C.J. Williams, United States District Judge.
I. BACKGROUND ... 987
II. SECTION 1653 AND RULE 15 ... 988
III. JUDICIAL ADMISSIONS ... 994
IV. RELATION BACK ... 996
V. CONCLUSION ... 1000
This matter is before the Court on GenoSource, LLC's ("plaintiff") Motion for Leave to File Amended Complaint (Doc. 112), and on plaintiff's amended Motion for Leave to File Amended Complaint (Doc. 143). Inguran, LLC, doing business as Sexing Technologies, timely resisted both motions (Docs. 117, 166), and plaintiff timely filed replies to both motions to amend (Docs. 130, 172). On April 11, 2019, the Court ruled on plaintiff's amended Motion for Leave to File Amended Complaint (Doc. 143) in part and held the motion in abeyance in part. GenoSource, LLC v. Inguran, LLC, No. 18-CV-113-CJW-KEM, 2019 WL 2041661 (N.D. Iowa Apr. 11, 2019). The Court also held plaintiff's first motion to amend (Doc. 112) in abeyance. Id. In that same Order, the Court set a briefing schedule to permit the parties to address certain issues. Id., at *7. Plaintiff and defendant timely submitted their supplemental briefs and accompanying exhibits in support. (Docs. 188, 190, 198, 199, 208).
The Court previously set out a brief summary of the proceedings in this case, as those proceedings pertain to the current motions and jurisdictional issue. A portion of that summary is repeated here.
GenoSource, 2019 WL 2041661, at *1 (footnote in original).
In the Court's previous Order, the Court noted that "[p]laintiff's motions to amend are brought under Federal Rule of Civil Procedure 15(a)(2)," but that "defendant's
The Court proceeded, however, to consider whether plaintiff could properly amend its complaint under Rule 15. The Court found that plaintiff's second motion to amend should be granted on the merits under Rule 15(a)(2), but the Court held the motion in abeyance. In doing so, the Court stated as follows, with respect to the second motion:
Id., at *7. The Court directed plaintiff and defendant to brief the issue of whether the amended complaint would relate back to the date of the original complaint under Rule 15(c), and the parties did so. The relation back issue is the only issue remaining to be considered under plaintiff's amended motion, and the Court will now address that issue, as well as the parties' arguments surrounding the Court's authority to rule, and the arguments raised in response to the Show Cause Order.
Defendant offers two separate arguments that address ruling under Rule 15. First, defendant argues that the Court lacks the authority to rule on plaintiff's motions to amend under Rule 15 because, defendant reasons, the Court is wholly without subject matter jurisdiction, which renders the Court incapable of taking any action other than dismissing the case. (Doc. 198, at 12-16). In support, defendant cites to numerous out of circuit cases that, defendant argues, stand for the proposition that a court cannot rule on a Rule 15 motion to amend if the Court lacks subject matter jurisdiction, even if the proposed amendments would cure the jurisdictional defect. Defendant does not, however, cite to any authority from the Eighth Circuit Court of Appeals to support that proposition.
Defendant cites to only two Eighth Circuit cases in discussing the Court's authority to rule under Rule 15. The first, Associated Insurance Management Corp. v. Arkansas General Agency, Inc., 149 F.3d 794, 796-97 (8th Cir. 1998), is cited for the proposition that a "district court cannot retroactively create diversity jurisdiction if it did not exist when the complaint was filed." (Doc. 198, at 13). Aside from the fact that, here, the Court is presented with a situation seeking to establish federal question jurisdiction, not diversity jurisdiction, Associated Insurance Management is not on point. That case resulted in dismissal because the Eighth Circuit found that the jurisdictional deficiency was not cured by permitting a non-diverse real party in interest to ratify the lawsuit under Rule 17(a) instead of remaining a party to the
Associated Insurance Management also did not address whether the district court had the authority to rule on the merits of the case. Finally, the holding in Associated Insurance Management was narrow and does not encompass the situation at issue here. The Eighth Circuit held that "[i]f diversity jurisdiction is lacking when a lawsuit is started ... it cannot be created later when defendants use third-party practice to sue a nondiverse real party on their counterclaim." Id. at 798 (citation omitted). Plaintiff is not seeking to use third-party practice to cure the jurisdictional deficiencies in this case. Associated Insurance Management is, thus, of no benefit in determining either the merits of the current issues, or in determining whether the Court has the authority to reach the merits of the issues currently before the Court.
