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Aura Light U.S. Inc. v. LTF International LLC

United States District Court, D. Maryland

September 15, 2016

AURA LIGHT U.S. INC., Plaintiff,
v.
LTF INTERNATIONAL LLC, et al. Defendants. AURA LIGHT U.S. INC., Plaintiff,
v.
LTF INTERNATIONAL LLC, et al. Defendants.

          MEMORANDUM OPINION

          George L. Russell, III United States District Judge.

         THIS MATTER is before the Court on Defendants', LTF International LLC (“LTF International”), LTF Lighting LLC (“LTF Lighting”) (collectively, “LTF”), and Paul V. Palitti, Jr., Motions and Supplemental Motions to Dismiss Complaint for Lack of Subject-Matter Jurisdiction (ECF Nos. 5, 10 GLR-15-3198; ECF Nos. 5, 20 JFM-15-3200).[1] Also pending is Plaintiff's, Aura Light U.S. Inc. (“Aura US”), Motion for Summary Judgment (ECF No. 11, JFM-15-3200). The Motions are ripe for disposition. No hearing is necessary. See Local Rule 105.6 (D.Md. 2016). For the reasons outlined below, the Court will deny Defendants' Motions and Supplemental Motions to Dismiss. The Court will also deny Aura Light's Motion for Summary Judgment without prejudice.

         I. BACKGROUND

         Aura US, a Delaware corporation, markets and sells lighting products throughout North and South America. (Compl. ¶ 2, ECF No. 1, GLR-15-3198). Aura U.S. is a subsidiary of a Swedish limited liability company, Aura Light International AB (“Aura International”), which manufactures and resells lighting products internationally. (Id. ¶ 10). LTF International and LTF Lighting are Maryland limited liability companies that work as wholesale distributors and resellers of light-emitting diode (LED) products in North America. (Id. ¶¶ 3, 4). James Industry Group Co., Ltd. (“James”), a Hong Kong corporation, manufactures most of the lighting products that LTF sells. (Id. ¶ 9). Palitti provides management services for an umbrella of affiliated companies, including LTF. (Id. ¶ 5).

         In January 2015, LTF introduced Aura U.S. to James, and the parties engaged in negotiations to create a new business venture for the wholesale marketing, distribution, and sale of LED and other lighting products to commercial customers throughout North America. (Id. ¶ 11). Ultimately, the negotiations broke down, and in May 2015, the parties elected not to proceed with the proposed new business venture. (Id. ¶ 12). During the period when negotiations were ongoing, however, Defendants submitted thirty-four purchase orders to Aura U.S. for specific lighting products. (Id. ¶ 14; Compl. ¶ 14, ECF No. 1, GLR-15-3200). Defendants have either refused to accept delivery of or pay for approximately $9 million worth of lighting products that Aura U.S. manufactured to sell to Defendants under the purchase orders. (Compl. ¶¶ 15, 21, 22, GLR-15-3198); (Compl. ¶¶ 15-18, ECF No. GLR-15-3200).

         On October 20, 2015, Aura U.S. initiated two breach-of-contract actions against Defendants (the “Actions”). See Aura Light U.S. Inc. v. LTF Int'l LLC, No. GLR-15-3198 (D.Md. filed Oct. 20, 2015); Aura Light U.S. Inc. v. LTF Int'l LLC, No. JFM-15-3200 (D.Md. filed Oct. 20, 2015) (“Aura II”). On November 20, 2015, Defendants filed Motions to Consolidate the Actions and Motions to Dismiss Complaint for Lack of Subject-Matter Jurisdiction. (ECF Nos. 4, 5, GLR-15-3198; ECF Nos. 4, 5, JFM-15-3200). Aura U.S. filed Oppositions to Defendants' Motions to Consolidate and Motions to Dismiss on December 4, 2015 (ECF Nos. 6, 7, GLR-15-3198; ECF Nos. 6, 7, JFM-15-3200). Defendants filed Replies in further support of their Motions to Dismiss on December 21, 2015 (ECF No. 8, GLR-15-3198; ECF No. 8, JFM-15-3200). On December 28, 2015, Aura U.S. filed a Motion for Summary Judgment (ECF No. 11, JFM-15-3200).

         On December 30, 2015, the Honorable J. Frederick Motz set a February 29, 2016 deadline for jurisdictional discovery. (ECF No. 12, JFM-15-3200). On March 28, 2016, Defendants filed an Opposition to Aura US's Motion for Summary Judgment (ECF No. 22, JFM-3200) and Supplemental Motions to Dismiss Complaint for Lack of Subject-Matter Jurisdiction (ECF No. 10, GLR-15-3198; ECF No. 20, JFM-15-3200). Aura U.S. filed Oppositions to the Supplemental Motion to Dismiss on April 14, 2016. (ECF No. 14, GLR-15-3198; ECF No. 27, JFM-15-3200). On April 20, 2016, Aura U.S. filed a Reply in further support of its Motion for Summary Judgment. (ECF No. 31, JFM-15-3200). On April 25, 2016, the Court granted Defendants' Motions to Consolidate the Actions. (ECF No. 17, GLR-15-3198; ECF No. 32, JFM-15-3200). Finally, on May 2, 2016, Defendants filed a Reply in further support of their Supplemental Motions to Dismiss. (ECF No. 19, GLR-15-3198).

         II. DISCUSSION

         A. Motions to Dismiss for Lack of Subject-Matter Jurisdiction

         1. Legal Standards

         Federal Rule of Civil Procedure 12(b)(1) governs motions to dismiss for lack of subject-matter jurisdiction. A defendant challenging a complaint under Rule 12(b)(1) may advance a “facial challenge, asserting that the allegations in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting ‘that the jurisdictional allegations of the complaint [are] not true.'” Hasley v. Ward Mfg., LLC, No. RDB-13-1607, 2014 WL 3368050, at *1 (D.Md. July 8, 2014) (alteration in original) (quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)).

         With a factual challenge, the plaintiff bears the burden of proving the facts supporting subject matter jurisdiction by a preponderance of the evidence. U.S. ex rel. Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009). In determining whether the plaintiff has met this burden, the court “is to regard the pleadings' allegations as mere evidence on the issue, and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac R. Co. v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)).

         Nevertheless, the Court applies “the standard applicable to a motion for summary judgment, under which the nonmoving party must set forth specific facts beyond the pleadings to show that a genuine issue of material fact exists.” Id. (citing Trentacosta v. Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th Cir. 1987)). The movant “should prevail only if the material jurisdictional facts are not in dispute and the [movant] is entitled to prevail as a matter of law.” Id. (citing Trentacosta, 813 F.2d at 1558). Unlike under the summary judgment standard, however, the Court is permitted to decide disputed issues of fact, Kerns, 585 F.3d at 192, and weigh the evidence, Adams, 697 F.2d at 1219.

         Under 28 U.S.C. § 1332(a)(1) (2012), district courts “have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between . . . citizens of different States.” The parties must be completely diverse, “meaning that ‘no party shares common citizenship with any party on the other side.'” Cunningham v. Twin City Fire Ins. Co,669 F.Supp.2d 624, 627 (D.Md. 2009) (quoting Mayes v. Rapoport,198 F.3d 457, 461 (4th Cir. 1999)). The Court construes 28 U.S.C. § 1332 strictly and resolves any doubts against federal jurisdiction. Trans/Air Mfg. Corp. v. Merson, 524 F.Supp.2d 718, 721 (D.Md. 2007) (citation omitted). When determining whether there is diversity jurisdiction, the Court considers the citizenship of the parties when the action commenced. Athena Auto., ...


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