Greene v. Paramount Pictures Corporation et al

Filing 66

MEMORANDUM & ORDER granting 56 Motion to Dismiss for Lack of Jurisdiction; For the foregoing reasons, Defendants' motion to dismiss for lack of subject matter jurisdiction (Docket Entry 56) is GRANTED to the extent that Sikelia is dropped a s a defendant pursuant to Federal Rule of Civil Procedure 21. Plaintiff's claim against Sikelia is DISMISSED WITHOUT PREJUDICE and the Clerk of the Court is directed to TERMINATE Sikelia as a defendant in this action. So Ordered by Judge Joanna Seybert on 9/11/2017. C/ECF (Valle, Christine)

Case 2:14-cv-01044-JS-SIL Document 66 Filed 09/11/17 Page 1 of 15 PageID #: 514

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
ANDREW GREENE,
Plaintiff,

MEMORANDUM & ORDER
14-CV-1044(JS)(SIL)

-against–
PARAMOUNT PICTURES CORP., RED GRANITE
PICTURES, INC., APPIAN WAY, LLC,
SIKELIA PRODUCTIONS, INC., and
JOHN AND JANE DOES 1 through 10,
Defendants.
---------------------------------------X
APPEARANCES:
Plaintiff:
Alexander Martin Dudelson, Esq.
Louis R. Rosenthal, Esq.
Law Office of Louis R. Rosenthal
26 Court Street, Suite 2306
Brooklyn, NY 11242
Stephanie G. Ovadia, Esq.
1080 Grand Avenue, Suite 200F
South Hempstead, NY 11550
Aaron M. Goldsmith, Esq.
225 Broadway, Suite 715
New York, NY 10007
For Defendants:

Louis P. Petrich, Esq.
Vincent Cox, Esq.
Leopold, Petrich & Smith P.C.
2049 Century Park East, Suite 3110
Los Angeles, CA 90067
Katherine Mary Bolger, Esq.
Rachel Fan Stern Strom, Esq.
Davis Wright Tremaine LLP
1251 Avenue of the Americas, 21st Floor
New York, NY 10020

SEYBERT, District Judge:

Case 2:14-cv-01044-JS-SIL Document 66 Filed 09/11/17 Page 2 of 15 PageID #: 515

Presently
Paramount

pending

Pictures

before

Corporation

the

Court

is

(“Paramount”),

defendants

Red

Granite

Pictures, Inc. (“Red Granite”), Appian Way, LLC, and Sikelia
Productions,

Inc.

(“Sikelia”

and

collectively,

“Defendants”)

motion to dismiss pursuant to Federal Rule of Civil Procedure
12(b)(1).

(Defs.’ Mot., Docket Entry 56.)

For the following

reasons, Defendants’ motion is GRANTED to the extent that Sikelia
is dropped as a defendant pursuant to Federal Rule of Civil
Procedure 21.
BACKGROUND
The

Court

presumes

familiarity

with

the

factual

background of this matter, which is set forth in detail in its
Memorandum and Order dated September 30, 2015 (the “September 2015
Order”).

See generally Greene v. Paramount Pictures Corp., 138 F.

Supp. 3d 226 (E.D.N.Y. 2015).

Plaintiff, a New York resident,

filed this diversity action against Defendants, the producers and
distributors of the motion picture The Wolf of Wall Street,
alleging that he was defamed through the portrayal of a character
in the movie.
31.

(Suppl. Compl., Docket Entry 2, ¶ 2.)

Id. at 228-

Defendants moved to dismiss the action for failure to state

a claim.

Id. at 228.

In its September 2015 Order, the Court

granted Defendants’ motion in part and dismissed Plaintiff’s right

2

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of privacy claims and libel claim based on negligent defamation.1
Id. at 237.

Plaintiff’s remaining claim is his fourth cause of

action for libel per se.

Id.

On September 13, 2016, Defendants filed a motion to
dismiss

this

action

for

pursuant to Rule 12(b)(1).

lack

of

subject

matter

jurisdiction

(Defs.’ Br., Docket Entry 56-1, at 1.)

Defendants argue that complete diversity is destroyed because
Sikelia, a Delaware Corporation, is also a New York citizen.
(Defs.’ Br. at 1.)

Particularly, Defendants allege that Sikelia’s

principal place of business is in New York, as its two officers
work in New York, its only place of business is in New York City,
and “[i]ts key decisions regarding policies and activities by its
sole director and its two officers are made in New York State.”
(Defs.’ Br. at 4-5.)
Plaintiff argues that Sikelia has two offices, one in
California

and

one

in

New

York,

and

notes

that

it

was

not

registered to conduct business in New York until February 2016.
(Pl.’s Br., Docket Entry 57, ¶¶ 15-16.)