Next, defendant cites to Scottsdale Insurance Co. v. Universal Crop Protection Alliance, LLC, 620 F.3d 926, 931 (8th Cir. 2010), and Fenner v. Wyeth, 912 F.Supp.2d 795, 801 n.6 (E.D. Mo. 2012), as part of defendant's argument that jurisdiction cannot be created retroactively. (Doc. 198, at 13-14). Scottsdale addressed whether the amount-in-controversy requirement set forth in Title 28, United States Code, Section 1332(a) was satisfied and did not address a district court's authority to rule when subject matter jurisdiction is uncertain. Again, the Court notes that prohibiting the retroactive creation of jurisdiction does not necessarily equate to prohibiting consideration of a motion that could cure jurisdictional deficiencies, if granted. Scottsdale is, thus, not relevant to a determination of the Court's authority to rule.
Fenner cites to the same provision in Scottsdale that the Court has rejected as being irrelevant. The cited portion of Fenner addresses facts specific to that case. Those facts are not implicated here. Although Fenner does go on to discuss the limited circumstances in which a jurisdictional defect can be cured, the discussion addresses the validity of a judgment when the jurisdictional defect has been cured by the time of final judgment. 912 F.Supp.2d at 802-03. This case has not reached the final judgment stage, and the circumstances addressed in Fenner are not otherwise applicable to this case.
The District of Delaware recently addressed a case with a nearly identical procedural background as the case now before this Court. See Cliffs Nat. Res. Inc. v. Seneca Coal Res., LLC, No.17-567, 2018 WL 2012900 (D. Del. Apr. 30, 2018) ("Cliffs"). The District of Delaware found that it "clearly lack[ed] diversity jurisdiction," and, consequently, was without authority to consider plaintiff's motion to amend its complaint. Id., at *2, *5. Cliffs is on point, and defendant's reliance on Cliffs is well placed. Cliffs, however, was issued from the District of Delaware, and is therefore out of circuit persuasive authority. The Eighth Circuit Court of Appeals, in contrast, has reached a different conclusion. See Sanders v. Clemco Indus., 823 F.2d 214, 215-17 (8th Cir. 1987). This Court is bound by the Eighth Circuit's decision and, thus, this Court cannot apply the same rationale as was applied in Cliffs.
The Court has already addressed its authority to consider plaintiff's motions to amend under Rule 15 in light of the jurisdictional defect. See GenoSource, 2019 WL 2041661, at *6. In doing so, the Court offered the following discussion:
Id. In the absence of Eighth Circuit or United States Supreme Court authority to the contrary, this Court is bound by Sanders' implicit holding that a court may properly consider the merits of a Rule 15(a)(2) motion to amend, even in the absence of jurisdictional certainty.
Defendant next argues that Section 1653 serves as a limitation on Rule 15 and that, consequently, the Court's inquiry should have ended when the Court determined that Section 1653 does not provide a legal basis for plaintiff's proposed amendments. (Doc. 198, at 16). The Court disagrees. Defendant asserts that "Congress and the [United States] Supreme Court have made it clear that [Section 1653] expressly limits the type of amendments a plaintiff may make." (Id.). In support, defendant cites to Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. at 831, 109 S.Ct. 2218. (Id.). The paragraph defendant cites to, however, does not support defendant's interpretation of Section 1653 as limiting Rule 15. Further, the cited paragraph is taken out of context. When read in context, it becomes more apparent that defendant's interpretation is incorrect.
The relevant portions of Newman-Green, in full, read as follows:
490 U.S. at 831-32, 109 S.Ct. 2218 (alterations and emphasis in original) (footnotes omitted).
This Court reads Newman-Green as addressing limitations on the reach of Section 1653, but the Court does not read Newman-Green as holding that Section 1653 is, itself, a statutory limitation. The Newman-Green Court specifically found that because Section 1653 only permits allegations of jurisdiction to be amended, Section 1653 would not support dropping a non-diverse party to cure a defective jurisdictional fact. Id. at 831, 109 S.Ct. 2218. In reaching this holding, the United State Supreme Court necessarily found that dropping a non-diverse party amounted to changing the jurisdictional facts of a case brought under diversity jurisdiction. If defendant's interpretation were accurate that Section 1653 "expressly limits the types of amendments a plaintiff may make" (Doc. 198, at 16), then any amendments made under the Federal Rules of Civil Procedure that changed the jurisdictional facts of a case would be impermissible.
