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NEMAZEE v. PREMIER INC.

November 13, 2002

HASSAN NEMAZEE INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF MEDIBUY.COM, INC. A/K/A MEDIBUY, INC., PLAINTIFF,
V.
PREMIER, INC., PREMIER PURCHASING PARTNERS L.P., PREMIER PLANS, LLC, HEALTHTRUST PURCHASING GROUP, L.P., HCA, INC. F/K/A COLUMBIA/HCA HEALTHCARE CORP., MEDIBUY.COM, INC. A/K/A MEDIBUY, INC., JOHN DOES 1-10 WHO ARE PERSONS WHO MAY BE INTERESTED IN THIS ACTION, BUT WHO ARE UNKNOWN TO PLAINTIFF INCLUDING THE GENERAL PARTNER OF HEALTHTRUST PURCHASING GROUP, L.P., DEFENDANTS.



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

MEMORANDUM ORDER

I. Introduction

Plaintiff Hassan Nemazee originally filed this derivative action individually and on behalf of Medibuy.com, Inc. a/k/a Medibuy, Inc. ("Medibuy") in the Supreme Court of the State of New York, New York County. In his complaint, Nemazee alleged that certain transactions involving defendants were unlawful because the non-Medibuy defendants used their positions as controlling shareholders and board members of Medibuy to engage in self-dealing in violation of their fiduciary duties. Premier, Inc., Premier Purchasing Partners L.P., and Premier Plans LLC removed the action to this Court, invoking diversity jurisdiction.*fn1 Nemazee moved to remand the action, claiming that no diversity existed because both he and Premier Purchasing Partners, L.P. are citizens of New York, and seeks attorneys' fees and costs. Defendants have cross-moved to transfer venue to the Middle District of Tennessee. For the reasons set forth below, plaintiffs motion to remand is granted and defendants' cross-motion is denied as moot. Plaintiffs motion for attorneys' fees and costs is also denied.

II. Factual Background

A. The Parties

Plaintiff Hassan Nemazee is a resident of New York, New York. See Complaint, at ¶ 1 (appended to Nemazee's Notice of Motion as Exhibit ("Ex.") 1).*fn2 Nemazee holds 111,110 shares of common stock in defendants Medibuy.com, Inc. a/k/a Medibuy, Inc. ("Medibuy"). See id. at ¶ 1; Notice of Motion Ex. 3.

Defendant Medibuy is a corporation organized and existing under the laws of Delaware with its principal place of business in Nashville, Tennessee. See Complaint, at ¶ 7. Medibuy uses electronic commerce technology to connect buyers and sellers of medical supplies. See Memorandum of Law in Support of Nemazee's Motion for an Order Remanding the Case to the Supreme Court of the State of New York, and an Award of Costs and Attorneys [sic] Fees ("Plaintiff's Motion"), at 2. Medibuy also provides a bidding and auction system which permits buyers to purchase medical supplies from vendors worldwide. See id. at 2. Medibuy's customers include large healthcare supply purchasers such as hospitals and hospital purchasing groups. See id at 2. Hospital purchasing groups are cooperatives formed by various hospitals in order to achieve volume discounting in the purchase of medical supplies. See id. at 2. Medibuy also offers its customers the ability to sell excess medical inventory through its auction service. See id. at 2.

Defendant Premier, Inc. ("Premier") is a corporation organized and existing under the laws of Delaware with its principal place of business in San Diego, California. See Complaint, at ¶ 3; Notice of Removal of Civil Action Under 28 U.S.C. § 1441(b) ("Notice of Removal"), at ¶ 4 (appended to Nemazee's Notice of Motion as Ex. 2). Premier owns or has interests in a large chain of hospitals. See Plaintiffs Motion, at 2.

Defendant Premier Purchasing Partners L.P. ("PPP") is a limited partnership with its principal place of business in San Diego, California. See Complaint, at ¶ 2. PPP has hundreds of limited partners, some of whom are citizens of New York. See Notice of Removal, at ¶ 7. PPP is a hospital purchasing group beneficially owned by Premier. See Plaintiffs Motion, at 2.

Defendant Premier Plans LLC ("Premier Plans") is a corporation organized and existing under the laws of Delaware with its principal place of business in San Diego, California. See Complaint, at ¶ 4; Notice of Removal, at ¶ 4. Nemazee states that Premier is the sole member of Premier Plans, which is the corporate general partner of PPP. See Complaint, at 13.

Defendant Healthtrust Purchasing Group, L.P. ("HPG") is a limited partnership organized and existing under the laws of Delaware with its principal place of business in Nashville, Tennessee. See Complaint, at ¶ 5; Notice of Removal, at ¶ 4. None of HPG's limited or general partners is or was a citizen or resident of New York. See Notice of Removal, at ¶ 4. HPG is a hospital purchasing group affiliated with HCA. See Plaintiffs Motion, at 3.

Defendant HCA, Inc., f/k/a Columbia/HCA Healthcare Corp. ("HCA") is a corporation organized and existing under the laws of Delaware with its principal place of business in Nashville, Tennessee. See Complaint, at ¶ 6; Notice of Removal, at ¶ 4. HCA owns or has interests in a large chain of hospitals. See Plaintiffs Motion, at 3. Nemazee states that HCA is the largest member of HPG, and that HCA controlled HPG by virtue of the fact, inter alia, that James A. Fitzgerald served as an officer and director of HCA and was the president of HPG. See Complaint, at ¶ 30.

Defendants John Does 1 through 10 are parties unknown to Nemazee, including the general partner of HPG, who may have an interest in this action. See Complaint, at ¶ 8; Notice of Removal, at ¶ 5. The general partner of HPG is not a citizen or resident of New York. See Notice of Removal, at ¶ 5.

B. The Allegations*fn3

In 1999, Hassan Nemazee purchased 111,110 shares of Medibuy common stock from another investor for $1 million in a private transaction. See Declaration of Hassan Nemazee in Support of His Motion for An Order Remanding the Case to the Supreme Court of the State of New York, and an Award of Costs and Attorneys [sic] Fees Pursuant to 28 U.S.C. § 1447(c) ("Nemazee Decl."), at ¶ 5. Nemazee alleges that during the entire two and one-half years he has held Medibuy common stock, Medibuy has never announced, noticed, or conducted a meeting of shareholders, despite the fact that annual shareholders' meetings are required under Delaware law and the Medibuy by-laws. See Complaint at ¶ 46. Nemazee also ...


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