Plaintiff contends that

since Sikelia does not have “‘far-flung’” operations, the “public
impact test” is applicable to determine its principal place of
business.

(Pl.’s Br. ¶ 15.)

Plaintiff alleges that Sikelia has

While Plaintiff was granted leave to replead his libel claim
based on gross negligence, see id. at 237, he elected not to
file an Amended Complaint and that claim was dismissed with
prejudice in an Electronic Order dated October 17, 2015.
1

3

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been registered to conduct business in California since 2005, filed
California corporate taxes, and employed an agent of service and
a talent agent in California. (Pl.’s Br. ¶¶ 16-17, 19.) Plaintiff
also avers that Emma Koskoff,2 a California resident, oversaw
clearance activities and addressed day-to-day issues.
¶ 18.)

Plaintiff alleges Ms. Koskoff also worked with Red Granite

and Paramount, which both operate out of California.
¶ 18.)

(Pl.’s Br.

(Pl.’s Br.

Finally, Plaintiff argues that judicial economy will not

be served if he is forced to continue this action and commence a
parallel proceeding against Sikelia in state court.

(Pl.’s Br.

¶¶ 21-22.)
On reply, Defendants argue that Plaintiff has failed to
meet his burden of establishing that Sikelia’s principal place of
business is outside of New York.
58, at 1.)

(Defs.’ Reply Br., Docket Entry

Defendants argue that the “public impact” test was

overruled by the Supreme Court’s decision in Hertz Corp. v. Friend,
559 U.S. 77, 130 S. Ct. 1181, 175 L. Ed. 2d 1029 (2010), and the
“nerve center” test applies.

(Defs.’ Reply Br. at 1.)

Defendants

note that Ms. Koskoff, a legal resident of California, worked out
of Sikelia’s New York offices.

(Defs.’ Reply Br. at 1, n.1.)

Additionally, Defendants argue that the Court should exercise its

At his deposition, Martin Scorsese, the director of The Wolf of
Wall Street, testified that Ms. Koskoff was one of the producers
of the film. (Scorsese’s Dep. Tr., Docket Entry 57-2, 8:17-21;
16:2-5.)
2

4

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discretion pursuant to Federal Rule of Civil Procedure 21 and
terminate Sikelia, a non-diverse party, to preserve diversity
jurisdiction, rather than dismissing the entire action.

(Defs.’

Reply Br. at 2.)
DISCUSSION
At the outset, the Court notes that Defendants request
that

this

action

jurisdiction
However,

be

pursuant

since

dismissed
to

Rule

Defendants

for

lack

12(b)(1).

have

of

subject

(See

Answered

matter

Defs.’

the

Mot.)

Supplemental

Complaint, (see Docket Entries 27 through 30), a Rule 12(b)(1)
motion is technically not the appropriate procedural mechanism for
challenging

subject

matter

jurisdiction.

Greystone

Bank

v.

Tavarez, No. 09-CV-5192, 2010 WL 3325203, at *1 (E.D.N.Y. Aug. 19,
2010).

See also FED. R. CIV. P. 12(b) (“[a] motion asserting any

of these defenses must be made before a pleading if a responsive
pleading

is

allowed”).

Nevertheless,

since

Rule

12(h)(3)

instructs the Court to dismiss an action if it “determines at any
time that it lacks subject-matter jurisdiction,” FED. R. CIV. P.
12(h)(3), the Court will construe Defendants’ motion as a Rule
12(h)(3) motion.
Rule

See Greystone Bank, 2010 WL 3325203, at *1.

12(h)(3)

motions

are

governed

under

the

same

standards as Rule 12(b)(1) motions, and the district court “draws
all

facts

from

the

complaint,

assuming

them

to

be

true

and

construing all reasonable inferences in the plaintiff’s favor.”
5

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Bell v. Ramirez, No. 13-CV-7916, 2014 WL 7178344, at *2 (S.D.N.Y.
Dec. 9, 2014).

However, the Court is permitted to consider

evidence outside of the pleadings if jurisdictional facts are
disputed.

Id.

Additionally,

the

party

asserting

diversity

jurisdiction bears the burden of persuasion and “must support their
allegations by competent proof.”
I.

Hertz Corp., 559 U.S. at 96-97.

Diversity Jurisdiction
28 U.S.C. Section 1332 provides that this Court has

original jurisdiction over all civil actions where the matter in
controversy exceeds $75,000 and is between citizens of different
states.

