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September 7, 2000


The opinion of the court was delivered by: Stein, District Judge.


Plaintiffs Shlomo Marcus and Jewelry Dynasty, Inc. brought this diversity action against defendants "Five J" Jewelers Precious Metals Industry Ltd. ("Five J"), Joseph Berger, and Alon Berger to recover for services rendered by Marcus while working as an agent of Five J to sell jewelry. Defendants have moved, prior to discovery proceedings, to dismiss the complaint for lack of subject matter jurisdiction on the grounds that complete diversity of citizenship is destroyed by the Israeli citizenship of plaintiff Marcus and the three defendants. For the reasons set forth below, defendants' motion is granted.


Shlomo Marcus is a citizen of Israel who has been domiciled in New York since 1984 and became a permanent U.S. resident on July 11, 1985. See Aff. of Shlomo Marcus, dated Aug. 2, 2000, ¶¶ 3, 5; Aff. of Shlomo Marcus, dated Feb. 20, 2000, ¶ 81. At all relevant times, Marcus was an employee of plaintiff Jewelry Dynasty, Inc., a New York corporation engaged in the business of selling gold jewelry. See Compl. ¶¶ 4, 9. Five J is an Israeli corporation that maintains its principal place of business in Tel Aviv, Israel.*fn1 See Compl. ¶ 5; Aff. of Richard S. Kanowitz, dated Jan. 5, 2000, ¶ 1. The Bergers are citizens and residents of Israel and are officers of Five J. See Compl. ¶¶ 6-7; Kanowitz Aff. ¶ 1; see also Aviner v. "Five J" Jewelers Precious Metals Indus., Ltd., No. 99 Civ. 1800, slip op. at 2-4 (S.D.N.Y. Oct. 18, 1999) (dismissing suit against Five J and Joseph and Alon Berger on forum non conveniens grounds); Kanowitz Aff., Ex. E.


I. Standard

"[A]t the initial stage of litigation, a party seeking to establish jurisdiction need only make a prima facie showing by alleging facts which, if true, would support the court's exercise of jurisdiction." New Moon Shipping Co. v. Man B&W Diesel Ag, 121 F.3d 24, 29 (2d Cir. 1997) (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)). "[T]he facts must be viewed in the light most favorable to the plaintiff," and "[a] disputed fact may be resolved in a manner adverse to the plaintiff only after an evidentiary hearing." Id. (citations omitted).

II. Diversity jurisdiction

Subject matter jurisdiction premised on diversity of the parties' citizenship is governed by 28 U.S.C. § 1332.*fn2 Prior to 1988, the courts of appeals uniformly held that this statute "did not confer jurisdiction over a lawsuit involving an alien on one side, and an alien and a citizen on the other side." Saadeh v. Farouki, 107 F.3d 52, 55 (D.C.Cir. 1997) (collecting cases); see Buti v. Impressa Perosa, S.R.L., 935 F. Supp. 458, 461-62 (S.D.N.Y. 1996) (collecting Second Circuit cases), aff'd on other grounds, 139 F.3d 98 (2d Cir.), and cert. denied, 525 U.S. 826, 119 S.Ct. 73, 142 L.Ed.2d 57 (1998). This narrow holding was the product of two general principles: first, that "Article III of the Constitution does not give Congress the power to grant the federal courts jurisdiction over an action between two aliens"; and second, that the diversity statute requires "complete diversity" in the sense that "diversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff." Lloyds Bank PLC v. Norkin, 817 F. Supp. 414, 416-18 (S.D.N.Y. 1993) (quotation omitted). Although the first principle is a matter of constitutional law, the requirement of complete diversity is not, since the Constitution itself requires not complete diversity but "only minimal diversity, that is, diversity of citizenship between any two parties on opposite sides of an action, regardless of whether other parties may be co-citizens." Saadeh, 107 F.3d at 54 (citation omitted). For almost two centuries, federal courts have consistently required complete diversity of the parties as a matter of statutory construction. See, e.g., Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 373-77 & n. 13, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978); Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 267-68, 2 L.Ed. 435 (1806), overruled on other grounds, Louisville, Cincinnati & Charlestown R.R. Co. v. Letson, 43 U.S. (2 How.) 497, 555, 11 L.Ed. 353 (1844); Leveraged Leasing Admin. Corp. v. PacifiCorp Capital, Inc., 87 F.3d 44, 47 (2d Cir. 1996).

