MULTICULTURAL RADIO BROADCASTING, INC. v. KOREAN RADIO BROADCASTING, INC. et al
OPINION. Signed by Judge Stanley R. Chesler on 1/31/17. (sr, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NOT FOR PUBLICATION
BROADCASTING, INC., a New Jersey
KOREAN RADIO BROADCASTING,
INC., a New York Corporation; YOUNG
DAE KWON, an Individual,
KOREAN RADIO BROADCASTING,
INC., a New York Corporation; YOUNG
DAE KWON, an Individual,
BROADCASTING, INC., a New Jersey
Civil Action No. 15-1961 (SRC)
CHESLER, District Judge
Plaintiff Multicultural Radio Broadcasting, Inc. (“MBRI” or “Plaintiff”) brings this
diversity action against Defendants Korean Radio Broadcasting, Inc., (KBR) and Young Dae
Kwon (“Young”) (collectively, “Defendants”) for breach of contract and other state law causes
of action. Now before the Court are three motions: (1) Plaintiff’s motion for leave to amend its
complaint, pursuant to Federal Rule of Civil Procedure 15(a)(2) (Doc. No. 61); (2) Defendants’
cross-motion to dismiss the complaint for lack of subject matter jurisdiction, pursuant to Federal
Rule of Civil Procedure 12(b)(1) (Doc. No. 66); and (3) Defendants’ motion for judgment on the
pleadings as to count two of the complaint, pursuant to Federal Rule of Civil Procedure 12(c)
(Doc. No. 67). The Court has reviewed the parties’ submissions and proceeds to rule without
oral argument. See Fed. R. Civ. P. 78(b). For the reasons stated herein, Plaintiff’s motion for
leave to amend its complaint will be denied, and Defendants’ cross-motion to dismiss for lack of
subject matter jurisdiction will be granted. Because the court will dismiss this matter for want of
subject matter jurisdiction, it declines to consider Defendants’ motion for judgment on the
pleadings and will deny that motion as moot.
Plaintiff is the licensee and operator of WWRU-AM 1660 (“AM 1660”), an AM radio
station located in Jersey City, New Jersey. KBR is a producer and broadcaster of Koreanlanguage radio programing in the New York City metropolitan area. Young allegedly owns and
manages KBR. In November 2013, Plaintiff and KBR entered into a time brokerage agreement
(the “Agreement”), through which KBR agreed to purchase all of the program time on AM
1660’s radio broadcast from January 2014 to December 2015. Under the Agreement, KBR was
required to make monthly payments for the program time that it used.
Plaintiff commenced this action against Defendants in March 2015, asserting claims for
breach of contract, unjust enrichment, and trade libel. In its complaint, Plaintiff alleges that
Defendants failed to make payments due and owing under the Agreement, ceased transmission of
KBR’s signal to AM 1660 in violation of the Agreement, and, thereafter, published false
advertisements in Korean language media outlets suggesting that AM 1660’s broadcast signal
was of inferior quality. (Compl. ¶¶ 21-22, 30-32, 37-38.) Plaintiff asserts diversity jurisdiction
pursuant to 28 U.S.C. § 1332(a), based on allegations that Plaintiff is a “New Jersey
Corporation” and a “citizen of New Jersey” and that Defendants “are each . . . citizen[s] of the
State of New York.” (Compl. ¶¶ 1, 9.)
In May 2016, during a conference between the parties and the Court, Defendants raised,
for the first time, an objection to the court’s subject matter jurisdiction. Defendants contended
that Plaintiff’s principal place of business is located in New York, not New Jersey, and that
complete diversity between the parties is therefore lacking. Thereafter, the Court issued an order
limiting discovery to jurisdictional and other threshold issues until August 31, 2016, and it
directed the parties to file all 12(b)(1) motions to dismiss, and any other motion regarding
threshold issues, by that date.
Plaintiff now moves for leave to amend its complaint in order to add a claim under
Section 43(a) of the Lanham Act, 15 U.S.C. §1125(a), and to assert federal question jurisdiction
pursuant to 28 U.S.C. § 1331. (Doc. No. 61-2, Memorandum of Law in Support of
Plaintiff/Counterclaim-Defendant’s Motion for Leave to File a First Amended Complaint (“Pl.
Mov. Br.”), at 8; Doc. No. 61-3, Exhibit A, Amended Complaint, ¶¶ 9, 47-58.) Defendants
cross-move to dismiss the complaint for lack of subject matter jurisdiction, on grounds that
complete diversity between the parties is lacking. (Doc. No. 66-1, Brief in Support of Motion to
Dismiss Plaintiff’s Complaint for Lack of Subject Matter Jurisdiction Pursuant to F.R.C.P.
