Scales v. Web Design Gator

Background

William Scales filed an amended complaint against Web Design Gator and Internative Labs. He proceeded without a lawyer and under a filing-fee waiver. The amended complaint asserted breach of contract and negligence claims based on alleged online hiring and web-development events in June 2022. Scales alleged that the defendants refused to provide a refund and that their conduct caused lost revenue, depleted company investments, missed business opportunities, and other harm. He stated that the damages were in the millions of dollars.

In an earlier order, the court gave Scales an opportunity to correct deficiencies in his original complaint. The court directed him to allege facts showing that he was asserting claims for himself rather than for other entities, that the court had subject-matter jurisdiction, and that the Southern District of New York was a proper venue.

Claims asserted for other entities

The court concluded that Scales again appeared to assert claims on behalf of entities other than any sole proprietorship, and that he still did not allege that he was an attorney. The court therefore dismissed the claims he asserted on behalf of those other entities, not including any entity that was his sole proprietorship, without prejudice.

Subject-matter jurisdiction

The court held that the amended complaint did not establish federal-question jurisdiction because it identified breach of contract and negligence claims but provided no additional legal or factual basis for a federal claim.

The court then considered diversity jurisdiction, which can allow a federal court to hear state-law claims when the parties are citizens of different states and the amount in controversy exceeds $75,000. The court assumed for purposes of the order that the parties were diverse. It nevertheless held that Scales did not show, in good faith and to a reasonable probability, that the claims satisfied the required amount. The court found that the statement that the defendants were being sued for millions of dollars was conclusory and insufficient. The court therefore dismissed Scales’s claims for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3).

The opinion also notes inconsistent allegations about the defendants. One part of the amended complaint appeared to describe Web Design Gator and Internative Labs as one corporation incorporated and headquartered in California. Another part identified Web Design Gator as located in California and Internative Labs as located in Georgia. The court stated that it was unclear whether Web Design Gator was a corporation and that Scales had not alleged the citizenship of Internative Labs’s members.

Venue

The court separately held that the amended complaint did not establish that the Southern District of New York was the proper venue. Although Scales alleged that he lived in New York County, he also alleged that the defendants were located in California and Georgia and that the relevant events occurred on the internet. The court found those allegations insufficient under the applicable venue provisions and dismissed the action as filed in the wrong venue under 28 U.S.C. § 1406(a).

Disposition

The court dismissed the action. It also denied any pending motions as moot. The court certified that an appeal would not be taken in good faith and denied Scales fee-free status for purposes of an appeal. Judge Laura Taylor Swain directed the Clerk of Court to enter judgment dismissing the action. The opinion does not state that the action-wide dismissal was with or without prejudice.