L.Y.E. Diamonds LTD et al v. Gemological Institute of America Inc. et al

Filing 34

MEMORANDUM & OPINION re: 16 MOTION to Remand to State Court . filed by L.Y.E. Diamonds LTD, E.G.S.D. Diamonds, Ltd., Natanel Ylazaroy, Gregori Elizarow. For the foregoing reasons, Plaintiff's motion to remand is GRANTED. The case is hereby REMANDED to the Supreme Court of the State of New York, New York County. The Clerk of the Court is directed to close the motion at Document 16 and terminate this case. (Signed by Judge Vernon S. Broderick on 3/31/2017) (cla)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------X
:
L.Y.E. Diamonds LTD, E.G.S.D. Diamonds, :
Ltd., Gregori Elizarow also known as Gavriel :
Yelizarov, and Natanel Ylazaroy also known :
as Nati Yizrov,
:
Plaintiffs,
:
:
-v:
:
Gemological Institute of America Inc.,
:
Rapaport USA, Inc., Rapaport Diamond
:
Corporation, John and Jane Does 1 Through 10 :
:
the names being fictitious and whose true
names are unknown to Plaintiff, John Doe
:
Corporations 1 through 10 the names being
:
fictitious and whose true names are unknown :
to Plaintiff, Other John Doe Entities 1-10 the :
names being fictitious and whose true names :
are unknown to Plaintiff, and Thomas Moses, :
:
Defendants. :
:
--------------------------------------------------------- X

3/31/2017

16-CV-3766 (VSB)
MEMORANDUM & OPINION

Appearances:
Jeffrey R. Miller
Doron A. Leiby
Miller, Leiby & Associates, P.C.
New York, New York
Counsel for Plaintiffs
Andrew Lawrence Deutsch
Gail McLemore Rodgers
DLA Piper US LLP
New York, New York
Counsel for Defendants Gemological Institute of America Inc. and Thomas Moses
David M. Rabinowitz
Moses & Singer, LLP
New York, New York
Mario P. Lovato
Lovato Law Firm, P.C.
Las Vegas, Nevada
Counsel for Defendants Rapaport USA, Inc. and Rapaport Diamond Corp.

VERNON S. BRODERICK, United States District Judge:
Before me is the motion of L.Y.E. Diamonds LTD, E.G.S.D. Diamonds, Ltd., Gregori
Elizarow a/k/a Gavriel Yelizarov, Yosef Ylazarov, Mikhael Ylazarov, and Natanel Ylazarov
a/k/a/ Nati Yizrov (“Plaintiffs”) to remand this action to the Supreme Court of the State of New
York, New York County pursuant to 28 U.S.C. § 1447. (Doc. 16.) For the reasons that follow,
Plaintiffs’ motion to remand is GRANTED and this case is REMANDED.
Background and Procedural History
Plaintiffs commenced this action in state court on March 2, 2016 by filing a summons
with notice and naming Defendants Gemological Institute of America, Inc. (“GIA”), Thomas
Moses (“Moses”) (collectively, the “GIA Defendants”), Rapaport USA, Inc. (“Rapaport USA”),
Rapaport Diamond Corporation (“Rapaport Diamond”) (collectively, the “Rapaport
Defendants”), and various John and Jane Does, John Doe Corporations, and John Doe entities.
(Doc. 1-1 at 3.)1 The complaint was not attached to the summons. (See id.) On or about March
28, 2016, Plaintiffs served the GIA Defendants and Rapaport Diamond, and on or about March
30, 2016, Plaintiffs served Rapaport USA with the summons with notice. (Id. at 8, 13-15.) On
April 18, 2016 and April 19, 2016, respectively, the GIA Defendants and the Rappaport
Defendants filed demands for the complaint. (Id. at 16, 17-18.)
On April 29, 2016, Plaintiffs filed and served their complaint, (id. at 20, 122), and on
May 19, 2016, Rapaport USA filed the notice of removal, (Doc. 1). The notice of removal stated
that “Defendant Rapaport USA, Inc. . . . hereby removes this action from the Supreme Court of
New York, County of New York, to the United States District Court for the Southern District of

1

The summons with notice, affidavits of service, demands for the complaint, and verified complaint with various
exhibits are all attached to the notice of removal and are included in Document 1-1. Therefore, I cite to the page
numbers provided by the electronic filing system for Document 1-1.