12(b)(1) (“Def. Mov. Br.”), at 22-23). Plaintiff disputes Defendants’ contention, arguing that its
principal place of business is located in New Jersey. (Doc. No. 69, Plaintiff/CounterclaimDefendant’s Opposition to Defendant/Cross-Complainant’s Cross-Motion to Dismiss Plaintiff’s
Complaint for Lack of Subject Matter Jurisdiction Pursuant to F.R.C.P. 12(b)(1) (“Pl. Opp’n”),
at 3-5.) In addition, Plaintiff argues that the Court in any event “should direct its [jurisdictional]
inquiry not toward diversity, but toward the federal question jurisdiction specified” in Plaintiff’s
proposed amended complaint. (Pl. Opp’n, at 7). Plaintiff argues that its motion for leave to
amend thus “[r]enders [d]efendants’ [m]otion [m]oot” because the amended complaint, if
permitted to be filed, would supply an alternative jurisdictional basis for the action. (Pl. Opp’n,
7.) The Court will first address whether diversity jurisdiction existed at the time of the
commencement of this suit. It will then consider whether Plaintiff may cure the jurisdictional
defects in the original complaint in the manner that Plaintiff proposes.
Defendants’ Motion to Dismiss for Lack of Subject Matter Jurisdiction
“The district courts of the United States . . . are ‘courts of limited jurisdiction.’” Exxon
Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 552, 125 S. Ct. 2611, 162 L.Ed.2d 502 (2005)
(quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673, 128
L.Ed.2d 391 (1994). “They possess only that power authorized by Constitution and statute,
which is not to be expanded by judicial decree.” United States v. Merlino, 785 F.3d 79, 82 (3d
Cir. 2015) (quoting Kokkonen, 511 U.S. at 377)). Consequently, when a federal court finds that
it lacks jurisdiction over an action, “the only function remaining . . . is that of announcing the
fact and dismissing the cause.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94, 118 S.
Ct. 1003, 140 L.Ed.2d 210 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19
L.Ed. 264 (1869)); see Elliott v. Archdiocese of N.Y., 682 F.3d 213, 219 (3d Cir. 2012); Fed. R.
Civ. P. 12(h)(3).
A motion to dismiss for lack of subject matter jurisdiction may be raised by a defendant
at any time. Iwanowa v. Ford Motor Co., 67 F. Supp. 2d 424, 437-38 (D.N.J. 1999); see 2
Moore’s Federal Practice § 12.30 (Matthew Bender 3d ed. 2015). Because federal courts
have “an independent obligation to satisfy themselves of jurisdiction if it is in doubt,” they may
also “raise sua sponte subject-matter jurisdiction concerns.” Nesbit v. Gears Unlimited, Inc., 347
F.3d 72, 76 (3d Cir. 2003) (citing Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S.
274, 278, 97 S. Ct. 568, 50 L.Ed.2d 471 (1977)). “The burden of establishing federal jurisdiction
rests with the party asserting its existence.” Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d
99, 105 (3d Cir. 2015) (citing DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 342 n.3, 126 S. Ct.
1854, 164 L.Ed.2d 589 (2006)).
Challenges to subject matter jurisdiction pursuant to Rule 12(b)(1) may be regarded as
either facial or factual. See Mortensen v. First Fed. Sav. & Loan, 549 F.2d 884, 891 (3d Cir.
1977); 2 Moore’s Federal Practice § 12.30 (Matthew Bender 3d ed.). Facial challenges
“contest the sufficiency of the pleadings” as a basis for the court’s subject matter jurisdiction.
S.D. v. Haddon Heights Bd. of Educ., 833 F.3d 389 n.5 (3d Cir. 2016) (quoting Taliaferro v.
Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir. 2006)). A court reviewing such a challenge
may “only consider the allegations of the complaint[,]” which it takes to be true, “and documents
referenced therein and attached thereto, in the light most favorable to the plaintiff.” In re
Schering Plough Corp., 678 F.3d at 243 (quoting Gould Elecs. Inc. v. United States, 220 F.3d
169, 176 (3d Cir. 2000)) (internal quotation marks omitted); see Petruska v. Gannon Univ., 462
F.3d 294, 302 n.3 (3d Cir. 2006). In contrast, a factual challenge contests the truth of the
allegations underlying a plaintiff’s assertion of subject-matter jurisdiction. Constitution Party of
Pa. v. Aichele, 757 F.3d 347, 358 (3d Cir. 2014); Mortensen, 549 F.2d at 891. When a defendant
raises a factual challenge, “no presumptive truthfulness attaches to [the] plaintiff's allegations[,]”
Mortensen, 549 F.2d at 891, and “a court may weigh and ‘consider evidence outside the
pleadings[,]’” Constitution Party of Pa., 757 F.3d at 358 (quoting (Gould Elecs. Inc., 220 F.3d at
176)). The plaintiff bears the burden of proving that jurisdiction in fact exists, Mortensen, 549
F.2d at 891, and he or she must meet this burden by supplying “competent proof” thereof, Hertz
Corp. v. Friend, 559 U.S. 77, 96, 130 S. Ct. 1181, 175 L.Ed.2d 1029 (2010) (citing McNutt v.