28 U.S.C. § 1332(a).

However, “[d]iversity jurisdiction

under § 1332 requires complete diversity--that is, no plaintiff
may have the same citizenship as any defendant.”

Brauner v.

British Airways PLC, No. 12-CV-0343, 2012 WL 1229507, at *2
(E.D.N.Y. Apr. 12, 2012).

For diversity purposes, “‘a corporation

shall be deemed to be a citizen of every State and foreign state
by which it has been incorporated and of the State or foreign state
where it has its principal place of business.’”

Id. at 3 (quoting

28 U.S.C. § 1332(c)(1)).
In Hertz, the Supreme Court addressed the different
tests employed by Circuit Courts in determining a corporation’s
“principal place of business.”

Hertz, 599 U.S. at 80-81.

The

Court concluded that “principal place of business” refers to the
corporation’s “nerve center,” or “the place where a corporation’s
6

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officers

direct,

activities.”
omitted).

control,

and

coordinate

the

corporation’s

Id. at 92-93 (internal quotation marks and citation

The Court noted that the “nerve center” is generally

the location where the corporation maintains its headquarters, as
long as “the headquarters is the actual center of direction
control, and coordination . . . and not simply an office where the
corporation holds its board meetings (for example, attended by
directors and officers who have traveled there for the occasion).”
Id. at 93.
In

the

wake

of

Hertz,

“[t]he

State

in

which

the

corporation has its most extensive contacts or business dealings
or

the

greatest

impact

on

the

public

is

irrelevant”

to

the

determination of the corporation’s principal place of business.
Greystone Bank v. Tavarez, No. 09-CV-5192, 2010 WL 3311835, at *1
(E.D.N.Y. Jun. 10, 2010), report and recommendation adopted as
modified, 2010 WL 3325203 (E.D.N.Y. Aug. 19, 2010).

Indeed, Hertz

rejected the Second Circuit’s two-part test, which “involve[ed] an
initial determination as to whether a corporation’s activities are
centralized or decentralized followed by an application of either
the place of operations or nerve center test.”

Hertz, 559 U.S. at

91 (internal quotation marks and citation omitted).

See also

Greystone Bank, 2010 WL 3311835, at *1 (noting that Hertz rejected
the “‘business activity’ test, also known as the ‘public impact’
test”). Thus, as a threshold matter, Plaintiff’s reliance on cases
7

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determined long before Hertz in support of his argument that the
“public impact” or “place of operations” test applies is entirely
misplaced.3

(See generally Pl.’s Br. ¶¶ 6-12, 15.)

The Court will

utilize the “nerve center” test set forth in Hertz in determining
Sikelia’s principal place of business.
In support of his position that Sikelia’s principal
place of business is in California, Plaintiff alleges, without any
citation to evidentiary support, that Sikelia was incorporated in
California in 2005 with a Beverly Hills address, and Sikelia has
filed

California

corporate

taxes

and

maintains

a

California

office. (Pl.’s Br. ¶¶ 15-16.) Plaintiff also alleges that Sikelia
employed an agent of service within California, and notes that
Sikelia was not registered to conduct business in New York until
February 2016 and was not subject to New York corporate taxes prior

Plaintiff’s contention that the Court should consider judicial
economy in its diversity jurisdiction analysis is also
unpersuasive. (Pl.’s Br. ¶¶ 13-14.) In support, Plaintiff
relies on cases outside the Second Circuit that are wholly
inapposite to the issues at hand. Particularly, Plaintiff cites
a Fourth Circuit matter addressing the amount in controversy
requirement, and cases analyzing venue transfer requests
pursuant to 28 U.S.C. Section 1404(a). (Pl.’s Br. ¶¶ 13-14
(citing Cont’l Grain Co. v. Barge FBL-585, 364 U.S. 19,
80 S. Ct. 1470, 4 L. Ed. 2d 1540 (1960); In re Volkswagon of
Am., Inc., 566 F.3d 1349 (Fed. Cir. 2009); Coffey v. Van Dorn
Iron Works, 796 F.2d 217 (7th Cir. 1986); Stone v. Stone, 405
F.2d 94 (4th Cir. 1968)).) In any event, judicial efficiency is
not an appropriate consideration in determining whether
Sikelia’s principal place of business is in New York and
diversity jurisdiction is destroyed. See generally Hertz, 559
U.S. at 89-97.
3

8

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to its registration.
alleges

that

Ms.

(Pl.’s Br. ¶¶ 16-17.)

Koskoff,

a

resident

of

Plaintiff further
California,

oversaw

operations for Sikelia and worked with Paramount and Red Granite,
which are both California corporations.

