United States District Court, S.D. New York
For Wachtell, Lipton, Rosen & Katz, Plaintiff: James Sottile, IV, LEAD ATTORNEY, Zuckerman Spaeder LLP, New York, NY; Paul Lewis Shechtman, LEAD ATTORNEY, Zuckerman, Spaeder LLP(NYC), New York, NY.
For CVR Energy, Inc., Icahn Enterprises, L.P., Icahn Enterprises Holdings L.P., Carl C. Icahn, Defendants: Herbert Beigel, LEAD ATTORNEY, Herbert Beigel & Associates, LLC, Tucson, AZ; Robert R. Viducich, Law Office of Robert R. Viducich, New York, NY.
OPINION & ORDER
Paul A. Engelmayer, United States District Judge.
In a lawsuit filed in the Supreme Court of the State of New York, Plaintiff Wachtell, Lipton, Rosen, & Katz (" Wachtell" ) brought state-law claims for, inter alia, breach of contract and abuse of process against Defendants CVR Energy, Inc. (" CVR" ), Icahn Enterprises, L.P., Icahn Enterprises Holdings L.P., and Carl Icahn (collectively, " Defendants" ). Defendants then removed the action to this Court, claiming that Wachtell had fraudulently joined the latter three defendants to the lawsuit in order to defeat diversity jurisdiction.
Before the Court now is Wachtell's motion to remand the action to New York State Supreme Court for lack of federal subject matter jurisdiction. For the reasons that follow, Wachtell's motion is granted.
CVR is an energy company incorporated in Delaware, with its principal place of business in Texas or Kansas. Compl. ¶ ¶ 1,
11. This case arises out of the 2012 takeover of CVR by Carl Icahn, a New York-based investor. Id. ¶ ¶ 1, 12. In January 2012, Icahn purchased a large position in CVR and announced his intent to take a controlling stake in the company. Id. ¶ ¶ 1, 15. CVR retained Wachtell, as well as two investment banks (Goldman, Sachs & Co. (" Goldman Sachs" ) and Deutsche Bank Securities, Inc. (" Deutsche Bank" )), to provide legal and financial advice during the takeover process. Id. ¶ ¶ 1, 16, 18. CVR entered into engagement letters with all three entities. Id. ¶ ¶ 20-28. In April 2012, the parties entered an agreement allowing Icahn to take control of CVR. Id. ¶ ¶ 31, 33.
After Icahn took control, he instructed CVR not to pay the banks or Wachtell for their services. Id. ¶ ¶ 33, 34. (By this point, Wachtell had already been paid, but Icahn continued to instruct CVR not to pay the banks. Id. ¶ ¶ 33, 34.) In June 2012, Goldman Sachs filed suit in New York State court to recover fees allegedly owed it by CVR, see Goldman, Sachs & Co. v. CVR Energy, Inc., Index No. 652149/2012 (N.Y. Sup.Ct.) (filed June 21, 2012); in August 2012, Deutsche Bank did the same, see Deutsche Bank Securities Inc. v. CVR Energy, Inc., Index No. 652800/2012 (N.Y. Sup.Ct.) (filed August 10, 2012). These actions were consolidated into a single case (the " Bank Action" ). Compl. ¶ 34.
On September 24, 2012, the court in the Bank Action entered a stipulation and order agreed to by the parties regarding the production of confidential and privileged information (the " Protective Order" ). Id. ¶ 35. The Protective Order by its terms " limit[s] the review, copying, dissemination and filing of . . . information to be produced by either party and their respective counsel or by any non-party in the course of discovery in [the Bank Action] to the extent set forth [in the Order]." Beigel Decl. Ex. 2. The Protective Order applies to " the production, exchange and discovery of documents and information that the parties agree merit confidential treatment," and allows any party to designate information as " confidential." Id. ¶ ¶ 1, 2. Specifically, the Protective Order provides that " Confidential Information," i.e., documents, testimony, the information contained therein, and other information designated as confidential, " shall be utilized by the Receiving party and its counsel only for purposes of this litigation and for no other purposes." Id. ¶ ¶ 3(a), 6. The Protective Order further defines " Receiving party" as " the party to this action and/or any non-party receiving 'Confidential Information' in connection with depositions, document production or otherwise." Id. ¶ 3(c).
In December 2012, in response to a subpoena in the Bank Action, Wachtell produced certain documents regarding the fee arrangement it had negotiated with the banks on CVR's behalf pursuant to the Protective Order, and marked those items as " Confidential." Compl. ¶ 36.
In September 2013, Keith Schaitkin, an attorney for Icahn, contacted representatives for Wachtell. He threatened that CVR ...