1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Mountains of Spices LLC, No. CV-21-01497-PHX-JAT
10 Plaintiff, ORDER
11 v.
12 Sara Lihong Wei Lafrenz, et al.,
13 Defendants. 14 15 One March 30, 2023, the Court issued the following Order: 16 On September 2, 2021, and September 24, 2021, this Court required Plaintiff to file supplements to the complaint establishing federal subject 17 matter jurisdiction. (Doc. 8 and 10). Plaintiff filed those supplements. (Docs. 9 and 42). 18 Recently, the Court has been called upon to rule on several outstanding issues in this case including a motion for default judgment, a 19 motion to amend the complaint, and three separate discovery disputes. In particular, the details revealed in the discovery disputes regarding the parties 20 to this case have again caused the Court to question its jurisdiction. Specifically, the facts underlying the discovery disputes suggest that 21 all parties have a close relationship either now or historically to a foreign country. This Court does not have diversity jurisdiction over exclusively 22 foreign nationals. See Faysound Ltd. v. United Coconut Chems., 878 F.2d 290, 294 (9th Cir. 1989) (citing Cheng v. Boeing Co., 708 F.2d 1406, 1412 23 (9th Cir. 1983) (“Diversity jurisdiction does not encompass foreign plaintiffs suing foreign defendants.”); Nike, Inc. v. Comercial Iberica de Exclusivas 24 Deportivas, S.A., 20 F.3d 987, 990–91 (9th Cir. 1994) (one United States citizen plaintiff or defendant will not establish diversity if there is a foreign 25 plaintiff and a foreign defendant). The Court has again reviewed the second supplement regarding 26 jurisdiction (Doc. 42) which claims, for example, that the sole member of Plaintiff is a citizen of New York. However, the supplement never claims 27 that that person is a citizen of the United States. Further, the person’s affidavit does not state that the person votes in New York or elsewhere in the 28 United States. (Doc. 42-3 at 103-104). Thus, this Court will again inquire into its jurisdiction. Therefore, 1 IT IS ORDERED that by April 13, 2023, Plaintiff must file a supplement to the second amended complaint stating the country of 2 citizenship of all parties to this case so this Court may assess federal subject matter jurisdiction. 3 (Doc. 98). 4 Plaintiff timely responded. (Doc. 103). Plaintiff admitted that Plaintiff is a foreign 5 national. (Id.). Plaintiff further admitted that foreign nationals suing each other is not a 6 basis for diversity jurisdiction in federal court. (Id.). Plaintiff never affirmatively states 7 whether any Defendants are foreign nationals. (Id.). However, Plaintiff notes that 8 Defendant Jian Peng was previously dismissed. (Doc. 26). And Plaintiff filed documents 9 seeking to dismiss Xiuzhu (“Devin”) Wei, Jianjun Wang, and Maywind Trading LLC. 10 (Docs. 100, 101, and 102). (Defendant Xiuzhu (“Devin”) Wei stated in his deposition that 11 he is a United States Citizen (Doc. 103 at 10), so the Court is unclear if the timing of his 12 dismissal is just coincidental). 13 Plaintiff then argues that even if any of the four dismissed Defendants were foreign 14 nationals at the time this case was filed, their citizenship no longer matters because they 15 have been dismissed. (Doc. 103 at 4-5). Further, Plaintiff notes that the only two remaining 16 Defendants (after the above referenced dismissals) would be: Sara Lihong Wei Lafrenz and 17 Qisheng Chen. Plaintiff then alleges that both Sara Lihong Wei Lafrenz and Qisheng Chen 18 are United States Citizens. 19 The first question at this point is whether this Court can disregard the citizenship of 20 the parties at the time this case was filed (August 31, 2021) through April 2023 for purposes 21 of jurisdiction and instead consider only whether jurisdiction exists today. The United 22 States Supreme Court has stated: 23 It has long been the case that “the jurisdiction of the court depends upon the 24 state of things at the time of the action brought.” This time-of-filing rule is hornbook law (quite literally) taught to first-year law students in any basic 25 course on federal civil procedure. It measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship against the state of facts 26 that existed at the time of filing — whether the challenge be brought shortly after filing, after the trial, or even for the first time on appeal. 27 Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570-71 (2004) (citation and 28 footnote omitted). 