United States District Court, N.D. California, San Jose Division
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND RE:
DKT. NO. 33
H. KOH, UNITED STATES DISTRICT JUDGE.
SD-3C LLC (“SD-3C”) brings this lawsuit against
Defendants Barun Electronics, Co., Ltd. (“BEC”)
and Does 1-20, for claims arising from BEC's alleged
breach of contract. BEC also brings a variety of
counterclaims against SD-3C. Before the Court is SD-3C's
motion to remand. Having considered the parties'
submissions, the relevant law, and the record in this case,
the Court GRANTS SD-3C's motion to remand.
is a Delaware limited liability company that licenses S.D.
Memory Card technology. ECF No. 1-1 (“Compl.”)
¶ 1. SD-3C is owned by three entities: 1. Panasonic
Intellectual Property Corporation of America; 2. Toshiba
America Electronic Components, Inc; and 3. SanDisk LLC.
See ECF No. 12 at 1. The sole member of SanDisk LLC
is S.D. International Holdings, Ltd. See ECF No.
33-2 (“Quackenbush Decl.”) ¶ 2. BEC is a
foreign corporation organized under the laws of the Republic
of Korea. Compl. ¶ 1. On November 6, 2006, SD-3C entered
into an Amended and Restated S.D. Memory Card License
Agreement (“CLA”) with BEC, pursuant to which BEC
received a non-exclusive intellectual property license
relating to the manufacture and sale of certain memory cards.
See Id. ¶ 3. The CLA was initially set to
expire on November 8, 2016, but its expiration was extended
until November 8, 2017. See Id. The CLA's
expiration date was then further extended until November 8,
2018. See id.
required that BEC satisfy various obligations owed to SD-3C.
See Id. In particular, BEC was required to: report
quarterly sales of products covered by the CLA; pay royalties
associated with the relevant sales; maintain accurate books
and records concerning the relevant sales; and permit SD-3C
to periodically inspect BEC's books and records
concerning the relevant sales. See Id. ¶ 5.
alleges that after the CLA expired, BEC continued to
manufacture and sell products utilizing SD-3C's protected
intellectual property, without a license to do so. See
Id. ¶ 6. Further, upon inspecting BEC's books
and records on an unspecified date, SD-3C alleges that it
discovered that BEC owed it over $4.4 million in unreported
royalties corresponding to the period between January 1, 2013
and June 30, 2017, plus interest and audit fees contemplated
by the CLA. Id.
30, 2018, SD-3C and BEC entered into a Confidential
Settlement and Mutual Release Agreement
(“CSMRA”), pursuant to which BEC agreed to pay
SD-3C a compromise sum. See Id. ¶ 7. After an
unspecified number of payments were made under the CSMRA, BEC
and SD-3C amended the CSMRA on or around October 23, 2018.
See Id. This amendment allegedly required BEC to pay
SD-3C a total of $3 million, with an initial payment of $1.2
million due in October 2018 and a second payment of $1.8
million, plus $15, 750 in interest, due in January 2019.
See Id. SD-3C alleges that BEC made the first
payment but failed to make the second one. See Id.
¶ 8. SD-3C sent BEC notice of BEC's apparent breach
on January 17, 2019, id. ¶ 10.
February 4, 2019, SD-3C filed its complaint against BEC and
the Doe defendants in California Superior Court for the
County of Santa Clara. Compl. at 1. SD-3C's complaint
exclusively alleges state law breach of contract claims.
Id. at 2, 3. SD-3C first served BEC with the summons
and complaint by registered mail to its headquarters in South
Korea. See ECF No. 33-1 (“Kadotani
Decl.”) ¶ 2. SD-3C received a receipt and tracking
number, but SD-3C initially believed that it would be unable
to confirm delivery because the United States Postal Service
(“USPS”) does not track deliveries in South
Korea. See Id. SD-3C subsequently learned that the
USPS tracking number could be used to track the shipment
through the Korea Post. Id. ¶ 8. The Korea Post
confirmed that the shipment was delivered on February 21,
2019. Id. Ex. 7. In the meantime, SD-3C also
initiated service of the summons and complaint on BEC
pursuant to the Hague Convention. Id. ¶ 2.
February 13, 2019, SD-3C sent BEC notice that SD-3C planned
to apply for an ex parte Right to Attach Order
(“RTAO”) in California court, in order to secure
the amount that SD-3C alleged that SD-3C was owed under the
CSMRA. Kadotani Decl. ¶ 3. The RTAO hearing occurred on
February 14, 2019. See Id. At the hearing, the
California Superior Court for the County of Santa Clara
granted SD-3C's application and issued the RTAO. See
Id. The RTAO reflected the California court's
determination that SD-3C “established the probable
validity of [its] claim, ” and granted SD-3C the right
to attach property of BEC to satisfy the damages from the
alleged breach of the CSMRA. See Id. Ex. 3.
March 12, 2019, BEC's counsel informed SD-3C's
counsel that BEC intended to file a responsive pleading, and
BEC's counsel inquired into the status of service.
See Id. ¶ 6. SD-3C's counsel informed
BEC's counsel that service was pending under the Hague
Convention, but that SD-3C had not yet confirmed service.
See Id. BEC's counsel signed a Notice &
Acknowledgement of Receipt to confirm service under state law
electronically on that same day, March 12, 2019.
April 9, 2019, BEC removed SD-3C's complaint to federal
court. See ECF No. 1. BEC's notice of removal
claims that the Court has diversity jurisdiction over
SD-3C's complaint. See Id. at 2. The notice of
removal asserts that complete diversity exists because SD-3C
is “a Delaware corporation, ” while BEC is a
Korean corporation. See id.
April 12, 2019, BEC filed an answer to SD-3C's complaint,
and BEC asserted ten counterclaims against SD-3C and a group
of corporate entities. See ECF No. 4. Later in the
month, on April 30, 2019, BEC amended its answer and added
two additional counterclaims. See ECF No. 17. BEC
now asserts twelve counterclaims in total. See Id.
¶¶ 91-246. These counterclaims include eight state
law causes of action and four federal causes of action.
See Id. Three federal claims under the Sherman Act,