                  FOR PUBLICATION
  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT

In re: DIGIMARC CORPORATION            
DERIVATIVE LITIGATION.


GEORGE DIAZ, derivatively on
behalf of Digimarc Corporation,
                Plaintiff-Appellant,
                                            No. 06-35838
                v.
                                              D.C. Nos.
BRUCE DAVIS; E. K. RANJIT;
PHILLIP J. MONEGO; PETER W.
                                          CV-05-01324-HA
                                           CV-05-01325-HA
SMITH; ALTY VAN LUIJT; BRIAN J.
GROSSI; JIM ROTH; JAMES T.                    OPINION
RICHARDSON; JOHN TAYSOM;
WILLIAM A. KREPICK; GEOFFREY
RHOADS; and DIGIMARC
CORPORATION, a Delaware
corporation,
             Defendants-Appellees.
                                       
        Appeal from the United States District Court
                 for the District of Oregon
        Ancer L. Haggerty, District Judge, Presiding

                  Argued and Submitted
           August 26, 2008—Seattle, Washington

                  Filed December 11, 2008

  Before: Thomas G. Nelson, Michael Daly Hawkins, and
              Jay S. Bybee, Circuit Judges.

                  Opinion by Judge Bybee

                            16229
16232               IN RE: DIGIMARC CORP.


                        COUNSEL

Mark Umeda, Jeffrey Fink, and Rebecca Peterson, Robbins,
Umeda & Fink, LLP, San Diego, California, for the appellant.

Adam Gonnelli, Lubna Faruqi, and Beth Keller, Faruqi &
Faruqi, LLP, New York, New York, for the appellant.

Richard Baum, Julia Markley, and Banu Ramachandran, Per-
kins Coie LLP, Portland, Oregon, for the appellees.
                     IN RE: DIGIMARC CORP.                 16233
                          OPINION

BYBEE, Circuit Judge:

   George Diaz, sometime shareholder of Digimarc Corpora-
tion, filed this action derivatively on the corporation’s behalf.
Diaz alleges that the individual defendants, who are current
and former officers and directors of Digimarc, breached their
fiduciary duties to the corporation and its shareholders by
issuing misleading financial statements and misrepresenting
the business and prospects of Digimarc in violation of Cali-
fornia corporations law and section 304 of the Sarbanes-
Oxley Act, 15 U.S.C. § 7243. The district court dismissed his
Sarbanes-Oxley claim on the grounds that there is no private
cause of action for a violation of section 304 and then
realigned Digimarc as a plaintiff, thereby destroying diversity
jurisdiction over Diaz’ state law claims. For the reasons
explained below, we agree with the district court that there is
no private right of action under section 304, and that the Dis-
trict of Oregon accordingly lacked federal question jurisdic-
tion over the suit. We disagree, however, with the district
court’s realignment of Digimarc as plaintiff for the purpose of
determining diversity jurisdiction and therefore remand to that
court for proceedings consistent with this opinion.

                                I

   On September 13, 2004, Digimarc, a publicly-traded Dela-
ware corporation headquartered in Oregon (and a self-
described “leading supplier of secure personal identification
systems” including personal identification documents and
driver licenses based on digital watermarking technology),
publicly announced that, due to accounting errors, the corpo-
ration had likely overestimated earnings for the previous six
quarters. The announcement cited the improper capitalization
of internal software development costs as the most likely
cause of these accounting errors. In short, the corporation had
failed to record the costs of internal software development as
16234                IN RE: DIGIMARC CORP.
expenses on its balance sheet, thereby artificially inflating its
net earnings over the relevant period.

   Although the full extent of the accounting errors (approxi-
mately $2.7 million in overstated earnings) was not revealed
until April 5, 2005, when Digimarc formally issued a restate-
ment of earnings, class action lawsuits were filed within one
month of the September 13, 2004, announcement. On Sep-
tember 28, 2004, a class action complaint alleging violations
of sections 10(b) and 20(a) of the Securities Exchange Act
was filed (and eventually consolidated with two others) in the
District of Oregon. See Zucco Partners, LLC v. Digimarc
Corp., 445 F. Supp. 2d 1201 (D. Or. 2006). The Appellant in
this action, meanwhile, filed a shareholder derivative suit in
early October against Digimarc and certain of its officers and
directors in California Superior Court for San Louis Obispo
County. This action, which was consolidated with a similar
suit filed by Patrick Sheehan in the same court, pled state law
claims for violations of California Corporations Code
§ 25402, breach of fiduciary duty, abuse of control, gross mis-
management, waste of corporate assets, and unjust enrich-
ment.

   Other shareholders sought a more direct means of remedia-
tion. Shortly after the California Superior Court actions were
filed, Christopher Beasley sent a letter to the Chair of Digi-
marc’s Board of Directors demanding that the Board take
action to rectify the alleged breaches of fiduciary duties
described in the California Superior Court complaint. The let-
ter specifically demanded the Board “commence a civil action
against each of the Directors and Officers to recover for the
benefit of the Company” damages for misconduct and disgor-
gement of bonuses, stock options, and other incentive com-
pensation.

  In response to the derivative actions and the demand letter,
Digimarc created a Special Litigation Committee (“SLC”) by
board resolution on January 5, 2005, for the purpose of inves-
                     IN RE: DIGIMARC CORP.                 16235
tigating the breaches of fiduciary duty alleged in the Califor-
nia Superior Court action and the Beasley letter. The Board
endowed the SLC with the broad adjudicative power “to
undertake and supervise any action necessary and appropriate
to implement any [factual findings it made],” and to “deter-
mine whether or not the Company shall undertake or defend
against any litigation against one or more of the present or
former directors or officers of the company.”

