Alix v. McKinsey & Co., Inc. et al

Filing 402

OPINION AND ORDER re: 300 MOTION to Dismiss Defendants Seth Goldstrom's and Kevin Carmody's Counterclaims. filed by Jay Alix, AlixPartners, LLP, 328 MOTION to Dismiss . filed by Jon Garcia, Kevin Carmody, Ali son Proshan, Seth Goldstrom, Virginia Molino, Jared D. Yerian, Dominic Barton, Robert Sternfels, Mark Hojnacki, 332 MOTION to Dismiss Under Federal Rule of Civil Procedure 17 from Defendants. filed by McKinsey Recovery & Transfo rmation Services U.S., LLC, McKinsey & Company Inc. United States, McKinsey & Co., Inc. Accordingly, McKinsey's motion to dismiss is GRANTED, and both the Individual Defendants' motion to dismiss and Alix's and AlixPartners' motion to dismiss the counterclaims are deemed moot. (The parties' latest discovery disputes, see ECF Nos. 397 & 400, are also moot.) The Clerk of Court is directed to terminate ECF Nos. 300, 328, 332, 397, 399, and 400; to enter judgment in favor of Defendants in accordance with this Opinion and Order; and to close the case. SO ORDERED. (Signed by Judge Jesse M. Furman on 7/3/2024) (jca) Transmission to Orders and Judgments Clerk for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
JAY ALIX,
:
:
Plaintiff,
:
:
-v:
:
MCKINSEY & CO., INC. et al.,
:
:
Defendants.
:
:
---------------------------------------------------------------------- X

18-CV-4141 (JMF)
OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:
AlixPartners LLP (“AlixPartners”) and McKinsey & Co. (together with its relevant
subsidiaries, “McKinsey”) are bitter rivals in the highly competitive market for high-end
bankruptcy consulting. This suit involves claims that McKinsey and certain executives (the
“Individual Defendants”) obtained bankruptcy consulting engagements through a pattern of
deception that constitutes racketeering activity in violation of the Racketeer Influenced and
Corrupt Organizations (“RICO”) Act, 18 U.S.C. §§ 1961-1968. Notably, however, the case was
not filed by AlixPartners, the party allegedly injured by Defendants’ conduct. Instead, it was
filed by Plaintiff Jay Alix, the founder and a part owner of AlixPartners, “as assignee of”
AlixPartners. ECF No. 177 (“SAC”), at 1. After years of litigation, including two motions to
dismiss, an appeal, and a remand, Alix finally produced to Defendants a copy of the Assignment
pursuant to which he brings this suit. See ECF Nos. 333-1, 336-1 (“Assignment”). The question
presented here, by way of motions to dismiss filed by Defendants, is whether the Assignment
validly assigned to Alix the claims that he brings in this suit and, if not, whether that problem can
be cured through Rule 17(a)(3) of the Federal Rules of Civil Procedure, which provides that a
court “may not dismiss an action for failure to prosecute in the name of the real party in interest

until, after an objection, a reasonable time has been allowed for the real party in interest to ratify,
join, or be substituted into the action.” See ECF Nos. 328, 332.
For the reasons that follow, the Court holds that the Assignment did not assign to Alix the
claims that he brings here and that he therefore lacked Article III standing to sue, a defect that
cannot be cured in the manner that Alix and AlixPartners propose, namely by ratification under
Rule 17(a)(3). More specifically, applying federal law to assess the validity of the Assignment,
the Court concludes first that the Assignment did not encompass the RICO claims that Alix
brings here and, thus, that Alix lacked standing to bring his claims. Whether that defect is
curable through ratification under Rule 17(a)(3) is a harder question, if only because the Second
Circuit’s case law on Rule 17 is not altogether pellucid. But the Court concludes that it cannot
be cured because the defect is not a mere technical error in the caption of Alix’s pleading for
which Rule 17(a)(3) would allow correction, but a substantive problem that deprives the Court of
the power to adjudicate the case. Accordingly, the case must be and is dismissed. The parties’
other motions — including a motion by Alix and AlixPartners to dismiss counterclaims filed by
two Individual Defendants, see ECF No. 300, and discovery-related motions, see ECF Nos. 397,
399, 400 — are therefore moot.
BACKGROUND
The lengthy and substantial background to this case is, for the most part, irrelevant to the
motions now before the Court. In brief, Alix founded the corporation that would later become
AlixPartners in 1981, working with underperforming companies in bankruptcies, out-of-court
restructurings, and corporate turnarounds. SAC ¶ 51. 1 Alix currently serves on the board of
1

The following brief factual summary is, unless otherwise noted, drawn from the Second
Amended Complaint and assumed to be true. See, e.g., LaFaro v. N.Y. Cardiothoracic Grp.,
PLLC, 570 F.3d 471, 475 (2d Cir. 2009).

2

directors of AlixPartners and maintains an approximately thirty-five percent equity stake in the
company. See SAC ¶ 51. McKinsey entered the bankruptcy consulting field in or around 2001,
and later formed McKinsey Recovery & Transformation Services U.S., LLC. See id. ¶ 54.
AlixPartners and McKinsey were — and remain — rivals in the competitive high-end
bankruptcy consulting space. See id. ¶ 55.
The gravamen of Alix’s claims here — namely, three substantive RICO claims under
Section 1962(c) and one claim of RICO conspiracy under Section 1962(d) — is that McKinsey
(and various of its subsidiaries and executives) engaged in a criminal enterprise by
misrepresenting and concealing disqualifying conflicts of interest in its required disclosures as a
bankruptcy professional, allowing it to improperly secure assignments to the exclusion of
AlixPartners and other competitors. See, e.g., id. ¶¶ 1-5, 9-11, 390-707. Alix alleges that
“[AlixPartners] is the direct victim and target of Defendants’ unlawful scheme” and that
“Defendants’ criminal enterprise has caused [AlixPartners] to lose considerable revenue that it
otherwise would have earned had Defendants complied with the law,” id. ¶ 6, but he seeks treble
damages for himself, purportedly “as assignee of” AlixPartners, id. ¶¶ 8, 498, 576, 678, 707; see
also id. ¶ 34 (“All claims asserted herein have been fully and lawfully assigned to Alix by
[AlixPartners].”).
In August 2019, the Court dismissed Alix’s claims, principally on the ground that he had
failed to adequately allege proximate causation. See Alix v. McKinsey & Co., Inc., 404 F. Supp.
3d 827 (S.D.N.Y. 2019) (ECF No. 104). 2 The Second Circuit vacated and remanded for further

2

After the Court dismissed the RICO claims, Alix voluntarily dismissed his remaining
state-law claims and then sought to reinstate them. See ECF Nos. 107, 108, 111, 124. Of note
here, in ruling on that request, the Court held that the Assignment was presumptively collusive
given the relationship between Alix and AlixPartners, that Alix had failed to overcome that
presumption, and that diversity jurisdiction over the state-law claims was therefore barred by 28
3

proceedings. See Alix v. McKinsey & Co., Inc., 23 F.4th 196 (2d Cir. 2022). At a May 31, 2022
hearing following remand, Defendants explicitly raised for the first time concerns regarding the
Assignment, noting that Alix had not yet disclosed the Assignment and voicing doubts as to its
validity and scope. See ECF No. 168 (“May 31, 2022 Hearing Tr.”), at 20-21; see also ECF No.
183 (July 14, 2022 letter filed by McKinsey proposing a schedule for a potential Rule 17
motion). Shortly thereafter, Alix sought and obtained leave to file a Second Amended Complaint
(the operative Complaint), and Defendants once again moved to dismiss. See ECF No. 198.
This time, the Court granted in part and denied in part the motion. See Alix v. McKinsey & Co.,
Inc., No. 18-CV-4141 (JMF), 2023 WL 5344892 (S.D.N.Y. Aug. 18, 2023) (ECF No. 239).
The Court then set an expedited schedule for discovery related to an anticipated motion to
dismiss pursuant to Rule 17. See ECF No. 263. In January 2024, as part of Rule 17 discovery,
Alix produced — for the first time — the executed Assignment upon which this suit is premised.
The document consists of a single short paragraph:
FOR VALUE RECEIVED, AlixPartners, LLP does hereby irrevocably sell,
convey, transfer and assign to Jay Alix, individually, all of its rights and
interest in, to and under claims or causes of action against McKinsey & Co.,
Inc. and affiliates for illegal competitive activity in the crisis management and
consulting business involving major bankruptcy cases, to the extent the claims
or causes of action arose prior to the date of this assignment (the “Claim”).
This assignment shall be deemed an absolute and unconditional assignment of
the Claim for the purpose of litigation, collection and satisfaction. From and
after the date set forth below, Jay Alix shall be deemed owner of the Claim,
and shall be entitled to identify himself to any court of competent jurisdiction
for all purposes as the owner of the Claim.

