United States District Court, D. Oregon
TIMOTHY C. ROTE, Plaintiff,
LEAPFROG ONLINE CUSTOMER ACQUISITION, LLC, and DOES 1 THROUGH 5, Defendants.
FINDINGS AND RECOMMENDATION
Honorable Paul Papak United States Magistrate Judge
pro se Timothy C. Rote (a citizen of Oregon) filed
this action against defendant Leapfrog Online Customer
Acquisition, LLC ("Leapfrog") (a limited liability
corporation organized under Delaware law and headquartered in
Illinois), and five Doe defendants (each alleged to be a
citizen of a state other than Oregon) on July 15, 2016. By
and through his complaint, Rote alleges that at all material
times he was a "secured lender" of Northwest Direct
Marketing, Inc. ("NDM"), that NDM and Leapfrog were
parties to an agreement pursuant to which NDM agreed to
provide Leapfrog with "inbound and outbound
telemarketing services" and Leapfrog agreed to pay NDM
for those services, that Leapfrog breached its payment
obligations to NDM, and that Rote "has foreclosed on the
Accounts Receivable of NDM for the purpose of collecting said
receivables and paying the secured lenders... their balances
owed and to .return the balance for the benefit of the
unsecured creditors of NDM." Arising out of the
foregoing, Rote alleges Leapfrog's liability to him under
Oregon law for breach of its contract with NDM, Rote seeks
award of compensatory damages in the amount of $1, 080,
679.81 plus interest. It is Rote's position that this
court may properly exercise diversity jurisdiction over his
cause of action pursuant to 28 U.S.C. § 1332, based on
the purported complete diversity of the parties and the
amount in controversy.
before the court is Leapfrog's motion (#12) to dismiss
Rote's cause of action for lack of federal subject-matter
jurisdiction. I have considered the motion and all of the
pleadings and papers on file. For the reasons set forth
below, Leapfrog's motion to dismiss should be granted,
and Rote's action should be dismissed without prejudice
for lack of subject-matter jurisdiction.
federal courts are courts of limited jurisdiction. See,
e.g., Exxon Mobil Corp. v. Allapattah Servs., 545 U.S.
546, 552 (2005), citing Kokkonen v. Guardian Life Ins.
Co. of America, 511 U.S. 375, 377 (1994). As such, the
courts presume that causes of action "lie outside this
limited jurisdiction, and the burden of establishing the
contrary rests upon the party asserting jurisdiction."
Kokkonen, 511 U.S. at 377; see also, e.g., Vacek
v. United States Postal Serv., 447 F.3d 1248,
1250 (9th Cir. 2006).
motion under Federal Civil Procedure Rule 12(b)(1) to dismiss
for lack of subject-matter jurisdiction may be either
"facial" or "factual." See Safe Air
v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004),
citing White v. Lee, 227 F.3d 1214, 1242 (9th Cir.
2000). In a facial attack on subject-matter jurisdiction, the
moving party asserts that a plaintiffs allegations are
insufficient on their face to invoke federal jurisdiction,
whereas in a factual attack, the moving party disputes the
factual allegations that, if true, would give rise to
subject-matter jurisdiction. Where a defendant raises a
facial challenge to subject-matter jurisdiction, the factual
allegations of the complaint are presumed to be true, and the
motion may be granted only if the plaintiff fails to allege
an element necessary for subject matter jurisdiction. See
Savage v. Glendale Union High Sck, 343 F.3d 1036, 1039
n.l (9th Cir. 2003). By contrast, where a defendant raises a
factual challenge to federal jurisdiction, "the district
court may review evidence beyond the complaint without
converting the motion to dismiss into a motion for summary
judgment, " Safe Air v. Meyer, 373 F.3d at
1039, citing Savage, 343 F.3d at 1040 n.2, and
"need not presume the truthfulness of the plaintiffs
allegations, " id, citing White, 227 F.3d at
allegations of jurisdiction may be amended, upon terms, in
trial or appellate courts." 28 U.S.C. § 1653. It is
improper to dismiss an action based on a defective allegation
of jurisdiction without leave to amend "unless it is
clear, upon de novo review, that the complaint could not be
saved by amendment." Snell v. Cleveland, Inc.,
316 F.3d 822, 828 n.6 (9th Cir. 2002), citing Lee v. City
of Los Angeles, 250 F.3d 668, 692 (9th Cir. 2001).
Rote is an individual citizen of Oregon. At all material
times, Rote was the president, secretary, and registered
agent of NDM. At all material times, NDM was organized under
Oregon law and headquartered in Oregon.
Leapfrog is a limited liability corporation organized under
Delaware law and headquartered in Illinois. Leapfrog has
filed a disclosure statement (#11) asserting that "at
least one" (unspecified) Oregon citizen is a limited
partner of an (unspecified) limited partnership entity with
ownership interests in two additional (unspecified) limited
partnership entities, each of which has an ownership interest
in third-party Leapfrog Online Direct Response, LLC
("LODR"), which is the 100% owner of Leapfrog, hi
addition, Leapfrog has proffered in support of its motion the
Declaration (#13) of Scott Epskamp ("Epskamp Decl")
to the same effect as its disclosure statement.
Rote alleges that the Doe defendants are citizens of states
other than Oregon, he does not otherwise refer to them in his
complaint, allege any conduct attributable to them, or
suggest that any of them played any direct or indirect role
in the complained-of conduct.
Rote's Allegations Regarding the Parties'
December 15, 2011, Leapfrog and NDM "entered into a
contract for inbound and outbound telemarketing services.
Complaint, ¶ 9. NDM provided such services to Leapfrog
from a call center located in Beaverton, Oregon. See
id, ¶ 10. In approximately April 2013, Leapfrog
directed NDM to cease providing it with telemarketing
services, and began relying on a new strategic partner to
obtain such services. See id., ¶¶ 11-12.
Rote advised Leapfrog at approximately that time that
pursuant to the agreement between Leapfrog and NDM, Leapfrog
was not entitled to terminate its agreement with NDM without
first complying with a contractual provision calling for
gradual "ramp down of the contract volume."
Id., ¶ 13. Leapfrog nevertheless ceased doing
business with NDM without first gradually ramping down the
volume of services it required NDM to perform. See
id., ¶¶ 13. At some subsequent time, Rote
"foreclosed on the Accounts Receivable of NDM for the
purpose of collecting said receivables and paying the secured
lenders, Wells Fargo and Rote, their balances owed and to
return the balance for the benefit of the unsecured
creditors." Id., ¶ ...