   Initially, Alty van Luijt and Jim Roth, both directors of
Digimarc named as defendants in the California Superior
Court action, were appointed as sole members of the SLC. On
June 6, 2005, however, van Luijt and Roth were replaced by
Lloyd Waterhouse, Bernard Whitney, and William Miller—
all board members of Digimarc who were not named as
defendants in the California Superior Court action and who
were not affiliated with the company during the time period
at issue. The SLC also retained the law firm Farleigh Witt to
assist in the investigation of claims against individual officers
and directors. One of the SLC’s initial actions was to send a
letter dated February 25, 2005 to Beasley inviting him to par-
ticipate in the investigation. The SLC did not send similar let-
ters to Diaz or Sheehan at that time.

   Digimarc’s approach to the California action was decidedly
less generous. The corporation moved in California Superior
Court to dismiss the consolidated derivative action on grounds
of forum non conveniens. This motion was granted on July 29,
2005, and the case was dismissed. The court conditioned its
order to dismiss on an agreement by Digimarc and the indi-
vidual defendants to submit to the jurisdiction of an Oregon
state court (in which Beasley, unsatisfied with the SLC’s let-
ter, had also filed a derivative action), and an agreement that
the statute of limitations pertaining to any claims based on the
same facts alleged in the California Superior Court actions
would be tolled from the date of filing the California Superior
Court actions.
16236                   IN RE: DIGIMARC CORP.
   Instead of filing in Oregon state court, however, Diaz and
Sheehan each added a Sarbanes-Oxley claim and brought sep-
arate derivative actions in the District Court for the District of
Oregon on August 25, 2005. Specifically, these actions
asserted claims for disgorgement under section 304 of the
Sarbanes-Oxley Act, 15 U.S.C. § 7243, and state law claims
for breach of fiduciary duty, abuse of control, gross misman-
agement, waste of corporate assets, unjust enrichment, and
violations of the California Corporations Code. The actions
further alleged that the individual defendants, the directors
and officers of Digimarc,1 were liable to Digimarc for an
unspecified sum of damages and declaratory and equitable
relief. The district court consolidated the actions on Septem-
ber 29, 2005.

   On September 9, 2005, shortly after the district court
actions were filed, the SLC sent a letter to counsel for Diaz
and Sheehan, inviting them to “have input in our investiga-
tion” and to participate in the next committee meeting on
October 5, 2005. Three days later, the SLC sent another letter
to Beasley’s counsel, advising him of the committee meeting
and the ongoing investigation.

  A little over a month later, on October 17, 2005, the indi-
vidual defendants in this case filed a motion to dismiss the
consolidated complaint for lack of jurisdiction, pursuant to
Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). The
individual defendants argued that because section 304 of the
  1
    The verified shareholder derivative complaint filed by Patrick Sheehan
specifically named as defendants Bruce Davis, CEO and Chairman of the
Board of Digimarc; E. K. Ranjit, CFO and Treasurer of Digimarc until
2004; Geoffrey Rhoads, Chief Technology Officer and director of Digi-
marc until 2003; Phillip Monego, director of Digimarc since 1996; Peter
Smith, director of Digimarc since 2000; Alty van Luijt, director of Digi-
marc since 2000; Brian Grossi, director of Digimarc since 2000; Jim Roth,
director of Digimarc since 2003; James Richardson, director of Digimarc
since 2003; John Taysom, director of Digimarc until 2003; and William
Krepick, director of Digimarc until 2004.
                     IN RE: DIGIMARC CORP.                 16237
Sarbanes-Oxley Act did not create a private right of action,
the district court could not assert federal question jurisdiction
over that claim, and that because Digimarc corporation should
be aligned as a plaintiff in the action, the parties were not
diverse and the district court lacked jurisdiction over the
plaintiffs’ remaining state law claims.

   Meanwhile, after the motion to dismiss was filed but before
the district court ruled, the SLC finished its investigation and
reported its findings and recommendations on February 18,
2006. The SLC concluded that “[w]ith respect to the facts, . . .
there was insufficient evidence to establish that any of the
defendants violated applicable standards of conduct, inten-
tionally or otherwise,” and that “the evidence overwhelmingly
indicated that . . . there was simply no malfeasance or nonfea-
sance such that would entitle the Company (or someone suing
on its behalf) to prevail on any of the claims alleged in the
Derivative Litigation.” Accordingly, the SLC recommended
that “the defendants’ substantial defenses, and the risks, costs,
and burden of litigation . . . establish[ ] that pursuit of the
Derivative Litigation [is] not in the best interest of the Com-
pany and its shareholders.”

   The district court subsequently granted the individual
defendants’ motion to dismiss on August 11, 2006. The dis-
trict court concluded that there was no private right of action
under section 304, and thus that “plaintiffs lack[ed] standing
to assert the only federal law claim alleged in the Complaint.”
Additionally, the district court held that Digimarc should be
aligned as a plaintiff in the action because the company was
not “actively antagonistic” to the derivative plaintiffs. Once
Digimarc was realigned as a plaintiff, the district court dis-
missed the remaining claims for lack of diversity jurisdiction.
Diaz filed a timely appeal to this court.

  Diaz appeals both grounds. First, he argues that the district
court had federal question subject matter jurisdiction because
section 304 of the Sarbanes-Oxley Act permits a cause of
16238                IN RE: DIGIMARC CORP.
action. Second, he argues that even if the district court lacked
federal question jurisdiction, the district court should not have
realigned Digimarc as a plaintiff and, consequently, the dis-
trict court had diversity jurisdiction over the state law claims.
We consider each claim in turn.

                               II

   Diaz first contends that the district court erred in determin-
ing that section 304 of the Sarbanes-Oxley Act does not con-
tain a right of action allowing private parties to sue for
noncompliance. We review a district court’s decision involv-
ing interpretation of a federal statute de novo. Olympic Pipe
Line Co. v. City of Seattle, 437 F.3d 872, 877 n.12 (9th Cir.
2006).

