United States District Court, S.D. New York
MEMORANDUM AND ORDER
J. NATHAN, District Judge
Errant Gene Therapeutics, LLC ("Errant Gene")
initiated this action, which arises out of a licensing
agreement for gene therapy patent rights, on March 18, 2015.
Following approximately 19 months of litigation, including
motion to dismiss practice and substantial discovery overseen
by Magistrate Judge Ellis, Errant Gene now moves pursuant to
Federal Rule of Civil Procedure 41(a)(2) to dismiss this
action without prejudice for lack of subject matter
jurisdiction, asserting that it intends to refile its claims
in state court. For the reasons that follow, Errant
Gene's motion is GRANTED.
undisputed that the sole basis for the Court's subject
matter jurisdiction over this lawsuit, as alleged by Errant
Gene, is diversity of citizenship pursuant to 28 U.S.C.
§ 1332. See Amended Verified Complaint, Dkt.
No. 16, ¶ 11. In light of that fact and pursuant to Rule
4.C. of this Court's Individual Practices in Civil Cases,
Errant Gene submitted a letter on April 7, 2016, in advance
of the initial pretrial conference, advising the Court of the
following facts relevant to its allegations of jurisdiction:
Plaintiff is a Delaware limited liability company that
maintains its principal place of business in Illinois. None
of the members of Plaintiff are New York citizens. The
Manager of Plaintiff is a Delaware corporation with its
principal place of business in Illinois. The individual
members of Plaintiff are domiciled in Illinois, Minnesota,
California, Delaware, New Jersey, Connecticut, and Florida.
With respect to members of Plaintiff that are limited
liability companies, none of their members are domiciled in
New York. With respect to the member of Plaintiff that is [a]
corporation, the corporation was organized in Connecticut and
has a principal place of business in Connecticut.
Dkt. No. 47 at 1 (emphasis added). On the basis of those
representations, the Court continued to exercise subject
matter jurisdiction over this action.
October 28, 2016, nearing the original deadline for the
completion of fact discovery, Errant Gene abruptly submitted a
motion to dismiss. In support of its motion, it summarily
asserted that "[o]ne of its 68 members is a limited
liability company whose members include citizens of New York,
" and, as such, its representations to the contrary in
the April 7, 2016 letter were "inaccurate" and
"diversity jurisdiction does not exist." Dkt. No.
99 ¶ 1.
Sloan-Kettering Institute for Cancer Research
("SKI") opposed the motion. See Dkt. No.
107. It characterized the timing as "suspect, "
citing both Errant Gene's purported failures to provide
repeatedly requested disclosures concerning its membership
and ownership as well as the motion's filing at a time
when Errant Gene purportedly knew that a sanctions motion by
SKI alleging violations of a protective order entered by
Judge Ellis was forthcoming. See Dkt. No. 107 at
SKI urged the Court to deny Errant Gene's dismissal
application for failure to comply with Local Rule
7.1(a)'s requirement that all motions be accompanied by
supporting memoranda of law and factual submissions,
specifically highlighting the absence from Errant Gene's
perfunctory papers "of any information concerning the
timing and circumstances of [Errant Gene's] purported
discovery that the Court lacks jurisdiction."
Id. at 3-4. Alternatively, SKI sought denial on the
merits, noting, correctly, that diversity of citizenship
jurisdiction depends upon the citizenship of the parties at
the time an action is commenced, and arguing that Errant
Gene's representations in support of its motion addressed
only its citizenship as of the time of the motion itself.
Id. at 4. Finally, SKI requested that the Court
order Errant Gene and its counsel to show cause why sanctions
should not be imposed pursuant to Federal Rule of Civil
Procedure 11(c) for certifying to the Court that diversity
jurisdiction existed without (purportedly) conducting the
requisite reasonable inquiry. Id. at 5.
response, Errant Gene filed a "corrected" notice of
motion to dismiss, accompanied by a brief memorandum of law
in support and declarations by two of its counsel, including
lead trial counsel. Dkt. Nos. 108-109. Although light on
specifics and hardly models of clarity, the supporting
submissions, taken together, appear to aver that counsel to
Errant Gene learned in late October 2016 (under unspecified
circumstances) that at least one member of one or more of the
limited liability company members of Errant Gene was a
citizen of New York at the time this action was initiated.
Dkt. Nos. 108-1, 108-2. The inaccurate jurisdictional
representations contained in Errant Gene's April 7, 2016
letter were, according to a declaration submitted by the
letter's drafter, "mistake[s]" based on
counsel's review of Errant Gene's membership list as
of March 2015 (the month the original complaint was filed),
which incorrectly listed at least one individual member of a
limited liability company member of Errant Gene as residing
in Delaware, when he in fact resided - and continues to
reside - in New York. Dkt. No. 108-1.
renewed its opposition in response to Errant Gene's
"corrected" motion papers, arguing that the papers
(i) failed to definitively clarify whether the pertinent
individuals were domiciliaries (as opposed to merely
"residents") of New York as would be
required to nullify diversity jurisdiction, (ii) lacked
declarations with specific statements by persons with direct
knowledge of the relevant underlying facts, and (iii)
included insufficient particulars regarding Errant Gene's
original inquiry into its own citizenship and subsequent
discovery of the purported jurisdictional defect.
See Dkt. No. 117.
reply, Errant Gene proffers additional detail. Critically, it
submits, among other things, a declaration from Charles
Columbus, an individual member of Errant Gene itself since
2009 as well as a member of two limited liability company
members of Errant Gene since 2008 and 2014, respectively.
Dkt. No. 119. Mr. Columbus' declaration explains, with
supporting detail, that he is a citizen of New York and has
been so since 1980. Id. Errant Gene also represents
- and Mr. Columbus confirms - that the error in Errant
Gene's original assessment of its citizenship derived
from the fact that Mr. Columbus was listed in Errant
Gene's company records as residing in Delaware, where he
received tax-related correspondence and other mail at a
business office maintained by one of the other two limited
liability companies with which he is affiliated. Id.
at 1-2; Dkt. No. 120 at 2-3.
jurisdiction requires that all of the adverse parties in a
suit be completely diverse with regard to citizenship."
Handelsman v. Bedford Village Assocs. Ltd.
P'ship, 213 F.3d 48, 51 (2d Cir. 2000) (internal
quotation marks and ellipsis omitted); see also Wisconsin
Dep't of Corrs. v. Schacht, 524 U.S. 381, 388 (1998)
("A case falls within the federal district court's
'original' diversity 'jurisdiction' only if
diversity of citizenship among the parties is complete,
i.e., only if there is no plaintiff and no defendant
who are citizens of the same State."). SKI is
undisputedly a citizen of New York for purposes of diversity
jurisdiction. The citizenship of Errant Gene, a limited
liability company, "depends on the citizenship of all
its members." Quantlab Fin., LLC, Quantlab Techs.
Ltd. (BVI) v. Tower Research Capital, LLC, 715 F.Supp.2d
542, 547 (S.D.N.Y. 2010); see also Bayerische Landesbank,
N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42,
49 (2d Cir. 2012) (noting that defendant, as a limited
liability company, "takes the citizenship of each of its
the representations of counsel and - equally or more
important - of Mr. Columbus, all made upon penalty or
perjury, Errant Gene had at least one individual member (Mr.
Columbus) who was a citizen of New York at the time this
action was commenced and at least two limited liability
company members that, by virtue of the citizenship of at
least one of their own individual members (Mr. Columbus),
were citizens of New York at the time this action was
commenced. Accordingly, Errant Gene, by extension, was a
citizen of New York at the time this action was commenced,
and the Court lacked diversity jurisdiction. ...