Lux Eap, LLC v. Caeap

• Court: Court of Appeals for the Ninth Circuit
• Decided: July 31, 2023
• Docket: 21-56122
• Status: Unpublished

Opinion

NOT FOR PUBLICATION FILED JUL 31 2023 UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT

LUX EAP, LLC, No. 21-56122

Plaintiff-Appellant, D.C. No. 2:21-cv-02242-DMG-SP v. MEMORANDUM* COMMUNITY ACTION EMPLOYMENT ASSISTANCE PROGRAM,

Defendant-Appellee,

KATHLEEN A. BRUNER,

Intervenor-Appellee,

ROBERT BRUNER,

Appeal from the United States District Court for the Central District of California Dolly M. Gee, District Judge, Presiding

Argued and Submitted June 13, 2023 Pasadena, California

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. Before: BYBEE and CHRISTEN, Circuit Judges, and VITALIANO,** District Judge.

Lux EAP, LLC (“Lux”) appeals from the Rule 12(b)(1) dismissal of its

claim for indemnification against Community Action Employment Assistance

Program (“CAEAP”). We review the dismissal of this claim de novo, Rhoades v.

Avon Prods., Inc., 504 F.3d 1151, 1157 (9th Cir. 2007), and we affirm.

Kathleen and Robert Bruner (“the Bruners”), intervenors-appellees, were the

founders of CAEAP, a worker assistance program. In 2016, the Bruners

transferred management of CAEAP to Lux. By the terms of the transfer

agreement, the Bruners were retained by Lux as paid consultants. The agreement

also included a provision that obligated CAEAP to indemnify Lux against any

liability arising out of its management of CAEAP.

In May 2017, Lux wound down CAEAP’s operations and stopped paying

the Bruners their consulting fees. These events were the wellspring of a season of

litigation among the parties. At the start, the Bruners succeeded on their $3.1

million breach of contract claim against Lux. Litigation continued intermittently

thereafter in various state and federal courts. Finally, Lux brought this action

against CAEAP, in which the Bruners intervened with the consent of the parties.

** The Honorable Eric N. Vitaliano, Senior United States District Judge for the Eastern District of New York, sitting by designation.

2 This appeal is taken from the district court’s dismissal of that action for want of

subject matter jurisdiction.

It is a cardinal principle of federal jurisdiction, that a federal court is without

the authority to adjudicate a claim absent the presence of a bona fide case or

controversy. Id. Consequently, a suit between parties who are not truly adverse

cannot satisfy the requirement of Article III of the Constitution that the lawsuit

present an actual case or controversy. Aetna Life Ins. Co. v. Haworth, 300 U.S.

227, 239–41 (1937); United States v. Johnson, 319 U.S. 302, 304–05 (1943) (per

curiam). Appellant’s lawsuit presents no actual controversy, and that is the cause

of its failure here.

Lux sued CAEAP purportedly seeking a declaratory judgment directing

CAEAP to indemnify Lux for the damages Lux owed to the Bruners on their

breach of contract judgment. But, plaintiff Lux and defendant CAEAP had been,

and were at the time this action was filed, controlled by common management. In

actuality, Lux was suing itself. With the suit being friendly, CAEAP did not even

oppose Lux’s “demand” for relief. Finding that no bona fide case or controversy

had been presented, the district court granted the Bruners’ motion to dismiss for

lack of subject matter jurisdiction. See Rhoades, 504 F. 3d at 1157.

Lux now rests on its argument that the unopposed intervention by the

Bruners had resuscitated the district court’s subject matter jurisdiction over the

3 action because the Bruners were adverse to Lux, thus presenting a bona fide case

or controversy. Lux cites no authority for its postulation that post hoc intervention

by a third party can reanimate a case over which the court lacks subject matter

jurisdiction. Nor does it come to grips with case law suggesting that intervention

in such circumstances should not be allowed, much less be held to restore

jurisdiction that never existed. See, e.g., Leisnoi, Inc. v. United States, 313 F.3d

1181, 1184 (9th Cir. 2002); W. Coast Seafood Processors Ass’n v. Nat. Res. Def.

Council, Inc., 643 F.3d 701, 704 (9th Cir. 2011); United States v. Ford, 650 F.2d

1141, 1142–43 (9th Cir. 1981); cf. Lierboe v. State Farm Mut. Auto. Ins. Co., 350

F.3d 1018, 1023 (9th Cir. 2003) (establishing that in the class action context, in the

absence of a party with standing, jurisdiction cannot be salvaged through the

substitution of a new party); NEI Contracting & Eng’g, Inc. v. Hanson Aggregates

Pac. Sw., Inc., 926 F.3d 528, 533 (9th Cir. 2019) (applying Lierboe).

In sum, where the complaint at its filing does not satisfy the case or

controversy requirement of Article III, there is no case constitutionally present, and

the subsequent intervention of a third party will not, as the district court properly

found here, create subject matter jurisdiction where none previously existed.1 Rule

12(b)(1) dismissal is appropriate instead.

1 We further lack jurisdiction to review the district court’s conclusion in dictum that this action is “sham litigation” and “absurd.” See Black v. Cutter Lab’ys, 351 U.S. 292, 297 (1956) (We “review[] judgments, not statements in opinions.”). 4 AFFIRMED.