(Pl.’s Br. ¶ 18.)

However, the Court finds that Plaintiff has not met his
burden of demonstrating diversity.

As previously noted, Hertz

instructs that the corporation’s “nerve center” is generally the
corporate headquarters as long as the headquarters is “the actual
center of direction, control, and coordination.
at 93.

Hertz, 559 U.S.

Plaintiff’s assertion that Sikelia maintains an office in

California

is

wholly

unsupported.

Moreover,

Defendants

have

submitted the Declarations of Arnold Herrmann and Martin Scorsese,
Sikelia’s Officers, in which they attest that as of the filing
date of this action, Sikelia was headquartered in New York City,
all of its officers were located in New York City, and all
employees worked out of the New York City office. (Herrmann Decl.,
Docket Entry 56-7, ¶¶ 2, 5; Scorsese Decl., Docket Entry 56-10,
¶ 6.)

Herrmann also alleges that Sikelia maintains bank accounts

in New York City, it has filed corporate income taxes with Delaware
and New York since 2010, and it has maintained an unemployment
insurance

account

under

the

company’s

original

name,

Cappa

Productions,4 since 1989. (Herrmann Decl. ¶¶ 8-9.) Herrmann avers

Sikelia was originally founded in 1989 as Cappa Productions and
its name was changed to Sikelia in 2003. (Herrmann Decl. ¶ 2.)
4

9

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that Sikelia has been registered with the New York State Department
of Labor since 1989 and its failure to register with the New York
State Division of Corporations as a foreign corporation until 2016
was an “oversight.”

(Herrmann Decl. ¶ 13.)

Additionally, Mr.

Scorsese alleges that while Sikelia has been represented by a
California entertainment law firm since 2003, he “spend[s] the
preponderance of [his] time within the state of New York, and [ ]
key decisions are made by [him] in the state of New York.”
(Scorsese Decl. ¶ 7.)

In the absence of any evidence that

Sikelia’s New York City offices are nothing more than “a mail drop
box, a bare office with a computer, or the location of an annual
executive retreat,” Hertz, 559 U.S. at 97, the Court finds that
that

Sikelia’s

principal

place

of

business

is

New

York.

Accordingly, Sikelia’s presence as a defendant in this action
destroys diversity.
II. Rule 21
Federal Rule of Civil Procedure 21 provides, in relevant
part, that “[o]n motion or on its own, the court may at any time,
on just terms, add or drop a party.”

FED. R. CIV. P. 21.

This rule

permits the Court to drop a nondiverse party in order to preserve
diversity jurisdiction as long as the party is not “indispensable”
pursuant to Federal Rule of Civil Procedure 19(b).

Walpert v.

Jaffrey, 127 F. Supp. 3d 105, 119 (S.D.N.Y. 2015) (internal

10

Case 2:14-cv-01044-JS-SIL Document 66 Filed 09/11/17 Page 11 of 15 PageID #: 524

quotation marks and citation omitted).

In determining whether a

party is indispensable, the Court considers the following factors:
(1) whether a judgment rendered in a person’s
[or entity’s] absence might prejudice that
person [or entity] or parties to the action,
(2) the extent to which any prejudice could be
alleviated, (3) whether a judgment in the
person’s [or entity’s] absence would be
adequate, and (4) whether the plaintiff would
have an adequate remedy if the court dismissed
the suit.
CP Solutions PTE Ltd. v. Gen. Elec. Co., 553 F.3d 156, 159 (2d
Cir. 2009) (citing FED. R. CIV. P. 19(b)).

Courts should approach

the Rule 19(b) analysis with flexibility, as “very few cases should
be terminated due to the absence of nondiverse parties unless there
has been a reasoned determination that their nonjoinder makes just
resolution of the action impossible.”

Universal Reinsurance Co.,

Ltd. v. St. Paul Fire and Marine Ins. Co., 312 F.3d 82, 88 (2d
Cir. 2002) (internal quotation marks and citation omitted).
On

reply,

Defendants

argue

that

the

Court

should

exercise its discretion to drop Sikelia from the action in order
to preserve jurisdiction.

(Defs.’ Reply Br. at 2-3.)

While the

parties did not request supplemental briefing on this issue,
Defendants attach an email exchange in which Defendants’ counsel
inquires whether Plaintiff prefers “that the entire action be
dismissed in order to avoid piecemeal litigation” should the Court
find that Sikelia is a citizen of New York.

Plaintiff’s counsel

responds, “[the Court] would have to dismiss against Sikelia only.
11

Case 2:14-cv-01044-JS-SIL Document 66 Filed 09/11/17 Page 12 of 15 PageID #: 525

The basis of the motion was Sikelia’s lack of diversity.”

