Scales v. Design Nortex

Background

William Scales filed the action against Design Nortex and The Branded Professionals while representing himself and proceeding without paying the filing fee. He invoked federal-question and diversity jurisdiction. His original complaint alleged that an unnamed defendant sabotaged his company by interfering with the hiring of a web developer and preventing the company’s launch. He asserted breach-of-contract and negligence claims and sought millions of dollars.

The court’s January 2, 2024 order identified deficiencies in the original complaint. It dismissed any claims Scales was trying to bring for his corporation because a self-represented person who does not allege that he is an attorney cannot represent a corporation. It also found no federal-question jurisdiction over the contract and negligence claims and insufficient allegations to establish diversity jurisdiction, including insufficient allegations about the defendants’ citizenship and the amount in dispute. The court allowed Scales 60 days to amend.

Scales filed an amended complaint on March 29, 2024. He again sued both defendants, but alleged facts only about Design Nortex. He alleged that Design Nortex had been hired to develop Taskem’s website and mobile application, removed custom software and mobile-app functionality, produced a page that did not follow his direction and lacked professional quality, and failed to complete the project on time. He asserted breach of contract, negligence, possible economic espionage, and references to intellectual property. He sought an order requiring Design Nortex to complete the website and applications and $50 million in damages.

Claims for Taskem

The court concluded that Scales again appeared to be asserting claims for Taskem, which he identified as a corporation and his company. Because he did not allege that he was an attorney or that Taskem was a sole proprietorship, the court dismissed any claims brought on Taskem’s behalf without prejudice.

Subject-matter jurisdiction

The court held that the amended complaint did not establish federal-question jurisdiction. The contract and negligence claims were generally state-law claims. Although Scales referred to intellectual property, he alleged no facts supporting a claim under federal trademark law or copyright law. Merely invoking federal jurisdiction did not create federal-question jurisdiction.

The court also held that Scales had not established diversity jurisdiction. He alleged that he was a citizen of New York and that Design Nortex was incorporated and had its principal place of business in California. He alleged that The Branded Professionals was located in Los Angeles, California, but did not identify that defendant’s form of organization or, if it was a corporation, its state of incorporation and principal place of business. The citizenship of The Branded Professionals therefore remained unclear.

Even assuming that The Branded Professionals could be dismissed and that Scales and Design Nortex were citizens of different states, the court found that Scales had not plausibly shown that the amount in dispute exceeded $75,000. Although he requested $50 million, he did not allege facts explaining what losses he suffered or why the defendants were liable for that amount.

Because the amended complaint did not establish either federal-question or diversity jurisdiction, the court dismissed the action for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(h)(3).

Leave to amend and disposition

The court declined to give Scales another opportunity to amend because he had already been given an opportunity to correct the complaint and the defects could not be cured through another amendment. The court dismissed the action for lack of subject-matter jurisdiction, terminated all other pending matters, directed the Clerk to enter judgment, and certified that an appeal would not be taken in good faith. It therefore denied Scales permission to appeal without paying the required fees.