General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S. Ct. 780, 80 L.Ed. 1135 (1936)).
28 U.S.C. 1332(a)(1) grants federal district courts “original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of $ 75,000 . . . and is between
Citizens of different States.” 28 U.S.C. § 1332(a)(1). Section 1332(a) “require[s] complete
diversity between all plaintiffs and all defendants[,]” Lincoln Prop. Co. v. Roche, 546 U.S. 81,
89, 126 S. Ct. 606, 163 L.Ed.2d 415 (2005); Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 267,
2 L.Ed.435 (1806), with the effect that “in cases with . . . multiple defendants, no plaintiff [may]
be a citizen of the same state as any defendant.” Zambelli Fireworks Mfg. Co. v. Wood, 592
F.3d 412, 419 (3d Cir. 2010) (citing Exxon Mobil Corp., 545 U.S. at 553). For purposes of
diversity jurisdiction, “[a] natural person is deemed to be a citizen of the state where he is
domiciled.” Id. (citations omitted). A corporation is deemed to be a citizen of the state in which
it is incorporated and of the state “where it has its principal place of business[.]” 28 U.S.C. §
1332(c)(1). Thus, in order to establish jurisdiction under Section 1332(c), a corporate plaintiff
must plead both its state of incorporation and the location of its principal place of business.
Carolina Cas. Ins. Co. v. Ins. Co. of N. Am., 595 F.2d 128, 130 n.1 (3d Cir. 1979); Poling v. K.
Hovnanian Enters., 99 F. Supp. 2d 502, 515 (D.N.J. 2000).
The term “principal place of business” in Section 1332(c)(1) “refers to the place where
[a] corporation’s high level officers direct, control, and coordinate the corporation’s activities[,]”
often described as a corporation’s “nerve center.” Hertz Corp., 559 U.S. at 80-81. This ‘nerve
center’ “should normally be the place where the corporation maintains its headquarters[.]” Id. at
93. It is not necessarily the place where a corporation’s operations or sales are principally
carried out, however. Indeed, even “if the bulk of a company’s business activities visible to the
public take place in New Jersey,” if that company’s “top officers direct those activities just
across the river in New York, the ‘principal place of business’ is New York.” Id. at 96.
In the present case, Plaintiff’s complaint fails to assert the location of its principal place
of business and therefore fails to allege facts necessary to establish diversity jurisdiction. Such
deficiencies in jurisdictional allegations may be easily remedied, however, see 28 U.S.C. § 1653,
and courts in this circuit have permitted amendments curing those deficiencies in lieu of
dismissal based on a purely facial jurisdictional challenge, Lincoln Benefit Life Co., 800 F.3d at
110. Defendants, though, have raised more than a purely facial challenge. Indeed, the crux of
their objection is factual: that Plaintiff in fact has its principal place of business in New York, not
New Jersey. In support of this contention, Defendants have produced tax records, business
records, and annual reports of the Plaintiff which list its “Address,” “Main Business Address,”
“Business Address,” or “Principal Executive Office” as one of two locations in New York.
(Doc. No. 66-3, Declaration of Geoffrey D. Mueller, Esq., in Support of Cross-Motion to
Dismiss Plaintiff’s Complaint for Lack of Subject Matter Jurisdiction Pursuant to F.R.C.P.
12(b)(1) (“Mueller Declaration”), ¶¶ 25-35, 37-97.) Defendants also note that the “Contact”
page on Plaintiff’s public website lists one of these New York addresses as Plaintiff’s
“Headquarters.” (Mueller Declaration, ¶ 37.)
In opposition, Plaintiff argues that “[a]s a functioning radio station” its “principal place of
business and . . . nerve center is in New Jersey, where the radio station and the business operate”
(emphasis in original). (Pl. Opp’n, at 8.) This argument is without merit, for two reasons. First,
the argument belies the fact that Plaintiff operates radio stations in more than ten states—a point
Plaintiff concedes—and that its New Jersey operations are therefore only a subset of its corporate
activities nationwide. (See Complaint, ¶ 1.) Second, Plaintiff’s argument is essentially that its
‘primary place of operations’ is ipso facto its ‘principal place of business,’ and the Supreme
Court in Hertz specifically rejected this inference. See Hertz Corp., 559 U.S. at 96.
Aside from the foregoing representations, Plaintiff offers no affirmative proof supporting
its assertion that its principal place of business is in New Jersey. Plaintiff’s remaining arguments
in support of the assertion are also unavailing. For example, Plaintiff argues that Defendants’
reliance on the business and tax records at issue is misplaced because such records do not alone
establish the location of a corporation’s principal place of business. (Pl. Opp’n, at 7-8.)