In 1988, however, Congress amended 28 U.S.C. § 1332, effective May 18, 1989, to add the following provision: "For the purposes of this section . . ., an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled." 28 U.S.C. § 1332(a); see Judicial Improvements and Access to Justice Act, Pub.L. No. 100-702, § 203, 102 Stat. 4642, 4646 (1988). Courts have uniformly agreed that this provision eliminates diversity jurisdiction of suits in which a permanent resident alien appears opposite a citizen of the alien's state of domicile. See Engstrom v. Hornseth, 959 F. Supp. 545, 549 (P.R. 1997). For example, pursuant to the 1988 amendment, Marcus — a permanent resident alien domiciled in New York — is deemed to be a citizen of New York; therefore, there would be no diversity jurisdiction were he to sue another citizen of New York. Courts have sharply disagreed, however, whether the added provision creates diversity jurisdiction of suits in which a permanent resident alien appears opposite another alien. Compare Singh v. Daimler-Benz AG, 9 F.3d 303, 305-12 (3d Cir. 1993), with Saadeh, 107 F.3d at 57-61 (D.C.Cir. 1997). See generally 15 James Wm. Moore, Moore's Federal Practice § 102.78, at 102-146 to — 148.4 (Daniel R. Coquillette et al. eds., 3d ed. 2000).

This Court concludes that the 1988 revision to 28 U.S.C. § 1332 does not expand diversity jurisdiction to encompass this latter category of suits, for substantially the same reasons as set forth in the prior decisions of other judges of the Southern District of New York. See Buti, 935 F. Supp. at 460-63; A.T.X. Export, Ltd v. Mendler, 849 F. Supp. 283, 283-84 (S.D.N.Y. 1994); Lloyds Bank PLC, 817 F. Supp. at 415-19. To begin with, "the language of a statutory provision, if clear and unambiguous on its face, is presumed to bear its plain meaning unless the text suggests an absurd result." Nussle v. Willette, 224 F.3d 95, 100 (2d Cir. 2000). Here, adhering strictly to the statutory language would indeed produce an absurd result, since "to find subject matter jurisdiction, the Court [would have to] conclude that Congress abandoned the rule of complete diversity, enunciated nearly two hundred years ago in Strawbridge and regularly applied since to, inter alia, actions with aliens on both sides, but did so without comment." Lloyds Bank PLC, 817 F. Supp. at 418. Thus, recourse to the legislative history of the provision is appropriate, and that history indicates Congress' purpose was to narrow, rather than to expand, the scope of diversity jurisdiction. See Saadeh, 107 F.3d at 57-61; Lloyds Bank PLC, 817 F. Supp. at 418-19; Arai v. Tachibana, 778 F. Supp. 1535, 1538-40 & n. 6 (Haw. 1991); H.R.Rep. No. 100-889, at 22-23, 44-45 (1988), reprinted in 1988 U.S.C.C.A.N. 5982, 598384, 6005; 134 Cong. Rec. S31,049-55 (1988) (statement of Sen. Heflin).

Because the requirement of complete diversity is preserved, application of this provision to the facts of this case becomes straightforward. There is no dispute that Marcus is "an alien admitted to the United States for permanent residence" within the meaning of 28 U.S.C. § 1332(a). See Foy v. Schantz, Schatzman & Aaronson, 108 F.3d 1347, 1349 (11th Cir. 1997); Aff. of Shlomo Marcus, dated Aug. 2, 2000, Ex. A. Nor is there any dispute that Joseph and Alon Berger are citizens of Israel and that Five J is an Israeli corporation. Accordingly, all defendants and ...

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