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MK SYSTEMS, INC. v. SCHMIDT

February 1, 2005.

MK SYSTEMS, INC., Plaintiff,
v.
DAVID SCHMIDT, LIFEWAVE PRODUCTS, LLC, Defendants.



The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge

OPINION Page 2

On October 14, 2004, MK Systems, Inc. ("MK") filed the original complaint in this action, asserting three claims against defendants David Schmidt ("Schmidt") and LifeWave Products, L.L.C. ("LifeWave") (collectively, the "Defendants"): (i) a claim for fraud in the inducement asserted against both Defendants; (ii) a claim for breach of contract asserted against LifeWave; and (iii) a claim asserted against both Defendants for alleged violations of "the laws of the Food and Drug Administration" (Compl. at ¶ 63) for which MK is seeking a permanent injunction to prevent Defendants from manufacturing or commercially distributing certain products unless and until the products are "fully compliant with FDA law." (Compl. at ¶ 68).

  According to the complaint, which was verified by Mark Klein, the "President of the corporate plaintiff in the above-captioned action" (Compl. at 15), MK is a corporation incorporated under the laws of the State of New York, having its principal place of business at 500 Fifth Avenue in the City, County and State of New York. (See Compl. at ¶ 1.) LifeWave is alleged to be a limited liability company existing under and by virtue of the laws of the State of Georgia, with its principal place of business in Suwanee, Georgia. (See Compl. at ¶ 3.) Schmidt is alleged to be a "member" of LifeWave, whose offices are alleged to be in Suwanee, Georgia. (Compl. at ¶ 4.) Jurisdiction is alleged under both 28 U.S.C. § 1331 and 28 U.S.C. § 1332. Page 3

  On December 22, 2004, Schmidt moved to dismiss the complaint pursuant to Rule 12(b), Fed.R.Civ.P., on the grounds that MK lacks capacity to bring the suit and that no private right of action exists under the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301, et seq. (the "FDCA"), or, in the alternative, to transfer the action to the United States District Court in the Northern District of Georgia pursuant to 28 U.S.C. § 1404(a). On January 11, 2005, LifeWave moved to dismiss MK's complaint, adopting the arguments of Schmidt.

  One day earlier, by order to show cause dated January 10, 2005, MK moved to stay all proceedings and enjoin LifeWave from prosecuting an action entitled LifeWave Products, LLC v. Kline, et al., Case No. 04 Civ. 3710, currently pending in the United States District Court for the Northern District of Georgia, Atlanta Division (the "Georgia action"). The Georgia action was commenced on December 21, 2004, and MK argued that the Georgia action should be stayed pursuant to the so-called first-filed rule.

  On January 14, 2005, Active-8, Inc., d/b/a MK Lifepatch Systems, Inc. ("Active-8") filed a document in this matter styled a first amended complaint. According to the purported amended complaint, Active-8 is alleged to be a corporation incorporated under the laws of the State of Nevada, having its principal place of business at 500 Fifth Avenue, in the City, County and State of New York. Active-8, it is alleged, "was formally [sic] known as MK Page 4 Systems, Inc." and is allegedly "registered to do business in the states of New York and New Jersey." (Active-8 Am. Compl. at ¶ 1.) Apart from the addition of two new paragraphs and the absence of verification, the purported first amended complaint and the original complaint are substantially the same.

  A hearing was held on the motion to enjoin the Georgia action on January 19, 2005, and the motions to dismiss and transfer the action were heard on January 26, 2005. On January 25, 2005, Defendants filed a motion to dismiss Active-8's amended complaint on the ground that Active-8 was not a party to the action or, in the alternative, to transfer the action to Georgia.

  For the reasons set forth below, Defendants' motions to dismiss the original complaint are granted, and this action is dismissed in its entirety without prejudice subject to the condition specified below.

  Discussion

  A. The Purported Amendment By Active-8 Was Improper And The Original Complaint Remains The Operative Complaint

  Pursuant to Rule 15(a), Fed.R.Civ.P., "[a] party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served . . ." Fed.R.Civ.P. Page 5 15(a). As a motion to dismiss is not itself a pleading, see Fed.R.Civ.P. 7(a), where a plaintiff amends its complaint after a defendant has moved to dismiss the complaint but before the motion has been decided, the motion to dismiss is rendered moot. See, e.g., United Magazine Co. v. Murdoch Magazines Distrib., Inc., 146 F. Supp. 2d 385, 416 (S.D.N.Y. 2001).

  In this case, however, MK did not amend its complaint. Instead, the purported first amended complaint was filed by Active-8, a corporation which, unlike MK, is alleged to be incorporated under the laws of the State of Nevada and registered to do business in the States of New York and New Jersey.

  Rule 15(a) provides that a party "may amend the party's pleading. . . ." Fed.R.Civ.P. 15(a) (emphasis supplied). Active-8 could not amend the original complaint as of right as it is not "the party" which filed the original complaint but an entity bearing a different name and, according to the purported amended complaint, allegedly incorporated in a different state. The allegation that Active-8 was, at some unspecified time in the past, "formally known as MK Systems, Inc." (Active-8 Am. Compl. at ¶ 1), is a suggestive coincidence of name but provides no basis to conclude that Active-8, the alleged Nevada corporation, is one and the same entity as MK, the alleged New York corporation which filed the complaint in this matter. Page 6

  If either MK or Active-8 wished to substitute Active-8 as plaintiff in place of MK as the real party in interest under Rule 17(a), Fed.R.Civ.P., the proper means for doing so would have been to seek leave of the Court. See generally Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F. 3d 11, 20 (2d Cir. 1997) ("A Rule 17(a) substitution of plaintiffs should be liberally allowed when the change is merely formal and in no way alters the original complaint's factual allegations ...


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