1 Notwithstanding this language, all district court and court of appeals’ decisions 2 located by this Court recognize many exceptions to diversity jurisdiction being required on 3 the date the case is filed. See, e.g., United Food Grp., LLC v. Cargill, Inc., No. CV 11- 4 7752 SS, 2015 WL 13868996, at *4–5 (C.D. Cal. June 8, 2015) (collecting cases in various 5 circumstances). Perhaps most on point, the Ninth Circuit Court of Appeals has stated: 6 Infuturia argues that diversity jurisdiction does not lie under 28 U.S.C. § 1332(a)(2) because (1) jurisdiction is determined at the time of removal, 7 and the parties were not diverse when this case was removed to federal court; and (2) Sequus, as a forum defendant, could not have originally removed the 8 case to federal court even if it had been the only defendant sued. We disagree with Infuturia’s arguments, because they raise statutory rather than 9 jurisdictional objections. Both the forum defendant rule and the requirement for diversity at the time of removal are statutory requirements imposed by 10 the general removal statute, 28 U.S.C. § 1441, not jurisdictional requirements. See Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 11 574 (2004) (holding the requirement that there be diversity at the time of removal is a statutory, non-jurisdictional requirement imposed by 28 U.S.C. 12 § 1441(a)). … Although the court lacked diversity jurisdiction at the time of removal 13 because there were foreign citizens on both sides of the case, see Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, 20 F.3d 987, 990 (9th Cir. 14 1994), this jurisdictional defect was cured by Infuturia’s dismissal in its Second Amended Complaint of the foreign defendants that originally 15 destroyed diversity, see Grupo Dataflux, 541 U.S. at 572 (stating that a jurisdictional defect can be cured by the dismissal of the party that had 16 destroyed diversity). Only two parties remained under the Second Amended Complaint: Infuturia (a citizen of the British Virgin Islands) and Sequus (a 17 citizen of California). Thus, the district court had diversity jurisdiction under 28 U.S.C. § 1332(a)(2) (which states that “district courts shall have original 18 jurisdiction of all civil actions ... between citizens of a State and citizens or subjects of a foreign state”). 19 Infuturia Glob. Ltd. v.
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA
9 Mountains of Spices LLC, No. CV-21-01497-PHX-JAT
10 Plaintiff, ORDER
11 v.
12 Sara Lihong Wei Lafrenz, et al.,
13 Defendants. 14 15 One March 30, 2023, the Court issued the following Order: 16 On September 2, 2021, and September 24, 2021, this Court required Plaintiff to file supplements to the complaint establishing federal subject 17 matter jurisdiction. (Doc. 8 and 10). Plaintiff filed those supplements. (Docs. 9 and 42). 18 Recently, the Court has been called upon to rule on several outstanding issues in this case including a motion for default judgment, a 19 motion to amend the complaint, and three separate discovery disputes. In particular, the details revealed in the discovery disputes regarding the parties 20 to this case have again caused the Court to question its jurisdiction. Specifically, the facts underlying the discovery disputes suggest that 21 all parties have a close relationship either now or historically to a foreign country. This Court does not have diversity jurisdiction over exclusively 22 foreign nationals. See Faysound Ltd. v. United Coconut Chems., 878 F.2d 290, 294 (9th Cir. 1989) (citing Cheng v. Boeing Co., 708 F.2d 1406, 1412 23 (9th Cir. 1983) (“Diversity jurisdiction does not encompass foreign plaintiffs suing foreign defendants.”); Nike, Inc. v. Comercial Iberica de Exclusivas 24 Deportivas, S.A., 20 F.3d 987, 990–91 (9th Cir. 1994) (one United States citizen plaintiff or defendant will not establish diversity if there is a foreign 25 plaintiff and a foreign defendant). The Court has again reviewed the second supplement regarding 26 jurisdiction (Doc. 42) which claims, for example, that the sole member of Plaintiff is a citizen of New York. However, the supplement never claims 27 that that person is a citizen of the United States. Further, the person’s affidavit does not state that the person votes in New York or elsewhere in the 28 United States. (Doc. 42-3 at 103-104). Thus, this Court will again inquire into its jurisdiction. Therefore, 1 IT IS ORDERED that by April 13, 2023, Plaintiff must file a supplement to the second amended complaint stating the country of 2 citizenship of all parties to this case so this Court may assess federal subject matter jurisdiction. 3 (Doc. 98). 4 Plaintiff timely responded. (Doc. 103). Plaintiff admitted that Plaintiff is a foreign 5 national. (Id.). Plaintiff further admitted that foreign nationals suing each other is not a 6 basis for diversity jurisdiction in federal court. (Id.). Plaintiff never affirmatively states 7 whether any Defendants are foreign nationals. (Id.). However, Plaintiff notes that 8 Defendant Jian Peng was previously dismissed. (Doc. 26). And Plaintiff filed documents 9 seeking to dismiss Xiuzhu (“Devin”) Wei, Jianjun Wang, and Maywind Trading LLC. 10 (Docs. 100, 101, and 102). (Defendant Xiuzhu (“Devin”) Wei stated in his deposition that 11 he is a United States Citizen (Doc. 103 at 10), so the Court is unclear if the timing of his 12 dismissal is just coincidental). 