U.S.C. § 1359. See Alix v. McKinsey & Co., 470 F. Supp. 3d 310, 319-22 (S.D.N.Y. 2020) (ECF
No. 139).

4

Assignment. 3 The Assignment is signed by Kathryn Koorenny, AlixPartners’s General Counsel
at the time. It is not signed by Alix. Alix acknowledges that the Assignment is the “full and
complete statement of the assignment upon which” he relies “to bring the claims in this case.”
See ECF No. 334 (“Individual Defs.’ Mem.”), at 5. 4 It has never been amended or
supplemented. See id.
On March 19, 2024, McKinsey filed a motion to dismiss pursuant to Rule 17, arguing
that the Assignment was invalid and that Alix thus lacks authority to bring RICO claims for
harms to AlixPartners. See ECF No. 332; see also ECF No. 339 (“McKinsey Mem.”); ECF No.
371 (“McKinsey Reply”). 5 On the same date, the Individual Defendants filed a separate (partial)
motion to dismiss pursuant to Rules 12(b)(1) and 17, arguing that even if the RICO claims
generally were validly assigned, the Assignment did not encompass the claims filed against them
individually. See ECF No. 328; see also Individual Defs.’ Mem.; ECF No. 369 (“Individual

3

The Court granted leave to temporarily file the Assignment under seal, but as discussed
below, the Court now finds that it must be unsealed in its entirety, and thus may be discussed
fully herein without need for any sealing or redaction.
4

The parties’ memoranda include redactions because they refer to materials that are
currently filed under seal. As the Court discusses below, although the majority of such materials
may remain sealed (and references thereto may remain redacted), the excerpts explicitly referred
to in this Opinion and Order are deemed unsealed by virtue of their inclusion herein.
5

McKinsey styles its motion as a motion to dismiss pursuant to Rule 17 alone, but it
plainly also implicates Alix’s standing — and thus the Court’s subject-matter jurisdiction. See
McKinsey Mem. 14 (“[T]he purported Assignment is Alix’s only basis for standing, and thus his
only basis for invoking this Court’s subject matter jurisdiction.”). Accordingly, the Court can
and does also treat it as a motion brought pursuant to Rule 12(b)(1) — or, more precisely, Rule
12(h)(3) — of the Federal Rules of Civil Procedure. See, e.g., Odyssey Marine Expl., Inc. v.
Shipwrecked & Abandoned SS Mantola, 333 F. Supp. 3d 292, 300 n.4 (S.D.N.Y. 2018); see also
Now-Casting Econ., Ltd. v. Econ. Alchemy LLC, 628 F. Supp. 3d 501, 512 (S.D.N.Y. 2022)
(“The standard governing a Rule 12(h)(3) motion is the same as that governing a motion under
Rule 12(b)(1).”); Tasini v. N.Y. Times Co., Inc., 184 F. Supp. 2d 350, 354 (S.D.N.Y. 2002) (“An
objection to standing is properly made on a Rule 12(b)(1) motion.”).

5

Defs.’ Reply”). More specifically, Defendants argue in their motions that the Assignment did
not encompass the claims brought by Alix, was collusive, was not entered into for legitimate
business purposes, and was designed to improperly shield AlixPartners from the burdens of
litigation while allowing Alix to pursue a windfall payout. See McKinsey Mem. 11-21;
Individual Defs.’ Mem. 1 n.3. In conjunction with his opposition to these motions, see ECF No.
354 (“Alix Opp’n”), Alix submitted a Declaration of Simon Freakley, Chief Executive Officer of
AlixPartners, which purports to “ratif[y] and confirm[] Alix’s entitlement to pursue the Claims
asserted in the above-captioned action” “for purposes of Federal Rule of Civil Procedure 17,” see
ECF No. 358-1 (“Ratification”), ¶¶ 1, 12. Alix contends that, “if the Assignment is found
defective, the Rule 17 ratification filed herewith cures any defect.” Alix Opp’n 4.
On May 29, 2024, the Court held oral argument on the motions. See ECF No. 392 (“Oral
Argument Tr.”).
LEGAL STANDARDS
Defendants’ motions to dismiss are brought under Rule 17 and Rule 12(b)(1) or (h)(3) of
the Federal Rules of Civil Procedure. A motion under Rule 12(b)(1) or (h)(3) challenges the
court’s subject-matter jurisdiction to hear the case. “A case is properly dismissed for lack of
subject matter jurisdiction under [these] Rule[s] . . . when the district court lacks the statutory or
constitutional power to adjudicate it.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir.
2000). In reviewing a motion to dismiss under Rule 12(b)(1) or (h)(3), a court “must take all
facts alleged in the complaint as true and draw all reasonable inferences in favor of plaintiff, but
jurisdiction must be shown affirmatively, and that showing is not made by drawing from the
pleadings inferences favorable to the party asserting it.” Morrison v. Nat’l Austl. Bank Ltd., 547
F.3d 167, 170 (2d Cir. 2008) (internal quotation marks and citation omitted), aff’d, 561 U.S. 247

6

(2010). “The plaintiff bears the burden of proving subject matter jurisdiction by a preponderance
of the evidence.” Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635, 638 (2d Cir.
2005). By contrast, “the question of which party bears the burden of proof in the Rule 17 context
is unsettled.” Nastasi & Assocs., Inc. v. Bloomberg, L.P., 2021 WL 3541153, at *4 (S.D.N.Y.
Aug. 11, 2021), Here, as in Nastasi, however, “the issue is immaterial” because “the relevant
fact[s],” namely the existence and contents of the Assignment, are “undisputed,” id. It is the
legal implications of the Assignment — both for Rule 17 real-party-in-interest purposes and
Article III standing purposes — that are hotly disputed and now at issue before the Court.
DISCUSSION
Defendants challenge Alix’s ability to bring the claims in this case by way of the
Assignment on a host of grounds: because the Assignment was “collusive” and made for
“impermissible purposes,” McKinsey Mem. 14-17; because it was champertous and thus void
under New York law, see id. at 17-21; and because it was, at best, a partial assignment and did
not effect a valid assignment of the particular claims asserted, see id. at 21-23; Individual Defs.’
Mem. 6-16. The Court need not and does not reach the first of these arguments and rejects the
second because it concludes that federal law, not New York law, governs the validity of the
Assignment. But the Court agrees with the third argument because federal law provides that, to
effect assignment of a RICO claim, such assignment must be “express,” and the Assignment here
— which referred only to “claims or causes of action . . . for illegal competitive activity” — did
not meet that standard. The more difficult question is what to make of that fact, namely whether
the defect defeats subject-matter jurisdiction or whether it can be cured by AlixPartners’s
purported ratification under Rule 17(a)(3). Although not free from doubt, the Court concludes

7

that well-established principles of law and Second Circuit precedent dictate that the defect is
jurisdictional and cannot be cured.
A. Choice of Law
The Court begins with the question of what law applies. McKinsey argues that it should
prevail whether federal or New York state law applies, but the choice obviously affects the
analysis, if not the outcome. The parties agree that federal law governs the assignability of
federal claims, but they dispute what law should govern the validity of the Assignment. See
McKinsey Reply 6 n.2; see also Farey-Jones v. Buckingham, 132 F. Supp. 2d 92, 100 (E.D.N.Y.
2001) (“[F]ederal law governs the assignability of claims under the federal securities laws.”
(citing Bluebird Partners, L.P. v. First Fid. Bank, N.A., 85 F.3d 970, 973 (2d Cir. 1996)).
The Second Circuit has not squarely ruled on the question of whether courts assessing the
validity of an assignment of federal claims should apply state law or federal common law. The
two Circuits that have weighed in — the Third and the Fifth — arrived at different conclusions.
Compare Martin v. Morgan Drive Away, Inc., 665 F.2d 598 (5th Cir. Unit A 1982), with
Gulfstream III Assocs., Inc. v. Gulfstream Aerospace Corp., 995 F.2d 425 (3d Cir. 1993). In
Martin, the Fifth Circuit applied Louisiana champerty law in considering the validity of an
assignment of federal antitrust claims. See 665 F.2d at 604-05; accord Koehler v. NationsBank
Corp., No. 96-CV-2050, 1997 WL 112836, at *1 (N.D. Ill. Mar. 10, 1997) (“There is no federal
law of assignments.”); Nicolls Pointing Coulson, Ltd. v. Transp. Underwriters of La., Inc., 777
F. Supp. 493, 496 (E.D. La. 1991) (same). Notably, in doing so, the Martin court relied on
Sampliner v. Motion Picture Patents Co., 255 F. 242 (2d Cir. 1918), reversed on other grounds,
254 U.S. 233 (1920), an ancient Second Circuit decision on which McKinsey also relies here.

