Unclaimed Property Recovery Service, Inc. et al v. Credit Suisse First Boston Corporation et al

Filing 24

OPINION & ORDER: re: 13 MOTION to Dismiss for Lack of Jurisdiction. Plaintiffs Unclaimed Property Recovery Service, Inc. ("UPRS") and Bernard Gelb ("Gelb") filed a Complaint against Credit Suisse First Boston Corporation, Credit Suisse (USA) Inc., and Credit Suisse Securities (USA) LLC ("CSSU") on April 26, 2012, alleging Defendants' interference with Plaintiffs' business relationship, defamation, and various contractual claims. On July 31, 2012, Defenda nts moved to dismiss for lack of jurisdiction. Plaintiffs filed an Amended Complaint against Credit Suisse AG ("CS AG") and CSSU on August 23, 2012. Pursuant to a stipulation and order entered on August 31, 2012, the motion to dismiss was w ithdrawn without prejudice. Defendants again moved to dismiss for lack of jurisdiction On October 26, 2012. For the following reasons, Defendants' motion is granted. For the foregoing reasons, Plaintiffs' Complaint is dismissed with prejudice. The Clerk of Court is directed to terminate the motion at docket number 13 and to close the matter. SO ORDERED. (Signed by Judge Paul A. Crotty on 4/25/2013) (rsh)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRlCT OF NEW YORK

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UNCLAIMED PROPERTY RECOVERY
SERVICE, INC. and BERNARD GELB,

USDCSDNY
DOCUMENT
ELECTRONICALL Y FILED
DOC#:
DATE FILED: April ~ 013

Plai nti ffs ,
-against-

12 Civ. 3290 (PAC)

CREDIT SUISSE AG, alk/a CREDIT SUISSE, flk/a:
CREDIT SUISSE FIRST BOSTON, and CREDIT
SUISSE FIRST BOSTON LLC,

OPINION & ORDER

Defendants .
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HONORABLE PAUL A. CROTTY, United States District Judge:
Plaintiffs Unclaimed Property Recovery Service, Inc. ("UPRS") and Bernard Gelb
("Gelb") filed a Complaint against Credit Suisse First Boston Corporation, Credit Suisse (USA)
Inc., and Credit Suisse Securities (USA) LLC ("CSSU") on April 26, 2012, alleging Defendants'
interference with Plaintiffs' business relationship, defamation , and various contractual claims.
On July 31, 2012, Defendants moved to dismiss for lack of jurisdiction.

Plaintiffs tiled an

Amended Complaint against Credit Suisse AG ("CS AG") and CSSU I on August 23, 2012.
Pursuant to a stipulation and order entered on August 31, 2012, the motion to dismiss was
withdrawn without prejudice. Defendants again moved to dismiss for lack of jurisdiction On
October 26,2012. For the following reasons, Defendants' motion is granted.
DISCUSSION
Diversity jurisdiction requires that "all adverse paliies to a litigation are completely
diverse in their citizenships," Herrick Co., Inc. v. SCS Commc'ns., Inc., 251 F.3d 315, 322 (2d

I Atlh.ough CSSU is not named as a defendant and does not appear in the caption, Credit Suisse First Boston LLC
was renamed Credit Suisse Securities (USA) LLC in January 2006. (Burstein Dec!. ~ 2.)

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Cir.2001), meaning that "'the citizenship of each plaintiff is diverse from tbe citizenship of eacb
defendant. ", Synergy Advanced Phann . v. CapeBio LLC, 797 F. Supp. 2d 276, 281 (S.D.NY
2011) (quoting Caterpillar InC. v. Lewis, 519 U.S 61 ,68 (1996». "A plaintiff asserting subject
matter jUlisdiction has the burden of proving by a preponderance of tbe evidence that it exists "
Makarova v. U.S .. 201 F.3d 110, 113 (2d Cir. 2000). While "a court must accept as true all
material factual allegations in the complaint," jurisdiction may not be shown "by drawing from
the pleadings inferences favorable to the party asserting it." Shipping Fin. Servo Corp. v. Drakos,
140 F.3d 129, 131 (2d Cir.1998) (internal quotations omitted).

Additionally, "[o]n a rule

12(b)(1) motion, . . . the court may resolve the disputed jurisdictional issues by referring to
evidence outside of the pleadings, such as affidavits." Zapata Middle E. Const. Co. Ltd. v.
Emirate of Abu Dhabi, 215 F.3d 247 , 253 (2d Cir. 2000).
"CSSU is a limited liability company organized and existing under the laws of
Delaware." (Burstein Dec!.