13 Plaintiff then argues that even if any of the four dismissed Defendants were foreign 14 nationals at the time this case was filed, their citizenship no longer matters because they 15 have been dismissed. (Doc. 103 at 4-5). Further, Plaintiff notes that the only two remaining 16 Defendants (after the above referenced dismissals) would be: Sara Lihong Wei Lafrenz and 17 Qisheng Chen. Plaintiff then alleges that both Sara Lihong Wei Lafrenz and Qisheng Chen 18 are United States Citizens. 19 The first question at this point is whether this Court can disregard the citizenship of 20 the parties at the time this case was filed (August 31, 2021) through April 2023 for purposes 21 of jurisdiction and instead consider only whether jurisdiction exists today. The United 22 States Supreme Court has stated: 23 It has long been the case that “the jurisdiction of the court depends upon the 24 state of things at the time of the action brought.” This time-of-filing rule is hornbook law (quite literally) taught to first-year law students in any basic 25 course on federal civil procedure. It measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship against the state of facts 26 that existed at the time of filing — whether the challenge be brought shortly after filing, after the trial, or even for the first time on appeal. 27 Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 570-71 (2004) (citation and 28 footnote omitted). 1 Notwithstanding this language, all district court and court of appeals’ decisions 2 located by this Court recognize many exceptions to diversity jurisdiction being required on 3 the date the case is filed. See, e.g., United Food Grp., LLC v. Cargill, Inc., No. CV 11- 4 7752 SS, 2015 WL 13868996, at *4–5 (C.D. Cal. June 8, 2015) (collecting cases in various 5 circumstances). Perhaps most on point, the Ninth Circuit Court of Appeals has stated: 6 Infuturia argues that diversity jurisdiction does not lie under 28 U.S.C. § 1332(a)(2) because (1) jurisdiction is determined at the time of removal, 7 and the parties were not diverse when this case was removed to federal court; and (2) Sequus, as a forum defendant, could not have originally removed the 8 case to federal court even if it had been the only defendant sued. We disagree with Infuturia’s arguments, because they raise statutory rather than 9 jurisdictional objections. Both the forum defendant rule and the requirement for diversity at the time of removal are statutory requirements imposed by 10 the general removal statute, 28 U.S.C. § 1441, not jurisdictional requirements. See Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 11 574 (2004) (holding the requirement that there be diversity at the time of removal is a statutory, non-jurisdictional requirement imposed by 28 U.S.C. 12 § 1441(a)). … Although the court lacked diversity jurisdiction at the time of removal 13 because there were foreign citizens on both sides of the case, see Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, 20 F.3d 987, 990 (9th Cir. 14 1994), this jurisdictional defect was cured by Infuturia’s dismissal in its Second Amended Complaint of the foreign defendants that originally 15 destroyed diversity, see Grupo Dataflux, 541 U.S. at 572 (stating that a jurisdictional defect can be cured by the dismissal of the party that had 16 destroyed diversity). Only two parties remained under the Second Amended Complaint: Infuturia (a citizen of the British Virgin Islands) and Sequus (a 17 citizen of California). Thus, the district court had diversity jurisdiction under 28 U.S.C. § 1332(a)(2) (which states that “district courts shall have original 18 jurisdiction of all civil actions ... between citizens of a State and citizens or subjects of a foreign state”). 19 Infuturia Glob. Ltd. v. Sequus Pharms., Inc., 631 F.3d 1133, 1137 (9th Cir. 2011). 20 Thus, the Court will, as necessary, dismiss the Defendants Plaintiff seeks to dismiss 21 and consider the jurisdiction-destroying-concerns raised by those Defendants to be “cured” 22 by the dismissals. See id. 23 However, the Court is not without a remaining jurisdiction-destroying-concern 24 related to Sara Lihong Wei Lafrenz. Sara Lihong Wei Lafrenz is in default (Docs. 39 and 25 84) and therefore cannot be forced to answer questions about her citizenship. However, if 26 Sara Lihong Wei Lafrenz is not a United States citizen, this Court must dismiss this case, 27 even as to United States citizen Defendant Qisheng Chen. See Nike, Inc. v. Comercial 28 Iberica de Exclusivas Deportivas, 20 F.3d 987, 990 (9th Cir. 1994). 