The Supreme Court has, however, declined to adopt this interpretation. Immediately after addressing the reach of Section 1653, the Supreme Court went on to address whether the amendment sought could be properly made under Federal Rule of Civil Procedure 21. Newman-Green, 490 U.S. at 832, 109 S.Ct. 2218. The Supreme Court could not have done so if Section 1653 served as a limitation on jurisdictional amendments as a whole.
Nor does this Court read Section 1653 as always imposing a limitation on the reach of Rule 15. The effect of Rule 15, in this case, would accomplish the same result as the Rule 21 amendment in Newman-Green. As the Court explained in its prior Order, the addition of the two new federal claims and the assertion of federal question jurisdiction amount to the addition of new jurisdictional facts. See GenoSource, 2019 WL 2041661, at *3. Likewise, dropping the jurisdictional spoiler in Newman-Green served to modify the jurisdictional facts of the case. 490 U.S. at 831, 109 S.Ct. 2218. Newman-Green counsels that although Section 1653 cannot support amendments to jurisdictional facts—such as the amendments sought to be made in this case—those same jurisdictional facts can properly be amended if they find support in other authority. The Court notes that the relevant authority that may permit jurisdictional facts to be amended in this case is Rule 15, as opposed to Rule 21. This, however, does not defeat Newman-Green's applicability because the central issue in both cases is amending jurisdictional
Finally, defendant argues that three cases support defendant's argument that this Court can "grant [plaintiff's] motion for leave only if doing so [would be] proper under Section 1653." (Doc. 198, at 19). Defendant's reliance upon each case is misplaced. First, defendant argues that Sanders v. Clemco Industries, 823 F.2d 214 (8th Cir. 1987), supports defendant's position because "the parties were in fact diverse, which meant that the court had subject matter all along." (Doc. 198, at 18). Upon this basis, defendant asserts that the amendments sought in Sanders were merely "technical" and that "the court had subject matter jurisdiction over the case despite the pleading defects." (Id.).
As noted above, the Eighth Circuit made no such finding of jurisdiction. To the contrary, the Eighth Circuit found that diversity jurisdiction had not been established, and the Eighth Circuit did not reference any facts that could lead to the establishment of diversity jurisdiction. Sanders, 823 F.2d at 216. Thus, defendant's conclusion that the amendment was permitted under Rule 15(a) only because it likewise would have been permitted under Section 1653 simply misreads the facts of the case. Additionally, Sanders makes no reference to Section 1653, which, if anything, indicates that Rule 15(a) need not be read together with Section 1653.
Defendant next cites to Local 179, United Textile Workers of America, AFL-CIO v. Federal Paper Stock Co., 461 F.2d 849 (8th Cir. 1972) ("Federal Paper Stock"), arguing that this Court, in its prior Order in this case, misapplied Federal Paper Stock. This Court disagrees. As an initial matter, defendant seems to imply that the Court relied more extensively on Federal Paper Stock than the Court actually did. (See Doc. 198, at 18-20). The Court relied on Federal Paper Stock only as ancillary support for the proposition that Rule 15(a) can provide a basis to amend a complaint to cure a constitutional infirmity. GenoSource, 2019 WL 2041661, at *3. Federal Paper Stock was not the Court's only basis for concluding that the Court can properly consider plaintiff's motions to amend under Rule 15, nor does Federal Paper Stock defeat the Court's conclusion.
