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Peralta v. Worthington Industries Inc.

United States District Court, D. Arizona

July 17, 2018

Jason Lou Peralta, Plaintiff,
Worthington Industries Incorporated, et al., Defendants.


          Honorable John J. Tuchi United States District Judge.

         At issue are the following Motions: (1) Plaintiff Jason Lou Peralta's Motion to Amend Order Dated January 22, 2018 (Doc. 64, Mot. to Amend Order), to which Defendants filed a Response (Doc. 67, Resp. to Mot. to Amend Order); (2) Plaintiff's Motion to Amend the Complaint (Doc. 70, Mot. to Amend Compl.), to which Defendant filed an Opposition (Doc. 73, Opp.), and Plaintiff filed a Reply (Doc. 74); and (3) Plaintiff's Motion for Hearing (Doc. 79, Mot. for Hearing), to which Defendants filed a Response (Doc. 80, Resp. to Mot. for Hearing). Although Plaintiff has requested oral argument for each brief and by separate Motion, the Court finds the matters appropriate for resolution without such argument. See LRCiv 7.2(f). Accordingly, the Court will deny all of Plaintiff's pending motions. Further, upon sua sponte review of Plaintiff's operative Complaint, the Court concludes that Plaintiff's allegations are insufficient to establish subject matter jurisdiction. The Court therefore will dismiss Plaintiff's Complaint (Doc. 1). . . . .


         A party may amend a pleading once as a matter of course within 21 days after serving it, or within 21 days of service of, inter alia, a Rule 12(b)(6) motion. Fed.R.Civ.P. 15(a). In all other circumstances, absent the opposing party's written consent, a party must seek leave to amend from the court. Fed.R.Civ.P. 15(a)(2). Although the decision to grant or deny a motion to amend is within the trial court's discretion, “Rule 15(a) declares that leave to amend shall be freely given when justice so requires.” Foman v. Davis, 371 U.S. 178, 182 (1962) (citation and internal quotation marks omitted). “In exercising its discretion with regard to the amendment of pleadings, a court must be guided by the underlying purpose of Rule 15-to facilitate a decision on the merits rather than on the pleadings or technicalities.” Eldridge v. Block, 832 F.2d 1132, 1135 (9th Cir. 1987) (citation and internal quotation marks omitted).

         However, the policy in favor of allowing amendments is subject to limitations. After a defendant files a responsive pleading, leave to amend is not appropriate if the “amendment would cause prejudice to the opposing party, is sought in bad faith, is futile, or creates undue delay.” Madeja v. Olympic Packers, 310 F.3d 628, 636 (9th Cir. 2002) (citation and internal quotation marks omitted). “Futility alone can justify the denial of a motion for leave to amend.” Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir. 2003).

         “A proposed amended complaint is futile if it would be immediately subject to dismissal. Thus, the proper test to be applied when determining the legal sufficiency of a proposed amendment is identical to the one used when considering the sufficiency of a pleading challenged under Rule 12(b)(6).” Nordyke v. King, 644 F.3d 776, 788 n.12 (9th Cir. 2011) (quotations and citations omitted), aff'd on reh'g en banc on other grounds, 681 F.3d 1041 (9th Cir. 2012). To survive a Rule 12(b)(6) motion, a complaint must allege “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A dismissal for failure to state a claim can be based on either (1) the lack of a cognizable legal theory or (2) insufficient facts to support a cognizable legal claim. Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990).

         II. ANALYSIS

         A. Motion to Amend the Complaint

         In opposition to Plaintiff's Motion to Amend the Complaint, Defendants raise several arguments, which the Court will address in turn. However, the Court first addresses the proposed Amended Complaint's jurisdiction defects, which Defendants do not address and which alone require denial of the Motion.

         1. Subject Matter Jurisdiction

         Unlike state courts, federal courts only have jurisdiction over a limited number of cases, and those cases typically involve either a controversy between citizens of different states (“diversity jurisdiction”) or a question of federal law (“federal question jurisdiction”). See 28 U.S.C. §§ 1331, 1332. “[B]ecause it involves a court's power to hear a case, ” subject matter jurisdiction “can never be forfeited or waived.” United States v. Cotton, 535 U.S. 625, 630 (2002). Courts “have an independent obligation to determine whether subject matter jurisdiction exists, even in the absence of a challenge from any party.” Arbaugh v. Y&H Corp., 546 U.S. 500, 513-14 (2006). Thus, a federal court is obligated to inquire into its subject matter jurisdiction in each case and to dismiss a case when subject matter jurisdiction is lacking. See Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116 (9th Cir. 2004); Fed.R.Civ.P. 12(h)(3).

         Diversity jurisdiction exists in actions between citizens of different states where the amount in controversy exceeds $75, 000, exclusive of interest and costs. 28 U.S.C. § 1332(a). For the purpose of determining diversity of citizenship, a corporation is a citizen both of its state of incorporation and the state “where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). Similarly, a limited liability company (“LLC”) is a citizen of every state in which its owners/members are citizens. Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Thus, a plaintiff must “allege the citizenship of all the members” of an LLC to properly plead diversity jurisdiction. NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 611 (9th Cir. 2016).

         In the proposed Amended Complaint, Plaintiff names as Defendants five entities: Bernzomatic, Worthington Industries, Inc., Worthington Cylinder Corporation, Worthington Cylinder Corporation LLC, and Worthington Cylinder Wisconsin LLC. Yet, Plaintiff's allegations about each entity fail to establish the Court's diversity jurisdiction over the matter. First, as to the two LLC Defendants, Plaintiff fails to allege the citizenship of each member/owner of the LLC. (See Doc. 70-1, Proposed Am. Compl. ¶¶ 6-7.) This alone undermines Plaintiff's assertion of diversity jurisdiction, renders the proposed Amended Complaint deficient, and requires that the Court deny the Motion to Amend. Second, Plaintiff's proposed Amended Complaint lacks any allegation as to the citizenship of Bernzomatic. This again renders Plaintiff's assertion of diversity jurisdiction insufficient and requires denial of the Motion.[1]

         Finally, Plaintiff has only alleged the state of incorporation with regard to the two remaining entities in the proposed Amended Complaint: Worthington Industries, Inc. and Worthington Cylinder Corporation. (Proposed Am. Compl. ¶¶ 4-5.) Because a corporation is a citizen both in its state of incorporation and in the state where it has its principal place of business, Plaintiff fails properly plead diversity jurisdiction when he omits allegations as to a Defendant's principal place of business.[2] Because of these three independent inadequacies, Plaintiff fails to demonstrate that this Court has subject matter jurisdiction over the Amended Complaint.

         Upon closer review, the Court finds that these identical jurisdictional deficiencies also exist in Plaintiff's initial Complaint, which remains operative, in part, subject to the Court's earlier Order. (See Doc. 46, Dec. 4, 2017 Tr. 17:8-24:8.) In his initial Complaint, Plaintiff alleges only that “Defendant's principle [sic] place of business is in Ohio.” (Doc. 1, Compl. at 1.) Just as with the Amended Complaint, this allegation fails to make clear to which of the four Defendants Plaintiff refers. Additionally, the Complaint fails to allege the state of incorporation for each corporate Defendant and the citizenship of each member/owner of the LLC Defendant. Because Plaintiff has not adequately pled the citizenship ...

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