eBay (UK) Limited v. Gravity4, Inc.

Filing 16

ORDER CONTINUING CMC AND HEARING ON MOTION FOR DEFAULT JUDGMENT; ORDER TO SHOW CAUSE RE: SUBJECT MATTER JURISDICTION. New Hearing: July 10, 2019, 01:00 PM. Signed by Judge Nathanael Cousins on 6/17/2019. (lmh, COURT STAFF) (Filed on 6/17/2019)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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United States District Court
Northern District of California

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EBAY (UK) LIMITED,
Plaintiff,

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v.
GRAVITY4, INC.,
Defendant.

Case No. 19-cv-0522 NC
ORDER CONTINUING CMC AND
HEARING ON MOTION FOR
DEFAULT JUDGMENT; ORDER TO
SHOW CAUSE RE: SUBJECT
MATTER JURISDICTION
New Hearing: July 10, 2019, 1:00 p.m.

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Federal courts possess limited jurisdiction, which means that this Court may only

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resolve disputes in subject matter categories permitted by the Constitution or laws of the

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United States. The Court has an independent obligation to examine subject matter

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jurisdiction. If subject matter jurisdiction is lacking, the Court must dismiss the case even

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if no party to the case moves for dismissal. Any doubts about jurisdiction should be

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resolved against federal jurisdiction.

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In the present case, plaintiff eBay (UK) Limited is a United Kingdom corporation

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that sues another corporation, Gravity4, Inc. for breach of contract. The plaintiff has

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moved for default judgment and a hearing is set for June 19. ECF 14.

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Before the Court may rule on the motion for default judgment, subject matter
jurisdiction must be satisfied. In the complaint, eBay asserts that jurisdiction is fulfilled

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under the diversity of citizenship statute, 28 U.S.C. § 1332(a). Complaint, ECF 1, ¶ 12.

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Generally speaking, that statute provides that jurisdiction is satisfied if there is complete

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diversity of citizenship between the parties and the amount in controversy exceeds

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$75,000.

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Here, plaintiff eBay (UK) Limited alleges that it is a “foreign corporation organized

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under the laws of the United Kingdom with its principal place of business in London,

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England.” Complaint ¶ 10. Defendant Gravity4, Inc. is alleged to be a “foreign

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corporation organized under the laws of Delaware, previously authorized to do business in

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the state of California and the state of Florida, with former principal place of business in
San Francisco, California, and Miami, Florida.” Complaint ¶ 11. The Complaint does not

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United States District Court
Northern District of California

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expressly say where Gravity4 is incorporated and where its principal place of business was

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at the time of the Complaint. Plaintiff demands more than $2 million in compensatory

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damages, so the “amount in controversy” threshold is easily exceeded. Complaint, Prayer

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for Relief at p. 6:9.

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The unresolved question is whether there is complete diversity of citizenship
between the parties. A few foundational concepts underlie this analysis.
First, citizenship for a corporation is determined under 28 U.S.C. § 1332(c)(1): “a

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corporation shall be deemed to be a citizen of every State and foreign state by which it has

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been incorporated and of the State or foreign state where it has its principal place of

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business.”

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Second, diversity jurisdiction does not encompass a suit between two foreign

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corporations. Cheng v. Boeing, 708 F.2d 1406, 1412 (9th Cir. 1983); see 28 U.S.C. §

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1332(a).

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And third, diversity is determined at the time the action is filed. Smith v. Snerling,

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354 U.S. 91, 93 n.1 (1957). Plaintiff’s allegations about Gravity4’s “former” principal

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places of business are therefore jurisdictionally irrelevant. Complaint ¶ 11.

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At bottom, given that paragraphs 10 and 11 of the Complaint allege that both

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plaintiff and defendant are “foreign corporations,” it appears that complete diversity is not
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established. Plaintiff is ordered to show cause in writing by July 1, 2019, as to why this

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case should not be dismissed, and the motion for default judgment denied, due to lack of

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subject matter jurisdiction. If plaintiff seeks to amend the Complaint to address the

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subject matter jurisdiction question, it must do so by July 1. The CMC and hearing on

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default judgment are both continued from June 19 to July 10, 2019, at 1:00 p.m. in San

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Jose courtroom 5. Plaintiff is ordered to serve on Gravity4: the motion for default

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judgment, this Order, its response to the Order to Show Cause, and any amended

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Complaint. Plaintiff must file a certificate of service by July 8.

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IT IS SO ORDERED.

United States District Court
Northern District of California

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Dated: June 17, 2019

_____________________________________
NATHANAEL M. COUSINS
United States Magistrate Judge

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