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Nxivm Corp. v. Ross

June 19, 2009

NXIVM CORPORATION, PLAINTIFF,
v.
RICK ROSS, A/K/A/ RICKY ROSS, D/B/A ROSS INSTITUTE OF NEW JERSEY OR RICK A. ROSS INSTITUTE OF NEW JERSEY, MORRIS SUTTON, ROCHELLE SUTTON, AND LOLLYTOGS, LTD, DEFENDANTS.



The opinion of the court was delivered by: William M. Skretny United States District Judge

DECISION AND ORDER

I. INTRODUCTION

On March 5, 2009, Plaintiff commenced this case by filing a Summons and Complaint in the Supreme Court for the State of New York, Niagara County, alleging fourteen claims against Defendants. Before Plaintiff had formally served any Defendant with the Summons and Complaint, three of the four named Defendants received a copy of the Complaint, and removed the case to this Court based on federal diversity jurisdiction. Presently before this Court is Plaintiff's Motion to Remand. For the reasons discussed below, Plaintiff's Motion is denied.

II. BACKGROUND

A. Facts

Plaintiff NXIVM is a New York corporation with its principal place of business in Niagara Falls, New York. (Compl., ¶ 1.) NXIVM has locations in over 32 countries. (Compl., ¶ 6.) According to the Complaint, NXIVM's business includes "training, coaching and ethics programs designed primarily for leaders, teachers, executives, organization heads, concerned citizens, decision makers and others who value ethical, humanitarian performance." (Compl., ¶ 6.)

Defendants Morris and Rochelle Sutton ("Suttons") are married, and have a son, Michael Sutton. (Morris Cert., ¶ 2; Rochelle Cert., ¶ 2; Compl., ¶ 10.) Morris and Rochelle live together in Elberon, New Jersey. (Morris Cert., ¶ 2; Rochelle Cert., ¶ 2.) The Sutton family owns Defendant Lollytogs Ltd. ("Lollytogs"), a clothing manufacturing business. (Compl., ¶ 10; Docket No. 16-5, ¶ 3.) Lollytogs is a New York corporation with its principal corporate offices in New York, New York. (Compl., ¶ 4.) Michael Sutton worked at Lollytogs, and held the position of partner and vice president. (Docket No. 16-5, ¶ 3.)

In the fall of 2000, Michael attended a course at NXIVM. (Compl., ¶ 10.) Following his coursework at NXIVM, Michael allegedly began to reduce the time he spent working at Lollytogs. (Compl., ¶ 11.) Eventually, Michael informed his father that he wanted to leave the family business in order to become more involved with NXIVM. (Docket No. 16-5, ¶ 6.) According to Michael, his father became upset with this decision. (Id.) Michael stated that his father blamed NXIVM, and threatened to use his resources to destroy NXIVM. (Id.)

Thereafter, the Suttons hired Defendant Rick Ross ("Ross"), an individual, who claims to be an expert in the field of "destructive cults, controversial groups and movements," for the purpose of persuading Michael to leave NXIVM. (Compl., ¶¶ 7 & 12.) Ross resides and does business in New Jersey, and operates two websites -- www.cultnews.com and www.rickross.com. (Compl., ¶¶ 2 & 7.) According to the Complaint, Ross met with Michael Sutton at the Lollytogs corporate offices in New York, on at least two occasions. (Compl. ¶ 12.)

On March 6, 2008, Ross published an article on his website discussing NXIVM. (Compl., ¶ 14; Docket No. 1, Ex. A.) In the article, Ross characterized NXIVM as a "purported cult," that is "targeting" college a capella groups. (Docket No. 1, Ex. A.) Ross's article also mentioned that some of the NXIVM program participants "have sought psychiatric treatment subsequent to attending the group's intensives, one participant was hospitalized and another committed suicide." (Docket No. 1, Ex. A.) The phrase "committed suicide" was a link to a separate article published by the Albany Times Union about an Alaskan woman who, according to the article, attended classes at NXIVM, and later committed suicide.

Ross's article went on to discuss a piece in Forbes magazine that had reported, "people see a darker and more manipulative side to Keith Raniere (president of NXIVM). Detractors say he runs a cult-like program aimed at breaking down his subjects psychologically, separating them from their families and inducting them into a bizarre world of messianic pretensions, idiosyncractic language and ritualistic practices." (Docket No. 1, Ex. A.)

Following Ross's article, Metroland Magazine, Inc., published an article about NXIVM. (Compl., ¶ 66; Docket No. 1, Ex. C.) This piece contained quotations from Ross, which, among other things, states, "[w]hat Raniere is obviously doing is gearing up for the college crowd. The demographic that has been the most lucrative, the most fruitful for cults is 18 to 26." (Docket No. 1, Ex. C.) The article referred to Ross as a "leading cult deprogrammer and controversial critic of NXIVM." (Id.)

III. DISCUSSION

A. Removal Requirements

When a plaintiff files a complaint in state court that could have been filed in federal court, Congress allows the defendant or defendants to remove the action from state to federal court pursuant to 28 U.S.C. sections 1441 and 1446. Section 1441 sets forth the jurisdictional basis for removal, while section 1446 sets forth the procedural requirements for removal to federal court.

Section 1441 recognizes federal diversity jurisdiction as an acceptable jurisdictional basis for which an action may be removed to federal court. 28 U.S.C. 1441(b). To meet the requirements of federal diversity jurisdiction, the action must involve citizens of different states, and ...


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