Opinion
00 Civ. 0676 (JCF)
September 8, 2003
MEMORANDUM AND ORDER
The plaintiff, Torah Soft Ltd. ("Torah Soft"), has moved to remand this case to the New York State Supreme Court on the basis that this Court lacks subject matter jurisdiction. For the reasons set forth below, the plaintiff's motion is denied.
Background
This action was originally filed in New York State Supreme Court, New York County in 1998. In short, the plaintiff alleges that an author, Michael Drosnin, breached an agreement to provide publicity for Torah Soft in his book, The Bible Code. In response to the complaint, Mr. Drosnin filed counterclaims against Torah Soft and its principal shareholder and sole officer, Dr. Yochanan Spielberg, claiming that they breached an agreement by selling to the public software that had been designated for Mr. Drosnin's exclusive use. Mr. Drosnin also claims that Torah Soft and Dr. Spielberg engaged in unfair competition when they marketed the software with the allegedly false representation that Mr. Drosnin had used it to write The Bible Code.
In The Bible Code, Mr. Drosnin purported to have discovered prophesies of future events embedded within the text of the Hebrew Bible. The plaintiff created computer software that Mr. Drosnin used in connection with the creation of his book. The plaintiff claims that Mr. Drosnin agreed to acknowledge Torah Soft in the book and provide it with an opportunity to market its software with the book.
A complete discussion of the factual background of the case is set forth in a prior opinion, Torah Soft Ltd, v. Drosnin, 224 F. Supp.2d 604 (S.D.N.Y. 2002).
On January 31, 2000, the defendant removed this action to federal court pursuant to 28 U.S.C. § 1441(b) based on the determination that the plaintiff's claims relating to Mr. Drosnin's alleged use of certain print-outs in The Bible Code were essentially claims for copyright infringement over which the federal courts have exclusive jurisdiction. (Notice of Removal dated January 31, 2000, ¶¶ 5-11).
On March 1, 2000, the plaintiff filed a motion to remand the case to state court arguing that the lack of any federal question in the complaint prohibited removal. However, the Honorable Richard Conway Casey, U.S.D.J., ordered that Torah Soft's motion "be stricken from the docket for failure to abide by [his] Local Rules of Practice." (Order dated March 7, 2000, attached as Exh. C to the Declaration of Suzan Arden dated July 28, 2003 ("Arden Decl.")). Torah Soft did not again raise any formal objection to this Court's subject matter jurisdiction until July 2003.
This case is before me for all purposes on consent of the parties pursuant to 28 U.S.C. § 636(c). Now, immediately before trial is scheduled to commence, the plaintiff contends that this Court lacks subject matter jurisdiction and that the case should be remanded to state court pursuant to 28 U.S.C. § 1447(c). Essentially, the plaintiff claims that removal based on federal question jurisdiction was improper since Torah Soft asserted no federal question in its complaint. Moreover, Torah Soft argues that diversity jurisdiction is also an inadequate basis for jurisdiction since there has never been diversity of citizenship between the parties.
Discussion
Under 28 U.S.C. § 1447 (c) a district court is required to remand a case to state court "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." "In determining whether an action should be remanded, a court should refer to the complaint at the time the petition for removal was filed." Grace v. Corporation of Lloyd's, No. 96 Civ. 8334, 1997 WL 607543, at *3 (S.D.N.Y. Oct. 2, 1997) (citations omitted); see Charles Alan Wright, Arthur R. Miller Edward H. Cooper, 14C Federal Practice Procedure § 3739, at 468 ("[w]hether an action should be remanded to state court must be resolved by the district court with reference to the complaint, the notice of removal, and the state court record at the time the notice of removal was filed").
A. Federal Question Jurisdiction
The plaintiff asserts that this court lacks federal question jurisdiction under 28 U.S.C. § 1331. That statute provides that "[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States." 28 U.S.C. § 1331.
As noted above, the defendant initially premised his notice of removal on what he perceived to be a federal question in the plaintiff's complaint. While the plaintiff did not explicitly ground any of its allegations on federal law, the defendant believed that Torah Soft's claim relating to Mr. Drosnin's use of certain print-outs in The Bible Code were the plaintiff's "attempt to adjudicate a copyright claim over which [the federal courts have] exclusive jurisdiction." (Notice of Removal, ¶ 9).
