in any given year. Under the EC Treaty, in other words, the EC cannot suffer
harm to its revenues as a result of Defendants' alleged cigarette smuggling.
This is not to say, of course, that the individual Member States, who are
ultimately responsible for funding the EC's budget, would not have been
harmed by cigarette smuggling. If cigarettes were smuggled into one of the
Member States thereby depriving that state of tax revenue, such smuggling
would presumably have the effect of increasing the amount owed by that state
to the EC in the form of the "fourth resource." But the Member States are
not parties to this suit. Because the EC cannot suffer loss due to
cigarette smuggling, and therefore cannot have suffered any injury to its
business or property, it lacks standing to sue under
18 U.S.C. § 1964(c).
VII. EC State Law Claims Must Be Dismissed Because Diversity Jurisdiction
There is no diversity jurisdiction over Plaintiff's state law claims
because complete diversity between the parties is lacking. The Second
Circuit has long recognized the "explicit and unequivocal" rule requiring
complete diversity, and dismisses actions when aliens are on both sides
of a matter. See, e.g., Corporacion Venezolana de Fomento v. Vintero
Sales Corp., 629 F.2d 786, 790 (2d Cir. 1980) (citing ITT v. Vencap.
Ltd., 519 F.2d 1001, 1015 (2d Cir. 1975) (holding that diversity
jurisdiction under 28 U.S.C. § 1332 is defeated by the presence of
aliens both as plaintiffs and as defendants) (citing 1 Moore, Federal
Practice P 0.75 at 709.6-7 (1974) and the cases cited therein)); Int'l
Shipping Corp. v. Hydra Offshore, Inc., 875 F.2d 388 (2d Cir. 1989)
(affirming Rule 11 sanctions against an attorney for bringing a
jurisdictionally defective complaint on an alien corporation's behalf
against another alien corporation); Franceskin v. Credit Suisse,
214 F.3d 253 (2d Cir. 2000) (holding that federal courts lack subject
matter jurisdiction over state law claims among aliens).
VIII. The EC's Motion to Amend its Complaint
The EC seeks to amend its complaint.*fn23 Leave to amend a party's
pleadings "shall be freely given" by the court "when justice so requires."
Fed. R. Civ. P. 15(a). Permission to amend is "within the discretion of
the trial court." Zenith Radio Corp. v. Hazeltime Research. Inc.,
401 U.S. 321, 330 (1971). Leave should be freely granted unless the
movant unduly delayed in bringing the request or brings it in bad faith
or with a dilatory motive, or the proposed amendment would be unavailing
or the non-movants would be unfairly prejudiced thereby. Foman v. Davis,
371 U.S. 178, 182 (1962). "[V]alid reasons for denying leave to amend
include undue delay, bad faith or futility of the amendment."
Mackensworth v. S.S. American Merchant, 28 F.3d 246, 251 (2d Cir. 1994).
"Mere delay . . . absent a showing of bad faith or undue prejudice, does
not provide a basis for a district court to deny" leave to amend. State
Teachers Ret. Bd. v. Flour Corp., 654 F.2d 843, 856 (2nd Cir. 1981);
Richardson Greenshields Sec. Inc. v. Lau, 825 F.2d 647, 653 n. 6 (2d
Cir. 1987) (delay alone is insufficient). The party opposing a motion
for leave to amend has the burden of establishing that granting such leave
would be unduly prejudicial. Saxholm AS v. Dynal, Inc., 938 F. Supp. 120,
123 (E.D.N.Y. 1996).
Defendants argue that where subject matter jurisdiction is lacking, a
court is powerless to grant leave to amend a complaint, even where to do
so would cure an obvious lack of jurisdiction. (See Defs.' Mem. in Opp.
to Mot. to Amend EC Compl. at 3, 7.) Because I agree with Defendants on
this point, I need not reach the question whether or not Defendants have
succeeded in showing that the timing, or any other feature, of the EC's
proposed amendment provides a basis for denying leave to amend.