8

See 665 F.2d at 604-05; see McKinsey Reply 5-6. 6 Martin reads Sampliner to hold that, “as a
matter of federal law, . . . the federal courts should look to state law” in determining the validity
of an assignment of federal claims. Id. at 604-05. But putting aside the fact that Sampliner is
from a bygone era (for example, it predated Erie Railroad Co. v. Tompkins, 304 U.S. 64 (1938),
by two decades), the decision did not go so far. Yes, it applied Ohio champerty law in assessing
the validity of an assignment of federal claims, but it did so in the context of an assignment that
explicitly designated Ohio law as the law governing the assignment’s validity. See Sampliner,
255 F. at 250 (“It is said . . . that whether the lex loci contractus or the lex loci solutionis is to
determine the validity of the assignment that law in this case is the law of Ohio. There is no
disagreement on either side on this phase of the subject.”). Sampliner made no broader
pronouncement that would bind the Court here.
On the other side of the split, the Third Circuit found it “clear that the validity of the
assignment of an antitrust claim is a matter of federal common law.” Gulfstream III Associates,
995 F.2d at 437. The Gulfstream III Associates court offered two principal grounds for this
holding. First, “the issue of assignment is appropriate for the development of interstitial federal
common law in harmony with the overall purposes of the antitrust statutes.” Id. at 438. Second,
“assignments of antitrust claims cannot appropriately be left to determination under possibly
differing state law standards.” Id. Or as one district court following the Third Circuit put it:
“[T]here is no doubt that states have the authority to dictate how state claims are transferred and
assigned to parties. But it would be intolerable to permit the states to determine the
6

The only other case McKinsey cites for the proposition that “[t]he question of whether a
valid assignment exists is determined under state law” is entirely off point as the quoted
language pertains to the assignment of state-law claims over which the court had supplemental
jurisdiction. King v. Tuxedo Enters., Inc., 975 F. Supp. 448, 451 (E.D.N.Y. 1997); McKinsey
Reply 6.

9

transferability, and thus the value, of interests created by federal law.” In re Turkey Antitrust
Litig., No. 19-C-8318, 2024 WL 1328824, at *3 (N.D. Ill. Mar. 28, 2024) (cleaned up).
In DNAML Pty, Ltd. v. Apple, Inc., No. 13-CV-6516 (DLC), 2015 WL 9077075
(S.D.N.Y. Dec. 16, 2015), which involved the assignment of federal antitrust claims, Judge Cote
took the Third Circuit’s side in this debate. After noting that “[w]hether a federal antitrust claim
may be assigned is itself a matter of federal law,” she turned to the “issue [of] what law will be
used to determine whether [the plaintiff’s] causes of action have been validly assigned.” Id. at
*3. To answer that question, she looked not only to the Third Circuit’s decision in Gulfstream
III Associates, but also to United States v. Kimbell Foods, Inc., 440 U.S. 715, 728-29 (1979), in
which the Supreme Court held that “courts determining whether federal common law should
displace state law must consider whether: “(1) the issue requires a nationally uniform body of
law; (2) application of state law would frustrate specific objectives of the federal programs; and
(3) application of a federal rule would disrupt commercial relationships predicated on state law.”
2015 WL 9077075, at *3. Applying that test, and observing that the Supreme Court had
“concluded long ago that the first two sections of the Sherman Act, with their ‘sweeping
language,’ are among those instances in which courts are empowered to create governing rules of
law,” she held that federal common law governs the validity of the assignment of antitrust
claims. Id. (quoting Texas Indus., Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 644 (1981)). 7
The Court agrees with the Third Circuit and Judge Cote and, thus, concludes that federal
common law governs the validity of the Assignment here. Granted, their decisions addressed the
7

Judge Cote did not explicitly address Sampliner, presumably finding — as the Court did
above — that it does not control. Nevertheless, her opinion appears to implicitly distinguish the
circumstances in Sampliner, noting that “[t]he Agreement does not contain a choice of law
provision, nor do the parties argue for the application of any law outside of the Third Circuit’s
federal common law framework.” DNAML, 2015 WL 9077075, at *4 n.3.

10

assignment of antitrust claims, not RICO claims. But the Supreme Court has explicitly noted the
“similarities in purpose and structure” between RICO and federal antitrust statutes in the context
of applying federal common law. See Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483
U.S. 143, 152 (1987) (applying the four-year statute of limitations used for Clayton Act claims to
RICO’s civil enforcement provision); see also Nat’l Asbestos Workers Med. Fund v. Philip
Morris, Inc., 74 F. Supp. 2d 221, 230 (E.D.N.Y. 1999) (“[T]he RICO statute contains an express
admonition that the statute be read broadly in order to effectuate its policies. It provides that,
‘[t]he provisions of this title shall be liberally construed to effectuate its remedial purposes.’”
(quoting Pub. L. No. 91-452, § 904(a), 84 Stat. 922, 947 (1970))). And consistent with that
observation, courts have regularly applied federal common law to other aspects of RICO actions.
See, e.g., Allstate Ins. Co. v. Yehudian, No. 14-CV-4826 (AKT), 2018 WL 1767873, at *18
(E.D.N.Y. Feb. 15, 2018) (“Courts apply federal common law to determine whether the set-off
rule is applicable to a plaintiff’s claim for RICO damages.”); Tho Dinh Tran v. Alphonse Hotel
Corp., 281 F.3d 23, 35-37 (2d Cir. 2002) (holding that federal common law governs statute of
limitations and tolling thereof in RICO actions); Epstein v. Epstein, 966 F. Supp. 260, 260-61
(S.D.N.Y. 1997) (holding that federal common law governs survival of RICO claims).
Accordingly, the Court holds that the validity of the Assignment is governed by federal law. 8
B. AlixPartners Did Not Assign Its RICO Claims to Alix
Having determined that federal common law governs both the assignability of federal
claims and the validity of the Assignment, the Court must now apply that law. On the
assignability front, it is well settled that “RICO claims are assignable.” Kalimantano GmbH v.

8

It follows that McKinsey’s challenge to the Assignment on the ground that it violates
New York’s champerty law, see McKinsey Mem. 17-21, fails.

11

Motion in Time, Inc., 939 F. Supp. 2d 392, 400 n.2 (S.D.N.Y. 2013); accord Zap Cellular, Inc. v.
Kurland, No. 15-CV-682 (BMC), 2015 WL 8207315, at *6 (E.D.N.Y. Dec. 6, 2015).
Meanwhile, on the validity (or scope) front, it is equally well settled that, “in order to make [an]
assignment valid, ‘the owner must manifest an intention to make the assignee the owner of the
claim.’” Sonterra Cap. Master Fund, Ltd. v. Barclays Bank PLC, 403 F. Supp. 3d 257, 263
(S.D.N.Y. 2019) (quoting Advanced Magnetics Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 21
(2d Cir. 1997)); see DNAML, 2015 WL 9077075, at *4 (applying “ordinary principles of contract
law” to determine whether the assignment at issue “effectively made an assignment of the right
to bring an antitrust claim”). “[I]f the accrued causes of action are not expressly included in the
assignment, the assignee will not be able to prosecute them.” Sonterra Cap. Master Fund, 403
F. Supp. 3d at 263 (quoting John Wiley & Sons, Inc. v. DRK Photo, 882 F.3d 394, 404 (2d Cir.
2018)).
The express assignment requirement applies “with particular force” in the antitrust and
RICO contexts. Id.; see Lerman v. Joyce Int’l, Inc., 10 F.3d 106, 112 (3d Cir. 1993) (“[A]n
assignment of a RICO claim must . . . be express.” (internal quotation marks omitted)); JGIAP
RH 160 LLC v. CRI Holding Corp., No. 21-CV-2489 (DG) (JRC), 2023 WL 5979125, at *7-8
(E.D.N.Y. Aug. 16, 2023) (requiring “language in the assignments demonstrating an intent to
assign the [RICO] claims at issue”), report and recommendation adopted by 2023 WL 6307320
(E.D.N.Y. Sept. 28, 2023); Zap Cellular, 2015 WL 8207315, at *6 (finding an assignment that
“broadly includes all causes of action, which encompasses the RICO claims since such claims
are generally assignable,” sufficiently express (cleaned up)). It means that a “transferee must
expressly assign the right to bring that cause of action, either by making specific reference to the
[] claim or by making an unambiguous assignment of causes of action in a manner that would

