Su v. World Kuk Sool Association Inc

Background

Sung Jin Su sued World Kuk Sool Association, Inc. and WKSA, LLC after the case was removed from California state court based on diversity jurisdiction, which generally requires opposing parties to be citizens of different states. Su alleged that he had been promised an ownership interest and future leadership of the defendants’ businesses, worked for them for decades, and was terminated after raising concerns about alleged misconduct. He also alleged that the defendants and others defamed him and caused him emotional distress.

The defendants asked the court to dismiss the First Amended Complaint for lack of personal jurisdiction or failure to state a claim, or alternatively to transfer the case to the Southern District of Texas. Su asked to file a Second Amended Complaint adding Gene Gause and Gaya Won LLC as defendants. The court focused first on Su’s proposed addition of Gause and the request to transfer.

Request to Add Gene Gause

The court denied Su’s request to add Gause. The parties agreed that Gause was a California resident and that adding him would destroy complete diversity, eliminating the federal court’s subject-matter jurisdiction. Applying the factors used when a proposed amendment would destroy diversity jurisdiction, the court found that Gause’s role was described as peripheral and that Su had not shown he needed Gause in this case to obtain complete relief.

The court also found that Su could pursue claims against Gause in a separate state-court action without being barred by the one-year California defamation limitations period. The court found Su’s delay and motive were neutral factors, but concluded that the proposed claims appeared legally insufficient. It held that Gause’s social-media statements, viewed in the adversarial setting described in the proposed complaint, were rhetorical hyperbole and opinions rather than provably false statements of fact. The court similarly found that an emotional-distress claim based on the same conduct fell short. The court therefore concluded that denying joinder would not prejudice Su.

Transfer to Texas

The court granted the transfer request under 28 U.S.C. § 1404(a), which permits transfer for the convenience of the parties and witnesses and in the interests of justice when the proposed district is one where the case could have been filed. The court found that the Southern District of Texas had diversity jurisdiction and proper venue because Su resided in California, the Association and WKSA were based in Texas, and the amount in controversy exceeded $75,000 based on Su’s allegation of at least $50 million in damages.

The court gave Su’s choice of California little weight because almost all operative events occurred in Texas. The court found that most likely witnesses and relevant records were in Texas, and that Texas had a significant interest because the alleged termination and underlying misconduct occurred there and the dispute involved Texas entities, Texas property, and an alleged ownership interest in those entities. The court found the parties’ convenience, applicable-law, and court-congestion considerations either supported transfer or were neutral.

Disposition

The court denied Su’s Motion for Leave to Amend and granted the Motion to Dismiss or Transfer as to the request to transfer the case. It denied the Motion to Dismiss or Transfer without prejudice in all other respects. The case was transferred to the Southern District of Texas. The court did not decide the remaining question of whether Gaya Won LLC could be added, the adequacy of the claims under the rule governing failure to state a claim, or the defendants’ personal-jurisdiction arguments; those issues were left for the transferee court.