   Section 1331 of Title 28 grants federal district courts origi-
nal jurisdiction over “all civil actions arising under the Con-
stitution, laws, or treaties of the United States.” Additionally,
28 U.S.C. § 1367(a) furnishes district courts with supplemen-
tal jurisdiction over “all other claims that are so related to
claims in the action within such original jurisdiction that they
form part of the same case or controversy.” The only basis
Diaz asserts for federal question jurisdiction is section 304 of
the Sarbanes-Oxley Act. If private plaintiffs have a right of
action to sue under section 304, the District of Oregon had
subject matter jurisdiction over both the Sarbanes-Oxley
claim and the state law claims asserted in this case. See Mer-
rell Dow Pharms. Inc. v. Thompson, 478 U.S. 804, 808
(1986); Am. Well Works Co. v. Layne & Bowler Co., 241 U.S.
257, 260 (1916) (opinion of Holmes, J.) (“[A] suit arises
under the law that creates the cause of action.”). If, however,
section 304 does not contain a private right of action, the dis-
trict court properly dismissed the Sarbanes-Oxley claim for
lack of subject matter jurisdiction, see Merrell Dow Pharms.,
478 U.S. at 807-12.

  [1] Section 304 of the Sarbanes-Oxley Act of 2002 pro-
vides for the forfeiture of certain bonuses and profits when
                      IN RE: DIGIMARC CORP.                 16239
corporate officers fail to comply with securities law reporting
requirements. The statute provides in relevant part:

      (a) Additional compensation prior to noncompli-
    ance with Commission financial reporting require-
    ments

       If an issuer is required to prepare an accounting
    restatement due to the material noncompliance of the
    issuer, as a result of misconduct, with any financial
    reporting requirement under the securities laws, the
    chief executive officer and chief financial officer of
    the issuer shall reimburse the issuer for—

       (1) any bonus or other incentive-based or equity
    based compensation received by that person from the
    issuer during that 12-month period following the
    first public issuance or filing with the Commission
    (whichever first occurs) of the financial document
    embodying such financial reporting requirement; and

       (2) any profits realized from the sale of securi-
    ties of the issuer during the 12-month period.

15 U.S.C. § 7243(a). The statute also allows the Securities
and Exchange Commission to exempt “any person” from the
effect of the forfeiture penalty. 15 U.S.C. § 7243(b).

   [2] “[T]he fact that a federal statute has been violated and
some person harmed does not automatically give rise to a pri-
vate cause of action in favor of that person.” Touche Ross &
Co. v. Redington, 442 U.S. 560, 568 (1979) (quotation omit-
ted). Instead, the statute must either explicitly create a right of
action or implicitly contain one. Id. at 575. Whether this lan-
guage contains a private right of action is a question of first
impression in this court.
16240                IN RE: DIGIMARC CORP.
                               A

   [3] Section 304 does not explicitly create a private right of
action because nothing in the text of the section makes any
mention of a cause of action. Other sections of the Sarbanes-
Oxley Act demonstrate how Congress expressly creates pri-
vate rights of action. Section 306, for example, provides that
“[a]n action to recover profits in accordance with this subsec-
tion may be instituted at law or in equity in any court of com-
petent jurisdiction by the issuer, or by the owner of any
security of the issuer . . . .” 15 U.S.C. § 7244(a)(2)(B)
(emphasis added). By contrast, section 304 does not mention
the availability of any action to enforce its mandates, nor does
it explicitly describe a forum in which suit may be brought or
a plaintiff for whom such a forum is available. Accordingly,
any private right of action within section 304 must be implied
from the statute’s language, structure, context and legislative
history. Opera Plaza Residential Parcel Homeowners Ass’n v.
Hoang, 376 F.3d 831, 836 (9th Cir. 2004).

                               B

  We next turn to whether section 304 creates an implied pri-
vate right of action. So far as we can determine, no circuit has
yet answered this question, except in dicta. Pirelli Armstrong
Tire Corp. Retiree Med. Benefits Trust v. Raines, No. 07-
7108, ___ F.3d ___, 2008 WL 3166142, at *10 (D.C. Cir.
Aug. 8, 2008) (holding that defendant’s directors’ decision
not to bring suit under section 304 for disgorgement by CEO
and CFO was within the business judgment rule, since “§ 304
does not create a private right of action”). However, a number
of district courts have squarely addressed the issue and have
concluded that there is no such right. See Pedroli ex rel.
Microtune, Inc. v. Bartek, 564 F. Supp. 2d 683, 685-86 (E.D.
Tex. 2008); In re Diebold Derivative Litig., Nos.
5:06CV0233, 5:06CV0418, 2008 WL 564824, at *2 (N.D.
Ohio Feb. 29, 2008); In re iBasis, Inc. Derivative Litig., 532
F. Supp. 2d 214, 223-25 (D. Mass. 2007); In re Infosonics
                     IN RE: DIGIMARC CORP.                16241
Corp. Derivative Litig., No. 06cv1336 BTM (WMc), 2007
WL 2572276, at *8-9 (S.D. Cal. Sept. 4, 2007); In re Good-
year Tire & Rubber Co. Derivative Litig., Nos. 5:03CV2180,
5:03CV2204, 5:03CV2374, 5:03CV2468, 5:03CV2469, 2007
WL 43557, at *7 (N.D. Ohio Jan. 5, 2007); Kogan v. Robin-
son, 432 F. Supp. 2d 1075, 1082 (S.D. Cal. 2006); In re
Whitehall Jewellers, Inc. S’holder Derivative Litig., No. 05 C
1050, 2006 WL 468012, at *8 (N.D. Ill. Feb. 27, 2006); In re
BISYS Group Inc. Derivative Action, 396 F. Supp. 2d 463,
464 (S.D.N.Y. 2005); Neer v. Pelino, 389 F. Supp. 2d 648,
657 (E.D. Pa. 2005); Mehlenbacher v. Jitaru, No.
6:04CV1118ORL-22KRS, 2005 WL 4585859, at *10 (M.D.
Fla. June 6, 2005).