2

New York, and are informed that the other Defendants in this action will join and otherwise
support the Petition for Removal.” (Id.) The notice also indicated that Rapaport USA
“understand[s] that all Defendants consent to the removal of this case to this Court.” (Id. ¶ 53.)
Although counsel for the GIA Defendants thereafter filed notices of appearance on May 26,
2016, (Docs. 4, 5), and counsel for Rapaport Diamond filed their notice of appearance on July
19, 2016, (Doc. 21), they did not file or otherwise submit to this Court any explicit written
consent to removal.
On May 26, 2016, the GIA Defendants submitted a pre-motion letter in anticipation of
filing a motion to dismiss the complaint, (Doc. 6), and on May 31, 2016, the Rapaport
Defendants submitted a pre-motion letter in anticipation of filing a motion to dismiss, for
summary judgment, or, in the alternative, to change venue or sever claims, (Doc. 8). The
Rapaport Defendants explained that their pre-motion letter had erroneously been filed in state
court on May 26, 2016. (Doc. 9.) I set a pre-motion conference for July 7, 2016 to address the
motions. (Doc. 14.)
On June 17, 2016, Plaintiffs filed a motion to remand, along with an accompanying
memorandum of law with exhibits. (Docs. 16-17.) Upon receiving the motion, I set a briefing
schedule and adjourned the pre-motion conference to September 1, 2016. (Doc. 18.) In
accordance with that schedule, the Rapaport Defendants filed an opposition on July 18, 2016,
(Doc. 22), and on August 1, 2016, Plaintiffs filed their reply, (Doc. 24).
On August 31, 2016, I issued an order instructing the parties to be prepared to address
specific questions in connection with the motion to remand, mainly involving whether the rule of
unanimity, requiring the consent of all defendants to removal, had been satisfied. (See Doc. 25.)
In that order, I also directed the parties to the case of Bedminster Financial Group, Ltd. v.

3

Umami Sustainable Seafood, Inc., No. 12 Civ. 5557(JPO), 2013 WL 1234958 (S.D.N.Y. Mar.
26, 2013), and asked that the parties be prepared to discuss the case’s relevance to the questions
posed, (Doc. 25). After the conference was held on September 1, 2016 and for the reasons set
forth during the conference, I set deadlines for the parties to submit additional, focused
arguments by letter addressing the questions raised in my order and during the conference. (See
Dkt. Entry Sept. 1, 2016.) In accordance with those deadlines, the GIA Defendants submitted a
letter on September 16, 2016 together with an accompanying declaration and exhibit, which
stated that, among other things, counsel for Rapaport Defendants had received the consent of all
Defendants by telephone prior to filing the notice of removal. (Docs. 26-27.) On that same day,
the Rapaport Defendants filed a similar letter. (Doc. 28.) On September 30, 2016, Plaintiffs
filed a response to those letters, (Doc. 29), and on October 7, 2016, the GIA Defendants and the
Rapaport Defendants, respectively, filed their replies, (Docs. 32, 33).
Legal Standard
“[A]ny civil action brought in a State court of which the district courts of the United
States have original jurisdiction, may be removed by the defendant or the defendants, to the
district court of the United States for the district and division embracing the place where such
action is pending.” 28 U.S.C. § 1441(a). A defendant seeking removal of a civil action from
State court must file “in the district court of the United States for the district and division within
which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules
of Civil Procedure and containing a short and plain statement of the grounds for removal,
together with a copy of all process, pleadings, and orders served upon such defendant or
defendants in such action.” 28 U.S.C. § 1446(a). The notice of removal “shall be filed within 30
days after the receipt by the defendant, through service or otherwise, of a copy of the initial