12

clearly encompass the [] claim.” DNAML, 2015 WL 9077075, at *3. In the case of RICO,
examples of the latter would include an assignment of claims that “aris[e] in tort” because civil
RICO “is often described as [a] statutory tort,” Lateral Recovery, LLC v. Cap. Merch. Servs.,
LLC, 632 F. Supp. 3d 402, 444 (S.D.N.Y. 2022) (internal quotation marks omitted), or, more
broadly, an assignment of “all . . . causes of action formerly attributed to [the assignor],” Zap
Cellular, 2015 WL 8207315, at *6; accord Lerman, 10 F.3d at 112 (holding that assignment of
“all of [the assignor’s] causes of action and claims . . . of whatsoever nature” was “unambiguous
and all-inclusive” and thus “express” (internal quotation marks omitted)).
At oral argument, counsel for Alix contended that the express assignment requirement (if
it exists at all) requires only that claims generally — as opposed to other forms of property — be
expressly assigned, not specific causes of action. See Oral Argument Tr. 29-30. But that
argument misunderstands the rationale behind the requirement, which is intended to avoid “the
difficulty of determining on a case-by-case basis whether an assignment . . . had been intended
by the parties to transfer” the specific claims at issue. Lerman, 10 F.3d at 112. Nor can that be
squared with Second Circuit precedent, which has parsed assignments to determine whether they
encompass the particular claims at issue. Compare, e.g., Sonterra, 403 F. Supp. 3d at 264
(applying the express assignment requirement and finding that the phrase “securities class action
lawsuit” in an assignment did not encompass “‘any kind of class action lawsuit’ related to
FrontPoint’s transaction in financial products”), with, e.g., Zap Cellular, 2015 WL 8207315, at
*6 (finding that an assignment including “all ‘causes of action’” encompassed RICO claims); see
also Banque Arabe et Internationale D’Investissement v. Md. Nat’l Bank, 57 F.3d 146, 151 (2d
Cir. 1995) (“Under New York law, the assignment of the right to assert contract claims does not
automatically entail the right to assert tort claims arising from that contract.”).

13

Thus, whether the Assignment included the RICO claims that Alix brings here turns on
whether it made “specific reference” to those claims or made “an unambiguous assignment of
causes of action in a manner that would clearly encompass” them. DNAML, 2015 WL 9077075,
at *3. It did neither. It plainly made no “specific reference” to RICO (or to related terms, such
as racketeering or organized crime). Nor did it make “an unambiguous assignment of causes of
action in a manner that would clearly encompass” RICO claims. To the contrary, the
Assignment made specific reference to “claims or causes of action against McKinsey & Co., Inc.
and affiliates for illegal competitive activity in the crisis management and consulting business
involving major bankruptcy cases.” Assignment (emphasis added). And the phrase “illegal
competitive activity” is naturally construed to mean antitrust, not RICO, claims. See, e.g., Gatt
Commc’ns, Inc. v. PMC Assocs., LLC, 711 F.3d 68, 76 (2d Cir. 2013) (discussing the “three-step
process for determining whether a plaintiff has sufficiently alleged antitrust injury,” including
that “the party asserting that it has been injured by an illegal anticompetitive practice must
identify the practice complained of and the reasons such a practice is or might be
anticompetitive” (cleaned up)); 7 West 57th St. Realty Co., LLC v. Citigroup, Inc., 314 F. Supp.
3d 497, 512 (S.D.N.Y. 2018) (finding that antitrust injury was plausibly alleged where the
plaintiff had “identified an illegal anticompetitive practice” (internal quotation marks omitted));
In re Libor-Based Fin. Instruments Antitrust Litig., No. 11-MDL-2262 (NRB), 2015 WL
4634541, at *1 (S.D.N.Y. Aug. 4, 2015) (“Plaintiffs failed to state antitrust claims because their
injuries were not ‘antitrust injuries’ that flowed from the anti-competitive nature of defendants’
alleged conduct.” (emphasis added)). Indeed, the Black’s Law Dictionary entry for the similar
term “competition law” simply incorporates by reference the entry for “antitrust law,” which, in
turn, is defined as “[t]he body of law designed to protect trade and commerce from restraints,

14

monopolies, price-fixing, and price discrimination.” BLACK’S LAW DICTIONARY 115, 344 (10th
ed. 2014). 9
That is true even though, as discussed above, RICO and the federal antitrust statutes share
some structural similarities. At their substantive core, they are aimed at distinct types of
conduct. “Whereas antitrust law and statutes are ultimately intended to prevent corporations
from exerting monopolizing anticompetitive force, the language of RICO is clearly aimed at
individual ‘racketeers’ infiltrating legitimate business.” USA Certified Merchs., LLC v. Koebel,
262 F. Supp. 2d 319, 329 n.3 (S.D.N.Y. 2003) (citing Cedric Kushner Promotions, Ltd. v. King,
533 U.S. 158, 165-66 (2001)). But see Virginia G. Maurer, Antitrust and RICO: Standing on the
Slippery Slope, 25 GA. L. REV. 711, 747-48 (1991) (“[RICO], like antitrust laws, provides both
criminal and civil sanctions for illegal competitive activity.”). Indeed, “RICO was enacted to
prevent organized crime from infiltrating America’s legitimate business organizations” and
operates by proscribing a “pattern of racketeering activity,” which, in turn, is “defined to include
a variety of federal and state crimes, including murder, kidnapping, gambling, arson, robbery,
bribery, extortion, wire fraud, and mail fraud.” Frederick v. Wells Fargo Home Mortg., No. 13CV-7364 (DLI), 2015 WL 1506394, at *8 (E.D.N.Y. Mar. 30, 2015) (citing 18 U.S.C. § 1961(1)
(internal quotation marks omitted)); see also Stevenson v. Thornburgh, No. 23-CV-4458 (CM),
2024 WL 645187, at *9 (S.D.N.Y. Feb. 14, 2024) (“Congress’s goal in enacting the RICO statute
was to prevent legitimate businesses from becoming infiltrated by organized crime, although the
statute’s reach is not limited to mobsters”). True to RICO’s focus, Alix rests his RICO claims

9

Whether the Assignment met the express assignment requirement and thus encompassed
Alix’s RICO claims is an objective question of law for the Court. But it is worth noting that
AlixPartners’ own General Counsel admitted in an email (filed under seal) that she was
“surprise[d]” that Alix had brought RICO claims. See ECF No. 336-14, at 3.

15

here on bankruptcy fraud, mail and wire fraud, obstruction of justice and witness tampering,
inducement to interstate or foreign travel, and money laundering. See, e.g., SAC ¶ 510. His
claims are not based on “illegal competitive activity,” the realm of antitrust law, per se.
Moreover, the similarities between antitrust claims and RICO claims are ultimately
beside the point. Under the express assignment requirement, the question is not whether the
phrase “illegal competitive activity” squarely and unambiguously excludes RICO claims, but
rather whether the language “unambiguous[ly]” and “clearly” includes such claims. DNAML,
2015 WL 9077075, at *3. Thus, it is not enough to argue — as counsel for Alix did at oral
argument — that the phrase “illegal competitive activity” could encompass some kinds of RICO
claims. Neither plausibility nor possibility alone satisfies the requirements of federal law. It
follows that AlixPartners did not effectively assign to Alix the RICO claims that he brought in
this action. And because RICO claims were not validly assigned at all, it necessarily follows that
the RICO claims that Alix brought against individuals associated with McKinsey also were not
validly assigned, rendering the independent arguments raised by the Individual Defendants moot.
C. Alix Lacks Standing and Cannot Obtain Standing Through Ratification
What the implications of that conclusion are for purposes of this case is a more complex
question, if only because the applicable precedent is confusing, if not internally inconsistent.
The question turns on the complex interplay between Article III standing — which generally
requires proof that, at the time a case was filed, the plaintiff suffered a cognizable injury — and
Rule 17 — which allows a “real party in interest” to ratify, join, or be substituted into an action.
The Court begins with undisputed first principles. Article III of the Constitution
“restricts the federal ‘judicial Power’ to the resolution of ‘Cases’ and ‘Controversies.’” Sprint
Commc’ns Co., L.P. v. APCC Servs., Inc., 554 U.S. 269, 273 (2008). “That case-or-controversy

16

requirement is satisfied only where a plaintiff has standing” to bring suit, which requires the
plaintiff to “adequately establish,” among other things, “an injury in fact (i.e., a ‘concrete and
particularized’ invasion of a ‘legally protected interest’).” Id. (quoting Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61 (1992)). Standing helps to “ensure, in every case or controversy,
that concrete adverseness which sharpens the presentation of issues upon which the court so
largely depends for illumination.” Id. at 288 (internal quotation marks omitted). And
significantly, it is a threshold requirement that must be met at the outset of a case. See Lujan,
504 U.S. at 570 n.5 (“[S]tanding is to be determined as of the commencement of suit.”); see also
Davis v. Fed. Election Comm’n, 554 U.S. 724, 734 (2008) (“The standing inquiry focuses on
whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was
filed.” (citing Friends of the Earth, Inc. v. Laidlaw Env’t Servs. (TOC), Inc., 528 U.S. 167, 180
(2000))). On top of the requirement of Article III standing, a plaintiff generally must also stay
on the right side of the so-called “prudential standing” line, which “normally bars litigants from
asserting the rights or legal interests of others in order to obtain relief from injury to themselves.”
Patterson v. Patterson, No. 20-CV-2552 (PMH), 2022 WL 356513, at *4 (S.D.N.Y. Feb. 7,
2022) (quoting Keepers, Inc. v. City of Milford, 807 F.3d 24, 40 (2d Cir. 2015)).
All of that said, there is at least one circumstance in which a plaintiff can sue to obtain
relief for an injury caused to another party: when the relevant claim was assigned to the plaintiff
by the injured party. Any doubt on that score was settled by the Supreme Court’s decision in
Sprint, which held that “[l]awsuits by assignees . . . are cases and controversies of the sort
traditionally amenable to, and resolved by, the judicial process.” 554 U.S. at 285 (internal
quotation marks omitted). The assignment of a claim from an injured party to a plaintiff allows
the plaintiff “to ‘stand in the place of the injured party’ and satisfy constitutional standing

