Newgen, LLC v. Safe Cig, LLC, 840 F.3d 606

NewGen (plaintiff) sued Safe Cig (defendant) for breach of two contracts (Affiliate and Consulting agreements) related to online marketing; NewGen alleged unpaid commissions and consulting fees.
NewGen properly served Safe Cig’s registered agent but Safe Cig failed to timely answer; district court entered default and later default judgment awarding $1,483,075.84 to NewGen.
After judgment, Safe Cig challenged subject matter jurisdiction, arguing NewGen’s original complaint failed to plead complete diversity (LLC membership citizenship omitted); Safe Cig raised this in a Rule 60(b) motion and on appeal.
District court found the original jurisdictional pleading defective but, relying on supplemental declarations and 28 U.S.C. § 1653, allowed NewGen to amend the complaint to allege members’ citizenship instead of reopening the judgment.
Safe Cig’s post-amendment answer repeatedly stated it lacked knowledge of its members’ domiciles but never affirmed any member was a Wisconsin citizen or otherwise factually contested NewGen’s amended jurisdictional assertions or sought discovery.
Ninth Circuit held Safe Cig lodged only a facial challenge; because Safe Cig never disputed the amended factual allegations, the court accepted them as true, affirmed subject matter jurisdiction, upheld denial of Rule 60(b) relief, and affirmed the default judgment and damages award.

Issue	NewGen's Argument	Safe Cig's Argument	Held
Whether § 1653 permits amendment of defective jurisdictional allegations after default judgment	§ 1653 allows late amendment to cure pleading defects and avoid wasting resources	§ 1653 should not apply to default judgments; judgment should be reopened	§ 1653 applies; district court properly allowed amendment without reopening judgment
Whether Safe Cig’s challenge was facial or factual	Allegations of diversity were sufficient once amended; Safe Cig never denied underlying facts	Safe Cig’s repeated “without knowledge” statements required NewGen to prove diversity with evidence	Safe Cig’s challenge was facial, not factual; amendment cured pleading defect; NewGen need not further prove diversity absent a factual attack
Whether Rule 60(b) relief (void judgment) was required because of lack of subject matter jurisdiction	Judgment not void once amended allegations establish diversity; deny Rule 60(b) relief	Judgment void for lack of jurisdiction at time of entry; judgment should be vacated and case reopened	Denial of Rule 60(b) relief affirmed; judgment not void because amended allegations (uncontested) establish jurisdiction
Whether default judgment and damages were appropriate under Eitel factors	Entry of default and damages supported by record, merits, and plaintiff’s declaration	Default was excusable or unjust; damages unsupported or overstated	District court did not abuse discretion; default justified and damages calculation upheld

Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894 (9th Cir. 2006) (LLC citizenship is citizenship of each member)
Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986) (factors for default judgment analysis)
Watts v. Pinckney, 752 F.2d 406 (9th Cir. 1985) (distinguishing total want of jurisdiction from error in exercise of jurisdiction)
D.C. ex rel. Am. Combustion, Inc. v. Transamerica Ins. Co., 797 F.2d 1041 (D.C. Cir. 1986) (§ 1653 permits amendment on appeal and supplementation to establish diversity)
Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635 (2d Cir. 2005) (Purpose of § 1653 is avoiding needless dismissal for pleading defects when jurisdiction can be shown)
Leite v. Crane Co., 749 F.3d 1117 (9th Cir. 2014) (facial vs. factual jurisdictional challenges standard)
FW/PBS, Inc. v. City of Dallas, 493 U.S. 215 (1990) (party invoking federal jurisdiction bears burden of pleading and proving it when challenged)
Geddes v. United Fin. Grp., 559 F.2d 557 (9th Cir. 1977) (on default, allegations except damages are taken as true)