4

pleading setting forth the claim for relief upon which such action or proceeding is based, or
within 30 days after the service of summons upon the defendant if such initial pleading has then
been filed in court and is not required to be served on the defendant, whichever period is
shorter.” 28 U.S.C. § 1446(b)(1). When an action is removed pursuant to 18 U.S.C. § 1441(a),
“all defendants who have been properly joined and served must join in or consent to the removal
of the action.” 28 U.S.C. § 1446(b)(2)(A); see also Ortiz v. City of N.Y., No. 13 Civ. 136(JMF),
2013 WL 2413724, at *1 (S.D.N.Y June 4, 2013).
“Usually, an action brought in state court may only be removed if federal jurisdiction
would have been proper at the outset.” McCullogh Orthopaedic Surgical Servs., PLLC v. Cigna
Health & Life Ins. Co., No. 15 Civ. 2244(CM), 2015 WL 3526951, at *3 (S.D.N.Y. June 3,
2015); see also Fax Telecommunicaciones Inc. v. AT & T, 138 F.3d 479, 485–86 (2d Cir. 1998).
The existence of federal subject matter jurisdiction is “normally to be determined as of the time
of removal.” Warburton v. John Jay Coll. of Criminal Justice of City Univ. of N.Y., No.
14-CV-9170 (JPO), 2015 WL 3948107, at *2 (S.D.N.Y. June 29, 2015) (quoting Halingby v.
Hallingby, 574 F.3d 51, 56 (2d Cir. 2009)).
Whenever removal of an action to federal court is challenged, the removing party “has
the burden of establishing that removal is proper.” See United Food & Commercial Workers
Union, Local 919, AFL–CIO v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d
Cir. 1994); Bedminster, 2013 WL 1234958, at *2. “Such an approach is ‘warranted because
removal abridges the deference courts generally give to a plaintiff’s choice of forum.’” Ritchie
Capital Mgmt., L.L.C. v. BMO Harris Bank, N.A., No. 14 Civ. 1936 (ER), 2015 WL 1433320, at
*3 (S.D.N.Y. Mar. 30, 2015) (citations omitted). This requires not only that the removing party
demonstrate “a jurisdictional basis for removal,” but also that the party show “the necessary

5

compliance with the statutory requirements. There is nothing in the removal statute that suggests
that a district court has “discretion” to overlook or excuse prescribed procedures.”
Commonwealth Advisors Inc. v. Wells Fargo Bank, Nat’l Ass’n, No. 15-CV-7834 (JMF), 2016
WL 3542462, at *2 (S.D.N.Y. June 23, 2016) (quoting Codapro Corp. v. Wilson, 997 F. Supp.
322, 324–25 (E.D.N.Y. 1998)); see also In re Vill. of Kiryas Joel, N.Y., No. 11 Civ. 8494(ER),
2012 WL 1059395, at *2 (S.D.N.Y. Mar. 29, 2012). If the removing party fails to meet that
burden, “the case must be remanded back to state court.” Bellido Sullivan v. Am. Int’l Grp., Inc.,
123 F. Supp. 2d 161, 163 (S.D.N.Y. 2000).
“In light of the congressional intent to restrict federal court jurisdiction, as well as the
importance of preserving the independence of state governments, federal courts construe the
removal statute narrowly, resolving any doubts against removability.” Lupo v. Human Affairs
Int’l, Inc., 28 F.3d 269, 274 (2d Cir. 1994) (quoting Somlyo v. J. Lu-Rob Enters., Inc., 932 F.2d
1043, 1045–46 (2d Cir. 1991)); see also Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 109
(1941) (“Due regard for the rightful independence of state governments, which should actuate
federal courts, requires that they scrupulously confine their own jurisdiction to the precise limits
which the statute has defined.”) (citation omitted); In re Methyl Tertiary Butyl Ether (“MTBE”)
Prods. Liab. Litig., 488 F.3d 112, 124 (2d Cir. 2007) (“[O]ut of respect for the limited
jurisdiction of the federal courts and the rights of states, we must resolve any doubts against
removability.” (internal quotation marks omitted)).
Discussion
Plaintiffs argue that the failure of each defendant to independently express consent to
removal within thirty days of Defendant Rapaport USA filing the notice of removal requires