   [4] Where a federal statute does not explicitly create a pri-
vate right of action, a plaintiff can maintain a suit only if
“Congress intended to provide the plaintiff with a[n implied]
private right of action.” First Pac. Bancorp, Inc. v. Helfer,
224 F.3d 1117, 1121 (9th Cir. 2000). If not express, a right
of action must be implied because “private rights of action to
enforce federal law must be created by Congress.” Alexander
v. Sandoval, 532 U.S. 275, 286 (2001) (citing Touche Ross,
442 U.S. at 578). In the absence of clear evidence of congres-
sional intent, we may not usurp the legislative power by uni-
laterally creating a cause of action. Touche Ross, 442 U.S. at
578 (“The ultimate question is one of congressional intent, not
one of whether this Court thinks that it can improve upon the
statutory scheme that Congress enacted into law.”). Accord-
ingly, “[t]he judicial task is to interpret the statute Congress
has passed to determine whether it displays an intent to create
not just a private right but also a private remedy.” Alexander,
532 U.S. at 286 (citing Transamerica Mortgage Advisors, Inc.
v. Lewis, 444 U.S. 11, 15 (1979)).

   The Supreme Court has created a four-factor test for deter-
mining the existence of an implied private right of action “in
a statute not expressly providing one.” Cort v. Ash, 422 U.S.
66, 78 (1975). A court determining whether a private right of
16242                 IN RE: DIGIMARC CORP.
action is implied in a statute must consider (1) whether the
plaintiff is “one of the class for whose especial benefit the
statute was enacted—that is, [whether] the statute create[s] a
federal right in favor of the plaintiff”; (2) whether “there [is]
any indication of legislative intent, explicit or implicit, either
to create such a remedy or to deny one”; (3) whether the cause
of action is “consistent with the underlying purposes of the
legislative scheme”; and (4) whether “the cause of action [is]
one traditionally relegated to state law, in an area basically the
concern of the States, so that it would be inappropriate to infer
a cause of action based solely on federal law.” Id. (internal
quotations and citations omitted).

   In analyzing the Cort factors we will focus on the second
factor (“whether Congress intended to provide the plaintiff
with a private right of action”) as “the key inquiry in this cal-
culus.” Opera Plaza, 376 F.3d at 835. See also Orkin v. Tay-
lor, 487 F.3d 734, 739 (9th Cir. 2007) (“Indeed, the three Cort
questions that are not explicitly focused on legislative intent
are actually indicia of legislative intent, such that the Cort test
itself is focused entirely on intent.”). Here, congressional
intent weighs decisively against finding a private right of
action. “We . . . begin . . . our search for Congress’s intent
with the text and structure of [the statute].” Alexander, 532
U.S. at 288; see also Lamie v. United States Trustee, 540 U.S.
526, 534 (2004) (“The starting point in discerning congressio-
nal intent is the existing statutory text . . . .”). In conducting
this examination, we must consider “the entire statutory
scheme provided by Congress in determining if a private
cause of action exists, noting that analogous provisions
expressly providing for private causes of action can imply
congressional intent not to create an implied cause of action.”
Opera Plaza, 376 F.3d at 836 (citing Touche Ross, 442 U.S.
at 571-74).

  [5] The language of section 304 is at best ambiguous about
an intent to create a private right of action. Diaz argues that
section 304’s language is analogous to that of section 901(a)
                      IN RE: DIGIMARC CORP.                16243
of Title IX of the Education Amendments of 1972, 20 U.S.C.
§ 1681, which the Supreme Court found to contain an implied
private right of action. See Cannon v. University of Chicago,
441 U.S. 677 (1979). It is clear, however, that the “rights-
creating’ language so critical to the Court’s analysis in Can-
non” is “completely absent” (Alexander, 532 U.S. at 288)
from section 304. Unlike section 901(a), which expansively
provides that “no person . . . shall be subjected to discrimina-
tion under any program or activity receiving Federal financial
assistance,” see 20 U.S.C. § 1681(a), section 304 does not
create a right to disgorgement in shareholders. Instead, it
speaks in terms of the remedy, detailing when and under what
circumstances a CEO and CFO must reimburse an issuer. See
15 U.S.C. § 7243(a) (“[T]he chief executive officer and chief
financial officer of the issuer shall reimburse the issuer
. . . .”).

   [6] The fact that both Title IX and section 304 use the hor-
tatory “shall” is irrelevant. It is the “no person” language in
Title IX, conspicuously absent from section 304, which gives
Title IX its remunerative force. Section 304 focuses on “the
person regulated” rather than the “individual[ ] who will ulti-
mately benefit from [the statute’s] protection,” and thus does
not provide a private right of action. Alexander, 532 U.S. at
289.

