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Paul D. Ceglia v. Mark Elliott Zuckerberg

March 28, 2011

PAUL D. CEGLIA, PLAINTIFF,
v.
MARK ELLIOTT ZUCKERBERG, INDIVIDUALLY AND FACEBOOK, INC., DEFENDANTS.



The opinion of the court was delivered by: Honorable Richard J. Arcara United States District Judge

DECISION AND ORDER

INTRODUCTION

Plaintiff Paul Ceglia commenced this action in New York State Supreme Court asserting a breach of contract claim against defendants Mark Elliot Zuckerberg and Facebook, Inc. ("Facebook"). Defendants removed to federal court based upon diversity jurisdiction. Plaintiff moves to remand claiming that diversity is lacking because he and defendant Zuckerberg are both domiciled in New York. Zuckerberg opposes the motion and claims that his domicile is California. For the reasons stated, the Court finds that diversity jurisdiction exists because Zuckerberg is domiciled in California. Accordingly, the motion to remand is denied.

BACKGROUND

In this action, plaintiff claims that, pursuant to the terms of a 2003 contract between Zuckerberg and himself, he (plaintiff) owns an eighty-four percent interest in defendant Facebook. Facebook is a social media company that was founded by Zuckerberg in 2004. It has since grown into a highly successful company employing over 1,600 employees with more than 500 million active users. Zuckerberg is the founder, Chairman and CEO of Facebook, a Delaware corporation with its principal place of business in Palo Alto, California.

At issue in this motion is defendant Zuckerberg's domicile. Zuckerberg's domicile was also the subject of a prior unrelated federal proceeding. See ConnectU LLC v. Zuckerberg, et. al, 482 F. Supp. 2d 3 (D. Mass. 2007), rev'd, 552 F.3d 82 (2008). In that case, Zuckerberg asserted New York domicile as of September 2004, the date on which that case had been filed. At the time, Zuckerberg had just completed his sophomore year at Harvard University, had spent the summer of 2004 in California, and had decided to take a temporary leave of absence from Harvard. Zuckerberg represented to the ConnectU court that, despite his temporary residency in California, he intended to return to New York after graduating from Harvard. Based upon those representations, the court determined that Zuckerberg's domicile as of September 2, 2004, was New York. Id. at 10.

As it turns out, Zuckerberg never did return to Harvard or to New York. Instead, he remained in California where he continues to live today. Zuckerberg explains that certain events occurred in the fall of 2004 that caused him to alter his original plans and remain in California permanently. From 2004 to the present, Facebook grew from a small startup internet company with only a handful of employees to an international social media company with a global presence. Zuckerberg is the Chairman and CEO of the company and runs its day-to-day operations. He rents an apartment in Palo Alto, California, that is within walking distance to Facebook headquarters. Zuckerberg has provided a sworn affidavit stating that he intends to live in California indefinitely.

According to plaintiff, Zuckerberg's actual domicile remains New York where his parents still reside. Plaintiff claims that Zuckerberg has failed to demonstrate his intent to remain in California indefinitely and, as such, the law presumes that his prior New York domicile remains. Alternatively, plaintiff argues that jurisdictional discovery and a hearing are necessary to ascertain Zuckerberg's true domicile.

DISCUSSION

Plaintiff seeks remand asserting a lack of diversity jurisdiction. Diversity jurisdiction exists where the parties are citizens of different states and the amount in controversy exceeds $75,000. Hallingby v. Hallingby, 574 F.3d 51, 56 (2d Cir. 2009). "'[C]itizens of different States' means that there must be complete diversity, i.e., that each plaintiff's citizenship must be different from the citizenship of each defendant." Id. If Zuckerberg is a citizen of New York, as plaintiff contends, then diversity would be lacking because both the plaintiff and one of the defendants would be from the same state.

A person's citizenship for purposes of diversity is based upon his domicile. Domicile is "the place where a person has 'his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning.'" Linardos v. Fortuna, 157 F.3d 945, 948 (2d Cir. 1998)(quoting 13B C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3612 (2d ed.1984)). A person can have multiple residences, but only one domicile. Rosario v. I.N.S., 962 F.2d 220, 224 (2d Cir. 1992)("One may have more than one residence in different parts of this country or the world, but a person may have only one domicile."). Domicile is determined as of the date the complaint is filed. LeBlanc v. Cleveland, 248 F.3d 95, 100 (2d Cir. 2001).

A person's domicile, once established, is presumed to continue absent evidence that it has been changed. Gutierrez v. Fox, 141 F.3d 425, 427 (2d Cir. 1998). To effect a change in domicile, two elements are required: (1) residence in a new domicile; and (2) the intention to remain there indefinitely. Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 42 (2d Cir. 2000). A person asserting a change in domicile bears the burden of proving it by clear and convincing evidence. Id.

As of September 2004, Zuckerberg's domicile was New York.*fn1 The issue, then, is whether Zuckerberg changed his domicile to California before June 30, 2010--the date that this action was filed. Zuckerberg bears the burden of proving his change in domicile by clear and convincing evidence. Courts consider the following objective indicators to ascertain domiciliary intent: current residence; voting registration and voting practices; location of personal and real property; location of brokerage and bank accounts; membership in unions, fraternal organizations, churches, clubs, and other associations; place of employment or business; driver's license and automobile registration [and] payment of taxes.

See Connolly v. Spielman, 999 F. Supp. 270, 272-73 (N.D.N.Y. 1998)(citing 13B Charles Alan Wright, et al., Federal Practice and Procedure ยง 3612, (2d ed. 1984)). No single factor is conclusive and the ...


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