6

remand. (Pls.’ Mem. ¶¶ 30-39; Pls.’ Reply ¶¶ 18-29.)2 In response, the Rapaport Defendants
originally contended only that the GIA Defendants were not required to join the notice of
removal because at the time it was filed, they had not been served with the complaint. (Rapaport
Opp. 18-20.)3 The Rapaport Defendants further asserted that Rapaport Diamond was
fraudulently joined and, therefore, could be disregarded in determining whether there was proper
consent to removal. (Id. 17-18.) The Rapaport Defendants did not otherwise address the
requirement for unanimous consent. However, following my request that the parties submit
additional letters addressing the consent issue, the GIA Defendants argued that the rule of
unanimity had been satisfied because: (1) counsel for the GIA Defendants informed counsel for
the Rapaport Defendants by telephone that the GIA Defendants consented to removal prior to
Rapaport USA filing the notice of removal; (2) Rapaport USA’s notice of removal stating that all
defendants consent to removal should be sufficient, as the rule of unanimity “does not require
that each non-moving defendant file a separate statement of consent with the Court”; (3) the GIA
Defendants’ consent to removal is confirmed by the filing by counsel of notices of appearance in
federal court, a corporate disclosure statement for GIA, and a pre-motion letter; and (4) in any
event, any defect in the notice of removal is a technical defect, meaning that I should permit the
Rapaport Defendants to amend the notice of removal to clearly indicate the GIA Defendants’
consent. (GIA Ltr.)4 The Rapaport Defendants offer similar arguments in their letter. (See
Rapaport Ltr.)5 However, while addressing the rule of unanimity and the issues surrounding the

2
“Pl.’s Mem.” refers to the Memorandum of Law in Support of Plaintiffs’ Motion to Remand. (Doc. 17.) “Pls.’
Reply” refers to the Reply Memorandum of Law in Further Support of Plaintiffs’ Motion to Remand. (Doc. 24.)
3

“Rapaport Opp.” refers to Defendants Rapaport USA, Inc. and Rapaport Diamond Corporation’s Memorandum of
law in Support of Opposition to Motion to Remand. (Doc. 22.)
4

“GIA Ltr.” refers to the September 16, 2016 letter written by the GIA Defendants. (Doc. 26.)

5

“Rapaport Ltr.” refers to the September 16, 2016 letter written by the Rapaport Defendants. (Doc. 28.)

7

GIA Defendants’ alleged consent, the Rapaport Defendants seem to obscure the procedural
history, referring to the notice of removal as filed “on behalf of the Rapaport Parties,”6 (id.),
despite their former acknowledgement that the notice of removal was only submitted by
Rapaport USA, (see, e.g., Rapaport Opp. 6, 12, 17).
Since 2011, the statute governing the procedure for removal has also provided that “all
defendants who have been properly joined and served must join in or consent to the removal of
the action.” 28 U.S.C. § 1446(b)(2)(A); see also Ortiz, 2013 WL 2413724, at *1. Prior to the
inclusion of this provision in the statute, courts in the Second Circuit “consistently interpreted
the statute ‘as requiring that all defendants consent to removal within the statutory thirty-day
period, a requirement known as the ‘rule of unanimity.’’” Pietrangelo v. Alvas Corp., 686 F.3d
62, 66 (2d Cir. 2012) (quoting Beatie & Osborn LLP v. Patriot Scientific Corp., 431 F. Supp. 2d
367, 383 (S.D.N.Y. 2006)); see also Payne v. Overhead Door Corp., 172 F. Supp. 2d 475, 477
(S.D.N.Y. 2001) (“[T]he removal statute has consistently been interpreted to require that all
defendants consent to removal within the thirty day period, known as the ‘Rule of Unanimity.’”)
(citing Berrios v. Our Lady of Mercy Med. Ctr., No. 99 Civ. 21(DLC), 1999 WL 92269, at *2
(S.D.N.Y Feb. 19, 1999)). The rule requires that defendants “independently express their
consent to removal.” Pietrangelo, 686 F.3d at 66 (citing Ricciardi v. Kone, Inc., 215 F.R.D. 455,
458 (E.D.N.Y. 2003); Codapro Corp., 997 F. Supp. at 325).
The independent consent requirement initially read into § 1446 was then codified by the
federal removal statute gives appropriate deference to the plaintiff’s choice of forum. See
Commonwealth Advisors Inc., 2016 WL 3542462, at *3 (further noting that “[i]f any defendant

6
Rapaport Defendants is defined in the letter as “Defendants Rapaport USA, Inc. and Rapaport Diamond
Corporation (collectively, the ‘Rapaport Parties’).” (Rapaport Ltr. 1.)