   Although the language and structure of section 304 do not
indicate congressional intent to create a private right of action,
we must also “examine the entire statutory scheme provided
by Congress” to satisfy our inquiry into legislative intent.
Opera Plaza, 376 F.3d at 836. Where “analogous provisions”
expressly provide for a private right of action, we must infer
that Congress did not intend to create a private right of action
in the statutory section at issue, see id., because “when Con-
gress wished to provide a private damages remedy, it knew
how to do so and did so expressly.” Touche Ross, 442 U.S.
at 572.
16244                 IN RE: DIGIMARC CORP.
   Here, Appellant and Appellees debate which is the most
“analogous provision” within the Act with which to compare
section 304. Diaz points to section 303, which prohibits offi-
cers and directors from “tak[ing] any action to fraudulently
influence, coerce, manipulate, or mislead any independent
public or certified accountant” for the purpose of creating
misleading financial statements. 15 U.S.C. § 7242(a). Diaz
notes that section 303, unlike section 304, contains a specific
restriction on private enforcement—it gives the Commission
“exclusive authority to enforce this section.” Id. § 7242(b).
Diaz also cites section 804, which amended 28 U.S.C.
§ 1658’s statute of limitations period for certain actions and
provides that “nothing in this section shall create a new, pri-
vate right of action.” Pub. L. No. 107-204, Title VII, § 804(c),
116 Stat. 801. Appellees, meanwhile, highlight section 306,
which prohibits insider trading during “pension fund blackout
periods” and requires a disgorgement of profits from officers
and directors who engage in such trading. 15 U.S.C. § 7244.
Section 306, unlike section 304, explicitly creates an “action
to recover profits” that “may be instituted at law or in equity
in any court of competent jurisdiction by the issuer, or by the
owner of any security of the issuer [under certain circum-
stances].” Id. § 7244(a)(2)(B).

   Diaz cannot satisfy his burden to show that section 304
creates a private right of action by pointing to other sections
in Sarbanes-Oxley that expressly disclaim private enforce-
ment. It would turn Cort on its head to hold that by making
clear it did not intend to create a private right of action in sec-
tions 303 and 804, Congress affirmatively intended to create
rights of action in sections where it omitted such an express
denial. Furthermore, section 804 does not create a new reme-
dial scheme—instead, it merely extends a statute of limita-
tions for certain actions and adds prophylactic rather than new
private-right-of-action language.

  [7] Sections 304 and 306, meanwhile, both require non-
compliant directors and officers to reimburse the issuer by
                         IN RE: DIGIMARC CORP.                       16245
disgorging the profits of their noncompliance. Compare 15
U.S.C. § 7243(a)(1) (“[T]he chief executive officer and chief
financial officer of the issuer shall reimburse the issuer.”),
with 15 U.S.C. § 7244(a)(2)(A) (“Any profit realized by a
director or executive officer . . . shall inure to and be recover-
able by the issuer.”). It is true that both sections’ disgorge-
ment remedies are equitable (in the sense that they require
wrongdoers to reimburse the issuer for ill-gotten gains) and
that we have previously acknowledged that where the statu-
tory remedy is “an equitable one, we are more inclined to per-
ceive in Congress’ silence a presumption that an individual
may pursue a claim.” Helfer, 224 F.3d at 1125. But setting
section 304 against section 306 prevents us from reading an
implied private right of action into section 304. Again, in
addition to creating the disgorgement remedy, section 306
also expressly creates a private right of action to enforce this
remedy. 15 U.S.C. § 7244(a)(2)(B). Accordingly, we cannot
find in Congress’ silence in section 304 an intent to create a
private right of action where it was not silent in creating such
a right to similar equitable remedies in other sections of the
same Act.2 Opera Plaza, 376 F.3d at 836 (citing Touche Ross,
442 U.S. at 571-74).

  Because the text and the structure of the Sarbanes-Oxley
Act do not demonstrate an intent to create a private right of
  2
    Diaz suggests that the structure of the remedy under section 306
required Congress to spell out the private remedy in that section but not
under section 304. Specifically, Diaz claims that section 306, unlike sec-
tion 304, has a demand requirement that compels a shareholder bringing
a private right of action under section 306 first to make a demand on the
directors of the issuer to bring the action before maintaining it deriva-
tively. See 15 U.S.C. § 7244(a)(2)(B). To the extent this argument has any
merit, however, it cannot explain why Congress also explicitly gave the
issuer a private action to disgorge under section 306 but not section 304.
See id. (“An action to recover profits in accordance with this subsection
may be instituted at law or in equity in any court of competent jurisdiction
by the issuer, or by the owner of any security of the issuer [who has satis-
fied the demand requirement].”) (emphasis added).
16246                     IN RE: DIGIMARC CORP.
action under section 304, we need not delve into the first (fed-
eral right in plaintiff’s favor), third (general statutory pur-
pose), and fourth (nature of the action) Cort factors. As we
have previously recognized, “[t]hat the first two Cort factors
weigh against finding a private right of action is dispositive
of our inquiry.” Opera Plaza, 376 F.3d at 837 (citing Califor-
nia v. Sierra Club, 451 U.S. 287, 297 (1981)); Oliver v.
Sealaska Corp., 192 F.3d 1220, 1224 (9th Cir. 1999)). Even
if we assume that Diaz would prevail under the first Cort fac-
tor, this is not enough to offset the clear text and structure of
section 304. We also observe that nothing that Diaz has
argued with respect to the third or fourth Cort factors calls
into question our conclusion. See Neer, 389 F. Supp. 2d at
655-57 (analyzing the legislative history of section 304 and
determining that nothing in the legislative history demon-
strates congressional intent to create a private right of action).

