Sergey Aleynikov v. The Goldman Sachs Group Inc.

Filing 36

MEMORANDUM OPINION fld. Signed by Judge Kevin McNulty on 1/6/16. (sr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

SERGEY ALEYNIKOV,

Civ. No. 15-2057 (KM)

Plaintiff,
MEMORANDUM OPINION
V.

THE GOLDMAN SACHS GROUP, INC.,
Defendant.

This matter comes before the Court pursuant to the Objections (ECF No.
33) of The Goldman Sachs Group, Inc. (“OS Group”) to a Report and
Recommendation (“R&R”) (ECF No. 30) filed by Magistrate Judge Michael A.
Hammer. The R&R, in the form of an oral opinion dictated into the record by
Judge Hammer, granted the motion (ECF No. 4) of the plaintiff, Sergey
Aleynikov, pursuant to 28 U.S.C. § 1447(c), to remand an action for
advancement of legal fees to the Delaware Court of Chancery. Because this is a
dispositive ruling, I review it de novo. See Fed. R. Civ. P. 72(b)(3); D.N.J. Local
Rule 72.1(c)(2); In re US. Healthcare, 159 F.3d 142, 146 (3d Cir. 1998) (remand
decision is dispositive for purposes of 28 U.S.C. § 636). Because I am in
agreement with Judge Hammer’s well-reasoned opinion, I will adopt the R&R
with minimal discussion.
As to advancement of fees for defending against Goldman’s pending civil
counterclaims. Aleynikov has filed a separate action in the Delaware Court of
Chancery (C.A. No. 10636-VCL). He acknowledges that he wishes to take
advantage of that state court’s expedited fact finding procedures. See DCGL §
145(k); see also Aleynikov v. Goldman Sachs, No. 12 cv 5994, 2015 WL
225804, at *2 n.4 (D.N.J. Jan. 16, 2015). And indeed, those state court
procedures seem well adapted to the state law provisional remedy of
advancement of fees. This Court, however, is not called upon to select the
“better” forum; both sides posture the dispute as one over the proper scope of
removal under federal procedural law. GS Group removed the Delaware state
court case to the U.S. District Court for the District of Delaware, invoking
diversity jurisdiction; Aleynikov immediately moved to remand the case to state
court, asserting that removal had been contrary to law. That remand motion is
before this Court as a result of the Delaware federal court’s transfer of venue to
this District.

There is no dispute that the parties are diverse and that the matter in
controversy exceeds $75,000. See 28 U.S.C. § 1332(a). OS Group acknowledges
that it is incorporated in Delaware and is a citizen of that state. At issue is the
applicability, or not, of the “home state” exception to removal based on diversity
jurisdiction. See 28 U.S.C. § 144 1(b)(2).’ If the home state exception applies,
then GS Group’s removal of the case to the federal district court in its home
state of Delaware was barred by statute.
This remand motion thus presents a question of statutory interpretation.
OS Group stresses that it filed the notice of removal immediately after the
complaint had been filed, but before it had been served, so it is not a party
“joined and served as [a] defendant[J” within the meaning of Section 144 1(b)(2).
Aleynikov’s motion to remand contends that GS Group’s interpretation is
contrary to the legislative intent and purpose, and that the § 144 1(b)(2) home
state exception bars removal. (For a recent overview of district courts’
treatment of the issue nationwide, and the arguments pro and con, see Gentile
v. Biogen Idec, Inc., 934 F. Supp. 2d 313 (D. Mass. 2013).) 2
In my view, this motion is properly categorized as one to remand
pursuant to 28 U.S.C. § 1447(c), based on an asserted defect in removal: i.e., a
contention that removal was “not authorized by law.” Cook v. Wikier, 320 F.3d
431, 437 (3d Cir. 2003) (quoting Pierpoint v. Barnes, 94 F.3d 813, 817 (2d
Cir.1996) (interpreting 28 U.S.C. § 1447(c)). I decide the motion on that basis.
3
“A civil action otherwise removable solely on the basis of the jurisdiction under
section 1332(a) of this title may not be removed if any of the parties in interest
properly joined and served as defendants is a citizen of the State in which such action
is brought.”
As Gentile pointed out in summarizing the district court case law, appellate
authority is lacking because such a remand is not appealable. 934 F. Supp. 2d at 316
n.3. See 28 U.S.C. § 1447(d) (with irrelevant exceptions, “[a]n order remanding a case
to the State court from which it was removed is not reviewable on appeal or
otherwise”); Cook u. Wikler, 320 F.3d 431, 435 (3d Cir. 2003) (holding that a 1996
strengthening amendment to 28 U.S.C. § 1447(c) worked a corresponding expansion
in the scope of the § 1447(d) bar to appeal, in effect abrogating earlier case law
permitting appeal in some circumstances); McBride v. Twp. of W. Orange, 127 F. Appx
54, 56 (3d Cir. 2005) (citing 28 U.S.C. § 1447(d) and dismissing appeal from § 1447(c)
remand)).
2

To be clear, this is not a remand based on lack of subject matter jurisdiction.
There are
two ways by which a plaintiff can challenge a notice of
removal. First, he can assert that the federal court lacks subject matter
jurisdiction over the case because it does not come within the “original
jurisdiction” of the federal court. 28 U.S.C. § 144 1(a). It is undisputed
here, however, that there is complete diversity among the parties such
that this case falls within the diversity subject matter jurisdiction of this
court. 28 U.S.C. § 1332. Second, a plaintiff can claim that there was a
...

The issue under 28 U.S.C. § 144 1(b)(2) has been ably surveyed and
discussed by Magistrate Judge Hammer in his oral R&R. I agree with the
reasoning and the result. The Report and Recommendation will be affirmed and
adopted as the ruling of the Court.
For the foregoing reasons, the case will be remanded to the Delaware
Court of Chancery. An appropriate order accompanies this Memorandum
4
Opinion.
Dated: January 6, 2016

KEVIN MCNULTY
United States District Judge

procedural defect in the removal. The forum defendant rule has been
held to implicate the latter type of challenge
Gentile, 934 F. Supp. 2d at 316.

Section 144 1(b) is not a jurisdictional limitation, but a statutory limit on a
case’s removability. This is a case that could have been filed originally in federal court
under its diversity jurisdiction. Thus the remand issue here involves the statutory
scope of removal, not the court’s jurisdiction. See In re FMC Corp. Packaging Sys. Div.,
208 F.3d 445, 450 n.6 (3d Cir. 2000); Korea Exchange Bank v. Trackwise Sales Corp.,
66 F.3d 46, 50—5 1 (3d Cir. 1995). Although subject matter jurisdiction maybe raised
at any time, a motion to remand on other grounds must be brought within 30 days of
the filing of the notice of removal. 28 U.S.C. § 1447(c). Aleynikov’s motion was timely.
4
The parties are in agreement that, if remand is ordered, this transferee court is
empowered (indeed required) to remand it to the Delaware Court of Chancery. (R&R,
ECF No. 32 at 7 (citing Allied Signal Recovery Trust v. Allied Signal Inc., 298 P.3d 263,
270 (3d Cir. 2002)).