United States District Court, D. Nevada
M. Navarro, Chief Judge United States District Court
before the Court is the Motion to Dismiss or Alternatively to
Transfer Venue (ECF No. 9) filed by Defendant Frida Franco
(“Defendant”). Plaintiff Bank Transactions, Inc.
(“Plaintiff”) filed a Response (ECF No. 12),
Defendant filed a Reply (ECF No. 13), and Plaintiff filed a
Sur-Reply (ECF No. 22).
case arises out of an alleged violation of a non-compete
clause in an employment agreement entitled “Marketing
Agreement” between Plaintiff, the company employer, and
Defendant, its former sales representative. On February 2,
2016, Plaintiff filed the instant lawsuit against Defendant
alleging one claim for breach of contract. (See
Compl., ECF No. 1). On March 7, 2016, Plaintiff filed an
Amended Complaint, re-alleging breach of contract, and adding
claims for breach of covenant of good faith and fair dealing
and unjust enrichment. (See Am. Compl., ECF No. 4).
April 5, 2016, Defendant filed the instant Motion asserting
that the Court lacked personal jurisdiction over her. (Mot.
Dismiss 4:3-6:23, ECF No. 9). Defendant specifically argues
that the choice of law and forum selection clauses in the
Marketing Agreement are “invalid.” (Id.
6:23-10:18). Alternatively, if the Court is not inclined to
dismiss the case, Defendant seeks to transfer it to the
United States District Court for the Southern District of
California under 28 U.S.C. § 1404, “for the
convenience of the parties and in the interest of
justice.” (Id. 13:1-20:22). Plaintiff counters
that the Marketing Agreement dictates the governing law is
that of the State of Nevada, and such an agreement as to
choice of law is valid and enforceable. (Resp. 2:19-5:24, ECF
Reply, Defendant first suggests that this Court lacks subject
matter jurisdiction because the parties are not diverse.
(Reply 1:20-7:9, ECF No. 13). District courts may disregard
arguments first raised in a reply brief because the timing of
the argument deprives the opposing party of the opportunity
to respond. See, e.g., Provenz v. Miller,
102 F.3d 1478, 1483 (9th Cir. 1996); USF Ins. Co. v.
Smith's Food & Drug Ctr., Inc., 921 F.Supp.2d
1082, 1090 n.1 (D. Nev. 2013). However, given the importance
of subject matter jurisdiction, the Court determined the
appropriate remedy was to allow Plaintiff the opportunity to
respond in the form of a Sur-Reply (see ECF No. 21),
which Plaintiff timely filed (ECF No. 22).
courts are courts of limited jurisdiction. Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
District courts have jurisdiction in two instances. First,
district courts have subject matter jurisdiction over civil
actions that arise under federal law. 28 U.S.C. § 1331.
Second, district courts have subject matter jurisdiction over
civil actions where no plaintiff is a citizen of the same
state as a defendant and the amount in controversy exceeds
$75, 000. 28 U.S.C. § 1332(a). For the latter, referred
to as diversity jurisdiction, a corporation is a citizen of
both the “state by which it has been incorporated and
[the state] where it has its principal place of
business.” 28 U.S.C. § 1332(c)(1). Diversity of
citizenship is determined as of the filing of the complaint.
Harris v. Bankers Life & Cas. Co., 425 F.3d 689,
696 (9th Cir. 2005) (citing Smith v. Sperling, 354
U.S. 91, 93 n.1 (1957)).
party seeking to invoke the district court's diversity
jurisdiction always bears the burden of both pleading and
proving diversity jurisdiction.” NewGen, LLC v.
Safe Cig, LLC, 840 F.3d 606, 613-14 (9th Cir. 2016).
When a plaintiff originally files in federal court,
“[t]he essential elements of diversity jurisdiction . .
. must be affirmatively alleged in the pleadings.”
Bautista v. Pan Am. World Airlines, Inc., 828 F.2d
546, 552 (9th Cir. 1987) (citation omitted); see also
Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th
Cir. 2001) (“[I]n a diversity action, the plaintiff
must state all parties' citizenships such that the
existence of complete diversity can be confirmed.”). At
the pleading stage, the plaintiff is “merely required
to allege (not to prove) diversity.” Kanter,
265 F.3d at 857.
Rule of Civil Procedure 15 provides that “leave to
amend shall be freely given when justice so requires.”
Fed.R.Civ.P. 15(a); Foman v. Davis, 371 U.S. 178,
182 (1962); Amerisource Bergen Corp. v. Dialysis West,
Inc., 465 F.3d 946, 951 (9th Cir. 2006). Specifically,
when a court dismisses a complaint for failure to properly
allege diversity jurisdiction, leave to amend should be
granted unless doing so would be futile. See Jacobs v.
Patent Enf't Fund, 230 F.3d 565, 567-68 (9th Cir.
2000). When amendment is futile in a case dismissed for lack
of subject matter jurisdiction, the court should still
dismiss the case without prejudice so the plaintiff may
reassert its claims in a competent court. See Frigard v.
United States, 862 F.2d 201, 204 (9th Cir. 1988) (per
brought this case under the Court's diversity
jurisdiction, pursuant to 28 U.S.C. § 1332. (Am. Compl.
¶ 1). Amount in controversy is not in dispute, nor is
Defendant's citizenship as an individual domiciled in the
State of California. However, Defendant asserts that while
Plaintiff is incorporated in Nevada, and therefore a citizen
of Nevada, Plaintiff is also a citizen of California because
its “principal place of business” is California.
(Reply 2:24- 5:21); see also 28 U.S.C. §
1332(c)(1) (a corporation is a citizen of both the state in
which it was incorporated and the state in which its
principal place of business is located). In its Sur-Reply,
Plaintiff argues that the Court should not rely on the
“self-serving conclusions stated in [Defendant's]
Affidavit” to determine subject matter jurisdiction.
(Sur-Reply 2:10, ECF No. 22). However, Plaintiff never
asserts where its principal place of business is located,
despite ample opportunity to do so in its Complaint, Amended
Complaint, and the Sur-Reply allowed by the Court
specifically to address subject matter jurisdiction. Given
the lack of pleading as to Plaintiffs principal place of
business, Plaintiffs Amended Complaint plainly fails to
allege the “essential elements of diversity
jurisdiction” required under § 1332(a). See
Bautista, 828 F.2d at 552. Accordingly, the Court lacks
subject matter jurisdiction over this case. However, the
Court will dismiss the case without prejudice and allow
Plaintiff leave to file a Second Amended Complaint because it
is possible that diversity jurisdiction exists in this
matter. See Jacobs, 230 F.3d at 567-68.
HEREBY ORDERED Defendant's Motion to Dismiss (ECF No. 9)
is GRANTED. Plaintiffs Complaint is dismissed without
prejudice. If Plaintiff can correct this pleading defect, it
may file a Second Amended Complaint no later than February 3,
2017. Otherwise, ...