(Cox’s

Decl., Docket Entry 58-1, at Ex. 1.)
The Court concurs with Defendants that Sikelia should be
dropped as a party pursuant to Rule 21.
factors,

a

judgment

rendered

prejudice the parties.

in

As to the first two

Sikelia’s

absence

will

not

Defendants have requested that Sikelia be

dropped as a party and thus are “willing to bear” any prejudice
caused by Sikelia’s absence.

CP Solutions, 553 F.3d at 159.

The

Court is unaware of any prejudice to Plaintiff that would result
from

Sikelia’s

dismissal;

however,

to

the

extent

Sikelia’s

dismissal would prejudice Plaintiff in some respect, Plaintiff
would suffer far greater prejudice if the Court dismissed the
entire action after approximately three years of litigation.
With respect to the third Rule 19(b) factor, the Court
finds that a judgment in Sikelia’s absence would, in fact, be
adequate.

Sikelia’s absence will not prevent Plaintiff from

obtaining complete legal relief regarding his remaining libel per
se claim.

The Complaint alleges that all Defendants produced,

developed,

distributed,

licensed,

and/or

financed

the

film,

(Suppl. Compl. ¶¶ 3-10), and Sikelia’s remaining claim is asserted
against all Defendants, (Suppl. Compl. ¶¶ 57-61).

Thus, even

without Sikelia’s presence in this action, Plaintiff may still
pursue his claim against the remaining Defendants.
Reinsurance

Co.,

312

F.3d

at
12

88

(affirming

Cf. Universal
the

court’s

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determination that the plaintiff was not an indispensable party
and noting that “dismissal of a claim for an inability to join
additional parties is not warranted where complete relief is
available from a remaining party”); Quantlab Fin., LLC v. Tower
Res.

Cap.,

LLC,

715

F.

Supp.

2d

542,

551

(E.D.N.Y.

2010)

(considering in its analysis of the third Rule 19(b) factor that
“[t]he absence of [one of the plaintiffs] will not prevent [the
co-plaintiff] from being granted the full equitable and legal
relief sought in the [complaint]”).
Additionally, the third Rule 19(b) factor “concerns the
social interest in the efficient administration of justice and the
avoidance of multiple litigation.”

CP Solutions, 553 F.3d at 160

(internal quotation marks and citations omitted).
alleges,

in

the

context

of

his

subject

While Plaintiff

matter

jurisdiction

argument, that he will be forced to litigate a parallel state court
action against Sikelia if the Court grants Defendants’ motion,
(Pl.’s Br. ¶ 21), New York’s one-year statute of limitation for
libel claims, see N.Y. CPLR § 215(3), casts doubt on the viability
of a subsequent state court action sounding in libel per se.
Further, Plaintiff has not pursued a state court action against
New York residents, such as Scorsese, who were involved in the
development and production of the film.
Moreover, in evaluating the third factor, the Court
considers the procedural posture of the case.
13

CP Solutions, 553

Case 2:14-cv-01044-JS-SIL Document 66 Filed 09/11/17 Page 14 of 15 PageID #: 527

F.3d at 160.

This case was commenced approximately three years

ago, and while it is not trial-ready, the parties have engaged in
motion practice and discovery.

At this juncture, it would be

imprudent to require the parties to “start over in state court”
because one production entity among many cannot be joined in
federal court.

See id.

Finally, as to the fourth factor, it is unclear whether
the state forum is available given the previously noted one-year
statute of limitations.

Nevertheless, even assuming Plaintiff may

commence an action in the state court, “when federal diversity
jurisdiction will exist if nondiverse parties are dropped, the
bare fact that a state court forum is available does not, by itself
make it appropriate to dismiss the federal action.”
(internal quotation marks and citation omitted).

Id. at 161
Accordingly,

after balancing the relevant factors, the Court concludes that
Sikelia is not an indispensable party and exercises its discretion
to drop Sikelia from this action.
CONCLUSION
For the foregoing reasons, Defendants’ motion to dismiss
for lack of subject matter jurisdiction (Docket Entry 56) is
GRANTED to the extent that Sikelia is dropped as a defendant
pursuant to Federal Rule of Civil Procedure 21.

Plaintiff’s claim

against Sikelia is DISMISSED WITHOUT PREJUDICE and the Clerk of

14

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the Court is directed to TERMINATE Sikelia as a defendant in this
action.
SO ORDERED.

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated:

September
11 , 2017
Central Islip, New York

15