Although Plaintiff is correct that “the mere filing of a form . . . listing a corporation’s ‘principal
executive offices’” does not constitute “sufficient proof to establish a corporation’s ‘nerve
center,’” see Hertz Corp., 559 U.S. at 97, this point is inapposite, as it is Plaintiff, not
Defendants, who bears the burden of persuasion on a Rule 12(b)(1) motion. In addition, Plaintiff
argues that the New York address listed in its business and tax records is “simply a mailing
address put on record for the purpose of completing such reports.” (Pl. Opp’n, at 8.) While this
proffer would explain why the records produced by Defendants contain a New York address, it
does not constitute affirmative evidence that Plaintiff’s principal place of business is located in
In short, the record before the Court on this 12(b)(1) motion contains no evidence
showing that Plaintiff’s corporate officers ‘direct, control, or coordinate’ Plaintiff’s activities
from a location in New Jersey. Consequently, the Court finds that Plaintiff has failed to meet its
burden of showing that diversity jurisdiction, pursuant to Section 1332, exists.
Plaintiff’s Motion for Leave to Amend its Complaint
Amendments Pursuant 28 U.S.C. 1653
Under Rule 15(a)(2), a party may amend its pleading with consent of the opposing party
or the court’s leave, which “should [be] freely give[n] . . . when justice so requires.” Fed. R.
Civ. P. 15(a)(2). Leave should be granted “‘[i]n the absence of any apparent or declared
reason—such as undue delay, bad faith or [a] dilatory motive on the part of the movant, . . .
undue prejudice to the opposing party . . . , [or] futility of amendment . . . .’” Great W. Mining
& Mineral Co. v. Fox Rothschild LLP, 615 F.3d 159, 174 (3d Cir. 2010) (quoting Foman v.
Davis, 371 U.S. 178, 182, 83 S. Ct. 227, 9 L.Ed.2d 222 (1962)).
When a proposed amendment involves issues of subject matter jurisdiction, however, a
more detailed inquiry is required. Under 28 U.S.C. § 1653, plaintiffs are permitted to amend
their complaints in order to cure defective allegations of jurisdiction, or “technical error[s] in
jurisdictional pleading.” 3 Moore’s Federal Practice § 15.14 (2015) (Matthew Bender 3d ed.);
Scattergood v. Perelman, 945 F.2d 618 (3d Cir. 1991) (“section 1653 . . . ‘permits amendments
broadly so as to avoid dismissal of diversity suits on technical grounds’”) (quoting Kiser v.
General Electric Corp., 831 F.2d 423, 427 (3d Cir. 1987)). Consequently, a plaintiff who has
either omitted or incorrectly stated allegations supporting his or her assertion of subject matter
jurisdiction may be permitted to amend the complaint in order to demonstrate that such
jurisdiction exists. However, Section 1653 only “gives . . . district and appellate courts the
power to remedy inadequate jurisdictional allegations . . . not defective jurisdictional facts.” See
USX Corp. v. Adriatic Ins. Co., 345 F.3d 190, 204 (3d Cir. 2003) (citation omitted); NewmanGreen, Inc. v. Alfonzo Larrain, 490 U.S. 826, 831-32, 109 S. Ct. 2218, 104 L.Ed.2d 893 (1989).
Thus, the statute does not “empower federal courts to amend a complaint so as to produce
jurisdiction where none actually existed before.” Newman-Green, Inc., 490 U.S. at 831.
Accordingly, courts have held that Section 1653 does not authorize the addition of a new
plaintiff, Field v. Volkswagenwerk AG, 626 F.2d 293, 306 (3d Cir. 1980); Aetna Cas. & Sur. Co.
v. Hillman, 796 F.2d 770, 776 (5th Cir. 1986), or a new federal cause of action, Pressroom
Unions-Printers League Income Security Fund v. Continental Assurance Co., 700 F.2d 889, 893
(2d Cir. 1983); Saxon Fibers, LLC v. Wood, 118 F. App’x 750, 752 (4th Cir. 2005); Boelens v.
Redman Homes, Inc., 759 F.2d 504 (5th Cir. 1985), in order to cure a lack of subject matter
In the instant matter, Plaintiff’s proposed amended complaint asserts a new federal cause
of action and a new basis for subject matter jurisdiction. Because this amendment does not
simply cure a ‘technical defect’ in Plaintiff’s jurisdictional allegations, Plaintiff’s motion is not
authorized by Section 1653. Plaintiff appears to object to this conclusion, arguing that its motion
is authorized by Section 1653 because the proposed amended complaint does not “add facts not
alleged in the original complaint in an effort to establish jurisdiction pursuant to 28 U.S.C.
1331.” (Pl. Opp’n, at 8). Plaintiff’s point appears to be that, for purposes of subject matter
jurisdiction, its original complaint already contains a federal cause of action, i.e. the Lanham Act
claim, because that claim does not require additional factual allegations in order to be asserted.
