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Kim v. Genesis Co., Ltd.

United States District Court, D. New Jersey

October 26, 2017

GENESIS CO., LTD et al., Defendants.



         Currently before this Court are two motions: defendants' motion to dismiss the complaint and plaintiffs' motion to amend the summons and complaint. (ECF nos. 28, 42).[1] Defendants argue that this court lacks personal jurisdiction over one defendant, the plaintiffs failed to effectuate service, and the complaint fails to state a claim. (ECF no. 28). Plaintiffs seek to amend their complaint to add parties and change the causes of action. (ECF no. 42).

         However, regardless of the motions before them, federal courts have an ever-present obligation to ensure that subject matter jurisdiction exists. Courts must decide this issue sua sponte as necessary. Concluding that this Court lacks jurisdiction, I will dismiss the action.


         I first consider the motion to amend.

         Plaintiff Sunghoon Kim ("Kim"), is a citizen of New Jersey; plaintiff SHKIM Corporation is a New York corporation. The original complaint asserted twelve state-law claims against Genesis Co., Ltd ("Genesis"), a South Korean company. Jurisdiction was premised on diversity of citizenship, 28 U.S.C. § 1332(a). (Compl. ¶ 2).

         While the motion to dismiss the original complaint was pending, the plaintiffs proffered an amended complaint. It names two additional defendants: Phoenix U.S.A. Corporation ("Phoenix"), and BBQ USA LLC ("BBQ USA"). Phoenix and BBQ USA are New Jersey corporations. (AC ¶ 8, 11). With the addition of Phoenix and BBQ USA, the parties are no longer diverse. Rather, the Amended Complaint asserts that this Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331. (AC ¶ 2). The sole federal claim in the Amended Complaint is based on the Federal Trade Commission's Franchise Rule, 16 C.F.R. § 436. (AC ¶ 2, 53-56). The Amended Complaint also asserts ten pendent state-law claims.

         The substantive allegations of the Amended Complaint are as follows. Kim, now a New Jersey resident, came to the United States from South Korea to open a "BBQ Chicken Restaurant" under a franchise agreement. (AC ¶ 18, 20-21). Kim operates his restaurant through SHKIM Corporation, which he wholly owns and controls. (AC ¶ 5). The Amended Complaint alleges that these three defendants acted wrongfully in various ways during the course of their franchise dealings. (AC ¶ 9-17).

         Leave to amend a complaint is granted freely. Fed.R.Civ.P. 15(a); see also Foman v. Davis, 371 U.S. 178, 182 (1962). No reason to deny amendment appears. Indeed, it seems that the two newly-named parties, Phoenix and BBQ USA, are essential to the claims. Kim signed his franchise agreement with Phoenix, and BBQ USA later assumed responsibility for the agreement. (AC ¶ 22, 32). Although Kim argues that Phoenix and BBQ USA act as agents of Genesis, they remain central to this litigation. Moreover, it is an outstanding question as to whether Genesis is even amenable to service. (ECF no. 28) (Indeed, this may have been the impetus for the filing of the amended complaint.)

         The remainder of this Opinion analyzes the amended complaint.


         A. Standards

         Federal courts are courts of limited subject matter jurisdiction. "[F]ederal courts have an ever-present obligation to satisfy themselves of their subject matter jurisdiction and decide the issue sua sponte ..." Liberty Mut. Ins. Co. v. Ward Trucking Co., 48 F.3d 742, 750 (3d Cir. 1995). Under Fed.R.Civ.P. 12(h)(3), "if the court determines at any time that it lacks subject matter jurisdiction, the court must dismiss the action." That obligation is paramount because subject matter jurisdiction "calls into question the very legitimacy of a court's adjudicatory authority." Council Tree Commc'ns., Inc. v. FCC, 503 F.3d 284, 292 (3d Cir. 2007) (quoting .Am. Canoe Ass Vi v. Murphy Farms, Inc., 326 F.3d 505, 515 (4th Cir. 2003)). Ultimately, I must dismiss a case if there is no subject matter jurisdiction because "subject matter jurisdiction is non-waivable." Nesbit v. Gears Unlimited, Inc., 347 F.3d 72, 76-77 (3d Cir. 2003).

         Subject matter jurisdiction exists in the federal courts on the basis of (1) diversity of citizenship, 28 U.S.C. § 1332, and (2) federal question jurisdiction, 28 U.S.C. § 1331. Diversity exists when there is "complete diversity*' of the parties and the controversy's value exceeds $75, 000. 28 U.S.C. § 1332; Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806). If any plaintiff and any defendant are citizens of ...

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