1 UNITED STATES DISTRICT COURT 2 SOUTHERN DISTRICT OF CALIFORNIA 3 PPNP, LLC, Case No.: 25-cv-0790-AGS-AHG 4 Plaintiff, ORDER REMANDING CASE 5 v. 6 Rahul N. ARYA, et al., 7 Defendants. 8 9 Defendants removed this case, arising from a “breach of contract concerning a lease 10 of real property” of a hotel, from state court based on federal-question jurisdiction. (ECF 1, 11 at 2.) “‘Arising under’ jurisdiction—more often known as federal-question jurisdiction— 12 enables federal courts to decide cases founded on federal law.” Royal Canin U.S.A., Inc. v. 13 Wullschleger,

(2025) (quoting

). “A suit most typically 14 falls within that statutory grant when federal law creates the cause of action asserted.”

(cleaned up). “On rare occasions, the grant also covers a suit containing state-law claims 16 alone, because one or more of them necessarily raises a substantial and actually disputed 17 federal question.”

(cleaned up). “That is, federal jurisdiction over a state law claim will 18 lie if a federal issue is: (1) necessarily raised, (2) actually disputed, (3) substantial, and 19 (4) capable of resolution in federal court without disrupting the federal-state balance 20 approved by Congress.” Gunn v. Minton,

(2013). “Either way, the 21 determination of jurisdiction is based only on the allegations in the plaintiff’s well-pleaded 22 complaint—not on any issue the defendant may raise.” Royal Canin,

. “Upon 23 removal, the burden to demonstrate Article III jurisdiction shifts to the Defendant as the 24 party invoking federal jurisdiction.” Jones v. Ford Motor Co.,

, 573 (9th Cir. 25 2023) (cleaned up). 26 The complaint alleges only a single cause of action: a state-based breach-of-contract 27 claim. (See ECF 1-2, at 7–8.) Despite the lack of any federal claim, defendants advance 28 three arguments in favor of federal-question jurisdiction, but none of them have merit. 1 First, they contend that the “commercial lease” in question “contains an arbitration clause 2 . . . which is inextricably bound up with the federal question of whether such clause requires 3 arbitration of this action under the Federal Arbitration Act.” (ECF 1, at 2.) Yet the Federal 4 Arbitration Act “does not create any independent federal-question jurisdiction under 28

. . . or otherwise.” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 6

, 26 n.32 (1983). So, an arbitration clause does not automatically confer federal- 7 question jurisdiction on this Court simply because the Federal Arbitration Act exists. Cf. 9

(allowing motions to compel arbitration in federal court only if the court would 9 have otherwise had “jurisdiction under title 28”). 10 Second, defendants point out that “Congress has enacted numerous civil rights 11 statutes under its Commerce Power,” which impact the hotel at issue, and thus “the 12 commercial lease in question clearly affects interstate commerce.” (ECF 1, at 3.) But 13 subject matter’s “mere relation to interstate commerce does not create federal question 14 jurisdiction.” Jones v. Bank of Am. NA, No. CV-17-08231-PCT-JJT,

, 15 at *3 (D. Ariz. Dec. 8, 2017). The passage of civil-rights legislation did not federalize all 16 lawsuits involving hotels. 17 Finally, the defense insists that the complaint “alleges that Defendants engaged in 18 unlawful and nuisance related activity and conduct, including alleged prostitution and 19 human trafficking at the motel.” (ECF 1, at 4.) It’s true that the complaint alleges that, due 20 to defendants’ action, plaintiff “was sued by the People of the State of California and the 21 City of San Diego,” resulting in damages of “$360,000” arising from defendants’ violations 22 of “several laws,” “specifically including alleged prostitution and human trafficking.” 23 (ECF 1-2, at 7.) But the complaint never specifies that the underlying prostitution or human 24 trafficking allegations were based on federal law, nor did defendants clarify this point in 25 their notice of removal. (See ECF 1, at 4.) The defense instead boldly asserts that the 26 “construction and effect of state and federal sex trafficking laws such as the California 27 State Red Light Abatement Act and the Federal TVPA and other Congressional enactments 28 dealing with abatement of interstate sex trafficking, and in its construction and effect to | case, implicates federal jurisdiction.” (/d.) This single sentence falls far short of 2 || showing that this case is part of the “special and small category” of federal-question cases 3 ||in which a federal issue is “necessarily raised,” “actually disputed,” and “substantial.” See 4 || Gunn,

. 5 As the defense has failed to carry its burden of establishing Article III subject-matter 6 jurisdiction, the Clerk is ordered to remand this suit to state court and close this case. 7 |\|Dated: April 8, 2025

9 Hon. rew G. Schopler United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28