8

does not consent to removal within the requisite time, the plaintiff’s decision to bring his action
in a state forum will trump and removal will fail”). “Courts have very little discretion—if any—
to forgive a failure to comply with the rule of unanimity.” Bedminster, 2013 WL 1234958, at *5
(citation omitted); see also Metro. Transp. Auth. v. U.S. Fidelity & Guaranty Co., No. 14 Civ.
9059(PAE), 2015 WL 1730067, at *4 (S.D.N.Y. Apr. 14, 2015) (“[T]he failure of any defendant
to provide its written consent within the thirty-day period constitutes a fatal procedural defect in
the removal procedure and warrants a remand of the case.” (quoting Kiryas Joel, 2012 WL
1059395, at *3)). There are three exceptions to the rule, which allow a defendant to avoid
obtaining the consent of a co-defendant when that co-defendant “(1) has not been served with
service of process at the time the removal petition is filed; (2) is merely a nominal or formal
party; or (3) is not subject to the removal claim, which is a separate and independent claim from
those asserted against the non-consenting defendant as defined by 28 U.S.C. §1441(c).”
Bedminster, 2013 WL 1234958, at *6 (alterations omitted) (quoting Heller v. New York City
Health & Hosps. Corp., No. 09 Civ. 6193(LTS)(GWG), 2010 WL 481336, at *2 (S.D.N.Y. Feb.
1, 2010)); accord Metro. Transp. Auth., 2015 WL 1730067, at *4; Kiryas Joel, 2012 WL
1059395, at *4 & n.2. None of the exceptions are applicable here.
As an initial matter, although the Second Circuit has yet to advise precisely what form the
consent should take, most courts in this district have required “some form of unambiguous
written evidence of consent.” Baiul v. William Morris Agency, LLC, No. 13 Civ. 8683(KBF),
2014 WL 465708, at *2 (S.D.N.Y. Feb. 3, 2014) (quoting Stop & Shop Supermarket Co. v.
Goldsmith, No. 10 Civ. 3052(KMK), 2011 WL 1236121, at *2 (S.D.N.Y. Mar. 31, 2011)); see
also Metro. Transp. Auth., 2015 WL 1730067, at *4; Payne, 172 F. Supp. 2d at 477 (the rule of
unanimity requires that “each defendant must submit written consent unambiguously agreeing to

9

removal”). While this does not mean that all defendants have to sign the removal petition, see
Baiul, 2014 WL 465708, at *2, it is “insufficient for a defendant who has not signed the removal
petition to merely advise the removing defendant that it consents to removal and that the
removing defendant may represent such consent to the Court on its behalf,” Bedminster, 2013
WL 1234958, at *6 (quoting Codapro, 997 F. Supp. at 326); see also Metro. Transp. Auth., 2015
WL 1730067, at *4.
I agree with the courts in this Circuit that have found that something more is required for
a defendant to express unambiguous consent to removal than merely advising the removing
defendant that it consents to removal or filing documents that do not address consent on the
federal docket, and for that reason Defendants’ first three arguments, (supra at 7), fail. It is
simply insufficient that Rapaport USA received the consent to removal during a telephone
conversation with the GIA Defendants and later expressed that consent on their behalf in the
removal petition. See, e.g., Metro. Transp. Auth., 2015 WL 1730067, at *4; Bedminster, 2013
WL 1234958, at *6; Kiryas Joel, 2012 WL 1059395, at *3. Moreover, with respect to Rapaport
Diamond, the Rapaport Defendants neglect to point to any indication of independent consent, but
rather—for the first time in their supplemental letter—state that the notice of removal was filed
on behalf of both Rapaport USA and Rapaport Diamond. And, given the specific decision made
by counsel—who represents both Rapaport Defendants—to specifically state that “Rapaport
USA . . . hereby removes this action,” (Doc. 1), and to later affirm as much in the briefing, the
circumstances indicate a conscious decision on the part of Rapaport Diamond to disregard the
rule of unanimity. Whether counsel chose not to include Rapaport Diamond in the notice of
removal in reliance on their argument that Rapaport Diamond was fraudulently joined, omitted it
in error, or for some other strategic reason is not relevant; whatever the reason, Rapaport

