Maas v. Zymbe, LLC

Background

Eric Maas sued Zymbe, LLC, Greg Rotman, and other defendants over claims arising from Maas’s consulting work for Zymbe. The defendants removed the case from state court to federal court based on federal-question jurisdiction. Zymbe and Rotman then filed a cross-complaint against Maas and Jason Leaf.

The first amended cross-complaint asserted claims for breach of fiduciary duty, an accounting, conversion, unjust enrichment, fraud, constructive fraud, interference with contractual relations, statutory misappropriation of trade secrets, and slander and libel. The allegations concerned, among other things, Leaf and Maas’s work involving Zymbe, Vystar, NHS, and Azanca, LLC.

Leaf moved to dismiss the cross-complaint under Federal Rule of Civil Procedure 12(b)(1), (2), (5), and (6), which address subject-matter jurisdiction, personal jurisdiction, insufficient service of process, and failure to state a claim. The counterclaimants separately moved for permission to serve Leaf by an alternative method and for additional time to complete service.

Subject-Matter Jurisdiction

The court denied Leaf’s Rule 12(b)(1) argument. It found federal-question jurisdiction over Maas’s underlying action because that action included federal claims. It also found supplemental jurisdiction over the cross-claims against Leaf because they involved many of the same facts, relationships, events, and evidence as the underlying action. The court concluded that the claims against Leaf were sufficiently connected to the underlying case even though Leaf was not a party to the original action and the claims against him arose under state law.

Personal Jurisdiction and Service

The court concluded that it could exercise general personal jurisdiction over Leaf because he was a citizen and resident of California. But the court separately considered whether Leaf had been properly served with the cross-complaint.

The parties did not dispute that Leaf had not been served with either the original cross-complaint or the first amended cross-complaint before removal. The court explained that, after removal, federal service rules applied. Leaf had not been served within the applicable period, and the counterclaimants had not shown good cause for the delay. The court also noted that the record indicated they did not attempt to serve Leaf until April 2020, even though he had previously been served with subpoenas in the underlying action.

Because Leaf had not been served as required by Federal Rule of Civil Procedure 4, the court dismissed the cross-complaint against him under Rule 12(b)(5). The dismissal was without prejudice. Because service was an adequate basis for dismissal, the court did not address Leaf’s Rule 12(b)(6) argument.

Alternative Service and Disposition

The court held that the counterclaimants’ motion for alternative service was moot because it had dismissed the cross-complaint against Leaf. The court therefore granted in part Leaf’s motion to dismiss and denied as moot the counterclaimants’ motion for alternative service of process. The order states that it disposed of Docket Nos. 52 and 53.