   [8] Accordingly, we conclude that section 304 does not
create a private right of action. Because Diaz’s section 304
claim was the only basis for federal question jurisdiction, the
district court correctly determined that it lacked federal ques-
tion jurisdiction over Diaz’s suit. Thus the only possible basis
for the district court’s jurisdiction over the plaintiff’s remain-
ing state law claims is diversity.3
  3
    Despite lacking federal question jurisdiction, a district court may in
some circumstances exercise supplemental jurisdiction over state law
claims which accompanied a dismissed federal claim. See 28 U.S.C.
§ 1367. Under 28 U.S.C. § 1367(c), however, a district court may decline
to exercise supplemental jurisdiction over state law claims where, as here,
“the district court has dismissed all claims over which it had original juris-
diction.” This decision “lies within the district court’s discretion,” see Fos-
ter, 504 F.3d at 1051, and is reviewed for abuse of such discretion. See
Acri v. Varian Assoc., Inc., 114 F.3d 999, 1000 (9th Cir. 1997) (en banc).
Because neither party has raised the issue of supplemental jurisdiction,
however, “we are not required, sua sponte, to decide whether the district
court abused its discretion under § 1367(c).” Id.
                      IN RE: DIGIMARC CORP.                 16247
                                III

   Diaz argues that subject matter jurisdiction over the
remaining state law claims may be maintained on diversity
grounds because the district court’s decision to realign Digi-
marc Corporation as a plaintiff (thereby destroying diversity
jurisdiction) was error. We review the district court’s legal
conclusions de novo, Kroske v. U.S. Bank Corp., 432 F.3d
976, 979 (9th Cir. 2005), and its factual determinations “nec-
essary to establish diversity jurisdiction” for clear error.
Kroske, 432 F.3d at 979. Cf. Prudential Real Estate Affiliates,
Inc. v. PPR Realty, Inc., 204 F.3d 867, 872-73 (9th Cir. 2000)
(“The issue of alignment for purposes of diversity jurisdiction
requires a court to look beyond the pleadings to the actual
interest of the parties.”). Because we find there was antago-
nism between the derivative plaintiffs and Digimarc’s direc-
tors and officers at the time the suit was filed, we conclude
that the district court erred in its decision to realign the corpo-
ration as a plaintiff.

                                A

   [9] Section 1332 of Title 28 confers jurisdiction on federal
courts where there is diversity of citizenship between plain-
tiffs and defendants. Diversity jurisdiction requires complete
diversity between the parties—each defendant must be a citi-
zen of a different state from each plaintiff. Strawbridge v.
Curtiss, 7 U.S. (3 Cranch) 267, 267 (1806). This requirement
would be satisfied if the parties were aligned as asserted in the
complaint: while Diaz and Sheehan are citizens of New York,
the individual defendants are citizens of California, Oregon,
the Netherlands, and the United Kingdom; and Digimarc is
incorporated in Delaware and has its principal place of busi-
ness in Oregon. See 28 U.S.C. § 1332(a)(1), (a)(2), (c)(1).

   Although the plaintiff is generally the master of his com-
plaint, diversity jurisdiction “cannot be conferred upon the
federal courts by the parties’ own determination of who are
16248                IN RE: DIGIMARC CORP.
plaintiffs and who defendants.” City of Indianapolis v. Chase
Nat’l Bank of City of New York, 314 U.S. 63, 69 (1941).
Instead, a court must realign the parties in order to protect our
judgments against artful pleading and ensure an actual “colli-
sion of interest.” Id. (quoting Dawson v. Columbia Ave. Sav.
Fund, Safe Deposit, Title & Trust Co., 197 U.S. 178, 181
(1905)); Dolch v. United Cal. Bank, 702 F.2d 178, 181 (9th
Cir. 1983). The court should determine the “collision of inter-
est” by reference to the “principal purpose of the suit” and not
mere “mechanical rules.” Chase, 314 U.S. at 69-70.

                               B

   Because a derivative lawsuit brought by a shareholder is
“not his own but the corporation’s,” the corporation “is the
real party in interest” and usually properly aligned as a plain-
tiff. Koster v. Lumbermens Mut. Cas. Co., 330 U.S. 518, 522-
23 (1947)). There is an exception, however, when a corpora-
tion’s officers or directors are “antagonistic” to those of the
shareholder plaintiff(s). Smith v. Sperling, 354 U.S. 91, 95-96
n.3 (1957) (citing Doctor v. Harrington, 196 U.S. 579, 587
(1905) (“The ultimate interest of the corporation made defen-
dant may be the same as that of the stockholder made plain-
tiff, but the corporation may be under a control antagonistic
to him, and made to act in a way detrimental to his rights.”)).
To determine whether antagonism exists, the court should
look to “the face of the pleadings and . . . the nature of the
controversy,” id. at 96, because “the very individuals who
have a stranglehold over the corporation are the people
against whom suit is sought to be brought and, therefore, in
any sense that has any meaning they are the defendants for
that reason,” id. at 103 (Frankfurter, J., dissenting).

   A corporation is generally antagonistic to a shareholder
plaintiff where “management is aligned against the stock-
holder and defends a course of conduct which he attacks,”
Smith, 354 U.S. at 95, or merely where “management—for
good reasons or for bad—is definitely and distinctly opposed
                     IN RE: DIGIMARC CORP.                 16249
to the institution of [the derivative] litigation,” Swanson, 354
U.S. at 116. For example, where management “refuses to take
action to undo a business transaction or whenever . . . it so
solidly approves [of the transaction] that any demand to
rescind would be futile,” a court should find antagonism.
Smith, 354 U.S. at 97.

                               C

   Diaz objects to the district court’s analysis of antagonism
in two respects. First, he contends that the district court erred
in failing to give dispositive weight to allegations of fraud and
misconduct contained in the complaint. Second, he argues that
the district court improperly considered events that occurred
after the filing of the complaint—including the issuance of
letters from Digimarc’s Special Litigation Committee to Diaz
and Sheehan inviting them to participate in the committee’s
private investigation—when it determined that Digimarc’s
officers and directors were not antagonistic to the mainte-
nance of a derivative suit.

                               1

  The scope of a district court’s inquiry for purposes of
antagonism was delimited in Smith v. Sperling, where the
Supreme Court cautioned “that the proper course is not to try
out the issues presented by the charges of wrongdoing but to
determine the issue of antagonism on the face of the pleadings
and by the nature of the controversy.” 354 U.S. at 96.