17

requirements.” Cortlandt St. Recovery Corp. v. Hellas Telecomm., S.a.r.l, 790 F.3d 411, 418 (2d
Cir. 2015) (quoting W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100,
107 (2d Cir. 2008)). But “[t]o assign a claim effectively, the claim’s owner must manifest an
intention to make the assignee the owner of the claim.” Id. (internal quotation marks omitted).
That is, a “would-be assignor” must “transfer at least title or ownership, i.e., to accomplish a
completed transfer of the entire interest of the assignor in the particular subject of assignment,”
as opposed to, say, creating a mere “power of attorney.” Id. (internal quotation marks omitted).
At first glance, a straightforward application of these fundamental principles would seem
to doom Alix’s claims. First, Alix did not suffer injury-in-fact (or, to be more precise and as
discussed in more detail below, the injury-in-fact alleged in his Complaint); AlixPartners did.
Thus, Alix lacked Article III standing at the time this lawsuit was filed, seemingly depriving this
Court of subject-matter jurisdiction over the case. Second, for the reasons discussed above,
AlixPartners did not manifest an intention to make Alix the owner of the RICO claims that he
brings in this case. Thus, at least when Alix filed his case, he did not “stand in the place” of
AlixPartners for purposes of those claims “and satisfy constitutional standing requirements” in
that way. Cortlandt St. Recovery Corp., 790 F.3d at 418. But the plot is thicker than that
because the Second Circuit has held that some defects of these sorts can be cured under Rule 17,
which requires that “[a]n action must be prosecuted in the name of the real party in interest,”
Fed. R. Civ. P. 17(a)(1), but provides, in more relevant part, that a “court may not dismiss an
action for failure to prosecute in the name of the real party in interest until, after an objection, a
reasonable time has been allowed for the real party in interest to ratify, join, or be substituted
into the action,” Fed. R. Civ. P. 17(a)(3). “After ratification, joinder, or substitution,” the Rule

18

continues, “the action proceeds as if it had been originally commenced by the real party in
interest.” Id.
Two of the Circuit’s decisions loom especially large here. In the first, Cortlandt Street
Recovery Corp., the plaintiff, Cortlandt, sued to collect on defaulted notes as the assignee of
certain noteholders. The district court held that Cortlandt lacked Article III standing because it
did not allege that it had title to the noteholder’s claims and denied Cortlandt the opportunity to
cure the deficiency under Rule 17(a)(3). See 790 F.3d at 416. On appeal, the Second Circuit
affirmed both decisions. As to the former, the Court held that Cortlandt alleged neither “direct
injury” of its own, id. at 417-18, nor a valid assignment from the injured noteholders, see id. at
418-19. At most, the Court reasoned, Cortlandt alleged something akin to a power of attorney,
which is not enough for a plaintiff “to bring the claim in his or her own name and satisfy the
requirements of constitutional standing.” Id. at 420.
As to the latter, the Circuit observed that it had never addressed the question —
previously answered by the Sixth Circuit in the negative, see Zurich Ins. Co. v. Logitrans, Inc.,
297 F.3d 528, 531 (6th Cir. 2002) — “whether a plaintiff may use Rule 17(a)(3) to remedy a
standing deficiency when it lacks standing as to all of its claims,” Cortlandt St. Recovery Corp.,
790 F.3d at 423. But the Court declined to answer the question, concluding that it need not do so
“because neither of the requests made by Cortlandt in its effort to cure the standing problem
would have been consistent with Rule 17(a)(3).” Id. at 423. Cortland’s first request — to
substitute the noteholders for it as plaintiffs — failed because it would have created “a different,
fatal jurisdictional defect,” i.e., lack of complete diversity (“the only potential basis for federal
subject matter jurisdiction”). Id. at 423-24. More relevant here, Cortland’s second request —
for leave to obtain a new assignment — failed because it would have required amendment of

19

“the original complaint’s factual allegations as to the events or the participants” and, thus,
exceeded the bounds of what Rule 17(a)(3) permits. Id. at 424; see id. (“We have ordinarily
allowed amendments under Rule 17 only when a mistake has been made as to the person entitled
to bring suit and such substitution will not alter the substance of the action.” (internal quotation
marks omitted)). “Cortlandt’s legal claims might remain unaltered if a new assignment were
substituted for the old one,” the Court explained, “but the factual allegations supporting them
would not. Unlike a substitution, . . . pleading the existence of a new and substantively different
assignment would require more than a merely formal alteration of the complaint.” Id. (internal
quotation marks omitted).
Six years later, in Fund Liquidation Holdings LLC v. Bank of America Corporation, 991
F.3d 370 (2d Cir. 2021), the Second Circuit answered the question it had ducked in Cortlandt
Street Recovery Corp., parting ways with the Sixth Circuit. Fund Liquidation Holdings involved
a suit by two Cayman Islands investment funds regarding the manipulation of certain benchmark
interest rates. After the suit was filed, the defendants discovered that the two funds “had been
dissolved years earlier, and that the case was actually being prosecuted by a separate entity, Fund
Liquidation Holdings LLC,” which alleged that it had been “assigned the dissolved entities’
claims.” Id. at 375. The district court initially permitted Fund Liquidation Holdings to join the
case in its own name pursuant to Rule 17(a)(3). See id. at 377. But later, following a challenge
by the defendants, the district court dismissed the case for lack of subject-matter jurisdiction on
the ground that, because the two funds (the “Dissolved Funds”) had “lacked capacity to sue” at
the outset, “there was no real ‘case or controversy’ before the court,” and this jurisdictional
defect could not be retroactively cured under Rule 17. See id. at 377-78.

20

The Second Circuit vacated and remanded. The Court began by rejecting the defendants’
argument that the Dissolved Funds’ “pre-filing assignment of their claims stripped [them] of
Article III standing,” citing the well-established principle that “an assignment does not erase an
injury.” Id. at 380-81 (citing Cranpark, Inc. v. Rogers Grp., Inc., 821 F.3d 723, 730-31 (6th Cir.
2016)). “[T]he Dissolved Funds’ alleged injury,” the Court reasoned, was no less real and “no
less redressable through an award of damages simply because legal title to their claims” had been
transferred to Fund Liquidation Holdings. Id. at 381. But, the Court concluded, the Dissolved
Funds lacked standing because, under Cayman Islands law, they “did not legally exist when the
case was filed.” Id. at 384. “After all,” the Court explained, “the most elemental requirement of
adversary litigation is that there be two or more parties, meaning that absent a plaintiff with legal
existence, there can be no Article III case or controversy.” Id. (cleaned up).
The Court then turned to “what to make of that fact.” Id. at 386. The Court explained
that the evolution of pleading requirements culminating in Rule 17 revealed, first, that “the rule
concerning which party’s name a case must be prosecuted under (either the nominal plaintiff or
the real party in interest) is non-jurisdictional,” and, second, that there is “no constitutional
magic behind whether the name of a nominal plaintiff or a real party in interest is initially put in
the caption of a pleading.” Id. at 388. “When viewed this way,” the Court continued, “filing a
complaint in the name of a deceased or non-existent nominal plaintiff is akin to an error in the
complaint’s allegations of jurisdiction. And it is well-understood that a plaintiff may cure
defective jurisdictional allegations, unlike defective jurisdiction itself, through amended
pleadings.” Id. at 388-89 (citing cases). Parting ways with the Sixth Circuit’s decision in Zurich
Insurance, which had concluded that a case started in the name of a plaintiff that lacks standing
is a legal nullity, the Court thus held: “Article III is satisfied so long as a party with standing to

