Danzik et al v. CWT Canada II Limited Partnership et al

Filing 26

ORDER: IT IS ORDERED that within 30 days of service on all Defendants, Defendants and Plaintiffs shall file a joint supplement regarding jurisdiction which must include: 1) an allegation of the citizenship of CWT Canada II Limited Partnership base d on actual knowledge; and 2) a brief regarding whether this Court must consider the country of citizenship of foreign parties for purposes of determining whether complete diversity exists [see attached Order for details]. Signed by Senior Judge James A Teilborg on 6/20/17. (MAW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Dennis M Danzik and RDX Technologies
Corporation,

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Plaintiffs,

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No. CV-17-00969-PHX-JAT
ORDER

v.
CWT Canada II Limited Partnership,
Resource Recovery Corporation, Changing
World Technologies Incorporated, Jean
Noelting, Unknown Noelting, Bruce
MacFarlane, Unknown MacFarlane, Brian
Appel, and Unknown Appel,
Defendants.

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On June 9, 2017, the Court issued the following Order:

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“Inquiring whether the court has jurisdiction is a federal judge’s first
duty in every case.” Belleville Catering Co. v. Champaign Market Place,
L.L.C., 350 F.3d 691, 693 (7th Cir. 2003).

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In this case, the complaint alleges jurisdiction based on diversity.
See 28 U.S.C. § 1332. However, the complaint does not allege sufficient
facts for the Court to determine whether there is jurisdiction. See Valdez v.
Allstate Insurance Co., 372 F.3d 1115, 1116-1118 (9th Cir. 2004)
(remanding to the district court to conduct proceedings and consider
evidence as necessary to determine subject matter jurisdiction).
First, the complaint fails to allege the principal place of business of
Plaintiff corporation RDX Technologies. [footnote omitted] Hertz Corp. v.
Friend, 559 U.S. 77, 80, 92-93 (2010) (discussing the citizenship of a
corporation). Second, the complaint fails to allege the names and
citizenship of each partner of Defendant CWT Canada II Limited
Partnership. Carden v. Arkoma Associates, 494 U.S. 185, 195-96 (1990)
(discussing the citizenship of limited partnerships). [footnote omitted]
Third, the complaint fails to allege the citizenship of all partners in

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Defendant Changing World Technologies, LP. [footnote omitted] Fourth,
no allegation of citizenship of any kind is made for the following individual
Defendants: 1) Jean Noelting; 2) Jane Doe Noelting; 3) Bruce MacFarlane;
4) Jane Doe MacFarlane; 5) Brian Appel; and 6) Jane Doe Appel. See
generally Kanter, 265 F.3d 857-58. Fifth, the complaint makes no showing
that the amount in controversy exceeds the jurisdictional minimum. See
generally Valdez, 372 F.3d at 1116-1118. Sixth, diversity jurisdiction will
not exist if both the Plaintiff and the Defendant are foreign, which appears
to be true in this case. See Nike, Inc. v. Comercial Iberica de Exclusivas
Deportivas, S.A., 20 F.3d 987, 990 (9th Cir. 1994).
(Doc. 18).

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On June 15, 2017, the Court issued the following Order:

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On June 9, 2017, the Court ordered Plaintiffs to supplement the complaint
by June 16, 2017, to cure six defects in jurisdiction identified by the Court.
Today, Plaintiffs filed a supplement addressing 5 of the 6 identified defects.
IT IS ORDERED that by the original deadline, Plaintiffs must file a further
supplement addressing the sixth defect or this case will be dismissed,
without prejudice. (See Doc. 18 at 2 (“Sixth, diversity jurisdiction will not
exist if both the Plaintiff and the Defendant are foreign, which appears to be
true in this case. See Nike, Inc. v. Comercial Iberica de Exclusivas
Deportivas, S.A., 20 F.3d 987, 990 (9th Cir. 1994).)”).

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(Doc. 24).
Following the second order, Plaintiffs filed a second supplement.

Two

jurisdictional issues remain.

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First, with respect to one Defendant, CWT Canada II Limited Partnership,

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Plaintiffs have pleaded a citizenship for the general partner, then state “Upon information

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and belief, [the general partner] is the only partner in CWT Canada II Limited

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Partnership.” (Doc. 23 at 2). Initially, the Court finds it curious that a “partnership”

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would be created with only one “partner.” Additionally, the Court notes that this is the

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only party whose citizenship has been pleaded “on information and belief” rather than

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actual knowledge.

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The Court finds this allegation is insufficient to establish diversity jurisdiction.