~

2; see also Am . Comp!. '15 .) For purposes of detennining whether

diversity jurisdiction exists, "a limited liability company . . . takes th e citizenship of each of its
members." Bayeriscbe Landesbank

V.

Aladdin Capital Mgmt. LLC, 692 F.3d 42, 49 (2d Cir.

2012) . Accordingly, CSSU is a N ew York citizen because the sole member of CSSU is Credit
Suisse (USA), lnc., which has its principal place of business and corporate headquarters in New
York. (Burstein Dec!.

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3.) Plaintiffs respond that New York is only home to a branch offi ce of

CS AG, but that is not supported by any of the document upon which Plaintiffs rely. Plaintiffs'
exhibits merely confinn that CS AG has its own headquarters in Switzerland and an office in
New York, but they do not in any way suggest that Credit Suisse (USA) Inc. - and there fore
CSSU - are not New York citizens.

(See Exs. 6·7, 9.)

possibilities.
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These are not mutuall y exclusive

In arguing that Defendants are not New York citizens, Plaintiffs' heavy reliance on Hertz
Corp . v. Friend , 559 U.S. 77 (20 I 0), is misplaced. In Hertz, the Supreme Court addressed where
a corporation has its principal place of business under 28 U.S.c. § 1332(c)(l), but that is not the
relevant inquiry in the matter at bar. Because "the citizenship of a limited liability corporation is
detemlined by reference to the citizenship of its members," the Second Circuit has found that
where, with respect to a limited liability company such as CSSU, "plaintiffs employed the
citizenship test used for corporations and . . . alleged jurisdiction based on diversity of
citizenship," they did so "elToneously." Catskill Lit. Trust v. Park Place Entm ' t Corp., 169 Fed.
App'x 658, 659 (2d Cir. 2006). Accordingly, Hertz has no bearing on whether CSSU, a limited
liability corporation, is a citizen of New York.
Flnaliy, Plaintiffs argue that CSSU and CS AG are alter egos of one another, such that CS
AG's lack of New York citizenship should be imputed to CSSU. The Court need not adjudicate
the merits of Plaintiffs' alter ego claim because " an alter ego analysis for purposes of diversity
jurisdiction is limited to situations in which it will add an additional state of citizenship in order
to destroy diversity. " Zadora-Gerlof v. Axa Nordstem Art Ins . Corp., No. 0 I CY 11828 , 2002
WL 31324138, at *1 (S.D.N.Y. Oct. 17, 2002); see al so Schwartz v. Elec . Data Sys., 913 F.3d
279, 294 (5th Cir. 1990) (allowing alter ego doctrine only " as a tool to destroy diversity, not to
create it.").

"Two corporations that are deemed to be alter egos of each other acquire the

citizenship of each other. Consequently, ... 'the alter ego doctrine would attribute [CSSU's
New York citizenship] to [CS AG] even if such resulted in destroying complete diversity""
Grunblatt v. UnumProvident Corp., 270 F. Supp. 2d 347, 352 (S.D.N.Y. 2003) (quoting
Panalpina Welttransport GmBh v. Geosource, Inc., 764 F.2d 352, 354-55 (5th Cir. 1985).

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Assuming, arguendo , that Plaintiffs ' alter ego theory is cOITect, it would only serve to remove
an y diversity whatsoever between the parties.
Since CSSU is a citizen of New York , as are Gelb and URPS, the parties in this matter
are not completely diverse. Accordingly, the Court lacks subject-matter jurisdiction and "must
dismiss the action." Fed. R. Civ. P. 12(h)(3). It is dismissed with prejudice because Plaintiffs
have already had an opportunity to address its jurisdictional defects and have failed to do so. See
Dist. Council 1707 Local 389 Home Care Emps.' Pension & Health & Welfare Funds v.
Strayhorn, No. 11 Civ. 7911, 2013 WL 1223362, at *6 (S.D.N. Y. Mar. 25, 2013) ("while an
amended complaint can address defective allegations of jurisdiction, it cannot fix defects in the
jurisdictional facts themselves." (internal quotations omitted)).

CONCLUSION
For the foregoing reasons, Plaintiffs' Complaint is dismissed with prejudice. The Clerk
of Court is directed to teITninate the motion at docket number 13 and to close the matter.
Dated: New York, New York

/
April l.A, 2013

United States District Judge

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