21

prosecute the specific claim in question exists at the time the pleading is filed. If that party (the
real party in interest) is not named in the complaint, then it must ratify, join, or be substituted
into the action within a reasonable time.” Id. at 386.
The Circuit, applying that holding, concluded that the district court had erred in
dismissing the case for lack of subject-matter jurisdiction. Substitution of Fund Liquidation
Holdings for the Dissolved Funds, the Court reasoned, “does not substitute a new cause of action
over which there is subject-matter jurisdiction for one in which there is not. Rather, a real party
in interest who has been assigned a claim is the functional equivalent of the original plaintiff —
an assignee steps into the shoes of the assignor. So even though Fund Liquidation is replacing
the Dissolved Funds as the named party, it is prosecuting the Dissolved Funds’ claims.” Id. at
389 (cleaned up); see In re AXA Equitable Life Ins. Co. COI Litig., No. 16-CV-740 (JMF), 2022
WL 3018104, at *4 (S.D.N.Y. July 29, 2022) (noting that “the dissolved funds [in Fund
Liquidation Holdings] were plainly asserting their own injuries based on the defendants’
manipulation of benchmark interest rates”). Pointedly, the Court noted that these facts were
different from those in Zurich Insurance, “in which the originally named plaintiff never
possessed a claim against the defendant.” Id. at 389 n.10 (citing Zurich Ins., 297 F.3d at 532).
Applying these cases here, the Court concludes that the defect in Alix’s suit is not
amenable to cure, whether by way of ratification (which Alix proposes here), substitution (which
Alix does not propose), or joinder (same). Alix sued for damages in his own name and for his
own benefit, but he neither suffered the injury for which he sued nor was assigned the claims he
brought by the party that did suffer that injury. Put simply, unlike Fund Liquidation Holdings,
this is a case “in which the originally named plaintiff never possessed a claim against the
defendant.” Id. at 389 n.10. It is not enough to say that AlixPartners would have had Article III

22

standing to bring its own RICO claims against Defendants or to say that Alix would have had
Article III standing to bring some other claim against Defendants because “standing is not
dispensed in gross; rather, plaintiffs must demonstrate standing for each claim that they press
and for each form of relief that they seek.” TransUnion LLC v. Ramirez, 594 U.S. 413, 431
(2021) (emphasis added). In other words, the defect in this case is not merely a “technical error
in the original pleading’s caption” — the type of “merely formal” error that the Fund Liquidation
Holdings Court held could be cured under Rule 17(a)(3) without giving offense to Article III.
991 F.3d at 391, 392 n.14. Instead, it goes directly to “the concerns animating a constitutional
principle.” Id. at 391 (internal quotation marks omitted). Had AlixPartners brought this suit on
its own behalf (and for its own benefit) in the first instance, Defendants would be facing a
different party with different substantive rights and interests at issue in the action. A cure here
would thus require more than an amendment to the caption of the operative Complaint; it would
require either “substitut[ing] a new cause of action over which there is subject-matter jurisdiction
for one in which there is not,” id. at 389, or “pleading the existence of a new and substantively
different assignment,” Cortlandt Str. Recovery Corp., 790 F.3d at 424. 10

10

Alix relies here only on ratification. See Alix Opp’n 39-43. But the other remedies
available under Rule 17 — namely, substitution and joinder — would fare no better. Neither
would endow Alix with standing, and AlixPartners does not have standing to bring the specific
claims Alix has brought, which seek to recover damages in Alix’s name and for his benefit. In
any event, AlixPartners has not only failed to seek substitution or joinder, but it has affirmatively
sought to distance itself from this suit. See, e.g., ECF No. 262, at 5 (AlixPartners contending that
it “is a nonparty in the lawsuit” and thus “defendants may only seek discovery from AlixPartners
pursuant to Federal Rule of Civil Procedure 45”); ECF No. 350, at 1-2 (AlixPartners opposing a
motion to compel discovery in part on the grounds that “AlixPartners did not file the SAC and
has not levied any of the allegations therein” and “[t]here is no evidence reflecting that
AlixPartners had any involvement in the filing of this action, is in any way behind its allegations,
or has any knowledge of what Mr. Alix was thinking when he made any of the allegations
therein”). That is, AlixPartners has shown no indication that it “is willing to join the case.”
Fund Liquidation Holdings, 991 F.3d at 388. Quite the opposite. See also Branch of Citibank
NA v. De Nevares, 74 F.4th 8, 21 (2d Cir. 2023) (“Unlike Fund Liquidation Holdings, however,
23

Indeed, to hold otherwise would be to permit by way of ratification what the Cortlandt
Street Recovery Corp. Court prohibited by way of substitution — with nothing in the language of
Rule 17 justifying the distinction. As discussed above, in Cortlandt Street Recovery Corp., the
Court rejected the plaintiff’s request for an opportunity “to create and execute a new assignment
transferring complete title and ownership of the claims in issue.” 790 F.3d at 424. Amendments
under Rule 17, the Court explained, are “ordinarily allowed . . . only when a mistake has been
made as to the person entitled to bring suit and such substitution will not alter the substance of
the action. Cortlandt’s legal claims might remain unaltered if a new assignment were substituted
for the old one, but the factual allegations supporting them would not.” Id. (cleaned up). So too
here. Allowing Alix to obtain a new, broader assignment or allowing him to do the functional
equivalent through ratification (especially when that would fall short of the complete transfer of
title required for an assignee to step into the shoes of the assignor for purposes of Article III)
would be to allow “more than a ‘merely formal’ alteration of the complaint.” Id. 11 Such an
amendment would not be “consistent with Rule 17(a)(3).” Id. at 423; see Fund Liquidation

Citibank has not moved to substitute itself into this action. Far from it: The Branch’s theory of
the case, from the first few pages of the Petition onward, has fundamentally been premised on
the claim that Citibank and the Branch are distinct entities.”).
11

It is true that the complaint in Cortlandt Street Recovery Corp. alleged that the plaintiff
had been “assigned ‘full rights under the assignments to collect principal and interest due and to
pursue all remedies,’” 790 F.3d at 424, while the Second Amended Complaint here alleges only
in conclusory fashion that the claims asserted were “fully and lawfully assigned to Alix by
[AlixPartners],” SAC ¶ 34. But it would elevate form over substance to hold that a party can
cure a subject-matter jurisdiction problem by way of Rule 17 so long as the party’s allegations
are entirely conclusory, especially in light of the well-established rule that courts may consider
evidence outside of the pleadings in assessing whether they have subject-matter jurisdiction.
See, e.g., Makarova, 201 F.3d at 113.

24

Holdings, 991 F.3d at 392 n.14 (citing Cortlandt Street Recovery Corp. for the proposition that
Rule 17 limits the scope of permissible amendment to the “merely formal”). 12
Holding that ratification retroactively vests Alix with Article III standing would also run
afoul of the Rules Enabling Act, 28 U.S.C. § 2072. “The Rules Enabling Act provides that the
Federal Rules of Civil Procedure ‘shall not abridge, enlarge[,] or modify any substantive right.’”
Bugliotti v. Republic of Argentina, 67 F.4th 102, 107 (2d Cir. 2023) (quoting 28 U.S.C.
§ 2072(b)). Accordingly, “the procedural mechanisms set forth in Rule 17(a) for ameliorating
real-party-in-interest problems may not be employed to expand substantive rights.” Id. (cleaned
up) (quoting Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het
Kapitaal Van Saybolt Int’l B.V. v. Schreiber, 407 F.3d 34, 49 (2d Cir. 2005)). Applying that
principle, the Second Circuit held in Federal Treasury Enterprise Sojuzplodoimport v. SPI
Spirits Ltd., 726 F.3d 62 (2d Cir. 2013), that even when a ratifying entity “endorses [the
plaintiff’s] authority to bring [the] suit and is willing to be bound” by its results — as Alix argues
is the case here — “plaintiffs cannot deploy Rule 17 to bypass” a statutory standing requirement,
id. at 83. “[T]o extend standing to [a plaintiff] through ‘ratification’ under Rule 17(a),” the
Court explained, “would do more than alter ‘the manner and the means’ for enforcing the
[ratifying entity’s] rights” — it would “extend the entitlement to sue to a new party that is
otherwise unauthorized . . . to bring suit to enforce whatever rights it may claim.” Id. (citation
omitted); see also Del Re v. Prudential Lines, Inc., 669 F.2d 93, 97-98 (2d Cir. 1982) (holding
12

The Fund Liquidation Holdings Court suggested that “more substantive amendments”
might be permissible “through a motion made jointly under both Rule 15 and Rule 17.” 991
F.3d at 392 n.14. But it did not take a position on the issue. See also id. at 390 (noting that the
Court had “never taken a position on” whether Rule 15(d) could be used to cure a jurisdictional
defect that existed at the time of the initial filing and declining to do so there). Neither does the
Court here, as Alix has not relied on Rule 15 or any “other rule of civil procedure . . . . [He] has
relied upon only Rule 17.” Cortlandt Street Recovery Corp., 790 F.3d at 424-25.