   Many courts have interpreted this admonition as normally
preventing the judiciary from “launching an extended eviden-
tiary inquiry” when a shareholder derivative complaint alleges
fraud or malfeasance. Gabriel v. Preble, 396 F.3d 10, 15 (1st
Cir. 2005). See also Liddy v. Urbanek, 707 F.2d 1222, 1224
(11th Cir. 1983); Rogers v. Valentine, 426 F.2d 1361, 1363
(2d Cir. 1970). Some courts have even concluded that if “the
complaint in a derivative action alleges that the controlling
16250                IN RE: DIGIMARC CORP.
shareholders or dominant officials of the corporation are
guilty of fraud or malfeasance, then antagonism exists” and
no further analysis is necessary. ZB Holdings, Inc. v. White,
144 F.R.D. 42, 46 (S.D.N.Y. 1992); see also, e.g., Hildebrand
v. Lewis, 281 F. Supp. 2d 837, 846 (E.D. Va. 2003); Trabucco
v. Carlile, 57 F. Supp. 2d 1074, 1076 (D. Or. 1999). These
courts generally rely on the Court’s observation in Smith, that
“[t]he bill and answer normally determine whether the man-
agement is antagonistic to the stockholder.” 354 U.S. at 96.

   Other courts, however, have suggested that when determin-
ing the “nature of the controversy,” see Smith, 354 U.S. at 96,
judges may look to facts beyond the complaint and answer.
Reilly Mortgage Group, Inc. v. Mount Vernon Sav. & Loan
Ass’n, 568 F. Supp. 1067, 1074 (E.D. Va. 1983); see also
Lewis v. Odell, 503 F.2d 445, 447 (2d Cir. 1974) (considering
that “[t]he [defendant] has not only retained neutrality in its
responses to appellant’s complaints but has even reserved the
right to take control of the action”).

   As we have previously recognized in non-derivative cases,
a court determining alignment is permitted to “ ‘look beyond
the pleadings’ to the actual interest of the parties” and make
“factual determinations of the type ordinarily left to the dis-
trict court and reviewed for clear error.” Prudential Real
Estate, 204 F.3d at 872-73 (citing City of Indianapolis, 314
U.S. at 69). Cf. Safe Air for Everyone v. Meyer, 373 F.3d
1035, 1039 (9th Cir. 2004) (citing Savage v. Glendale Union
High School, Dist. No. 205, Maricopa County, 343 F.3d 1036,
1040 n.2 (9th Cir. 2003)) (“In resolving a [Rule 12(b)(1)] fac-
tual attack on jurisdiction, the district court may review evi-
dence beyond the complaint without converting the motion to
dismiss into a motion for summary judgment.” (emphasis
added)). Thus, mere allegations of fraud or malfeasance, with-
out more, are not enough to determine conclusively the ques-
tion of antagonism. See Smith, 354 U.S. at 97 (“This is a
practical not a mechanical determination.”). Instead, a court
may consider not only the “face of the pleadings” but “the
                      IN RE: DIGIMARC CORP.                16251
nature of the controversy.” Id. at 96. This is especially impor-
tant in cases where, as here, the corporation has not yet
answered the plaintiffs’ complaint. Thus, the district court did
not err in failing to give dispositive weight to allegations in
the derivative complaint.

                                2

   [10] The district court did err, however, when it considered
facts that arose after the complaint was filed in federal court.
It is well-established that “the jurisdiction of the court
depends upon the state of things at the time of the action
brought.” Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 539
(1824). A court should therefore “measure[ ] all challenges to
subject-matter jurisdiction premised upon diversity of citizen-
ship against the state of facts that existed at the time of filing
—whether the challenge be brought shortly after filing, after
the trial, or even for the first time on appeal.” Grupo Dataflux
v. Atlas Global Group, L.P., 541 U.S. 567, 571 (2004). This
is true “regardless of the costs” the rule entails. Id. Although
the district court’s inquiry is not confined to the face of the
pleadings, its consideration of “the nature of the controversy,”
Smith, 354 U.S. at 96, should be limited to the facts and cir-
cumstances known at the time the suit was filed.

   [11] In this case, the district court, when analyzing antago-
nism, supported its conclusion by noting that “Digimarc has
not only taken no action directly opposed to plaintiffs’ claims,
but has cooperated with plaintiffs by investigating their claims
actively and inviting them to participate in that investigation.”
Although Digimarc formed the Special Litigation Committee
and began investigation before the plaintiffs’ suit was filed on
August 22, 2005, it did not send letters to the named plaintiffs
inviting them to participate in the SLC’s investigation until
almost three weeks after the suit was filed, on September 9,
2005. Thus the district court’s consideration of this evidence
was erroneous.
16252                IN RE: DIGIMARC CORP.
   The district court supported its decision to consider the
invitation letters by concluding that the letters were “consis-
tent” with an earlier invitation sent to the plaintiff in another
derivative suit (Beasley) in response to a November 8, 2004
demand letter sent by Beasley to Digimarc. Although the
Beasley invitation, dated February 25, 2005, was mailed
before the commencement of the derivative suit, and thus
properly considered by the district court in determining antag-
onism, its consistency with the subsequent letters to Diaz and
Sheehan cannot justify consideration of the subsequent letters
themselves. Such a consideration would transform the current
time-of-filing rule into a nebulous standard and violate the
Supreme Court’s charge to “adhere[ ] to the time-of-filing
rule regardless of the costs it imposes” in particular cases.
Grupo Dataflux, 541 U.S. at 571.

                               D

   [12] After evaluating the evidence, we find that antagonism
was present between Diaz and the controlling members of
Digimarc at the time the suit was filed. Diaz filed this action
against eleven current and former board members of Digi-
marc, seven of whom remain on the board and can fairly be
said to control the corporation. It is in the pecuniary interest
of these controlling board members to oppose the derivative
action, and all would be significantly harmed by an adverse
judgment here. No court has failed to find antagonism under
similar factual circumstances.