The plaintiff's First Amended Complaint alleges the following:
53. The opening screen of the revised version [of the software] stated "Copyright 1992 Torah Soft . . . SPECIAL VERSION FOR THE USE OF MICHAEL DROSNIN ONLY," and a label on the disk containing the revised version of the Software states "For the use of Michael Drosnin."
98. The Bible Code includes no fewer than ninety-nine (99) print-outs from the Software. The defendants merely copied, without permission, directly from the Software in placing those print-outs in The Bible Code.
99. Of those, ninety-nine print-outs, nine comprise a full page of The Bible Code, and forty-two comprise at least one-half a page of the book.
(First Amended Complaint). The defendant was reasonable in concluding that all allegations pertaining to Mr. Drosnin's purported use of Torah Soft's print-outs combined with Torah Soft's "stated intent to pursue its copyright claim at some future time" dictated that "all of [Torah Soft's] claims must and should be litigated in a single proceeding before a United States court having jurisdiction over both claims." (Notice of Removal, ¶ 9).
Indeed, after this case was removed, the plaintiff filed a separate copyright action. Torah Soft Ltd, v. Drosnin, No. 00 Civ. 5650. Ultimately, the Honorable Shira A. Scheindlin, U.S.D.J., dismissed the plaintiff's claims in that action, concluding that Torah Soft's work did not qualify for protection under the copyright laws. Torah Soft Ltd, v. Drosnin, 136 F. Supp.2d 276 (S.D.N.Y. 2001). Torah Soft now contends that because any federal copyright claim it may have had has been addressed in the action before Judge Scheindlin, only state law claims remain for adjudication here. Accordingly, Torah Soft claims that this action must be remanded to state court.
The fact that the plaintiff's copyright claims were ultimately dismissed does not, however, automatically divest this Court of jurisdiction. This is because "`the district court may, at its discretion, exercise supplemental jurisdiction over state law claims even where it has dismissed all claims over which it had original jurisdiction.'" Parker v. Delia Rocco, 252 F.3d 663, 666 (2d Cir. 2001) (quoting Nowak v. Ironworkers Local 6 Pension Fund, 81 F.3d 1182, 1187 (2d Cir. 1996)). These remaining claims may be addressed in federal court if they "derive from a common nucleus of operative fact . . . such that [a plaintiff] would ordinarily be expected to try them all in one judicial proceeding." United Mine Workers of America v. Gibbs, 383 U.S. 715, 725 (1996). In determining whether to assert jurisdiction over a party's remaining state law claims, the court should consider "the principles of economy, convenience, fairness and comity." Carnegie-Mellon University v. Cohill, 484 U.S. 343, 357 (1988); see Gibbs, 383 U.S. at 726 (finding that the "justification [for pendent jurisdiction] lies in considerations of judicial economy, convenience and fairness to litigants"); see also 14C Wright, Miller Cooper, Federal Practice Procedure § 3739, at 436 (noting that a federal court "has the power to continue to hear jurisdictionally insufficient claims that have been removed under Section 1441(c) even after the claim or claims providing the basis for removal jurisdiction have been eliminated from the federal action").
Here, it is appropriate to retain jurisdiction over the parties' state law claims. First, as I will discuss in further detail below, diversity jurisdiction exists over the parties' remaining claims and provides an independent basis for jurisdiction. See Grace, 1997 WL 607543, at *5. Second, the principles of economy, fairness, and convenience all weigh in favor of retaining the action. This case is set to be tried on September 15, 2003. Although the case was removed in January 2000, and Torah Soft's copyright claims were dismissed by Judge Scheindlin on March 30, 2001, the plaintiff has waited virtually until the eve of trial to seek a remand. During that time, I familiarized myself with the intricacies of this case and decided a summary judgment motion. Furthermore, I recently decided the parties' in limine motions, and a decision on the defendant's challenge to the plaintiff's expert is forthcoming. Because of my extensive involvement, it would inappropriate at this juncture to remand this case to state court.