In Federal Paper Stock, there was uncertainty as to whether a union had standing to sue on behalf of female employees. 461 F.2d at 850. The Eighth Circuit found it unnecessary to resolve this issue because even though the constitutional question presented itself, the court held that "[w]hen necessary to establish jurisdiction[,] leave to amend should be freely granted under [Federal Rule of Civil Procedure] 15(a)." 461 F.2d at 851. Thus, although the issue in Federal Paper Stock was a standing issue, the Eighth Circuit still considered the propriety of an amendment to cure a jurisdictional defect, and the Eighth Circuit found that an amendment can cure such defects, in the right circumstances. This is the proposition for which the Court cited Federal Paper Stock, and the Court does not find that citation to be misplaced.
Finally, defendant cites to Quality Refrigerated Services, Inc. v. City of Spencer,
Plaintiff first argues that defendant's "binding judicial admissions of jurisdictional facts conferred jurisdiction on the Court and satisfy [plaintiff's] burden to establish jurisdiction." (Doc. 190, at 12). The United States Supreme Court has addressed the issue of whether a court may act on parties' jurisdictional admissions: "Consent of parties cannot give the courts of the United States jurisdiction, but the parties may admit the existence of facts [that] show jurisdiction, and the courts may act judicially upon such an admission." Ry. Co. v. Ramsey, 89 U.S. 322, 327, 22 Wall. 322, 22 S.Ct. 823 (1874). In Ramsey, the Court was faced with the unique situation of the evidence supporting federal jurisdiction having been destroyed. Id. at 327-28. Thus, if a federal court was to exercise jurisdiction over the case, it would have no choice but to accept the parties' admissions as true. Id. Not so, here. Because the evidence regarding jurisdiction exists here and is available, the posture of this case is markedly different from Ramsey, and the rule carved out in Ramsey is inapplicable here.
Further, even if the Court were inclined to find Ramsey applicable to this case, the Court would still decline to act upon defendant's admissions. Ramsey is phrased in the permissive. Thus, Ramsey holds that a court may act upon admissions, but Ramsey does not require a court to do so. The Court would decline to act upon defendant's admissions, even if the Court found Ramsey to be instructive in this case. The reasons for this determination are explained more fully below.
The Supreme Court has explicitly stated that "no action of the parties can confer subject-matter jurisdiction upon a federal court." Ins. Corp. of Ire., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). "Thus, the consent of the parties is irrelevant, [and] principles of estoppel do not apply." Id. (citations omitted). This Court recognizes that defendant has repeatedly "admit[ted] [p]laintiff's allegations of diversity jurisdiction solely for the purposes of this proceeding." (Docs. 83, at 2; 113, at 2). Although this is not a direct response to the facts alleged in plaintiff's complaint, the Court interprets this admission as admitting that "the members of [defendant] are citizens of the states of Texas, California, Florida, and Arkansas[,] and the country of Colombia," and that "no member of [defendant] is a citizen of the states of Illinois or Iowa." (Doc. 1, at 2 (quoting paragraph that corresponds with defendant's response, quoted above)). Indeed, this interpretation is consistent with defendant aggressively litigating the merits of this case in this Court. These admissions, however, cannot confer jurisdiction on the Court. The Court has now ascertained,
The Court recognizes the existence of persuasive authority that would hold defendant to its jurisdictional admissions, even though those admissions are apparently inaccurate. See, e.g., Sparta Ins. Co. v. Hearthside Food Sols., LLC, No. 1:12-CV-29, 2012 WL 12849919, at *2-3 (W.D. Mich. Dec. 13, 2012) (collecting cases and holding a party's admissions regarding citizenship binding against that party). The Court is unpersuaded by these cases. The Court is required to satisfy itself that jurisdiction exists and, in doing so, the Court instead found that jurisdiction is lacking because plaintiff and defendant both have members who are Illinois citizens. See White, 43 F.3d at 376. If the Court were to refuse to acknowledge the evidence defeating diversity jurisdiction, the Court would effectively be relieving itself of its obligation to ensure that jurisdiction is proper. Such a holding would, instead, shift the Court's obligation onto the parties. Shifting the burden onto the parties would permit cases like this one— where the parties improperly assert the existence of jurisdiction—to proceed because the Court failed to ensure that jurisdiction is proper. The Court declines to reach this holding.