1 As Plaintiff correctly notes, “A district court makes factual findings regarding 2 jurisdiction under a preponderance of the evidence standard.” (Doc. 103 at 2 quoting 3 Mondragon v. Cap. One Auto Fin., 736 F.3d 880, 884 (9th Cir. 2013) (citing Valdez v. 4 Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004)). Here, Plaintiff offers two pieces 5 of evidence to support its factual allegation that Sara Lihong Wei Lafrenz is a United States 6 citizen. 7 First, Plaintiff offers the deposition of her son, Xiuzhu (“Devin”) Wei. Devin 8 testified at his deposition as follows: 9 “Q. And is your mother a U.S. citizen? 10 A. I believe so. 11 Q. Okay. Do you believe or do you know? 12 A. I don’t know. I believe so. 13 Q. Okay. And why do you believe so, sir? 14 A. Because we’ve been here for ten plus years. That’s just the process.” 15 (Doc. 103 at 10-11) (The deposition was taken in North Carolina (Doc. 103 at 9), so the 16 Court interprets “here” to mean the United States). 17 Second, Sara Lihong Wei Lafrenz filled out a form with a bank in which she attested 18 that she is either a “U.S. citizen or other U.S. Person.” (Doc. 103 at 13). Plaintiff does not 19 undertake to define “other U.S. Person.” 20 The Court finds that the foregoing does not establish, by a preponderance of the 21 evidence, that Sara Lihong Wei Lafrenz is a citizen of the United States. First, her son 22 does not claim to know whether she is a citizen of the United States. Further, his conclusion 23 that someone who has been in the country 10 years must have become a citizen along the 24 way is not legally supported. Finally, his testimony confirms that he thinks she must 25 become a citizen, not that she was a United State citizen at birth. Second, the bank form 26 directs the Court to the Internal Revenue Services’ instructions for a form W-9 for the 27 definition of an “other U.S. Person.” (Doc. 103 at 13). The IRS defines this term to include 28 resident aliens, a partnership, corporation, association or company organized in the United 1 States, a domestic estate or a domestic trust. https://www.irs.gov/pub/irs-pdf/fw9.pdf (last 2 visited May 2, 2023). Thus, the fact that Sara Lihong Wei Lafrenz attested that she is an 3 “other U.S. Person” (or citizen) is certainly not proof that she is or ever claimed to be a 4 U.S. citizen. Moreover, she signed as “president” perhaps indicating she was not even 5 signing in her personal capacity. (Doc. 103 at 13). 6 Because Plaintiff has failed to establish by a preponderance of the evidence that 7 Sara Lihong Wei Lafrenz is a United States citizen, Plaintiff must either further “cure” the 8 jurisdictional deficiency in this case by voluntarily dismissing Sara Lihong Wei Lafrenz, 9 and proceed against only Qisheng Chen; or the Court will dismiss this case, without 10 prejudice, for lack of federal subject matter jurisdiction. The Court will note that, should 11 Plaintiff choose to move for reconsideration and present additional evidence regarding Sara 12 Lihong Wei Lafrenz’s citizenship, the Court hereby imposes on Plaintiff an affirmative 13 duty to present to the Court both evidence that would tend to support Plaintiff’s argument 14 that Sara Lihong Wei Lafrenz is a United States citizen and any evidence in Plaintiff’s 15 possession, custody, or control that would tend to detract from Plaintiff’s argument. 16 Specifically, the Court would be surprised if, accepting the allegations in the complaint as 17 true, Plaintiff and its associates transferred to Sara Lihong Wei Lafrenz somewhere 18 between 4.6 million dollars and 90 million dollars (Doc. 84 at 2), and yet they do not have 19 a single piece of identification for her like a passport or social security number. Perhaps 20 this is true, or perhaps Plaintiff has not submitted all evidence. Regardless, the Court makes 21 clear that Plaintiff has an affirmative duty to present any such evidence. 22 Accordingly, 23 IT IS ORDERED that Defendant Maywind Trading LLC is deemed to be 24 voluntarily dismissed based on Doc. 102. The entry of default at Doc. 34 and the portion 25 of Doc. 84 that addresses Maywind Trading LLC are both vacated. 26 IT IS FURTHER ORDERED that the Stipulation to Dismiss Defendant Xiuzhu 27 (“Devin”) Wei (Doc. 100) is granted. Xiuzhu (“Devin”) Wei is dismissed from this case. 28 IT IS FURTHER ORDERED that the Stipulation to Dismiss Jianjun Wang (Doc. 101) is granted. Jianjun Wang is dismissed from this case. 2 IT IS FURTHER ORDERED that, within 14 days of the date of this Order, 3 || Plaintiff must also dismiss Sara Lihong Wei Lafrenz or this case will be dismissed for lack 4|| of federal subject matter jurisdiction. 5 Dated this 3rd day of May, 2023. 6 7 '
James A. CO 9 Senior United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
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