While Torah Soft did raise many of these jurisdictional concerns in the parties' December 3, 2002 Pre-Trial Order, it did not properly file a motion to remand the case until July 22, 2003.
B. Diversity Jurisdiction 28 U.S.C. § 1332 (a) provides in part that the "district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 and is between (1) citizens of different States; [or] (2) citizens of a State and citizens or subjects of a foreign state." Torah Soft claims that diversity jurisdiction has never existed here because Dr. Spielberg, a third-party defendant, is an American citizen residing in a foreign country. (Plaintiff's Memorandum of Law in Support of Remand Motion ("PI. Memo.") at 3-4; Declaration of Yochanan Spielberg dated July 18, 2003 ("Spielberg Decl"), ¶¶ 2-4). The plaintiff claims that Dr. Spielberg's status as an American citizen domiciled abroad destroys diversity here because "United States citizens who are domiciled abroad are neither citizens of any state of the United States nor citizens or subjects of a foreign state, and § 1332(a) does not provide that the courts have jurisdiction over a suit to which such persons are parties." Cresswell v. Sullivan Cromwell, 922 F.2d 60, 68 (2d Cir. 1990); see Jacobs v. Patent Enforcement Fund, Inc., 230 F.3d 565, 567 (2d Cir. 2000) ("a United States citizen domiciled abroad [is] necessarily non-diverse").
The defendant's theory that Dr. Spielberg's presence in the case destroys diversity jurisdiction is misplaced, however, because "where diversity of citizenship exists between the original parties, no independent jurisdictional basis is required for a defendant's claim against a third party defendant." Arias v. Brio Manufacturing Company, No. 92 Civ. 6661, 1995 WL 66431, at *3 (S.D.N.Y. Feb. 15, 1995); see Fedor v. Arnica Mutual Insurance Co., No. 3:01 Civ. 795, 2003 WL 77002, at *1 (D. Conn. Jan. 8, 2003) ("it is clear that diversity jurisdiction is established on the original pleadings"). Here, diversity exists between the original parties, Torah Soft and Mr. Drosnin. Torah Soft is an Israeli corporation with its principal place of business in Jerusalem, Israel (First Amended Complaint, ¶ 7), while Mr. Drosnin is a citizen of the State of New York. (First Amended Complaint, ¶ 9; Answer and Counterclaims, ¶ 8). Thus, Torah Soft and Mr. Drosnin satisfy § 1332(a)(2)'s requirement that the district court "shall have original jurisdiction" when the matter "is between citizens of a State and citizens or subjects of a foreign state." The parties do not dispute the fact that the amount in controversy exceeds $75,000.
Contrary to the plaintiff's assertions, it is not uncommon for courts to find that the presence of diversity jurisdiction precludes a remand to state court even if removal was not based on the diversity of the parties. See Grace, 1997 WL 607543, at *5 (noting that even if case was improperly removed on federal question grounds, the complete diversity of the parties created "an independent basis for federal jurisdiction" despite the fact that removal was not premised on diversity of citizenship); Austin v. Port Authority of New York and New Jersey. No. 91 Civ. 4185, 1993 WL 149033, at *2 (S.D.N.Y. May 5, 1993).
In its motion to remand, the plaintiff argues that the Court must analyze whether diversity jurisdiction existed at the time of removal in order to conclude that diversity jurisdiction presently exists. In support of that position, the defendant cites several cases where diversity between the parties did not exist at the time of removal. See Vasura v. Acands, 84 F. Supp.2d 531, 535-36 (S.D.N.Y. 2000); Soriano v. Amvac Chemical Corp., Nos. Civ. A. 99-3598, Civ. A. 99-3616, Civ. A. 99-3617, 2003 WL 21467557 (E.D. La. June 23, 2003);Rudow v. Monsanto Co., No. 99 Civ. 4700, 2001 WL 228163 (N.D. Cal. March 1, 2001). But those cases are clearly not applicable here since, as discussed above, there has been diversity between Torah Soft and Mr. Drosnin since the case was removed.
