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North Sails Group LLC v. Boards and More GmbH

United States District Court, D. Connecticut

February 6, 2018



          CHARLES S. HAIGHT, JR. Senior United States District Judge


         Plaintiff North Sails Group, LLC ("North Sails") brings this action against Boards and More GmbH ("B&M") and Emeram Capital Partners GmbH ("Emeram"), the private equity company that owns B&M, asserting that these defendants have breached a Trademark License Agreement ("License Agreement") entered between North Sails and B&M on October 1, 2000.[1] Under this License Agreement, North Sails provided B&M a worldwide exclusive license to use North Sails trademarks and a North Sails trade name ("North Marks") on certain B&M windsurfing, kitesurfing, and associated products ("Surf Sport Products"). Doc. 1, at 1. In return, B&M promised to use its "best good faith efforts to maximize the production, marketing, and sale of the Licensed Products" and to pay North Sails royalties on the these products. Id., at 2, 5.

         According to North Sails, contrary to the License Agreement, B&M is presently launching it own trademark for use with the Surf Sport Products. This B&M trademark which will replace the North Marks on all of B&M's 2019 models of Surf Sport Products, which will be released in Fall 2018. Id., at 2, ¶ 3. North Sails alleges that the replacement of its trademark will result in "irreparable and other substantial harm to North Sails."[2] Id. Accordingly, North Sails has filed a motion for preliminary injunction, requesting that this Court enjoin B&M and its owner, Emeram, from "further breach of the Trademark License Agreemnt." Doc. 6, at 1.

         In the Complaint, North Sails alleges that this Court has "diversity of citizenship" subject matter jurisdiction over this action under 28 U.S.C. § 1332(a)(2). Doc. 1, at 4, ¶ 13. That statutory provision states that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between - . . .citizens of a State and citizens or subjects of a foreign state, except that the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State.

         " Reviewing the Complaint, however, the Court finds that the Plaintiff has failed to allege sufficient facts from which this Court may determine the citizenship of the parties for purposes of diversity of citizenship jurisdiction. Therefore, as set forth infra, the Court must ascertain whether subject matter jurisdiction exists or this case should be dismissed for lack thereof. It thus follows that Plaintiff must make additional submissions so the Court may consider the existence vel non of its subject matter jurisdiction.


         A. Subject Matter Jurisdiction

         Federal district courts are courts of limited jurisdiction under Article III, Section 2, of the United States Constitution. See, e.g., Chicot Cnty. Drainage Dist. Baxter State Bank, 308 U.S. 371, 376 (1940), reh'g denied, 309 U.S. 695 (1940). The question of subject matter jurisdiction is fundamental so that a court must raise the issue sua sponte, of its own accord, when the issue is not addressed by the parties. Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884). See also Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party has suggested that we lack appellate jurisdiction, we have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte."), cert. denied, 549 U.S. 1282 (2007); Univ. of S. Alabama v. Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999) ("[I]t is well settled that a federal court is obligated to inquire into subject matter jurisdiction sua sponte whenever it may be lacking").

         In general, a federal district court may exercise subject matter jurisdiction over an action only if there is either: (1) "federal question" jurisdiction, applicable to "all civil actions arising under the Constitution, laws, or treaties of the United States, " 28 U.S.C. § 1331; or (2) there exists "diversity of citizenship, " complete diversity of citizenship between the plaintiff and all defendants and the amount in controversy exceeds "the sum or value of $75, 000, exclusive of interest and costs, " 28 U.S.C. § 1332(a). See also Strawbridge v. Curtiss, 7 U.S. 267, 267-68 (1806); Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir. 2000) (delineating two categories of subject matter jurisdiction).

         Unlike personal jurisdiction, "failure of subject matter jurisdiction is not waivable." Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000). If subject matter jurisdiction is lacking, the action must be dismissed. See Fed. R. Civ. P. 12(h)(3). 211 F.3d at 700-01. See also, e.g., Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) ("A district court properly dismisses an action . . . for lack of subject matter jurisdiction if the court lacks the statutory or constitutional power to adjudicate it . . . .") (quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)); Manway Constr. Co. v. Housing Auth. of Hartford, 711 F.2d 501, 503 (2d Cir. 1983) ("It is common ground that in our federal system of limited jurisdiction any party or the court sua sponte, at any stage of the proceedings, may raise the question of whether the court has subject matter jurisdiction; and, if it does not, dismissal is mandatory.").

         In order for diversity of citizenship to exist, the plaintiff's citizenship must be diverse from that of all defendants. See, e.g., St. Paul Fire and Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80 (2d Cir. 2005) ("Diversity is not complete if any plaintiff is a citizen of the same state as any defendant.") (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)). Moreover, such diversity must exist at the time the action is commenced." Universal Licensing Corp. v. Lungo, 293 F.3d 579, 581 (2d Cir. 2002). See also Wolde-Meskel v. Vocational Instruction Project Comm. Servs., Inc., 166 F.3d 59, 62 (2d Cir.1999) ("Satisfaction of the § 1332(a) diversity requirements (amount in controversy and citizenship) is determined as of the date that suit is filed - the 'time-of-filing' rule.")

         In the case at bar, there appears to be no basis for the Court to exercise "federal question" jurisdiction - i.e., no claim arising under the Constitution or federal law. See 28 U.S.C. § 1331. Plaintiff has brought two state law breach of contract claims, one against B&M and one against Emeram as B&M's alter ego, and a request for declaratory judgment against both defendants regarding breach of contract. Doc. 1, at 13-14. Consequently, Plaintiff's sole asserted jurisdictional basis is "diversity of citizenship." Id., ¶ 5. North Sails has explicitly stated that "[t]he Court has subject matter jurisdiction under 28 U.S.C. [§]1332(a)(2) because Plaintiff seeks damages in excess of $75, 000 exclusive of interest and costs, Plaintiff is a Delaware corporation with its principal place of business in Connecticut, and Defendants are Austrian and German Companies and residents." Doc. 1, at 4, ¶ II.13.

         In order for diversity of citizenship to exist, North Sails's citizenship must be diverse from that of both defendants. See, e.g., St. Paul Fire & Marine Ins. Co., 409 F.3d at 80. Moreover, the "time-of-filing" rule dictates that "diversity must exist at the time the action is commenced, " in ...

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