Tongsui LLC v. LeCocoLove LLC

Background

Plaintiffs’ complaint asserted one federal trademark-infringement claim and seven state-law claims. Defendants moved to dismiss six state-law claims for lack of subject-matter jurisdiction, arguing that the court should decline to exercise supplemental jurisdiction over them. Defendants did not challenge whether Plaintiffs’ claims were adequately pleaded.

Defendants had also filed an answer asserting an affirmative defense and three counterclaims. Plaintiffs moved to strike the affirmative defense and dismiss the counterclaims. Plaintiffs argued that the counterclaims were based on fraud but did not meet Federal Rule of Civil Procedure 9(b)’s requirement that fraud be pleaded with particularity. The court found Defendants’ opposition unclear about whether the counterclaims relied on fraud and, for the unfair-competition counterclaim, unclear about which legal theory formed its basis.

Plaintiffs later represented that they had strong reasons to believe Defendants were citizens of China and that diversity jurisdiction might exist over all claims. The court explained that an amended complaint alleging diversity jurisdiction must state the actual citizenship of every party, including the citizenship information required for limited liability companies and the citizenship and domicile of natural persons.

Court’s orders

The court ordered Plaintiffs to file, by August 18, 2021, an amended complaint that added only allegations supporting diversity jurisdiction under 28 U.S.C. § 1332 and made no other changes. The court stated that this controlled amendment was not intended to prevent Plaintiffs from seeking further amendment later.

If Defendants challenged subject-matter jurisdiction in the amended complaint, they were required to file a motion under Federal Rule of Civil Procedure 12(b)(1) within that rule’s deadlines. If they did not make such a challenge, they were required to file a timely answer with any affirmative defenses and counterclaims. The court directed that any counterclaim grounded in fraud must say so and must meet Rule 9(b)’s particularity requirement.

Dispositions

The court denied without prejudice Defendants’ motion to dismiss and Plaintiffs’ motion for judgment on the pleadings, pending the amended complaint. It also denied without prejudice Plaintiffs’ motion to strike Defendants’ affirmative defense and Plaintiffs’ motion to dismiss the counterclaims. Plaintiffs could refile those two motions after any jurisdictional challenge was resolved and Defendants filed an answer to the amended complaint.

The court denied Plaintiffs’ motion to strike Defendant Lan Zou’s declaration and related portions of Defendants’ motion to dismiss. It also denied Plaintiffs’ administrative motion to strike Defendants’ unauthorized surreply. The court said the evidentiary objection was improper and untimely because it was not included in Plaintiffs’ opposition brief as required by the local rule.

The court continued the August 12, 2021 case-management conference to November 3, 2021, and ordered the parties to file a joint case-management statement by October 27, 2021. The order did not resolve the parties’ underlying claims or counterclaims on their merits.