25

that a “purported ‘ratification’ under Rule 17(a) must be rejected” where giving effect to the
ratification would defeat the purposes of the relevant congressional statutory scheme). The same
is true here: To find ratification sufficient would be to permit expansion of the scope of the
Assignment (or creation of a new Assignment from whole cloth), and thus permit an enlargement
or modification of Alix’s substantive rights, in a manner prohibited the Rules Enabling Act.
Permitting Alix to continue prosecuting the claims asserted in this action by virtue of
AlixPartners’s ex post ratification would also be antithetical to the “long established principle
that ‘parties may not confer subject matter jurisdiction on the court by consent.’” Sharehold
Representative Servs. LLC v. Sandoz Inc., No. 12-CV-6154 (DLC), 2013 WL 4015901, at *9
(S.D.N.Y. Aug. 7, 2013) (quoting United States v. 27.09 Acres of Land, 1 F.3d 107, 111 (2d Cir.
1993)). “[T]he term ‘ratification’ in Rule 17(a) ‘implies that the [ratifier] is the party in interest
for whom the present action was commenced.” Alaska Russia Salmon Caviar Co., Inc. v. M/V
“Marit Maersk,” No. 98-CV-7685 (DLC), 2000 WL 145124, at *5 (S.D.N.Y. Feb. 2, 2000)
(quoting Del Re, 669 F.2d at 97). Here, because Alix “has brought this suit in [his] own name to
benefit [himself,] . . . this is not a case of ‘ratification.’” See id. That is, ratification would not
change the fact that Alix has no enforceable interest in the claims he asserts and would therefore
still result in a party lacking injury-in-fact (Alix) litigating against Defendants in federal court.
In arguing that the defect here may be cured, Alix relies on the Second Circuit’s decision
in Advanced Magnetics. See Alix Opp’n 40-42. In that case, the plaintiff company (“AMI”)
brought suit against the defendants for “shorting” stock ahead of a secondary public offering in
which AMI and five of its shareholders planned to sell 1.75 million shares. See 106 F.3d at 1314. AMI sued “partially in its own right and partially as assignee of the selling shareholders,”
relying in part on purported assignments that gave “AMI the power to commence and prosecute

26

to final consummation or compromise any suits, actions or proceedings at law or in equity in any
court of competent jurisdiction which arise from the above-[described] claims.” Id. at 14. On
appeal, the Circuit held that the assignments transferred only power of attorney with respect to
the shareholders’ claims, not ownership of the claims themselves, and thus AMI was not entitled
to bring those claims “in [its] own name.” Id. at 17-18. But it also held that the district court
should have permitted substitution of the selling shareholders as the named plaintiffs with
respect to their claims, noting that Rule 17 “is applicable in the present case because if AMI has
no standing to pursue the claims of the selling shareholders, it is precisely because the selling
shareholders are, with respect to those claims, the real parties in interest.” Id. at 20. Advanced
Magnetics thus stands for the proposition that “[a] Rule 17(a) substitution of plaintiffs should be
liberally allowed when the change is merely formal and in no way alters the original complaint’s
factual allegations as to the events or the participants.” Id.
Advanced Magnetics does complicate the picture somewhat because it suggests, contrary
to the discussion above, that a plaintiff’s lack of standing at the outset of a case can be cured by
way of Rule 17(a)(3), but the decision ultimately does not bear the weight that Alix would put on
it for the simple reason that the decision did not “examine the relationship between constitutional
standing requirements and Rule 17.” Cortlandt St. Recovery Corp., 790 F.3d at 422 n.6. 13

13

Some courts (including, arguably, the Second Circuit in Cortlandt Street Recovery Corp.)
have attempted to square the decision in Advanced Magnetics with general Article III principles
on the ground that AMI “had standing irrespective of any amendment under Rule 17 to pursue at
least some of its claims against the defendants.” 790 F.3d at 422 (citing cases). That explanation
is not fully satisfactory, however, because “judgments about standing are made based on an
independent analysis of each particular claim.” Digizip.com, Inc. v. Verizon Servs. Corp., 139 F.
Supp. 3d 670, 678 (S.D.N.Y. 2015). An alternative, and perhaps more persuasive explanation,
drawn from the subtext of the Circuit’s opinion and suggested by Defendants at oral argument in
this case, is that the Advanced Magnetics Court viewed the error as “akin to an error in the
complaint’s allegations of jurisdiction,” rather than a substantive lack of jurisdiction over the atissue claims. Fund Liquidation Holdings, 991 F.3d at 388; see also Oral Argument Tr. at 42-43.
27

Indeed, it is well established that “[w]hen a potential jurisdictional defect is neither noted nor
discussed in a federal decision, the decision does not stand for the proposition that no defect
existed.” Arizona Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 144-45 (2011); see, e.g.,
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 91 (1998) (“[D]rive-by jurisdictional rulings
. . . have no precedential effect.”). In any event, the Second Circuit has since made clear that
Advanced Magnetics does not stand for the proposition that a lack of Article III standing at the
inception of a case is curable by way of Rule 17. Indeed, in Fund Liquidation Holdings itself,
the Circuit characterized Advanced Magnetics as “indicating that courts have the power to permit
a real party in interest to join an action under Federal Rule of Civil Procedure 17 where the
originally named plaintiff had standing.” 991 F.3d at 380 (emphasis added). In short, in the face
of the Circuit’s more recent and direct confrontations with the interplay of Article III and Rule
17, Advanced Magnetics does not alter the Court’s conclusion.
In a last-ditch effort to salvage his claims, Alix invokes Franchise Tax Board of
California v. Alcan Aluminium Ltd., 493 U.S. 331 (1990), to assert that he may have Article III
standing separate and apart from the Assignment by virtue of his position as “a major
shareholder in AlixPartners.” Oral Argument Tr. 24-25. But this argument is too little, too late.
It is too late because Alix failed to raise it until oral argument. See, e.g., Tamar v. Mind C.T.I.,
Ltd., 723 F. Supp. 2d 546, 555 (S.D.N.Y. 2010) (“[T]his argument was raised for the first time at
oral argument and so was waived in terms of this motion.”); Gao v. Barr, 968 F.3d 137, 141 n.1
(2d Cir. 2020) (“It is well established that arguments raised for the first time at oral argument are
That interpretation is bolstered by the fact that there was no dispute in Advanced Magnetics that
AMI had the authority to bring and prosecute the shareholders’ claims — it merely had to name
the shareholders as the real parties in interest. See Advanced Magnetics, 106 F.3d at 18-21. In
other words, AMI did not purport to bring any claims it did not have authority to bring, and the
defects in the assignments indeed resulted in only a nominal error.

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deemed ‘waived.’”). And it is too little because, at most, Franchise Tax Board supports the
notion that, prudential considerations aside, Alix could have Article III standing to seek relief
from Defendants for his own injuries by virtue of his ownership stake in AlixPartners. See 493
U.S. at 336 (holding that foreign companies had Article III standing to challenge the way in
which their wholly owned subsidiaries’ locally taxable income was calculated on the ground that
the challenged method of calculation “threatens to cause actual financial injury to [the companies
themselves] by illegally reducing the return on their investments in [the subsidiaries] and by
lowering the value of their stockholdings”). But Alix does not seek relief for his own injuries.
To the contrary, he alleges standing only as assignee of AlixPartners and seeks relief only for the
injuries to AlixPartners, not for any injuries to himself. See SAC ¶¶ 8, 34, 498, 576, 678, 707.
In fact, in his briefing, he explicitly disavows “any personal claims against Defendants.” Alix
Opp’n 19 n.16.
All told, because AlixPartners never validly assigned its right, title, and interests in any
RICO claims to Alix, Alix never had (and still does not have) Article III standing to bring the
RICO claims asserted in this lawsuit. “That being so, Rule 17 provides no alternative avenue for
[Alix] to bring suit in federal court.” Bugliotti, 67 F.4th at 107 (citing Fed. Treasury, 726 F.3d at
83). It follows that Alix’s claims must be and are dismissed for lack of subject-matter
jurisdiction. At first glance, that result may smack of a technicality — especially in light of the
lengthy history of this litigation. But it is no mere technicality. Defendants raise colorable
arguments (albeit arguments that the Court ultimately need not reach) that Alix and AlixPartners
were playing games in the execution of the Agreement and their conduct surrounding this
litigation more broadly and that permitting Alix to proceed would arguably leave Defendants
vulnerable to a later suit by AlixPartners. See, e.g., McKinsey Mem. 4-9, 14-17, 21-24. In any