Plaintiff turns to the Fourth Circuit Court of Appeals' holding that "a court, unquestionably, has the right to relieve a party of his judicial admission if it appears that the admitted fact is clearly untrue and that the party was laboring under a mistake when he made the admission." New Amsterdam Cas. Co. v. Waller, 323 F.2d 20, 24 (4th Cir. 1963) (footnote omitted). Plaintiff urges the Court not to relieve defendant of its jurisdictional admissions because defendant has made no showing that it was "laboring under a mistake" when it admitted to the jurisdictional facts. (Doc. 199, at 3). Plaintiff cites to several cases decided either by the Eighth Circuit or by courts within the Eighth Circuit as support for the idea that defendant's admissions should be considered binding. (Doc. 190, at 13). Plaintiff acknowledges that these cases do not address jurisdictional admissions but argues, nonetheless,
The Court will not adopt plaintiff's argument. As discussed above, the Court has an independent obligation to verify the existence of jurisdiction, and if the Court were to hold defendant to its admissions, the precedential effect would be to trend toward permitting a court to preside over a case in which subject matter jurisdiction is lacking. The Court thus finds it improper to find that it has jurisdiction over this case by holding defendant to its inaccurate admissions. Moreover, the parties have yet to address whether defendant was "laboring under a mistake," under the standard established in New Amsterdam. If plaintiff brings a motion for sanctions, as plaintiff has indicated it may, perhaps defendant's actual knowledge will become relevant at that time, and perhaps the parties will fully address the issue.
The Court has already determined that "Rule 15(a)(2) supports plaintiff's [amended] motion." GenoSource, 2019 WL 2041661, at *7. Although plaintiff again contends that Spencer supports plaintiff's position that amending plaintiff's complaint under Rule 15(a)(2) would permit this Court to exercise jurisdiction, the Court remains firm in its previous conclusions as to Spencer.
In its prior Order, the Court addressed Spencer in considering whether plaintiff could properly amend under Section 1653. The Court finds the same rationale applicable as to Rule 15(a)(2). The Court will now add that this Court in Spencer did not need to reach the relation back issue because the Court concluded that the amendment sought would be futile on the merits. Spencer, 908 F.Supp. at 1493. Thus, the Court did not consider the futility issue with respect to Rule 15(c) because the Court denied the motion as futile for a different reason. To read the case as implicitly holding that the amendment would have related back had it not been futile on the merits would be adding to Spencer a
The final issue the Court will consider is whether the proposed amendments would relate back to the date the initial complaint was filed. Plaintiff's position is that the amendments do not need to relate back for the Court to properly exercise jurisdiction over this case. In support, plaintiff argues that the Court's earlier exercise of diversity jurisdiction—even though complete diversity is lacking—was proper based on defendant's judicial admissions. Plaintiff reasons that if the Court grants the proposed amendments, the jurisdictional basis would then become federal question jurisdiction. This argument contains two necessary components. First, plaintiff argues that the Court should rely on defendant's judicial admissions. The Court has already rejected this argument, and plaintiff's theory, therefore, cannot succeed in its entirety.
The second prong of plaintiff's argument is more properly characterized as seeking leave to file a supplemental pleading under Federal Rule of Civil Procedure 15(d). Plaintiff has not moved under Rule 15(d) and, even if plaintiff had, a successful Rule 15(d) motion would not save plaintiff's complaint. If the Court were to grant a Rule 15(d) motion, the new jurisdictional basis would not relate back, nor does plaintiff argue that the jurisdictional amendments would relate back under this theory.
Plaintiff further argues that although it is unnecessary for the amendments to relate back, relation back would be proper under Rule 15(c). In support, plaintiff relies on Rule 15(c)(1)(B). That provision states that "[a]n amendment to a pleading relates back to the date of the original pleading when ... the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading." FED. R. CIV. P. 15(c)(1)(B). "To arise out of the same conduct, transaction, or occurrence, the claims must be tied to a common core of operative facts." Dodd v. United States, 614 F.3d 512, 515 (8th Cir. 2010) (citation and internal quotation marks omitted). "An amended [pleading] may raise new legal theories only if the new claims relate back to the original motion by arising out of the same set of facts as the original claims." Id. (citation and internal quotation marks omitted). An amended pleading can relate back only in part, while the remaining part will be deemed filed on the date the amended pleading—not the original pleading —was filed. See Maegdlin v. Int'l Ass'n of Machinists & Aerospace Workers, Dist. 949, 309 F.3d 1051 (8th Cir. 2002) (finding that an amended complaint related back to the date the initial complaint was filed as to only two of four newly added claims).