The plaintiff also claims that removal on diversity grounds would have been inappropriate in the first instance because the defendant's notice of removal did not conform with the requirements of 28 U.S.C. § 1446(b), which provides, in part, that "a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after the commencement of the action." There is no dispute that the defendant removed this action well after a year after it was originally filed in state court. Rather, the dispute here centers on whether the plaintiff has waived its right to object to removal on that basis. That determination can only be made by deciding whether the one-year time limit provision of § 1446(b) is procedural or jurisdictional. If this provision is deemed procedural, then under 28 U.S.C. § 1447 (c), the plaintiff must have moved to remand "within 30 days after the filing of the notice of removal" or his right to challenge the removal on the ground is waived. On the other hand, if this provision is classified as jurisdictional, the plaintiff may seek to remand at any time. 28 U.S.C. § 1447(c).
28 U.S.C. § 1447 (c) provides in pertinent part that "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of a notice of removal under Section 1446(a)."
Courts are divided about whether § 1446(b)is a procedural or jurisdictional provision. Compare Barnes v. Westinqhouse Electric Corporation, 962 F.2d 513, 516 (5th Cir. 1992) ("the time limitation for removal is not jurisdictional; it is merely `modal and formal and may be waived.'"); Gray v. Moore Business Forms, Inc., 711 F. Supp. 543, 545 (N.D. Cal. 1989) (limit is procedural); with Green Point Savings Bank v. Hidalgo, 910 F. Supp. 89 (E.D.N.Y. 1995) (limit is jurisdictional and not waived by plaintiff's failure to make a remand motion within 30 days);Brock v. Syntex Laboratories, Inc., 791 F. Supp. 721 (E.D. Tenn. 1992),aff'd without opinion, 7 F.3d 232 (6th Cir. 1993) (same); Foiles v. Merrell National Laboratories, 730 F. Supp. 108 (N.D. I11. 1989). However, in light of the Second Circuit's decision in Pierpoint v. Barnes, 94 F.3d 813 (2d Cir. 1996), I am persuaded that § 1446(b) is procedural in nature.
While Pierpoint did not specifically address § 1446(b), it did interpret what qualifies as a "defect in removal procedure" under § 1447(c). In that case, the court concluded that "Congress intended the phrase `defect in removal procedure' to be interpreted broadly in order to subject a wide range of remand motions to the 30-day limit." Pierpoint, 94 F.3d at 817. Moreover, the court concluded that the thirty-day time limit was enacted to "prevent the delay, inefficiency, and unfairness resulting from late-stage, forum shopping remand motions." Id. Such considerations are particularly appropriate here, as the case is on the eve of trial. Pierpoint, with its instruction to interpret defects in removal procedure broadly, requires a finding that the one-year time provision of § 1446(b) is indeed procedural. Accordingly, the plaintiff's failure to seek remand thirty days after the defendant filed its notice of removal precludes remand on that ground now.
Furthermore, Mr. Drosnin's status as a New York citizen does not destroy the diversity of the parties. 28 U.S.C. § 1441(b) provides that an action "shall be removable only if none of the . . . defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441 (b). Here, there is no dispute that Mr. Drosnin is a citizen of New York (Answer, ¶ 9) and that he removed a New York state court action to this Court. However, "the clause restricting removal in diversity actions to defendants who are not resident in the state where the action is brought [is] not *jurisdictional in the true sense' [and is deemed] waived in the event that there was no timely request for remand." Barnett v. Turner Construction Co., No. 02 Civ. 6863, 2003 WL 329055, at *1 (S.D.N.Y. Feb. 13, 2003) (quoting Woodward v. D.H. Overmyer Co., 428 F.2d 880, 882-83 (2d Cir. 1970)); see also Notations, Inc. v. Tongkook America, Inc., No. 92 Civ. 4850, 1992 WL 395572, at * 2 (S.D.N.Y. Dec. 17, 1992).
Accordingly, I conclude that diversity jurisdiction currently exists and existed at the time the defendant filed the notice of removal. Conclusion
For the reasons stated above, the plaintiff's motion to remand is denied.
SO ORDERED.