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event, Alix and AlixPartners could easily have protected against this result by being more careful
and precise in their negotiation of the Assignment. And regardless, because the defect goes to
the Court’s subject-matter jurisdiction, the Court lacks authority to reach a different disposition.
See, e.g., Steel Co., 523 U.S. at 94.
D. The Individual Defendants’ State-Law Counterclaims
With the dismissal of Alix’s claims, the only claims remining in this case are
counterclaims brought by two Individual Defendants, Seth Goldstrom and Kevin Carmody,
against Alix and AlixPartners for defamation under state law. See ECF Nos. 277, 286. It is well
settled that when, as here, a district court “dismisses all federal claims for lack of subject-matter
jurisdiction pursuant to Rule 12(b)(1), the district court is thereby precluded from exercising
supplemental jurisdiction over related state-law claims.” Cohen v. Postal Holdings, LLC, 873
F.3d 394, 399 (2d Cir. 2017). It follows that the counterclaims must be and are dismissed
without prejudice to refiling in state court, and the motion to dismiss those claims filed by Alix
and AlixPartners, see ECF No. 300, is moot.
E. Sealing
One housekeeping matter remains. The parties filed a slew of letter motions to seal
portions of their motion papers and supporting exhibits, see, e.g., ECF Nos. 329, 331, 341, 342,
352, 361, 364, 366, 376, 377, which the Court granted temporarily, pending its decision on the
underlying motions, see, e.g., ECF Nos. 340, 343, 357, 363, 374, 375, 378, 379. Filings that are
“relevant to the performance of the judicial function and useful in the judicial process” are
considered “judicial documents” to which a presumption in favor of public access attaches.
Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 119 (2d Cir. 2006). A three-part test
applies to whether documents may be placed under seal. First, “a court must . . . conclude that

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the documents at issue are indeed ‘judicial documents’ . . . and that therefore a common law
presumption of access attaches.” Id. at 119. Second, the court “must determine the weight of
that presumption,” which is “governed by the role of the material at issue in the exercise of
Article III judicial power and the resultant value of such information to those monitoring the
federal courts.” Id. (internal quotation marks omitted). “Finally, . . . the court must balance
competing considerations against” the presumption of access, including “the danger of impairing
law enforcement or judicial efficiency and the privacy interests of those resisting disclosure.” Id.
at 120 (internal quotation marks omitted). The party or parties seeking to maintain information
filed under seal bear “the burden . . . to demonstrate that the interests favoring non-access
outweigh those favoring access.” United States v. Amodeo, 44 F.3d 141, 148 (2d Cir. 1995). To
justify sealing on the ground that a party’s business interests may be harmed, that party “must
make a particular and specific demonstration of fact showing that disclosure would result in an
injury sufficiently serious to warrant protection; broad allegations of harm unsubstantiated by
specific examples or articulated reasoning fail to satisfy the test.” Ashmore v. CGI Grp. Inc., 138
F. Supp. 3d 329, 351 (S.D.N.Y. 2015), aff’d, 923 F.3d 260 (2d Cir. 2019).
Applying these standards here, the Court concludes that the text of the Assignment itself
— and any language therefrom discussed in the parties’ memoranda of law — must be unsealed.
First, the weight of the presumption in favor of public access to the Assignment itself is heavy
given the central role that it played in the Court’s resolution of Defendants’ motions. See
Lugosch, 435 F.3d at 119 (“[T]he weight to be given the presumption of access must be
governed by the role of the material at issue in the exercise of Article III judicial power and the
resultant value of such information to those monitoring the federal courts.” (quoting United
States v. Amodeo, 71 F.3d 1044, 1049 (2d Cir. 1995))). And second, Alix fails to overcome the

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presumption as to the Assignment. He cites the fact that the Assignment is subject to a
confidentiality agreement. See ECF No. 341, at 1. But, without more, that is not “a valid basis
to overcome the presumption.” Sjunde AP-Fonden v. Gen. Elec. Co., No. 17-CV-8457 (JMF),
2023 WL 6314939, at *20 (S.D.N.Y. Sept. 28, 2023). And while sealing may be appropriate to
protect “specific business information and strategies,” Louis Vuitton Malletier S.A. v. Sunny
Merch. Corp., 97 F. Supp. 3d 485, 511 (S.D.N.Y. 2015), Alix fails to explain how that interest
calls for protection of the Assignment itself as opposed to documents and information that might
reveal his “negotiation style and strategy” behind the Assignment, ECF No. 341, at 2.
By contrast, the Court concludes that the remainder of the parties’ sealed or redacted
materials may remain in that form, with the exception of the handful of excerpts from sealed
filings that are quoted in this Opinion and Order. At best, “[t]he weight of any presumption is
limited” with respect to these other documents because “the Court did not need to reference or
otherwise rely on” them in resolving Defendants’ motions. In re Accent Delight Int’l, Ltd., No.
16-MC-125 (JMF), 2019 WL 2849724, at *6 (S.D.N.Y. June 11, 2018). And to the extent that
the presumption applies to these documents at all, Alix’s legitimate “interest in sealing
documents regarding his negotiation style and strategy with respect to the Assignment” would
overcome it. ECF No. 341, at 2. Accordingly, the Assignment aside, the parties’ requests to
maintain the documents referenced in their various letter-motions to seal in sealed or redacted
form are GRANTED, albeit “without prejudice to any future application — by a party or any
third party — for reconsideration as to a particular document or documents.” Golden Unicorn
Enters., Inc. v. Audible, Inc., No. 21-CV-7059 (JMF), 2023 WL 6143567, at *5 (S.D.N.Y. Sept.
20, 2023). Within two weeks of the date of this Opinion and Order, (1) McKinsey shall refile
the materials filed at ECF No. 338 with Exhibit 1 and references thereto unsealed; (2) the

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Individual Defendants shall refile the materials filed at ECF No. 335 with Exhibit 1 and
references thereto unsealed; and (3) the parties shall refile their memoranda of law with amended
redactions in light of this Opinion and Order — namely, with quotations from and references to
the Assignment unredacted.
CONCLUSION
In light of the foregoing, Alix’s claims must be and are dismissed for lack of subjectmatter jurisdiction and, in light of that conclusion, the Court cannot and does not exercise
supplemental jurisdiction over Goldstrom and Carmody’s state-law counterclaims. The Court
does not reach that conclusion lightly given that it comes after six years of litigation, including
two motions to dismiss and one appeal. But Alix has no one to blame but himself — or perhaps
AlixPartners. It is not clear whether Alix and AlixPartners were merely careless in drafting the
Assignment or if they tried to play fast and loose in an effort to permit Alix to seek relief from
Defendants while shielding AlixPartners from the risks and obligations that would fall on a party
to a federal case and preserving AlixPartners’s ability to bring its own claims. Either way, they
did not take the steps that were necessary for Alix to press the claims he brings here.
In any event, because the Court concludes that it lacks subject-matter jurisdiction, it has
no choice but to dismiss. To proceed would “carr[y] the [C]ourt[] beyond the bounds of
authorized judicial action and thus offend[] fundamental principles of separation of powers.”
Steel Co., 523 U.S. at 94; see also Murthy v. Missouri, — S. Ct. —, No. 23-411, 2024 WL
3165801, at *7 (U.S. June 26, 2024) (“If a dispute is not a proper case or controversy, the courts
have no business deciding it, or expounding the law in the course of doing so.” (cleaned up)).
Moreover, the principles leading the Court to the conclusion that this case must be dismissed are
neither trivial nor merely technical. To the contrary, the Article III standing requirement —

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demanding that parties have a direct stake in the claims that they assert — serves to safeguard
fundamental principles of adversary litigation, fairness to litigants, and judicial modesty. As the
Supreme Court recently observed, the Article III standing requirement “helps ensure that courts
decide litigants’ legal rights in specific cases,” “serves to protect the ‘autonomy’ of those who
are most directly affected so that they can decide whether and how to challenge the defendant’s
action,” and “implements ‘the Framers’ concept of the proper — and properly limited — role of
the courts in a democratic society.’” Food & Drug Admin. v. Alliance for Hippocratic Med., 602
U.S. 367, 379-80 (2024). Indeed, “[n]o principle is more fundamental to the judiciary’s proper
role in our system of government than the constitutional limitation of federal-court jurisdiction to
actual cases or controversies.” Id. at 397 (quoting Simon v. E. Ky. Welfare Rts. Org., 426 U.S.
26, 37 (1976)).
Accordingly, McKinsey’s motion to dismiss is GRANTED, and both the Individual
Defendants’ motion to dismiss and Alix’s and AlixPartners’ motion to dismiss the counterclaims
are deemed moot. (The parties’ latest discovery disputes, see ECF Nos. 397 & 400, are also
moot.) The Clerk of Court is directed to terminate ECF Nos. 300, 328, 332, 397, 399, and 400;
to enter judgment in favor of Defendants in accordance with this Opinion and Order; and to close
the case.
SO ORDERED.
Dated: July 3, 2024
New York, New York

__________________________________
JESSE M. FURMAN
United States District Judge

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