SD-3C, LLC v. Barun Electronics Co., Ltd.
- Lucy Koh
- 5:19-cv-01895
- U.S. District Court · Northern District of California
- 8
In SD-3C v. Barun Electronics, Judge Koh granted remand because foreign parties lacked diversity jurisdiction and returned the case to state court.
SD-3C, Barun Electronics, the Doe defendants, and the parties to Barun’s counterclaims; the case was returned to California Superior Court.
What happened
SD-3C, LLC sued Barun Electronics Co., Ltd. in California state court for allegedly breaching a licensing settlement agreement. Barun removed the case to federal court, claiming diversity jurisdiction.
SD-3C asked the federal court to return the case to state court, arguing that diversity jurisdiction was absent and that removal was late. Barun relied on its federal counterclaims and argued that the court could keep the case.
Judge Lucy H. Koh ruled that SD-3C’s members made it a citizen of the Cayman Islands, while Barun was a Korean corporation, so diversity jurisdiction was unavailable. She granted the motion to remand and returned the case to California Superior Court.
The detailed version
- SD-3C, LLC v. Barun Electronics Co., Ltd. · No. 5:19-cv-01895
- Lucy Koh
- Sept. 16, 2019
Background
SD-3C, LLC sued Barun Electronics Co., Ltd. and Doe defendants in California Superior Court for Santa Clara County. The complaint alleged state-law breach-of-contract claims arising from Barun’s alleged failure to make payments required by an amended settlement agreement concerning a license for SD Memory Card technology. Barun removed the case to federal court, asserting diversity jurisdiction.
SD-3C is a Delaware limited liability company. Its members include two corporations and SanDisk LLC. SanDisk LLC’s sole member is SD International Holdings, Ltd., a Cayman Islands corporation. Barun is organized under the laws of the Republic of Korea. After removal, Barun asserted twelve counterclaims, including state-law claims and federal claims under the Sherman Act and a request to invalidate SD-3C’s trademark.
Court’s analysis
The court explained that a limited liability company is a citizen of every place where its members—and, when necessary, its members’ members—are citizens. Because SanDisk LLC’s sole member is a Cayman Islands corporation, SanDisk LLC is a Cayman Islands citizen, making SD-3C a Cayman Islands citizen as well. Barun is a Korean corporation.
The court held that diversity jurisdiction does not cover a case brought by a foreign plaintiff against foreign defendants. It therefore concluded that federal subject-matter jurisdiction was lacking. The court also rejected Barun’s arguments that its federal counterclaims could create federal-question jurisdiction, that supplemental jurisdiction could support SD-3C’s claims, or that SD-3C’s prior litigation or alleged agreement to litigate in federal court could establish jurisdiction. Federal-question jurisdiction must appear from the plaintiff’s complaint, and the complaint here alleged only state-law claims.
Because the court resolved the motion based on the lack of diversity jurisdiction, it did not address SD-3C’s alternative argument that removal was untimely.
Disposition
The court GRANTS SD-3C’s motion to remand and REMANDS the case to the California Superior Court for the County of Santa Clara. The clerk was directed to close the file. Judge Lucy H. Koh signed the order on September 16, 2019.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.