Thus, Plaintiff contends, its motion is authorized because the latter merely seeks to assert a cause
of action and a jurisdictional basis that were previously unspecified.
The argument is unavailing. Under the well-pleaded complaint rule, a court has federal
question jurisdiction under Section 1331 when the “face of the plaintiff’s properly pleaded
complaint” presents a federal question. Abulkhair v. Liberty Mut. Ins. Co., 441 F. App'x 927,
930 (3d Cir. 2011) (quoting Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S. Ct. 2425, 96
L.Ed.2d 318 (1987)). That is true “if and only if the complaint seeks a remedy expressly granted
by a federal law or . . . requires the construction of a federal statute . . . .” Lindy v. Lynn, 501
F.2d 1367, 1369 (3d Cir. 1974). Plaintiff’s original complaint seeks no such federal remedy. It
only alleges state common law causes of action, and it neither refers to nor alludes to a federal
law with which defendants have failed to comply. This Court will not engraft a federal cause of
action onto Plaintiff’s original complaint simply because Plaintiff’s allegations could in theory
support one. See Caterpillar, Inc. v. Williams, 482 U.S. at 392 n.7 (“Jurisdiction may not be
sustained on a theory that the plaintiff has not advanced.”) (quoting Merrell Dow Pharm., Inc. v.
Thompson, 478 U.S. 804, 809 n.6, 106 S. Ct. 3229, 92 L.Ed.2d 650 (1986)). Consequently, the
Court finds that Plaintiff’s motion for leave to amend is not authorized by Section 1653.
Amendments Creating Retroactive Subject Matter Jurisdiction
Of course, even if Plaintiff’s motion is not authorized by Section 1653, that fact does not,
in theory, prevent the motion from being authorized by Rule 15 or basic judicial principles.
However, courts in cases such as the one at bar have also generally held that “if there is no
federal jurisdiction” at the outset, “it may not be created by amendment.” 2 Moore’s Federal
Practice § 15.14 (Matthew Bender 3d ed.). In other words, leave to amend should not be
granted if a proposed amendment would create subject matter jurisdiction where none previously
existed. Applying this principle, courts in several other circuits have denied plaintiffs’ motions
for leave to amend when the proposed amendment sought to add a federal cause of action and
thereby assert federal question jurisdiction if the amendment was necessary to cure a lack of
diversity jurisdiction. See, e.g., Asset Value Fund Limited Partnership v. The Care Group, Inc.,
179 F.R.D. 117, 119 (S.D.N.Y. 1998); V.W. Broad v. DKP Corp., No. 97 Civ. 2029, 1998 U.S.
Dist. LEXIS 12942, at *23 (S.D.N.Y. Aug. 19, 1998); Leonard J. Strandberg & Assocs. v. Misan
Constr. Corp., No. 08 CV 2939, 2010 U.S. Dist. LEXIS 38121, at *5-6 (E.D.N.Y. Apr. 19,
2010); Saxon Fibers, 118 F. App’x at 752; Sharp v. Town of Kitty Hawk, No. 2:11-CV-13-BR,
Sum, at *5 (E.D.N.C. July 29, 2011); Stafford v. Mobil Oil Corp., 945 F.2d 803, 806 (5th Cir.
1991); Whitmire v. Victus Ltd., 212 F.3d 885, 888 (5th Cir. 2000); DePass v. Par. of Jefferson
(In re Katrina Canal Breaches Litig.), 342 F. App’x 928, 931 (5th Cir. 2009); Sumpter v.
Hungerford, No. 12-717, 2014 U.S. Dist. LEXIS 94487, at *22 (E.D. La. July 11, 2014); United
States ex rel. Branch Consultants, L.L.C. v. Allstate Ins., 782 F. Supp. 2d 248, 260 (E.D. La.
2011). Similarly, several courts have rejected attempts to add a federal cause of action in order
to cure a lack of bankruptcy jurisdiction, Falise v. Am. Tobacco Co., 241 B.R. 63, 64 (E.D.N.Y.
1999), a lack of federal question jurisdiction based on different grounds, Morongo Band of
Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988), a lack of
subject matter jurisdiction due to an existing plaintiff’s lack of standing, Pressroom Unions, 700
F.2d at 889, and a lack of subject matter jurisdiction due to defendants’ immunity from suit on
existing claims, Brennan v. University of Kan., 451 F.2d 1287 (10th Cir. 1971).1
Several courts have also rejected attempts to add a new plaintiff in order to cure a lack of diversity jurisdiction, see
Field, 626 F.2d at 304 (“By parity of reasoning, jurisdiction cannot be conferred retroactively by the subsequent
substitution of a diverse claimant for a non-diverse party”); Aetna Cas. & Sur. Co., 796 F.2d at 776, or to cure a lack
of subject matter jurisdiction due to an existing plaintiff’s lack of standing, see Vianix Del. LLC v. Nuance
Communs., Inc., No. 09-0067 (NLH) (JS), 2009 U.S. Dist. LEXIS 40992, at *2 (D. Del. May 12, 2009) (“Because
Vianix Delaware LLC did not have standing to assert its claims when it filed suit, the Court does not have subject
matter jurisdiction to consider anything filed thereafter, including the amended complaint”); Rauner v. AFSCME,
No. 15 C 1235, 2015 U.S. Dist. LEXIS 65085, at *14 (N.D. Ill. May 19, 2015); Lans v. Gateway 2000, Inc., 84 F.
