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Kim-C1, LLC v. Valent Biosciences Corp.

June 3, 2010


The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge


(Doc. Nos. 7, 9)

Currently set for hearing and decision on June 7, 2010, is Respondent Valent Biosciences Corp.'s ("Valent") motion to dismiss. The motion to dismiss contains several motions, including a Rule 12(b)(1) jurisdictional challenge. Also pending for decision is Petitioner Kim-C1, LLC's ("Kim")'s petition to confirm arbitration. Hearing on Kim's petition is set for June 28, 2010. Petitioner opposes the request. The Court has received and reviewed the moving papers with respect to the motion to dismiss. The Court will vacate the June 7, 2010, hearing and instead issues this order that resolves the motion to dismiss, as well as the petition to confirm arbitration.


The parties entered into a contractual relationship, whereby Valent agreed to buy certain quantities of a unique plant growth regulator from Kim. The contract contains a choice of law clause, a forum selection clause, and an arbitration clause. The choice of law clause designates Illinois law, and the forum selection clause designates Illinois.

A dispute developed, and the parties held arbitration in California. The arbiter generally found in favor of Kim.

Valent challenged the arbiter's decision in the Illinois state courts. Shortly thereafter, Kim filed its petition to confirm arbitration in this Court.

There are several motions currently pending in the Illinois Court, including a motion to vacate arbitration award. Although there seems to be some dispute, there is an indication that the Illinois court intends to rule on some of the motions on or by June 14, 2010.

As discussed above, currently pending in this Court is Kim's motion to confirm arbitration award. Also pending is Valent's motion to dismiss. Included in this motion to dismiss are: (1) a Rule 12(b)(1) motion, (2) a Rule 12(b)(3) motion based on the forum selection clause, and (3) a motion to stay under the Colorado River doctrine.

12(b)(1) FRAMEWORK

Rule 12(b)(1) of the Federal Rules of Civil Procedure allows for a motion to dismiss based on lack of subject matter jurisdiction. See Fed. R. Civ. Pro. 12(b)(1). It is a fundamental precept that federal courts are courts of limited jurisdiction. Vacek v. United States Postal Serv., 447 F.3d 1248, 1250 (9th Cir. 2006). "A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears." A-Z Int'l v. Phillips, 323 F.3d 1141, 1145 (9th Cir. 2003); Fifty Associates v. Prudential Ins. Co., 446 F.2d 1187, 1190 (9th Cir. 1970). The plaintiff has the burden to establish that subject matter jurisdiction is proper. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994); Vacek, 447 F.3d at 1250. A Rule 12(b)(1) motion may be either facial, where the inquiry is confined to the allegations in the complaint, or factual, where the court is permitted to look beyond the complaint to extrinsic evidence. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004); Savage v. Glendale Union High School Dist. No. 205, 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). When a defendant challenges jurisdiction "facially," all material allegations in the complaint are assumed true, and the question for the court is whether the lack of federal jurisdiction appears from the face of the pleading itself. See Wolf, 392 F.3d at 362; Miranda v. Reno, 238 F.3d 1156, 1157 n.1 (9th Cir. 2000); Thornhill Publishing Co. v. General Telephone Electronics, 594 F.2d 730, 733 (9th Cir. 1979). The failure to make proper and complete factual allegations of jurisdiction fails to show standing and relegates a litigant to "jurisdictional purgatory." McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Fifty Associates, 446 F.2d at 1190. "A plaintiff suing in a federal court must show in his pleading, affirmatively and distinctly, the existence of whatever is essential to federal jurisdiction, and, if he does not do so, the court, on having the defect called to its attention or on discovering the same, must dismiss the case, unless the defect be corrected by amendment." Smith v. McCullough, 270 U.S. 456, 459 (1926); Fifty Associates, 446 F.2d at 1190.


Respondent's Argument Valent argues that Kim's petition alleges that the Court has diversity jurisdiction. In support of its allegation of diversity, Kim only alleges that it is a California LLC with its principal place of business in California. This allegation is faulty since the principal place of business does not determine the citizenship of an LLC. ...

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