.

C. Diversity Jurisdiction

Plaintiffs do not present a federal question sufficient to

invoke federal-question jurisdiction, and diversity jurisdiction

appears to be unavailable as well.

Plaintiffs (joined by defendants) again attempt to establish

diversity jurisdiction, relying on Navarro Savings Ass’n v. Lee

for the proposition that “a federal court must disregard nominal

or formal parties and rest jurisdiction only upon the citizenship

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13

of real parties to the controversy.” 446 U.S. 458, 461 (1980)

(citations omitted). Plaintiffs contend that Mii should be

considered a nominal party, whose citizenship does not destroy

diversity.

Navarro Savings is inapposite. That case involved a citizen

of Texas on one side and, on the other side, “eight individual

trustees of Fidelity Mortgage Investors, a business trust . . .

[who] hold title to real estate investments in trust for the

benefit of Fidelity’s shareholders.” Id. at 459. The issue in

that case was whether complete diversity was destroyed by the

fact “that some of Fidelity’s beneficial shareholders were Texas

residents.” Id. at 460. The trial court granted Navarro’s

motion to dismiss for lack of subject-matter jurisdiction, and

the court of appeals reversed, holding “that the . . . trustees

[and not the beneficial shareholders] were [the] real parties in

interest because they had full power to manage and control the

trust and to sue on its behalf.” Id. The Supreme Court affirmed

the court of appeals, based upon its determination that the

beneficial shareholders were “nominal or formal parties,” and

thus irrelevant to the jurisdictional calculus, rather than real

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14

parties in interest whose presence would destroy diversity. Id.

at 460-66.

As the claims are framed in this case, Mii is not analogous

to the beneficial shareholders in Navarro. Plaintiffs allege in

their complaint that “Glenn Beane was named as an inventor on all

patents and patent applications related to the press technology

developed by Mii and, prior to 2004, executed formal assignments

of his rights in all such inventions to Materials [Innovation,

Inc.], who has exclusively licensed these patents to Mii.” (Am.

Compl. ¶ 12.) Thus, Mii is alleged to hold exclusive property

rights in the patents underlying the request for declaratory

relief in Count VIII. Count I asserts that Glenn Beane

intentionally breached his fiduciary duty to Mii which “resulted

in a severe financial loss to Mii and to Alan Beane personally.” 

(Am. Compl. ¶ 68.) Count II asserts that Glenn breached his

fiduciary duty of loyalty to Mii. Count III asserts that Glenn

breached his fiduciary duty of care to Mii. Count IV asserts

that Glenn breached a duty of confidentiality he owed Mii. Count

V asserts that Glenn misappropriated trade secrets belonging to

Mii. Counts VI and VII assert that Glenn tortiously interfered

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9 Plaintiffs’ mention of copyrights in their fourth prayer

for relief is the first mention of copyrights anywhere in the

complaint; no copyrights are mentioned either specifically or

generally in the factual allegations or in any of the eleven

claims for relief. Count VIII, which seeks a declaratory

judgment concerning ownership of intellectual property, speaks

only of patents and says nothing about copyrights. While

“ownership of copyright interests . . . is governed by the

Copyright Act,” Cambridge Literary Props., Ltd. v. W. Goebel

Porzellanfabrik, G.m.b.H. & Co. KG, 510 F.3d 77, 85 (1st Cir.

2007), the issue of copyright ownership is raised far too

offhandedly in this case to be considered apparent on the face of

a well-pleaded complaint and, therefore, a proper basis for the

exercise of federal-question jurisdiction.

10 Mii is also not a just a “stakeholder,” that is, a party

“merely joined to perform the ministerial act of conveying the

title [of disputed property] if adjudged to the complainant.” 

Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204

F.3d 867, 873 (9th Cir. 2000) (quoting 13B CHARLES ALAN WRIGHT,

ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL PRACTICE AND PROCEDURE § 3603,

at 409 & n.2 (2d ed. 1984)). Rather, as demonstrated by the

complaint, Mii is a party that possesses, and seeks to vindicate,

its own rights. See id. (citation omitted).

15

with Mii’s existing and prospective contractual relations. Count

X asserts that defendants have been unjustly enriched at Mii’s

expense. And, among their prayers for relief, plaintiffs ask the

court to “[i]ssue a declaratory judgment that all intellectual

property embodied in the press systems and technology, including

all patents, copyrights and trade secrets, are the property of

Mii Technologies, L.L.C.”9 Given the allegations in plaintiffs’

complaint, Mii is not a “nominal plaintiff” at all.10 The rights

upon which plaintiffs base their claims are Mii’s rights, and the

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11 If there is any “nominal party” in this case, it is Alan

Beane. According to the complaint, Alan “brought this action

both personally and on behalf of Mii” (Am. Compl. ¶ 60), and the

complaint specifically refers to RSA 304-C:76, the statute that

governs actions brought by a member or members “in the right of a

limited liability company to recover a judgment in its favor”

(emphasis added). As the Court of Appeals for the Eleventh

Circuit has explained: “The plaintiff stockholder in a

stockholder’s derivative suit is ‘at best the nominal

plaintiff.’” Liddy v. Urbanek, 707 F.2d 1222, 1224 (11th Cir.

1983) (quoting Ross v. Bernhard, 396 U.S. 531, 538 (1970)). That

same reasoning would appear to cover Alan Beane’s participation

in this action.