Supp. 2d 112, 115-16 (D.D.C. 1999); Unigard Ins. Co. v. Dep’t of the Treasury, 997 F. Supp. 1339, 1343 (S.D. Cal.
1997); Lierboe v. State Farm Mut. Auto. Ins. Co., 350 F.3d 1018, 1023 (9th Cir. 2003). At least one court has also
rejected an attempt to add new claims in order to cure a lack of diversity jurisdiction due to failure to satisfy the
In these cases, several reasons have been offered as support for the bar on amendments
creating retroactive subject matter jurisdiction. One reason is that Rule 15(a), which authorizes
amendments to pleadings, should be “read together with section 1653 of title 28.” Falise, 241
B.R. at 65; Asset Value Fund Limited Partnership, 179 F.R.D. at 119 (“case law indicates that
Section 1653 serves essentially as a specific application of Rule 15”); Corporacion Venezolana
de Fomento v. Vintero Sales Corp., 477 F. Supp. 615, 618-19 & n.5 (S.D.N.Y. 1979); Kitty
Hawk, 2011 U.S. Dist. LEXIS 84977, at *7 (denying plaintiff’s motion for leave to amend based
on “the interplay of Rule 15(a) and 28 U.S.C. § 1653”); Whitmire, 212 F.3d at 888; see also
Wright et al., Federal Practice and Procedure § 1474, at 524 (2d ed. 1990) (“In some respects the
language of [Section 1653] is at variance with the text of Rule 15 and arguably supersedes it.
However, the cases do not reveal any conflict between the two.”). By only authorizing
amendments to cure defective allegations of jurisdiction, Section 1653, in turn, appears to
implicitly prohibit lower courts from allowing amendments to cure a lack subject matter
jurisdiction itself. See Falise, 241 B.R. at 65 (“There is a clear distinction between permitting
the curing of technical defects in stating a basis for jurisdiction and providing of a jurisdictional
basis where none previously existed. The latter is prohibited by section 1653, and, by
implication, Rule 15(a).”); Whitmire, 212 F.3d at 888; Kitty Hawk, 2011 U.S. Dist. LEXIS
84977, at *7. Put differently, the negative inference to be drawn from Section 1653’s language
is that the statute implicitly forecloses amendments aimed at curing a lack of subject matter
jurisdiction under Rule 15.
A second reason for the prohibition is that a court which lacks jurisdiction over an action
from the outset lacks the authority to entertain a motion for leave to amend that would add a
amount in controversy requirement. See State Farm Mutual Automobile Ins. Co. v. Narvaez, 149 F.3d 1269, 1272
(10th Cir. 1998).
cause of action.2 See Saxon Fibers, 118 F. App’x at 752 (“a court without subject matter
jurisdiction lacks authority to grant a party’s amendment motion”); Whitmire, 212 F.3d at 888
(quoting Falaise, 241 B.R. at 66); Morongo, 858 F.2d at 1380 (“[i]f jurisdiction is lacking at the
outset, the district court has no power to do anything with the case except dismiss” and “any
order other than to dismiss is a nullity”). As one district court has put the point, “never having
had power to act in the matter, the court never had authority to permit an amendment to the
complaint.” Falise, 241 B.R. at 66.
To be sure, federal courts are empowered to undertake certain actions even if they lack
subject matter jurisdiction. See, e.g. Sinochem Int'l Co. v. Malay. Int'l Shipping Corp., 549 U.S.
