NewGen, LLC v. Safe Cig, LLC

The district court had subject matter jurisdiction if complete diversity actually existed when the complaint was filed, even if the complaint failed to allege it properly, so the district court properly denied defendant’s motion to vacate a summary judgment for lack of subject matter jurisdiction after the plaintiff submitted evidence of complete diversity in opposition.  After entry of a $1.5 million default judgment against it, Safe Cig first raised the point that the complaint did not properly allege its citizenship by averring the states of which each of its members were citizens.  On Safe Cig’s motion to vacate judgment under Rule 60(b), the district court properly allowed plaintiff leave to amend to properly allege citizenship, and then denied the motion to vacate.  Contrary to Safe Cig’s argument, so long as complete diversity actually existed when the complaint was filed, the district court had subject matter jurisdiction even if the complaint failed to allege it properly.  The amendment did not reopen the judgment or allow Safe Cig to file a belated answer.  Here, Safe Cig claimed it didn’t know the citizenship of each of its members and submitted no evidence to contradict plaintiff’s amended allegations, so its attack was facial, not factual, and plaintiff was therefore not required to prove its legally sufficient amended jurisdictional allegations.  The district court also properly denied Safe Cig’s motion for relief from default since it showed neither any adequate excuse for its failure to answer in a timely manner nor any meritorious defense.

Ninth Circuit Court of Appeals (McKeown, J.); September 7, 2016; 2016 WL 4651406

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