United States District Court, D. New Jersey
MCNULTY, UNITED STATES DISTRICT JUDGE.
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). 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).
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.
MOTION TO AMEND
consider the motion to amend.
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).
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.
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).
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.)
remainder of this Opinion analyzes the amended complaint.
SUBJECT MATTER JURISDICTION
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).
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 ...