422, 431, 127 S. Ct. 1184, 167 L.Ed.2d 15 (2007) (holding that a court may dismiss an action on
forum non conveniens grounds before addressing questions of subject-matter jurisdiction);
Ruhrgas Ag v. Marathon Oil Co., 526 U.S. 574, 578, 119 S. Ct. 1563, 143 L.Ed.2d 760 (1999)
(holding that a court may dismiss for lack of personal jurisdiction without first establishing
subject-matter jurisdiction); Newman-Green, 490 U.S. at 832 (holding that Rule 21 authorizes
district courts to drop jurisdictional spoilers in order to perfect diversity jurisdiction that is
otherwise lacking). However, this power plainly does not extend to merits determinations, Steel
Co., 523 U.S. at 94, and, as one district court has noted, granting a motion for leave to amend
requires precisely such a determination: namely, a finding that the proposed amendment would
not be futile under a 12(b)(6) motion to dismiss standard. See Broad, 1998 U.S. Dist. LEXIS
At least two courts have cited similar grounds for denying a plaintiff’s motion for leave to amend in order to add a
new plaintiff and thereby cure an existing plaintiff’s lack of standing. See, e.g., Vianix, 2009 U.S. Dist. LEXIS
40992, at *5 (“Because Vianix Delaware LLC did not have standing to assert its claims when it filed suit, the Court
does not have subject matter jurisdiction to consider anything filed thereafter, including the amended complaint.”);
Rauner, 2015 U.S. Dist. LEXIS 65085, at * 13-14 (noting that “[w]hen a plaintiff amends the complaint as of right
the rules apply mechanically and the court's authority over the case is not brought to bear[,]” but holding that
because “[i]n the instant case . . . the court has determined that the original plaintiff . . . lacks standing and the court
lacks subject matter jurisdiction over the case . . . it has no power to enter an order allowing the addition of the
employees as plaintiffs.”).
12942, at *13-14l; see also Gutwirth v. Woodford Cedar Run Wildlife Refuge, 38 F. Supp. 3d
485, 488-89 (D.N.J. 2014) (quoting Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir.2000)) (holding
that a proposed amendment is futile if it would not survive a 12(b)(6) motion to dismiss).
Third, barring amendments creating retroactive subject matter jurisdiction is consistent
with the time-of-filing rule, the principle that “the jurisdiction of the Court depends upon the
state of things at the time of the action brought,” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541
U.S. 567, 570, 124 S. Ct. 1920, 158 L.Ed.2d 866 (2004) (quoting Mollan v. Torrance, 22 U.S.
537, 9 Wheat. 537, 539, 6 L.Ed. 154 (1824)). This rule has traditionally prohibited parties in
diversity suits from relying on post-commencement events as grounds for establishing or refuting
a complaint’s original jurisdictional allegations. Grupo Dataflux, 541 U.S. at 570; SMITH v.
SPERLING, 354 U.S. 91, 93 n.1, 77 S. Ct. 1112, 1 L.Ed.2d 1205 (1957). Allowing postcommencement amendments that could then be relied upon to establish or refute subject matter
jurisdiction—whether the amendments added a new party or a new federal cause of action—
would be a departure from this general principle. 3 Sumpter, 2014 U.S. Dist. LEXIS 94487, at *
21; see also Leonard J. Strandberg & Assocs., 2010 U.S. Dist. LEXIS 38121, at * 14; United
States ex rel. Branch Consultants, L.L.C. v. Allstate Ins., 782 F. Supp. 2d 248, 260 (E.D. La.
2011); but see ConnectU LLC v. Zuckerberg, 522 F.3d 82, 92 (1st Cir. 2008) (expressing
skepticism at other courts’ reliance on the time-of-filing rule as a basis for rejecting amendments
that add a federal cause of action).
Beyond these considerations, it bears noting that a prohibition on amendments creating
retroactive subject matter jurisdiction is more consistent with the Supreme Court’s “policy goal
The court of appeals for the Third Circuit has also cited the time-of-filing rule as grounds for rejecting an
amendment that would add a new plaintiff as a cure for a lack of diversity jurisdiction. See Field v.
Volkswagenwerk AG, 626 F.2d at 304. One district court has cited the time-of-filing rule as grounds for rejecting a
plaintiff’s attempt to add a plaintiff in order to cure a lack of jurisdiction due to the existing plaintiff’s lack of
standing. See Vianix Delaware, 2009 U.S. Dist. LEXIS 40992, at * 5.
of minimizing litigation over jurisdiction,” Grupo Dataflux, 541 U.S. 580-81. If such
amendments were allowed, plaintiffs who took no effort to ensure that their action had a valid
jurisdictional basis would initially bear little risk of dismissal, as they could respond to any
12(b)(1) motion to dismiss with a motion for leave to amend aimed at manufacturing jurisdiction
where it was previously lacking. Left unchecked, the potential for collateral litigation over a
veritable merry-go-round of plaintiffs and causes of action, all raised in the hopes of finding a
valid jurisdictional basis, is certainly the sort of time-consuming endeavor that the Supreme
Court in Grupo Dataflux warned against.
Finally, it also bears noting that barring such amendments is more consistent with the
principle that district courts are courts of limited jurisdiction, ones which “possess only that
power authorized by Constitution and statute, which is not to be expanded by judicial decree.”
