Blaszczyk v. Darby

• Decision Date: 26 November 2019
• Docket Number: Case No. 19-cv-11367
• Citation: 425 F.Supp.3d 841
• Parties: Nicholas M. BLASZCZYK, Plaintiff, v. Gregory B. DARBY, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

425 F.Supp.3d 841

Nicholas M. BLASZCZYK, Plaintiff,

v.Gregory B. DARBY, et al., Defendants.

Case No. 19-cv-11367

United States District Court, E.D. Michigan, Southern Division.

Signed November 26, 2019

Bradley S. Defoe, Varnum, Riddering, Schmidt & Howlett, Novi, MI, Saura J. Sahu, Clancy Advisors PLC, Detroit, MI, for Plaintiff.

Fredric A. Cohen, Cheng Cohen LLC, Chicago, IL, James M. McAskin, Brooks Wilkins Sharkey & Turco PLLC, Birmingham, MI, for Defendants.

OPINION AND ORDER DISMISSING CASE FOR LACK OF SUBJECT MATTER JURISDICTION

JUDITH E. LEVY, United States District Judge

On May 8, 2019, Plaintiff Nicholas Blaszczyk initiated this action for declaratory and injunctive relief against Defendants Gregory Darby, Cruisin' Tikis, LLC, Cruisin' Tikis Transportation Services, LLC, Cruisin' Tiki Builders, LLC, and Cruisin' Tikis International, Inc. (ECF No. 1.) The Court ordered Plaintiff to show cause why the case should not be dismissed for lack of subject matter jurisdiction. (ECF No. 15.) On September 26, 2019, the Court held a hearing at which the parties discussed, among other issues, whether a case or controversy exists and whether the amount in controversy exceeds $75,000. The Court now dismisses Plaintiff's case for lack of subject matter jurisdiction.

I. Background

This case involves a commercial dispute between two businesspeople over a summer hospitality enterprise. Defendant Gregory Darby operates a Florida-based family of companies under the name "Cruisin' Tiki." (ECF No. 1, PageID.4.) A Cruisin' Tiki vessel, which combines "common features of a ‘tiki bar’ with the functionality of a water-worthy vessel" (ECF No. 1, PageID.9), offers a maritime adventure for those "cruising to [their] favorite dockside venue or just hanging with friends for a fun time." Cruisin' Tikis, LLC, https://cruisintikis.com/ (last visited Nov. 13, 2019). In January 2018, Plaintiff entered into a contract (the "Purported Agreement") with Defendant Darby, authorizing Plaintiff to operate Cruisin' Tiki vessels in Metropolitan Detroit. (ECF No. 1, PageID.5) Under the agreement, Plaintiff received "an exclusive, non-assignable right and license to operate a commercial charter operation of a CRUISIN TIKI ® VESSEL" on "the United States side of Lake St. Clair." (Id. at PageID.21, PageID.28.) In exchange, Plaintiff must pay "a fee of 8% of charter revenue derived from using the Cruisin' Tiki® intellectual property, website, brand name, marketing materials and Charter software applications." (Id. at PageID.29.)

Like many business deals, the agreement never fully set sail. In November 2018, Defendants sent Plaintiff an additional 159-page franchise disclosure document. (ECF No. 1, PageID.11). The additional disclosures were not referenced in the original contract. Plaintiff, displeased with the new contractual requirements, sought to terminate the Purported Agreement. (ECF No. 1, PageID.12–13.) Counsel for both parties discussed the situation via email in January 2019, but they did not arrive at a resolution. (Id. at PageID.12–13.) In May 2019, one or more Defendant companies contacted Plaintiff by email requesting that Plaintiff enter a monthly revenue report, pursuant to the Purported Agreement. (ECF No. 1, PageID.13.) In response, Plaintiff filed this lawsuit, seeking a declaration that the Purported Agreement violates Federal Franchise Regulations and an injunction preventing Defendants from attempting to enforce it. (ECF No. 1, PageID.15–17.)

Plaintiff alleges that jurisdiction exists under § 1332 because "the parties are completely diverse and the amount in controversy exceeds $75,000.00." (ECF No. 1, PageID.5.) However, Plaintiff's theory does not hold water. Plaintiff's case meets neither the constitutional nor statutory requirements for subject matter jurisdiction.¹ Because Plaintiff's case does not raise a constitutionally sufficient controversy, and—even if the Court were to find such a controversy—the amount in controversy does not exceed $75,000, the Court must dismiss the case.

II. Subject Matter Jurisdiction

This Court does not have the power to hear every case brought before it. "Federal courts are not courts of general jurisdiction; they have only the power that is authorized by Article III of the Constitution and the statutes enacted by Congress." Hamama v. Adducci, 912 F.3d 869, 874 (6th Cir. 2018) (citing Bender v. Williamsport Area Sch. Dist. , 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986) ). "It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Hamontree v. United States , No. 16-6582, 2018 WL 1935935, at *1 (6th Cir. Feb. 1, 2018) (citing Kokkonen v. Guardian Life Ins. Co. , 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) ). "It has long been the case that ‘the jurisdiction of the Court depends upon the state of things at the time of the action brought.’ " Grupo Dataflux v. Atlas Glob. Grp., 541 U.S. 567, 570, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) (citing Mollan v. Torrance , 22 U.S. 537, 549, 9 Wheat. 537, 6 L.Ed. 154 (1824) ).

