Adam Techs. LLC v. Well Shin Tech. Co.

• Decision Date: 15 January 2021
• Docket Number: Civil Action No. 18-cv-10513
• Citation: Adam Techs. v. Well Shin Tech., Civil Action No. 18-cv-10513 (D. N.J. Jan 15, 2021)
• Parties: ADAM TECHNOLOGIES LLC, Plaintiff, v. WELL SHIN TECHNOLOGY CO., LTD.; DONGGUAN WELL SHIN ELECTRONICS PRODUCTS CO., LTD.; WELL SHIN USA; and XYZ Companies 1-4, Defendants.
• Court: U.S. District Court — District of New Jersey

ADAM TECHNOLOGIES LLC, Plaintiff, v. WELL SHIN TECHNOLOGY CO., LTD.;DONGGUAN WELL SHIN ELECTRONICS PRODUCTS CO., LTD.;WELL SHIN USA; and XYZ Companies 1-4, Defendants.

Civil Action No. 18-cv-10513

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

January 15, 2021

Not for Publication

OPINION

John Michael Vazquez, U.S.D.J.

This matter comes before the Court on (1) the November 4, 2020 Order to Show Cause ("OTSC") addressing the Court's subject matter jurisdiction, D.E. 99;(2)DefendantConntek Integrated Solutions, Inc.'s (improperly named as "Well Shin USA" and referred to herein as "Conntek") motion to dismiss pursuant to Federal Rule of Civil Procedure12(b)(6), D.E. 84; and (3) the motion to dismiss filed by Defendant Dongguan Well Shin Electronics Products Co., Ltd. ("Well Shin"), D.E. 94.PlaintiffAdam Technologies, LLC("Adam Tech.") filed briefs in opposition to both motions, D.E. 88, 95, to which Defendants replied, D.E. 92, 96.The parties also filed letters in response to the OTSC. D.E. 100-03.¹For the reasons set forth below, the Courtconcludes that it has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332.In addition, Defendants' motions to dismiss are GRANTED in part and DENIED in part.

I.BACKGROUND AND PROCEDURAL HISTORY

As the parties are familiar with this matter, the Court does not provide a detailed factual recitation.Instead, the Court reviews relevant facts here and discusses certain additional facts in the analysis section below.²

Adam Tech. is a manufacturer and seller of specialized electronic components made or produced by its Taiwan branch, Adam Technologies Int., Ltd.Adam Tech. had a contract with General Electric Appliances ("GE") to design and create a custom connector for a wire harness to be used for GE washing machines and other appliances.FAC ¶¶ 1, 19.Adam Tech. was contacted by Well Shin, who requested to buy the part for use in a wire harness it was manufacturing for GE.Id.¶ 2.To protect its intellectual property, Adam Tech. and Well Shin entered into the Non-Disclosure Non-Compete Agreement (the "Agreement") on January 23, 2015, which was facilitated by Conntek.Id.¶¶ 4, 22.Conntek "is believed to have extensive ties to and is affiliated with" Well Shin.Id.¶ 16.Well Shin then purchased the connector product from Adam Tech. Id.¶ 23.

In July or August of 2017, Well Shin began to complain about the quality of the connector and allegedly refused to pay for delivered stock and outstanding invoices.Id.¶ 24.Adam Tech. alleges that these were false and unsubstantiated claims, insinuating that Well Shin began makingthe false claims because it was manufacturing the connector part itself or through other vendors or manufacturers.Id.¶¶ 24-26.

Adam Tech. subsequently sued Conntek, Well Shin, and Well Shin Technology Co. Ltd.("Well Shin Tech."), asserting claims for patent infringement, breach of contract, Lanham Act violations, and New Jersey unfair competition violations.In response, Defendants filed a motion to dismiss for lack of jurisdiction, insufficient service of process, and failure to state a claim.D.E. 11.On August 12, 2019, this Court granted Defendants' motion as to Well Shin Tech. for lack of personal jurisdiction pursuant to Rule 12(b)(2).Aug. 12Opinionat 6-11, D.E. 37.This Court also quashed service as to Well Shin and Conntek because service was improper as to both entities, and granted Plaintiff leave re-serve these Defendants.Id. at 11-14.Because the motion was granted on these grounds, the Court did not address Defendants' arguments as to dismissal for failure to state a claim.

Plaintiff served Conntek on September 13, 2019, D.E. 48, and on October 29, 2019, Conntek renewed its motion to dismiss pursuant to Rule 12(b)(6), D.E. 47.Plaintiff, however, has faced difficulties in serving Well Shin, a Chinese entity, and requested multiple extensions of time to effectuate service.D.E. 48, 50, 60, 65, 69.Magistrate Judge Waldor granted Plaintiff's initial requests for extensions such that Plaintiff was required to serve Well Shin by May 11, 2020.D.E. 66.On May 4, 2020, Plaintiff filed a letter requesting at least an additional 60 days to effect service due to delays caused by the COVID-19 pandemic.D.E. 69.Defendants filed a letter opposing Plaintiff's request for another extension, indicating that "the agencies responsible for serving documents on Well Shin [in China] report that they have been operating regularly throughout the coronavirus outbreak."D.E. 73.On June 11, 2020, Judge Waldor entered a text order on the docket requiring Plaintiff to submit a letter "describing the efforts made to serve Wellshin inChina" by June 25, 2020.D.E. 80.Plaintiff filed its letter on June 23, 2020, which included a certification from Plaintiff's attorney in China, and requested an additional 120 days to effect service.D.E. 86.Defendants filed a letter in opposition.D.E. 87.Well Shin also filed its motion to dismiss, which seeks to dismiss the claims against it for, among other things, insufficient service of process.D.E. 94.