United States v. Merlino, 785 F.3d 79, 82 (3d Cir. 2015) (quoting Kokkonen, 511 U.S. at 377));
see Pressroom, 700 F.2d at 892 (“only Congress is empowed to grant and extend the subject
matter jurisdiction of the federal judiciary”); Steel Co., 523 U.S. at 101 (“The statutory and
(especially) constitutional elements of jurisdiction are an essential ingredient of separation and
equilibration of powers.”). This principle prevents courts from “infer[ing] a grant of jurisdiction
absent a clear legislative mandate.” Pressroom, 700 F.2d at 892. Presently, however, no statute
or rule clearly authorizes district courts to permit amendments creating retroactive subject matter
jurisdiction. Allowing those amendments in the absence of such a mandate would frustrate
Congress’s regulatory role over the lower courts.
In its opposition, Plaintiff does not address or attempt to rebut any of these
considerations. It argues, however, that “court[s] sometimes may constitutionally exercise
jurisdiction over a case even though [they] do not secure solid jurisdictional footing until after
the case has been brought.” (Pl. Opp’n, at 8). Plaintiff cites several cases as exceptions to the
general rule. None of those exceptions is applicable to the instant case, however, and Plaintiff
fails to explain why the exceptions should be expanded to encompass it. For example, in
Newman-Green, cited by Plaintiff, the Supreme Court held that lower courts are authorized to
drop dispensable non-diverse parties in order to perfect jurisdiction. Newman-Green, 490 U.S. at
832. The instant matter concerns the addition of a federal cause of action, not the dismissal of a
party, and thus does not fall within the Newman-Green paradigm. In Caterpillar Inc. v. Lewis,
519 U.S. 61, 117 S. Ct. 467, 136 L.Ed.2d 437 (1996), cited by Plaintiff, the Supreme Court held
only that “a statutory defect, namely a failure to comply with the requirement of the removal
statute, 28 U.S.C. § 1441(a) . . . d[oes] not require dismissal once there [i]s no longer any
jurisdictional defect,” Grupo Dataflux, 541 U.S. at 574. Because the present case involves the
curing of an underlying jurisdictional defect, not compliance with the removal statute, Caterpillar
Inc. v. Lewis is inapplicable. Finally, in Bernstein v. Lind-Waldock & Co., 738 F.2d 179 (7th
Cir. 1984), cited by Plaintiff, the court of appeals for the Seventh Circuit held only that the
plaintiff in that case was effectively estopped from disclaiming jurisdiction due to the case’s
unique procedural history. In Bernstein, defendants had removed the action to federal court, and
the plaintiff had added a federal cause of action and invoked federal question jurisdiction only
after the trial court had denied the plaintiff’s motion to remand. Bernstein, 738 F.2d at 182.
After the case had been decided in the defendants’ favor, the plaintiff appealed the trial court’s
denial of his motion to remand. On appeal, the Seventh Circuit held that the plaintiff could not
be permitted to invoke the jurisdiction of the federal court, and
then disclaim it when he loses. Otherwise [the plaintiff] would be
in a position where if he won his case on the merits in federal court
he could claim to have raised the federal question in his amended
complaint voluntarily, and if he lost he could claim to have raised
it involuntarily and to be entitled to start over in state court.
Id. at 185-86. Plainly, the procedural history of Bernstein—a removal case that had reached a
judgment on the merits, in which the plaintiff contested subject matter jurisdiction after having
already invoked it—is markedly different from that of the case at bar. For this reason, the Court
does not find the analysis in Bernstein to be applicable.
Plaintiff argues in the alternative that, even if the Court were to adopt a general bar on
amendments creating retroactive subject matter jurisdiction through the addition of a federal
cause of action, that principle should be limited to cases in which subject matter jurisdiction is
challenged before a plaintiff moves for leave to amend its complaint. In other words, a plaintiff
should be permitted to create subject matter jurisdiction retroactively, provided that the
jurisdictional defect in its original complaint goes undiscovered or unchallenged. Once the
challenge is raised, however, that plaintiff may not seek to cure the jurisdictional defect. The
Court is unmoved by this proposed distinction. In the first place, the concerns raised by
exercising jurisdiction over an action for which Congress has provided no clear jurisdictional
authority do not subside simply because a plaintiff seeks exercise of that power before rather
than after a defendant’s 12(b)(1) motion. Second, the distinction is of no consequence in the
instant matter because the jurisdictional issue was already raised by Defendants during the May
Therefore, for the foregoing reasons, this Court follows the numerous courts that have
considered this precise issue and holds that Plaintiff may not, by motion, create retroactive
subject matter jurisdiction through the addition of a federal cause of action. To hold otherwise
would run afoul of the practical and constitutional considerations justifying the limitation.
Accordingly, Plaintiff’s motion for leave to amend pursuant to Fed. R. Civ. P. 15(a) is
DENIED, and Defendants’ motion to dismiss this action pursuant to Fed. R. Civ. P. 12(b)(1) is
GRANTED. An appropriate order shall issue.
/s Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
Dated: January 31, 2017
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?