16

remedies sought would directly benefit Mii.11 Thus, Mii is not

just a nominal party whose citizenship must be – or even could be

– disregarded in determining whether the court has diversity

jurisdiction. As Mii is a New Hampshire plaintiff (an LLC

organized under the laws of New Hampshire) suing two New

Hampshire defendants, complete diversity of citizenship is not

present.

D. Dismissal of Mii

Plaintiffs’ fall-back argument is that in the event the

court determines Mii to be more than a nominal party, it is

nonetheless a dispensable party and should be allowed to dismiss

its claims without prejudice, to permit the exercise of diversity

jurisdiction. Defendants counter that Mii is a necessary and

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12 They further state that they would assent to voluntary

dismissal of plaintiffs’ entire suit, but only with prejudice and

if plaintiffs pay Glenn’s attorneys’ fees and expenses in

defending this suit.

17

indispensable party, such that dismissal of Mii would also

require dismissal of Alan’s claims.12

With respect to plaintiffs’ request for dismissal of Mii,

“[c]ourts have used Rule 21 [of the FRCP] to preserve diversity

jurisdiction by dropping a nondiverse party who is dispensable

(or ‘not indispensable’) to the action under Rule 19.” 15 MARTIN

H. REDISH, MOORE’S FEDERAL PRACTICE § 102.18[1] (3d ed. 2008). Rule

21 provides: “On motion or on its own, the court may at any time,

on just terms, add or drop a party.” FED. R. CIV. P. 21. Rule 21

may be used to preserve diversity jurisdiction. See NewmanGreen, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 832 (1989) (“it is

well settled that Rule 21 invests district courts with authority

to allow a dispensable nondiverse party to be dropped at any

time”); see also Murphy v. Newport Waterfront Landing, Inc., 806

F. Supp. 322, 325 (D.R.I. 1992) (dropping one nondiverse

defendant, who was employee of diverse defendant, when plaintiff

sued employer under doctrine of respondeat superior, and employee

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was not necessary party to suit against employer under respondeat

superior doctrine).

It is apparent that Mii is a necessary party to this suit

under Fed. R. Civ. P. 19(a). The substantive claims brought by

plaintiffs arise from and relate to Mii’s ownership interests in

intellectual property, or involve allegations of breaches of

fiduciary duties owed by defendants to Mii. That is, Mii’s

substantive rights are at stake and those rights are sought to be

vindicated in this suit by both Mii and Alan. In Mii’s absence,

complete relief cannot be accorded among the parties that would

remain, and, as a practical matter, resolution of the litigation

in Mii’s absence would impair Mii’s ability to protect its

interests and would pose a substantial risk of creating

inconsistent obligations upon those remaining as parties. Id.;

see Weber v. King, 110 F.Supp. 2d 124 (E.D.N.Y. 2000) (LLC is an

indispensable party to litigation between members involving LLC’s

interests, even where all members of the LLC are party to the

suit).

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Having determined that Mii is a necessary party, the

relevant question becomes whether Mii is a dispensable party,

that is a party without which in equity and good conscience, the

action could proceed without. “To help courts navigate the path

of equity and good conscience, Rule 19(b) lists four factors: (1)

the extent to which a judgment rendered in the person’s absence

might be prejudicial to . . . those already parties; (2) the

extent to which relief can be tailored or lessened to avoid

prejudice; (3) the adequacy of a judgment rendered in the

person’s absence; and (4) ‘whether the plaintiff will have an

adequate remedy if the action is dismissed for nonjoinder.’” 

United States v. Tribal Dev. Corp., 100 F.3d 476, 79 (7th Cir.

1996). “Only if the court concludes . . . that the party should

be included in the action but it cannot be, must it go on to

decide whether the litigation can proceed at all in the party’s

absence.” Thomas v. United States, 189 F.3d 662, 667 (7th Cir.

1999).

Here, keeping Mii as a party destroys diversity

jurisdiction, so the case can only proceed in its absence if

there is a way “to structure a judgment in the absence of [Mii]

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that will protect both [Mii’s] own rights and the rights of the

existing litigants.” Id. If not, Mii is “indispensable” and

should be dropped under Rule 21. As in Trademark Retail, Inc. v.

Apple Glen Investors, LP, 196 F.R.D. 535 (N.D. Ind. 2000),

because Mii is a separate legal identity, with rights,

obligations, and liabilities distinct from its members, see N.H.

Rev. Stat. Ann. ch. 304-C, and the LLC’s members are engaged in a

conflict that necessarily implicates the rights and obligations

of the LLC, it is apparent that Mii is both a necessary and an

indispensable party to this suit. As such, it should not be

dropped. Proceeding without Mii would be prejudicial to it,

given that the asserted claims involve, in a significant way,

Mii’s distinct legal interests. Secondly, there is no way to

structure relief in this case in a way that would lessen that

prejudice — at the core of this dispute are issues regarding what

Mii owns and whether defendants have breached fiduciary duties

owed to Mii, resulting in damage to it.

Defendants would also be prejudiced by going forward without

Mii — the most obvious example being that however the case is

resolved, Mii could bring its own suit in a proper forum,

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potentially subjecting defendants to inconsistent judgments. 

And, finally, plaintiffs have readily available alternative

remedies in state court, where jurisdiction over all the parties

is not in doubt.

Conclusion

The court is without federal-question jurisdiction. Mii is

a necessary and indispensable party, but its participation

destroys diversity jurisdiction. Therefore, the case is

dismissed for lack of subject-matter jurisdiction.

SO ORDERED.

____________________________

Steven J. McAuliffe

Chief Judge

April 18, 2008

cc: William S. Gannon, Esq.

W. E. Whittington, Esq.

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