United States District Court, D. Hawaii
ORDER DISMISSING ACTION
A. Otake, United States District Judge.
May 20, 2019 Status Conference, the Court raised the issue of
subject matter jurisdiction and orally ordered Plaintiff to
show cause why the case should not be dismissed for lack of
jurisdiction. After reviewing Plaintiffs Response to Order to
Show Cause (“Response”), ECF No. 44, the Court
concludes that it lacks jurisdiction over this case.
courts are presumed to lack subject matter jurisdiction, and
the plaintiff bears the burden of establishing that subject
matter jurisdiction is proper. Kokkonen v. Guardian Life
Ins. Co., 577 U.S. 375, 377 (1994). “When a
requirement goes to subject-matter jurisdiction, courts are
obligated to consider sua sponte issues that the
parties have disclaimed or have not presented.”
Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (citing
United States v. Cotton, 535 U.S. 625, 630 (2002));
Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S.
567, 593 (2004) (“[B]y whatever route a case arrives in
federal court, it is the obligation of both district court
and counsel to be alert to jurisdictional
requirements.”); Naruto v. Slater, 888 F.3d
418, 423 n.5 (9th Cir. 2018) (recognizing “long held
and often restated duty to examine sua sponte
whether jurisdiction exists, regardless how the parties have
framed their claims”). “Subject-matter
jurisdiction can never be waived or forfeited.”
Gonzalez, 565 U.S. at 141. If the Court lacks
subject matter jurisdiction, an action must be dismissed.
for both parties previously acknowledged that the parties are
not U.S. citizens. Although federal courts have diversity
jurisdiction over actions between “citizens of a State
and citizens or subjects of a foreign state, ” 28
U.S.C. § 1332(a)(2), “diversity jurisdiction does
not encompass a foreign plaintiff suing foreign
defendants.” Nike, Inc. v. Comercial Iberica de
Exclusivas Deportivas, S.A., 20 F.3d 987, 991 (9th Cir.
1994). Plaintiff concedes that the Court lacks diversity
jurisdiction given the parties' alien status. ECF No. 44
Plaintiff argues that federal question jurisdiction exists as
a result of his fraud claim, which gives rise to a federal
securities fraud claim. This contention is without merit.
Whether federal question jurisdiction exists is determined by
the well-pleaded complaint rule, which “‘provides
that federal jurisdiction exists only when a federal question
is presented on the face of the plaintiff's properly
pleaded complaint.'” Hunter v. Philip Morris
USA, 582 F.3d 1039, 1042 (9th Cir. 2009) (quoting
Fisher v. NOS Commc'ns, 495 F.3d 1052, 1057 (9th
Cir. 2007)); Kerr v. Delaware N. Cos., Inc., No.
116CV01797LJOSAB, 2017 WL 880409, at *1 (E.D. Cal. Mar. 6,
2017); Takeda v. Northwestern Nat'l Life Ins.
Co., 765 F.2d 815, 821 (9th Cir. 1985) (citations
omitted) (“A case ‘arises under' federal law
only if the federal question appears on the face of the
plaintiff's well-pleaded complaint.”).
exclusively asserts state law claims in the Complaint. With
respect to the fraud claim, there is no reference to 17
C.F.R. § 240.10b-5, the provision that Plaintiff
attempts to invoke for the first time in his Response. Nor do
Plaintiff's allegations present a federal question.
Without identifying the purported federal character of what
is typically a state/common law claim in the Complaint,
Plaintiff did not invoke federal question jurisdiction.
See, e.g., Pozez v. Clean Energy Capital, LLC, 593
Fed.Appx. 631, 632 (9th Cir. 2015) (holding that no federal
question subject matter jurisdiction existed under the
well-pleaded complaint rule because the complaint only set
forth state law claims and finding that “the isolated
allegation in the complaint of ‘knowing violations of
securities and other law' [did not] constitute a federal
claim by itself, or transform any of the state law claims in
the complaint into federal claims”).
footnote 2 of the Response, Plaintiff argues that he was not
required to cite to a specific statute to provide notice of a
claim. ECF No. 44 at 5 n.2. This directly contravenes the
well-pleaded complaint rule. Further, putting aside the fact
that Plaintiff relies on a Connecticut state court opinion
for this proposition, he cannot reasonably argue that under
federal notice pleading standards, he provides
sufficient notice to Defendant as to the nature of the fraud
claim by presenting it as a state law claim throughout the
course of litigation only to re-characterize it as a
securities fraud claim when confronted with a jurisdictional
defect shortly before trial.
disingenuousness of Plaintiff's position is further
revealed by reviewing the Motion for Summary Judgment,
wherein Plaintiff cites the Hawai‘i standard for common
law fraud. ECF No. 32-1 at 25-26. If Plaintiff actually
intended to proceed with a securities fraud claim, he would
have cited the applicable legal standard in the motion. As
with the Complaint, there is no mention of the securities
fraud provision, or any other federal provision that
implicates a federal question.
extent Plaintiff seeks to amend the Complaint, the request is
DENIED. This case has been pending since August 14, 2017.
Plaintiff is the master of his Complaint and he elected not
to include federal claims. He cannot now, nearly two years
later and in the final stage of litigation, attempt to
transform his fraud claim into a federal claim in an effort
to fabricate a basis for jurisdiction where none exists. Even
if this were not the case, amendment at this late stage in
the proceedings would be highly prejudicial to Defendant. The
deadline to file a motion to amend the pleadings expired on
March 23, 2018, as have all other pretrial deadlines (with
the exception of motions in limine), and trial is scheduled
to commence on August 5, 2019. Plaintiff has not and cannot
advance a legitimate argument that good cause exists for
seeking this late amendment. Johnson v. Mammoth
Recreations, Inc., 975 F.2d 604, 609 (9th Cir. 1992)
(“Rule 16(b)'s ‘good cause' standard
primarily considers the diligence of the party seeking the
amendment. The district court may modify the pretrial
schedule ‘if it cannot reasonably be met despite the
diligence of the party seeking the extension.'”).
that the Court lacks jurisdiction over this case, it cannot
address the Motion to Withdraw as Counsel. However, the Court
notes that in light of the circumstances precipitating the
request to withdraw, the Court does not expect defense
counsel to continue to act on Defendant's behalf.
accordance with the foregoing, the Court DISMISSES this
action for lack of jurisdiction.