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Dunn v. Standard Bank of London Ltd.

January 30, 2006

BRUCE DUNN, MICHAEL WEISSMAN AND JAMES VERRASTER, PLAINTIFFS,
v.
STANDARD BANK LONDON LTD. AND STANDARD INTERNATIONAL HOLDINGS, DEFENDANTS.



The opinion of the court was delivered by: Denise Cote, District Judge

OPINION & ORDER

Plaintiffs bring this action to recover bonus amounts they believe they are due from their former employer. They allege common law breach of contract, unjust enrichment, and conversion claims, as well as violations of Article 6 of the New York Labor Law, against Standard Bank London Ltd. ("Standard London") and Standard International Holdings ("Standard International"). The defendants claim that plaintiff's employer was Standard New York Trading Corp. ("Standard New York") rather than the captioned defendants, and that the action should thus be dismissed for failure to add an indispensable party under Rule 19, Fed. R. Civ. P.

It is undisputed that the sole basis for this Court's jurisdiction is diversity jurisdiction under 28 U.S.C. § 1332(a)(1). Standard New York is an indispensable party, and must be joined as a defendant. Since the parties dispute whether the principal place of business of Standard New York is in New York, and thus whether diversity exists, the parties will be permitted an opportunity to take limited discovery addressed to that discrete issue.

Background

On March 10, 2005, plaintiff Bruce Dunn ("Dunn") brought this action against "Standard Bank Group" in federal court. In his original complaint, he represented that he had been employed by Standard New York, a "division of Standard Bank Group located in New York," as a "Sales/Trader on the Precious Metals Desk" from October 1998 through August 2004. Dunn alleged that he had been promised specific bonus amounts over the years of his employment, but that the company had withheld portions of those bonus amounts subject to his being employed by Standard New York two years from the date each bonus was awarded. When Dunn left the company in 2004, $88,333 of the bonus amounts that he had earned was still being withheld by Standard New York. Standard New York refused to pay Dunn this amount when he demanded it upon his resignation.

On April 27, Dunn filed an Amended Complaint adding Standard New York and Standard Americas, Inc. ("Standard Americas") as defendants. These two entities are apparently the same; Standard New York became Standard Americas at an unspecified date.*fn1 After the Court inquired about the basis for subject matter jurisdiction at an initial pretrial conference of May 24, defendants sent a letter of June 3, advising that Standard New York was a separate entity that, while incorporated in Delaware, has its principal place of business in New York. It is undisputed that Dunn resides in New York as well. Dunn responded with a letter proposing that Standard Bank London Ltd. ("Standard London") and Standard International Holdings, Inc. ("Standard International") be added as defendants. After more correspondence, plaintiff was granted permission to add additional parties to the action.

Dunn filed a Second Amended Complaint (the "Complaint") on June 27. Two additional plaintiffs, Michael Weissman ("Weissman") and James Verraster ("Verraster"), were added to the Complaint. Their allegations are similar to Dunn's. In addition, the Complaint listed the sole defendants as Standard London and Standard International. Although the Complaint states that the plaintiffs "were located in and conducted business on behalf of [Standard London] in [Standard Americas]," neither Standard New York nor Standard Americas is captioned as a defendant.

On August 5, defendants filed a motion to dismiss for failure to join an indispensable party under Rule 19(b), Fed. R. Civ. P. They argue that the Complaint represents an "attempt to circumvent the jurisdictional requirements of the federal courts by covertly removing from [the] pleadings the only proper defendant in this action --[plaintiffs'] former employer, [Standard New York]." The defendants contend that, because the action is for the recovery of unpaid compensation, the entity that actually employed the plaintiffs is an indispensable party. They accordingly request dismissal of the action pursuant to Rule 12(b)(7), Fed. R. Civ. P.

Discussion

Rule 12(b)(7), Fed. R. Civ. P., provides that an action may be dismissed for failure to join a party under Rule 19. The Rule 19 framework was described by this Court in In re WorldCom, Inc. Sec. Litig., No. 02 Civ. 3288 (DLC), 2004 WL 2955237 (S.D.N.Y Dec. 22, 2004). In brief, Rule 19 sets forth a two-step test for determining whether a court must dismiss an action for failure to join an indispensable party. Viacom Int'l Inc. v. Kearney, 212 F.3d 721, 724 (2d Cir. 2000). First, the court must determine whether an absent party is a "necessary" party under Rule 19(a). Id. Rule 19(a) provides that the absent party should be joined, if feasible, where:

(1) in the person's absence complete relief cannot be accorded among those already parties or (2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.

Rule 19(a), Fed. R. Civ. P. With respect to the second prong of Rule 19(a), "there must be more than an unsupported assertion that [the non-joined party] has a claim to that interest." Jonesfilm v. Lion Gate Int'l, 299 F.3d 134, 140 (2d Cir. 2002).

Where a court makes a threshold determination that a party is necessary under Rule 19(a) and joinder of the absent party is not feasible for jurisdictional or other reasons, the court must then determine whether the party is "indispensable" under Rule 19(b). Universal Reins. Co. v. St. Paul Fire & Marine Ins. Co., 312 F.3d 82, 87 (2d Cir. 2002). Rule 19(b) provides:

The court shall determine whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable. The factors to be considered by the court include: first, to what extent a judgment rendered in the person's absence might be prejudicial to the person or those already parties; second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; third, whether a judgment rendered ...


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