It is the Court's unfailing duty to ensure that each case it hears is properly before it. All courts have an "independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party." Arbaugh v. Y & H Corp. , 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006) (citing Ruhrgas AG v. Marathon Oil Co. , 526 U.S. 574, 583, 119 S.Ct. 1563, 143 L.Ed.2d 760 (1999) ). Challenges to a court's subject matter jurisdiction "may be raised at any time, by any party or even sua sponte by the court itself." Franzel v. Kerr Mfg. Co. , 959 F.2d 628, 630 (6th Cir. 1992). The parties may neither consent nor stipulate to a court's subject matter jurisdiction where it does not exist. American Bankers Ins. Co. v. Nat'l Cas. Co. , No. 2:08-cv-13522, 2009 WL 257699, at *4 (E.D. Mich. Feb. 3, 2009) (citing California v. LaRue , 409 U. S. 109, 112 n.3, 93 S.Ct. 390, 34 L.Ed.2d 342 (1972) ).

This suit presents two closely related jurisdictional issues: whether Plaintiff has demonstrated an Article III case or controversy, and if he has, whether Plaintiff's suit involves an amount in controversy greater than $75,000. Neither requirement is met.

A. Case or Controversy Legal Standard

Because Plaintiff has failed to demonstrate a case or controversy over which this Court can exercise its jurisdiction, the case must be dismissed.

Article III of the United States Constitution provides that "[t]he judicial power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties ... [and] to Controversies...." U.S. Const. art. III, § 2, cl. 1. This provision limits federal jurisdiction to actual cases or controversies. See Babbitt v. United Farm Workers Nat. Union , 442 U.S. 289, 297, 99 S.Ct. 2301, 60 L.Ed.2d 895 (1979). For a court to have jurisdiction, an actual controversy must exist both at the time the complaint is filed and throughout the pendency of the suit. Already, LLC v. Nike, Inc. , 568 U.S. 85, 90–91, 133 S.Ct. 721, 184 L.Ed.2d 553 (2013).

The Supreme Court first examined the case-or-controversy requirement as it pertains to actions seeking declaratory relief in 1937:

The controversy must be definite and concrete, touching the legal relations of parties having adverse legal interests.... It must be a real and substantial controversy admitting of specific relief through a decree of conclusive character, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.

Aetna Life Insurance Co. v. Haworth , 300 U.S. 227, 240–41, 57 S.Ct. 461, 81 L.Ed. 617 (1937) (internal citations omitted). Circuit courts applying Aetna over the next seventy years routinely applied variations of a reasonable apprehension of litigation test. The Sixth Circuit held that "in [declaratory judgment actions], a justiciable controversy is made out upon plaintiff's showing of ‘any indirect or implicit or covert charge of infringement or threat of suit or any conduct or course of action from which any charge or threat could be inferred.’ " Robin Prods. Co. v. Tomecek , 465 F.2d 1193, 1195 (6th Cir. 1972) (citing Goodrich-Gulf Chemicals, Inc. v. Phillips Petroleum Co. , 376 F.2d 1015, 1019 (6th Cir. 1967) ). See also Norfolk Southern Ry. Co. v. Guthrie , 233 F.3d 532, 534 (7th Cir. 2000) ("Where a declaratory plaintiff files a complaint in anticipation of litigation by the declaratory defendant, a case or controversy exists if the threat of such litigation is real and immediate."); Atlas Air, Inc. v. Air Line Pilots Ass'n , 232 F.3d 218 227 (D.C. Cir. 2000) (holding that a reasonable apprehension of litigation was necessary for declaratory judgment claim to be justiciable); Spokane Indian Tribe v. United States , 972 F.2d 1090, 1092 (9th Cir. 1992) ("If the defendant's actions cause the plaintiff to have a ‘real and reasonable apprehension that he will be subject to liability,’ the plaintiff has presented a justiciable case or controversy."). The Sixth Circuit's reasonable apprehension test includes subjective and objective prongs: "The appropriate test is whether the course of action would be regarded by a reasonable [person] as a [threat of suit] and was so regarded by the party seeking declaratory relief." 465 F.2d at 1196.

In 2007, the Supreme Court held that these reasonable apprehension of litigation tests conflicted with the Court's earlier precedents, including Aetna . Medimmune, Inc. v. Genentech , 549 U.S. 118, 132 n.11, 127 S.Ct. 764, 166 L.Ed.2d 604 (2007). The Court addressed the justiciability of a declaratory relief claim brought by a licensee who continued to make payments under an allegedly invalid licensing agreement, thereby eliminating any apprehension of suit, reasonable or otherwise. The Court nevertheless held that a case or controversy...