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However, the Court notes that it must permit jurisdictional allegations on information and

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belief until the Defendant has been served.

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Equipment, Inc., 741 F.3d 1082, 1087 (9th Cir. 2014). Thus, the Court will require a

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See Carolina Cas. Ins. Co. v. Team

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further supplement regarding jurisdiction after the Defendant has been served.

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The second remaining jurisdictional issue stems from the Ninth Circuit Court of

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Appeals holding in Nike. 20 F.3d at 990-91. Specifically, the Court held that if there are

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foreign plaintiffs and foreign defendants, there can be no diversity jurisdiction. Id. (citing

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Cheng v. Boeing Co, 708 F.3d 1406, 1412 (9th Cir.) cert. denied, 464 U.S. 1017 (1983)).

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Further, the Court of Appeals held that a United States citizen plaintiff or defendant

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(added to the foreign plaintiffs and foreign defendants) would not be sufficient for

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diversity jurisdiction. Id. (citing Faysound Ltd. v. United Coconut Chem., Inc. 878 F.2d

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290, 294 (9th Cir. 1989)). However, the Court then held that even though a foreign

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plaintiff and a foreign defendant would not be completely diverse, so long as a United

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State citizen plaintiff and United State citizen defendant (who were diverse from each

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other) were added to the case, it would cure the lack of complete diversity between the

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foreign plaintiffs and defendants such that the federal court would have diversity

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jurisdiction. Id. (citing Transure, Inc. v. Marsh & McLennan, Inc., 766 F.2d 1297, 1298-

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99 (9th Cir. 1985).

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Against this backdrop, this Court must consider whether, when the Court has

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diverse United States plaintiffs and defendants, but also foreign plaintiffs and foreign

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defendants, does the Court disregard the foreign plaintiff’s and foreign defendant’s actual

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citizenship? In other words, in Transure, the foreign plaintiff was a citizen of Great

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Britain and the foreign defendant was a citizen of South Africa. 766 F.2d at 1298. In this

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case, all foreign parties are citizens of Canada.

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Faced with this same question, a district court in California held as follows:

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We have held in previous cases that the presence of foreigners on both
sides of a diversity case does not destroy diversity. Allendale Mutual Ins.
Co. v. Bull Data Systems, Inc., 10 F.3d 425, 428 (7th Cir. 1993); Dresser
Industries, Inc. v. Underwriters at Lloyd's of London, 106 F.3d 494 (3d Cir.
1997); Transure, Inc. v. Marsh & McLennan, Inc., 766 F.2d 1297, 1299
(9th Cir. 1985). But neither our court nor any other appellate court has
decided whether it makes a difference if there are foreigners from the same
country on both sides, though intimations that it does not can be found in
Dresser, 106 F.3d at 500, and in Karazanos v. Madison Two Associates,
147 F.3d 624, 627 (7th Cir.1998). All but one of the district court cases to
address the question hold that it makes no difference. Zenith Electronics

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Corp. v. Kimball Int'l Mfg., Inc., 114 F.Supp.2d 764, 768-74 (N.D.Ill.
2000); Bank of New York v. Bank of America, 861 F.Supp. 225, 228-29
(S.D.N.Y. 1994); Clark v. Yellow Freight System, Inc., 715 F.Supp. 1377,
1378 (E.D.Mich. 1989); K & H Business Consultants Ltd. v. Cheltonian,
Ltd., 567 F.Supp. 420, 422-24 (D.N.J. 1983). (The outlier is De Wit v. KLM
Royal Dutch Airlines, N.V., 570 F.Supp. 613, 617 (S.D.N.Y. 1983).) We
agree.

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Fischer v. Zespri Fresh Produce N. Am., Inc., No. 1:07-CV-00610LJO, 2007 WL

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2385074, at *6 (E.D. Cal. Aug. 17, 2007).

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Thus, it appears to be an open question as to whether this Court has diversity

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jurisdiction in case in which all of the foreign parties on both sides of a diversity case are

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from the same country. Before this Court decides whether complete diversity requires

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that the foreign plaintiffs and foreign defendants not be from the same country, the Court

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will require further supplemental briefing by both parties.

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Accordingly,

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IT IS ORDERED that within 30 days of service on all Defendants, Defendants

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and Plaintiffs shall file a joint supplement regarding jurisdiction which must include: 1)

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an allegation of the citizenship of CWT Canada II Limited Partnership based on actual

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knowledge; and 2) a brief regarding whether this Court must consider the country of

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citizenship of foreign parties for purposes of determining whether complete diversity

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exists.

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Dated this 20th day of June, 2017.

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