   Courts that have realigned corporate defendants in share-
holder derivative actions have looked to several factors when
determining that the corporation was not actively antagonistic
to the suit. Several courts have abstained from finding antago-
nism where the corporation was no longer controlled by the
directors and officers named in the complaint. See, e.g., Lewis
v. Odell, 503 F.2d 445, 446-47 (2d Cir. 1974); Taylor v. Swir-
now, 80 F.R.D. 79, 84 (D. Md. 1978); In re Penn Central Sec.
                     IN RE: DIGIMARC CORP.                 16253
Litig., 335 F. Supp. 1026, 1041-42 (E.D. Pa. 1971); Tessari
v. Herald, 207 F. Supp. 432, 435-37 (N.D. Ind. 1962).

   Other courts have found antagonism absent where the
plaintiff, rather than the defendants, controls the corporation
(either through majority stock ownership or other means).
See, e.g., Liddy v. Urbanek, 707 F.2d 1222, 1225 (11th Cir.
1983); Nejmanowski v. Nejmanowski, 841 F. Supp. 864, 868
(C.D. Ill. 1994); Gibson v. BoPar Dock Co., 780 F. Supp.
371, 374 (W.D. Va. 1991); Taylor, 80 F.R.D. at 84. Likewise,
courts have generally not found antagonism where the corpo-
ration is structurally incapable of acting to bring suit against
its officers and directors—where the corporation is “dead-
locked.” See, e.g., Duffey v. Wheeler, 820 F.2d 1161, 1162-63
(11th Cir. 1987); Kartub v. Optical Fashions, 158 F. Supp.
757, 758-59 (S.D.N.Y. 1958).

   Although Federal Rule of Civil Procedure 23.1’s pleading
requirement does not directly implicate subject matter juris-
diction, several courts have considered the absence of a
demand letter persuasive in finding no antagonism. See, e.g.,
Lewis, 503 F.2d at 447; Nejamanowski, 841 F. Supp. at 867;
Tessari, 207 F. Supp. at 435-37. But cf. Smith, 354 U.S. at 97
(holding that antagonism will exist when the corporation’s
management “so solidly approves [of a business transaction]
that any demand to rescind would be futile”).

   Finally, some courts have refrained from finding antago-
nism where the corporation, although it has not yet filed suit
against its officers and directors, has “reserved the right to
take control of the action” or otherwise “retain[s] neutrality in
its responses to appellant’s complaints.” Lewis, 503 F.2d at
447.

   [13] Taking these various factors into consideration, and
recognizing this is a close case, we conclude the company
was antagonistic to Diaz’s suit. Digimarc did take steps to
address the shareholders’ complaints. Once the first share-
16254                IN RE: DIGIMARC CORP.
holder derivative action was filed in California and Digimarc
received Beasley’s demand letter, the company created the
SLC to investigate the allegations. Although the SLC initially
consisted of two board members named in the California suit,
Digimarc eventually replaced them with new board members,
retained outside counsel, and invited Beasley to participate in
its investigation.

   [14] Notwithstanding the creation of the SLC, however, we
weigh heavily that a majority of the members of the corpora-
tion’s board were named as defendants in the derivative
action. Cf. id. at 446-47 (corporation was managed that the
time of the action by bankruptcy trustees who were not named
in the complaint). Additionally, we note that neither of the
plaintiffs was a majority shareholder in Digimarc or had the
means otherwise to control the corporation’s actions. There is
also no indication in the record that Digimarc was structurally
incapable of bringing suit against its officers and directors—
in fact, the corporation specifically delegated the power to file
such an action to the SLC. Finally, although neither Diaz nor
Sheehan sent Digimarc a formal demand letter requesting that
it bring suit upon the officers and directors, Beasley’s separate
demand letter of November 8, 2004 gave the corporation
ample opportunity to respond to shareholder demand for a
lawsuit long before Diaz filed his derivative action in August
2005. In the end, Digimarc’s creation of the SLC was not
enough to offset the remaining evidence that “management—
for good reasons or for bad—[was] definitely and distinctly
opposed to the institution of this litigation.” Swanson, 354
U.S. at 116.

                               E

   Finally, the individual defendants argue that Digimarc’s
grant of power to the SLC makes jurisdiction premature—i.e.,
that the district court must await the findings of the committee
before exercising its power over the derivative action.
Although the formation of the SLC is one indication that
                     IN RE: DIGIMARC CORP.                16255
Digimarc’s management may not be averse to the derivative
suit since it has “reserved the right to take control of the
action,” Lewis, 503 F.2d at 447, we cannot accord this factor
dispositive weight without undermining Smith’s distinction
between issues of jurisdiction and issues for trial, 354 U.S. at
97 (“[A trial] may show a dispute that lies within the penum-
bra of business judgment, unaffected by fraud. But that issue
goes to the merits, not to jurisdiction.”). Otherwise, to deter-
mine whether it had jurisdiction, a court would have to evalu-
ate whether an SLC were independent, whether it had been
formed in good faith, and whether it instituted a reasonable
investigation to determine liability before the committee had
completed its investigation and recommended a course of
action—an inquiry contrary to our instructions that “all chal-
lenges to subject-matter jurisdiction premised upon diversity
[must be measured] against the state of facts that existed at
the time of filing.” Grupo Dataflux, 541 U.S. at 571.

                              IV

   Accordingly, we hold that there is no private right of action
under section 304 of the Sarbanes-Oxley Act and that Digi-
marc’s managers and directors were antagonistic to Diaz’s
derivative suit at the time of filing for the purposes of estab-
lishing diversity jurisdiction. We remand to the district court
for proceedings consistent with this decision.

  AFFIRMED in part, REVERSED in part, and
REMANDED. The parties are to bear their own costs on
appeal.
