Mitchell Pozez v. Clean Energy Capital

MEMORANDUM

Defendants-Appellants Clean Energy Capital and Ethanol Capital Partners appeal from the district court’s award of attorneys’ fees to Plaintiffs-Appellees Mitchell Pozez and Neil Kleinman. Although neither party raised the issue on appeal, it appears that subject matter jurisdiction is lacking, and this court is “bound to consider jurisdictional defects sua sponte.” United States v. S. Pac. Transp. Co., 543 F.2d 676 , 682 (9th Cir.1976).

Under the well-pleaded complaint rule, no federal question subject matter jurisdiction exists here because the complaint only sets forth state law claims. Appellants’ argument that Appellees’ were required to register or take other action under one or more of the federal securities laws constitutes a defense, which cannot provide a basis for subject matter jurisdiction. See, e.g., Vaden v. Discover Bank, 556 U.S. 49, 60 , 129 S.Ct. 1262 , 173 L.Ed.2d 206 (2009); Cal. Shock Trauma Air Rescue v. State Comp. Ins. Fund, 636 F.3d 538, 541-42 (9th Cir.2011). Nor does the isolated allegation in the complaint of “knowing violations of securities and other law” constitute a federal claim by itself, or transform any of the state law claims in…