Scales v. LA Web Experts

Background

William Scales filed the action without a lawyer against LA Web Experts. He invoked federal-question and diversity jurisdiction and asserted state-law claims for breach of contract and negligence. Scales alleged that, beginning in July 2022, LA Web Experts failed to complete website and mobile-application work, refused to provide a refund, and prevented the launch of companies. He alleged lost revenue, depleted investments, missed business opportunities, and other losses. He estimated damages in the millions or possibly billions of dollars.

The court had previously granted Scales permission to proceed without prepaying filing fees. Scales also filed requests for a court-appointed volunteer lawyer and for default judgment.

Claims for Other Entities

The complaint was unclear about whether Scales was asserting claims for himself or for his businesses. The court explained that a person who is not a lawyer generally cannot represent corporations, partnerships, associations, or other artificial entities in federal court. Because Scales did not allege that he was a lawyer or establish that any business was a sole proprietorship, the court dismissed without prejudice any claims he was asserting on behalf of other entities. The court allowed him to amend to allege facts showing that he was asserting claims on his own behalf.

Subject-Matter Jurisdiction

The court held that the complaint did not show a basis for federal-question jurisdiction because breach-of-contract and negligence claims are usually state-law claims, and Scales did not identify a federal law creating his claims or requiring resolution of a substantial federal question.

The complaint also did not establish diversity jurisdiction. Scales alleged that he was a New York citizen and provided a California address for LA Web Experts, but he did not allege where LA Web Experts was incorporated or where it had its principal place of business. He also did not state whether LA Web Experts was a corporation, limited liability company, or another type of entity. The court noted that, if it were a limited liability company, Scales would need to allege the citizenship of each member. The court further found that the complaint did not explain how the claimed damages were reasonably likely to exceed the required amount of more than $75,000.

The court also noted that the complaint referred in its body to Vista Website Design, another California entity, even though only LA Web Experts appeared in the caption. If Scales intended to sue Vista Website Design, the court instructed him to list it as a defendant and identify the allegations against each entity.

Venue

The court found that Scales had not alleged facts showing that the defendants resided in New York or that a substantial part of the events or omissions occurred in the Southern District of New York. Scales alleged that he lived in New York County, but that fact alone did not establish that venue was proper. The court granted him leave to amend to explain why the district was a proper venue.

Requests for Counsel and Default Judgment

The court denied Scales’s request for counsel without prejudice because the case was at too early a stage for the court to assess its merits. The court denied his motion for default judgment because summonses had not been issued.

Disposition

The court granted Scales 60 days to file an amended complaint. The amended complaint must replace, rather than supplement, the original complaint and must include the facts and claims he wants the court to consider, including the parties, relevant events, injuries, requested relief, jurisdictional facts, and venue facts. The court stated that if Scales did not timely amend and could not show good cause for failing to do so, it would dismiss the action for the reasons stated in the order. No summonses would issue at that time.

The court also certified that any appeal would not be taken in good faith and denied permission to proceed without prepaying fees for an appeal.