10

Diamond’s consent was not independently given at any point in time.7
Defendants’ fourth argument—that I should allow them to amend the notice of removal
to cure any defect—also fails. In fact, a similar argument, addressing an affidavit indicating
consent filed months after the notice of removal was filed, was considered and rejected by the
court in Bedminster, which noted that the “unduly creative” view that a district court may
“ignore or allow defendants to cure defects in a notice of removal . . . has been repeatedly called
into doubt.” 2013 WL 1234958, at *6–7.
Finally, I reject the Rapaport Defendants’ original position—to the extent that they
continue to adhere to it—that the consent of the GIA Defendants to removal was not required
because the GIA Defendants had not been properly served.8 (See Rapaport Opp. 18-20.) In
reaching this conclusion, I note that while it is universally acknowledged that a removing
defendant is not required to obtain the consent of a defendant who has not been served, there is a
conflict among courts with respect to whether a removing defendant is absolved from following
the rule of unanimity based on the assertion that service on the non-removing defendant was
improper or defective. See Bedminster, 2013 WL 1234958, at *8–9 (citing case law).
Regardless, even under the approach that permits a removing defendant to avoid the rule of
unanimity based on alleged improper or defective service on the non-removing defendant, the
Rapaport Defendants’ argument still fails because the GIA Defendants were, in fact, properly

7

In light of the fact that I find remand necessary regardless of Rapaport Diamond’s status, I do not address here the
additional argument that Rapaport Diamond is a nominal party. (See Rapaport Opp. 14-15.)
8

During the pre-motion conference, Plaintiffs’ counsel produced a “consent to service from the GIA, Tom Moses
that was effectuated by written confirmation dated March 29th.” (Doc. 30 at 5:8-12.) Counsel also pointed out that
the summons with notice initiated the action in State court and that “all subsequent pleadings in [the] matter were
effectuated in the state system pursuit to the e-filing or the e-system delivery.” (Id. at 5:16-18.) Therefore, service
of the complaint was accomplished through e-filing. (Id.) The Rapaport Defendants did not raise the alleged failure
to serve the GIA Defendants in their supplemental letter and appear to have abandoned that argument in light of the
proof of service and representations of Plaintiffs’ counsel.

11

served.
Neither the Rapaport Defendants nor the GIA Defendants appear to dispute that the GIA
Defendants were properly served with the summons with notice, after which point the GIA
Defendants made a demand for the complaint. (See Rapaport Opp. 18; Pls.’ Reply ¶ 23.)
Moreover, although the affidavit of service for the complaint incorrectly states that Plaintiffs
served the Rapaport Defendants at the address for counsel for the GIA Defendants, it is clear that
counsel for the GIA Defendants were properly served with a copy of the verified complaint on
April 29, 2016 at the exact address given by the GIA Defendants’ counsel in their notice of
demand for complaint. (See Doc. 1-1 at 20, 122.) Indeed, at no point have the GIA Defendants
themselves raised the issue of improper service and, at the September 1, 2016 conference,
Plaintiffs indicated that they possessed a consent to service from the GIA Defendants. (Doc. 30
at 5:8-12.)
Thus, because I find that Defendants have failed to comply with the rule of unanimity,
and that such defect is fatal, I remand this action to the Supreme Court of the State of New York,
New York County.

12

Conclusion
For the foregoing reasons, Plaintiff’s motion to remand is GRANTED. The case is
hereby REMANDED to the Supreme Court of the State of New York, New York County. The
Clerk of the Court is directed to close the motion at Document 16 and terminate this case.

SO ORDERED.
Dated: March 31, 2017
New York, New York
______________________
Vernon S. Broderick
United States District Judge

13