The amendments plaintiff seeks are of two different types. First, plaintiff
Plaintiff's argument as to the relation back issue are as follows:
(Doc. 190, at 21-22 (emphasis in original) (citations omitted)). The Court agrees with plaintiff's argument. Plaintiff accurately illustrates that the proposed Lanham and Sherman Act claims arose out of the same set of facts as the original complaint. Specifically, the Court finds that the Lanham and Sherman Act claims stem from defendant's allegedly wrongful conversion of the animals and their genetic material, and from defendant's alleged representations to the public that defendant was authorized to market and sell the genetic materials. The Court therefore concludes that the Lanham and Sherman Act claims, as pled in the amended complaint that is appended to plaintiff's amended motion to amend (Doc. 143-1), would relate back under Rule 15(c) to the date the original complaint was filed.
Plaintiff does not, however, argue that the new assertion of federal question jurisdiction would relate back. The fact of federal question jurisdiction arises "when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987) (citation omitted). A
The original complaint contains no indication that an issue of federal law is implicated, and the complaint does not otherwise plead federal question jurisdiction.
In its first Order, the Court declined to address the merits of plaintiff's first motion to amend, and the Court likewise declines to do so in this Order. Plaintiff suggests that if the Court finds that the amended complaint appended to the amended motion to amend (Doc. 143-1) would not relate back under Rule 15(c), the Court could grant plaintiff's first motion to amend, then grant plaintiff's second motion to amend. (See Doc. 190, at 23 n.4). Plaintiff reasons that this solution would permit the second amended complaint to relate back to the date of the original complaint. The Court disagrees.
If the Court were to avail itself of plaintiff's proposal, the relation back issue would be shifted from the second motion to amend to the first motion to amend, but the legal analysis would remain the same. The issue is not whether the additional facts and claims would relate back. Rather, the issue is whether the new jurisdictional basis would relate back. Even if the Court were to grant the first motion to amend, the new jurisdictional basis alleged in the second proposed complaint would not relate back to the date of the original complaint. Granting either motion to amend, then, would be futile. Likewise, granting both motions to amend would be futile because the new jurisdictional allegations, which are key, would not relate back.
Finally, the Court notes that if it were to grant plaintiff's second motion to amend as to the substantive claims, but deny the motion as to the jurisdictional allegations, plaintiff could be tempted to bring a third motion to amend, which would seek to add the new jurisdictional allegations. Theoretically, the new federal question jurisdiction allegations contained in the third proposed complaint would then relate back based on the newly added federal claims. The Court recognizes that an amended complaint, once filed, becomes the operative complaint. Here, however, to permit such a course of action would be to permit plaintiff to cure an incurable jurisdictional deficiency by piggybacking off the Court's Orders. That practice will not render jurisdiction proper in this case.
The Court has addressed the parties' arguments regarding potential methods of curing the jurisdictional deficiencies in this case, and the Court finds that no theory plaintiff has proffered can support the exercise of subject matter jurisdiction. Further, the Court has rejected plaintiff's theories as to why plaintiff should be permitted to amend its complaint, and the Court finds that any amendments would be futile because the Court would still be bound to dismiss plaintiff's complaint.
The Court previously instructed the parties to brief the issue of whether a finding of federal question jurisdiction would cure any jurisdictional deficiencies that may exist in the Court's prior Orders. (Docs. 161; 181, at 16). Because the Court has concluded that federal question jurisdiction is lacking, however, this issue is not ripe for review. Should a litigant in a separate action, or in this action, at some point seek to invoke or overcome this Court's previous Orders in this case, the issue may then be ripe for review. Presently, however, the Court will not address the question.
For the reasons set forth in this Order and in the Court's previous Order, available at GenoSource, LLC v. Inguran, LLC, No. 18-CV-113-CJW-KEM, 2019 WL 2041661 (N.D. Iowa Apr. 11, 2019), plaintiff's motions to amend (Docs. 112, 143) are