On October 29, 2019, Conntek filed its second motion to dismiss, seeking to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).³D.E. 47.The Court granted Conntek's motion and dismissed the Complaint as to Conntek.SeeMay 5, 2020 Opinion, D.E. 70.The Court, however, granted Adam Tech."leave to file an Amended Complaint with respect to the dismissed claims."Id. at 10.Adam Tech. subsequently filed the FAC, which re-pleads each claim of the Complaint and asserts new claims for "bad faith of defendants"(Count Five) and a claim for common law unfair competition (Count Six).D.E. 77.

On June 23, 2020, the Court entered a stipulation that dismissed Plaintiff's patent infringement, Lanham Act, andNew Jersey Unfair Competition Act claims.D.E. 77.The remaining claims asserted in the FAC are for breach of contract and other state-law based common law causes of action.In their motions to dismiss, Defendants seek to dismiss this matter for lack of subject-matter jurisdiction, D.E. 84, 94, because the FAC states that this Court has subject-matter jurisdiction through the dismissed federal intellectual property-based claims, FAC ¶ 10.Plaintiff briefly addressed these arguments in its opposition brief, arguing that the Court has diversity jurisdiction, but failed to provide the Court with information by which it could determine if such jurisdiction exists.See, e.g., Plf's Conntek Opp.at 6.As a result, on November 4, 2020,this Court entered the OTSC requiring the parties to address whether there is diversity jurisdiction.D.E. 99.

II.SUBJECT MATTER JURISDICTION

A.Legal Standard

The Court first addresses Defendants' arguments to dismiss this matter for lack of subject-matter jurisdiction.In deciding a Rule 12(b)(1)motion to dismiss for lack of subject-matter jurisdiction, a court must first determine whether the party presents a facial or factual attack because the distinction determines how the pleading is reviewed.⁴A facial attack "contests the sufficiency of the complaint because of a defect on its face," whereas a factual attack "asserts that the factual underpinnings of the basis for jurisdiction fails to comport with the jurisdictional prerequisites."Elbeco Inc. v. Nat'l Ret. Fund, 128 F. Supp. 3d 849, 854(E.D. Pa.2015)(citingMoore v. Angie's List, Inc., 118 F. Supp. 3d 802, 806(E.D. Pa.2015)).Defendants raise a facial attack in their motions to dismiss, and the parties' responses to the OTSC create a factual attack.

For a facial attack, "the Court must consider the allegations of the complaint as true," much like a Rule 12(b)(6) motion to dismiss.Bd. of Trs. of Trucking Emps of N. Jersey Welfare Fund, Inc. v. Caliber Auto Transfer, Inc., No. 09-6447, 2010 WL 2521091, at *8(D.N.J.June 11, 2010)(quotingPetruska v. Gannon Univ., 462 F.3d 294, 302(3d Cir.2006)).The burden is on the plaintiff to prove the Court has jurisdiction.Id.(citingPetruska, 462 F.3d at 302).Thus, a district court must find that "the allegations on the face of the complaint, taken as true, allege sufficient facts to invoke the jurisdiction of the District Court" to overcome a facial attack.Culver v. U.S. Dep't of Labor Occupational Safety & Health Admin., 248 F. App'x 403, 406(3d Cir.2007)(citingTaliaferro v. Darby Twp. Zoning Bd., 458 F.3d 181, 188(3d Cir.2006))."To resolve a factual challenge, the 'court may look beyond the pleadings to ascertain the facts.'"GBForefront, L.P. v. Forefront Mgmt. Grp., LLC, 888 F.3d 29, 35(3d Cir.2018)(quotingConstitution Party of Pa. v. Aichele, 757 F.3d 347, 358(3d Cir.2014)).Again, the plaintiff has the ultimate burden of proof to establish that diversity jurisdiction exists by a preponderance of the evidence.Id.

B.Analysis

As discussed, Plaintiff initially pled that subject- matter jurisdiction existed by virtue of its patent and trademark claims, asserting federal question jurisdiction.FAC ¶ 10.After Plaintiff voluntarily dismissed these claims, it contends that this Court has diversity jurisdiction.Plf's OTSC Ltr. Defendants argue that this matter must be dismissed because Plaintiff only pleads federal question jurisdiction based on its intellectual property counts, see, e.g., Conntek Br.at 17, and Plaintiff fails to establish that diversity jurisdiction exists, Defs' OTSC Ltr.at 2-3.

Federal district courts have diversity jurisdiction where "the matter in controversy exceeds the sum or value of $75,000 .. . and is between citizens of different states."28 U.S.C. § 1332(a).As discussed in the OTSC, the FAC does not plead facts by which the Court can determine whether diversity jurisdiction exists.Plaintiff fails to plead that the Court has diversity jurisdiction, and pleads no facts regarding the citizenship of any party or the amount in controversy.Plaintiff, therefore, does not facially establish that this Court...