Scales v. Web Design Gator

Background

William Scales, appearing without a lawyer, sued Web Design Gator and Internative Labs. He invoked federal-question and diversity jurisdiction and identified breach of contract and negligence as his claims. He alleged that the defendants did not complete website and mobile-application work, refused to provide a refund, and prevented the launch of several companies. He described lost revenue, depleted investments, missed business opportunities, and other damages, estimating the damages at millions or possibly billions of dollars.

The court had previously allowed Scales to proceed without paying filing fees in advance. Because the case was filed without those fees, the court reviewed the complaint under the statute requiring dismissal of claims that are frivolous, fail to state a claim, seek relief from an immune defendant, or fall outside the court’s subject-matter jurisdiction. The court also considered whether the complaint adequately established jurisdiction and venue.

Claims on Behalf of Other Entities

The complaint was unclear about whether Scales was suing for himself or for businesses that appeared to be corporations or other artificial entities. A nonlawyer generally may represent himself but may not represent another entity in federal court. Scales did not allege that he was a lawyer or identify any business as a sole proprietorship.

The court therefore dismissed, without prejudice, any claims Scales was asserting on behalf of corporations or other artificial entities, excluding any sole proprietorship. The court granted him leave to amend by alleging facts showing that he was asserting claims on his own behalf and not on behalf of another entity.

Subject-Matter Jurisdiction

The court found that Scales had not alleged facts supporting federal-question jurisdiction. His breach-of-contract and negligence claims were generally state-law claims, and merely invoking federal-question jurisdiction did not establish that jurisdiction.

The court also found that the complaint did not adequately establish diversity jurisdiction. Scales alleged that he was a New York citizen and that Web Design Gator was incorporated and had its principal place of business in California. But he did not allege how Internative Labs was organized or, if it was a corporation, where it was incorporated and where it had its principal place of business. If Internative Labs was a limited liability company, he would need to allege the citizenship of each member. The court also found that the complaint did not explain why there was a reasonable probability that the claims exceeded the diversity-jurisdiction amount of $75,000, despite Scales’s references to damages in the millions or billions.

The court granted leave to amend to provide facts establishing subject-matter jurisdiction, including the parties’ citizenship and facts showing that the amount in controversy in this action exceeded $75,000.

Venue

The court found that Scales had not alleged facts showing that venue was proper in the Southern District of New York. He did not show that both defendants resided in New York with at least one residing in this district, and he did not identify where a substantial part of the events or omissions underlying his claims occurred or where relevant property was located.

The court granted leave to amend to allege facts establishing proper venue.

Leave to Amend and Disposition

Because Scales was representing himself and might be able to provide additional facts supporting claims under state law, diversity jurisdiction, and proper venue, the court granted him 60 days to file an amended complaint. The amended complaint was required to replace the original complaint completely and include the facts and claims he wanted the court to consider, including the relevant people, events, dates, locations, injuries, and requested relief.

The court denied Scales’s motion for default judgment because summonses had not been issued. No summonses would issue at that time. The court stated that failure to file a compliant amended complaint within the 60-day period, absent good cause, would result in dismissal of the action for the reasons stated in the order. The court did not rule on Scales’s request for pro bono counsel and stated that it would consider that application only after he filed a compliant amended complaint. The court also certified that an appeal would not be taken in good faith and denied fee-free appeal status.