Defendants rely upon Pressroom Union-Printers League Income Sec. Fund
v. Cont'l Assurance Co., 700 F.2d 889 (2d Cir. 1983). In Pressroom, a
pension fund brought a complaint against fiduciaries under ERISA. The
jurisdictional provisions of ERISA, however, do not authorize a pension
fund to assert a cause of action. 29 U.S.C. § 1132(e)(1) gives the
district courts "exclusive jurisdiction of civil actions under this
subchapter brought by the Secretary [of Labor] or by a participant,
beneficiary or fiduciary." Under the section of ERISA dealing with
standing, the Secretary or a "participant, beneficiary or fiduciary" may
bring an action for civil enforcement of the Act's fiduciary and other
provisions." 29 U.S.C. § 1132(a). The court concluded that absent some
indication that Congress intended to grant subject matter jurisdiction
over suits by funds, § 1132(e)(1) "should be viewed as an exclusive
jurisdictional grant." Pressroom, 700 F.2d at 892. The court in
Pressroom went on to consider the fund's motion to amend the complaint
and substitute plan participants as plaintiffs, which the court
characterized as an effort "to substitute a new action over which there
is jurisdiction for one where it did not exist." Id. The Second Circuit
noted "[t]he longstanding and clear rule is that if jurisdiction is
lacking at the commencement of a suit, it cannot be aided by the
intervention of a plaintiff with a sufficient claim," and concluded that
the district judge, having decided that the court lacked subject matter
jurisdiction to hear the fund's claims, had not abused his discretion in
denying the fund's motion to amend. Id. at 893-94.
Resolution of questions concerning federal jurisdiction "depends on the
facts as they exist when the complaint is filed." Newman-Green, Inc. v.
Alfonzo-Larrain, 490 U.S. 826, 830 (1989). I have already concluded that
dismissal of the EC's federal claims is warranted pursuant to Fed. R.
Civ. P. 12(b)(1) because, having failed to satisfy the "by reason of"
requirement under 18 U.S.C. § 1964(c), the EC lacks standing to bring
its civil RICO claim. I have also concluded that dismissal of the EC's
state-law claims is warranted because diversity jurisdiction is lacking.
Thus, as of the filing the EC's complaint, this court was powerless to
adjudicate its federal and state law claims. Under these circumstances,
Plaintiff's motion to amend amounts to an effort at creating "an entirely
new jurisdictional basis to provide competence in a court which lacked
authority over the case ab initio." Falise v. Am. Tobacco Co., 241 B.R. 63,
67 (E.D.N.Y. 1999) (denying leave to reinstate and amend original
complaint to assert civil RICO claim following dismissal of complaint
asserting only state law causes of action for lack of subject matter
I note that this outcome is the same, whether Plaintiff's motion is
construed as a motion to amend pursuant to Rule 15 or, as Defendants
suggest, the motion is governed
by Rule 21. (See Defs.' Mem. in Opp. to Mot. to Amend EC Compl.
at 5 n. 1.) "While. . . various rules [i.e., Fed. R. Civ. P. 15, 20 and
21] regulate this motion, there is in practical terms little difference
between them. . . . [A]ll leave the decision whether to permit or deny
amendment to the district court's discretion." Savine-Rivas v.
Farina, No. CV-90-4335 (CPS), 1992 WL 193668, at *1 (E.D.N.Y. Aug. 4,
1992) (internal citations omitted). That discretion is severely constrained
in this case by the Supreme Court's conclusion in Newman-Green
that a complaint cannot be amended so as to alter defects in the
jurisdictional facts in order to produce jurisdiction where none existed
before. See Newman-Green, 490 U.S. 826,
831-32 (holding that court of appeals may grant motion to dismiss
dispensable non-diverse party whose presence spoils jurisdiction).
For the foregoing reasons, Defendants' motion to deconsolidate the
above-captioned cases is GRANTED; Defendants' motion to dismiss the EC
Complaint is GRANTED; Japan Tobacco, Inc.'s motion to dismiss the EC
Complaint is DENIED as moot; and the EC's motion to amend its complaint
It is SO ORDERED.