Zegato Travel Solutions, LLC v. Martin Bailey et al

Filing 8

MEMORANDUM ORDER directing that this case is dismissed. Signed by Judge Theodore D. Chuang on 12/22/2014. (aos, Deputy Clerk)

UNITED STATES IJISTRICT COURT
DISTRICT OF MARYLAND

lEGATO TRAVEL SOLUTIONS, LLC,
Plaintiff:

v.
Civil Action No. TDC-14-3808

GERALDINE M. I3AILEY.
STEPHEN A. FRIEDMAN, ESQ.,
and JOSEPH, GREENWALD & LAAKE, PA.
Defendants.

MEMORANDUM

ORDF.R

On December 10, 2014, Plaintiff Zegato Travel Solutions. LLC ("Zegato") tiled suit
against Geraldine M. Bailey. Stephen A. Friedman, Esq., and Joseph. Greenwald & Laake. PA
(collectively, "Defendants")
simultaneously

alleging misappropriation

of trade secrets.

liIed a Motion for Ex Parte Temporary

ECF No. 1. Zegato

Restraining Order and Preliminary

Injunction, which Zcgato served on Defendants. t\,'lot.TRO at 15. ECF NO.2.

The Court, having

reviewed the filings and finding subject matter jurisdiction insufficiently established. issued an
Order on December 12.2014, directing Zegato to show good cause ","hy the case should not he
dismissed for lack of subject matter jurisdiction.

Order, EeF NO.4.

Zegato tiled an Amended Complaint alleging additional jurisdictional

On December 17.2014.
facts. feF NO.6. The

Court has reviewed the Amended Complaint and. for the reasons sct forth bclo\v. the case is
dismissed for lack of subject matter jurisdiction.

DISCUSSIOt>
I. Legal Standard
Federal courts arc courts of limited jurisdiction,

"constrained

to exercise only the

authority conferred by Article III of the Constitution and affirmatively granted by federal
statute."

In re Bulldog Trucking. Inc.. 147 FJd 347. 352 (4th Cir. 1998). The Court therefore

has a "duty to inquire. sua .'ponte, whether a valid basis for jurisdiction exists. and to dismiss the
action if no such ground appears:'

Id. The plaintiff bears the burden to shO\v that jurisdiction

exists. Dar;s v. Pak, 856 F.2d 648, 650 (4th Cif. 1988). If the court "determines at any lime that

it lacks subjeet.mattcr jurisdiction. the court must dismiss the action:" Fed. R. Civ. P. 12(h)(3).
II. Oinrsil)' .Iurisdiction

In the Amended Complaint, Zegato pleads that the Court has diversity jurisdiction
pursuant to 28 U.S.c. ~ 1332. Under 28 U.S.C. S 1332, federal courts have jurisdiction over '"all
civil actions where the matter in controversy exceeds the sum or value of $75,000" and is
between "citizens of ditTerent States:'

28 U.S.c. ~ 1332(a) (20t2).

The Amended Complaint

pleads that diversity exists in this case because "PlaintiITis a business incorporated in the District
of Columbia and Defendants reside and operate a business in the state of Maryland:'
CompI. ~ 5.. Ilo\',;ever, Zegato is a limited liability company. not a corporation.

Am.

Id. ~ l. For

purposes of diversity jurisdiction, the citizenship of a limited liability company is determined by
the citizenship of all of its members, in that the limited liability company is a citizen of each state
of which one of its members is a citizen.

Gen. Tech. Applications. Inc. v. Exro Ltda, 388 F.3d

114,121 (4th Cif. 2004). Here. "[a]11of the interests ofZegato are owned by Donald Railey ...
a citizen of thc state of Maryland."

Am. Compl. \ 1. Thus. Zegato, like the Defendants. is a

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citizen of Maryland. Accordingly, the parties arc not diverse. and the Court lacks subject matter
jurisdiction under 28 U.S.C.
III.

S

13321

Federal Question .Jurisdiction
Zegato pleads in the alternative that the Court has federal question jurisdiction pursuant

to 28 V.S.c. ~ 1331 because the Amended Complaint alleges federal claims under 18 U.S.C.
~ 1832 and the Uniform Trade Secrets Aet ("UTSA").

Am. Compl. ~ 7. Federal courts have

original jurisdiction "of all civil actions arising under the Constitution. laws. or treaties of the
United States." 28 U.S.c.

S

1331.

To the extent that Zegato attempts to establish federal jurisdiction in this civil suit based
on 18 U.S.C.

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1832. it fails. Title 18 is the Crimes and Criminal Procedure Title of the United

States Code, and 18 V.S.c. S: 1832 is the federal criminal statute for theft of tmde secrets.
Private citizens do not have the right to institute a criminal prosecution or to enforce criminal
statutes. See Linda R.S. v. Richard D., 410 U.S. 614. 619 (1973); Lopez \'. Robinson. 914 F.2d
486, 494 (4th CiT. 1990). Therefore, a "criminal statute that only establishes a crime and
punishment cannot be the basis for subject matter jurisdiction in a civil action." See Afarsh v.
lavale, No. 3:10-3071-CMC-PJG.

2011 WI. 780516, at '2 (D.S.C. Feb. 7,2011) (citing Linda

I Even if Zegato were a corporation. it is likely that diversity would not exist in this case. A
corporation is deemed to be a citizen of both its state of incorpomtion and the state in which its
principal place of business. typically the site of its corporate headquarters, is located. 28 U.S.C.
1332(c)(I); Hem Corp. t'. Friend, 559 U.S. 77,92-93 (2010). lIere, Zegato initially pleaded
that it is "a business incorpomted in the District of Columbia" with its "principal place of
business at 10001 Derekwood Lane. Suite 205. Lanham. MD 20706:' Comp!. ~~16. see Mot.
12.
TRQ at 5.6. thus Zegato \,,'ould still have had Maryland citizenship. Without any apparent
justilication. Zegato changed this fact by alleging in the Amended Complaint that its principal
place of business is Washington, D.C. Am. Comp!. ~ l. The Court notes that the caption on the
Amended Complaint and Zegato's 0\\11 Motion indicate that Zegato is indeed headquartered at
the Lanham. Maryland address. See Am. Comp!. at l, Mot. TRQ at 5-6.

*

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R.S. and Lopez). Accordingly, any claim under 18 U.S.c.

* 1832 in this civil suit is not a basis

for subject matter jurisdiction. nor is it properly pleaded.
Zegato also suggests that federal question jurisdiction arises under the UTSA. However,
the UTSA is not a federal statute.

It is a uniform act drafted by the National Conference of

Commissioners on Uniform State Laws that many states have adopted and enacted into law. ,\'ee
generally Unif. Trade Secrets Act, Prefatory Note (amended 1985). U.L.A. Trade Secr. Refs &
Annos. In fact, no federal civil cause of action currently exists for trade secret misappropriation.
See David R. Pruitt, Will Congress Enact a Federal Trade ,",'ecretsAct in lOI5?, NaCI Law
Review, Dec. 12,2014, ami/able at 2014WLNR 35194498. Because the UTSA is not a federal
statute, it is not a basis fiJr subject matter jurisdiction in this casc.
COI\CLUSIOI\
Because the Amended Complaint fails to establish subject matter jurisdiction
Court, it is hereby ORDERED that the case is DISMISSED.

Date: Dccember 22, 2014
TIIEODORE D. C
United States Distric

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