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L.Y.E. Diamonds LTD v. Gemological Institute of America Inc.

United States District Court, S.D. New York

March 31, 2017

L.Y.E. Diamonds LTD, E.G.S.D. Diamonds, Ltd., Gregori Elizarow also known as Gavriel Yelizarov, and Natanel Ylazaroy also known as Nati Yizrov, Plaintiffs,
v.
Gemological Institute of America Inc., Rapaport USA, Inc., Rapaport Diamond Corporation, John and Jane Does 1 Through 10 the names being fictitious and whose true names are unknown to Plaintiff, John Doe Corporations 1 through 10 the names being fictitious and whose true names are unknown to Plaintiff, Other John Doe Entities 1-10 the names being fictitious and whose true names are unknown to Plaintiff, and Thomas Moses, Defendants.

          Jeffrey R. Miller Doron A. Leiby Miller, Leiby & Associates, P.C. New York, New York Counsel for Plaintiffs

          Andrew Lawrence Deutsch Gail McLemore Rodgers DLA Piper U.S. LLP New York, New York Counsel for Defendants Gemological Institute of America Inc. and Thomas Moses

          David M. Rabinowitz Moses & Singer, LLP New York, New York Mario P. Lovato Lovato Law Firm, P.C. Las Vegas, Nevada Counsel for Defendants Rapaport USA, Inc. and Rapaport Diamond Corp.

MEMORANDUM & OPINION

          VERNON S. BRODERICK, United States District Judge.

         Before me is the motion of LYE. Diamonds LTD, E.G.S.D. Diamonds, Ltd., Gregori Elizarow a/k/a Gavriel Yelizarov, Yosef Ylazarov, Mikhael Ylazarov, and Natanel Ylazarov a/k/a/ Nati Yizrov (“Plaintiffs”) to remand this action to the Supreme Court of the State of New York, New York County pursuant to 28 U.S.C. § 1447. (Doc. 16.) For the reasons that follow, Plaintiffs' motion to remand is GRANTED and this case is REMANDED.

         I. Background and Procedural History

         Plaintiffs commenced this action in state court on March 2, 2016 by filing a summons with notice and naming Defendants Gemological Institute of America, Inc. (“GIA”), Thomas Moses (“Moses”) (collectively, the “GIA Defendants”), Rapaport USA, Inc. (“Rapaport USA”), Rapaport Diamond Corporation (“Rapaport Diamond”) (collectively, the “Rapaport Defendants”), and various John and Jane Does, John Doe Corporations, and John Doe entities. (Doc. 1-1 at 3.)[1] The complaint was not attached to the summons. (See id) On or about March 28, 2016, Plaintiffs served the GIA Defendants and Rapaport Diamond, and on or about March 30, 2016, Plaintiffs served Rapaport USA with the summons with notice. (Id. at 8, 13-15.) On April 18, 2016 and April 19, 2016, respectively, the GIA Defendants and the Rappaport Defendants filed demands for the complaint. (Id. at 16, 17-18.)

         On April 29, 2016, Plaintiffs filed and served their complaint, (id. at 20, 122), and on May 19, 2016, Rapaport USA filed the notice of removal, (Doc. 1). The notice of removal stated that “Defendant Rapaport USA, Inc. . . . hereby removes this action from the Supreme Court of New York, County of New York, to the United States District Court for the Southern District of New York, and are informed that the other Defendants in this action will join and otherwise support the Petition for Removal.” (Id.) The notice also indicated that Rapaport USA “understand[s] that all Defendants consent to the removal of this case to this Court.” (Id. ¶ 53.) Although counsel for the GIA Defendants thereafter filed notices of appearance on May 26, 2016, (Docs. 4, 5), and counsel for Rapaport Diamond filed their notice of appearance on July 19, 2016, (Doc. 21), they did not file or otherwise submit to this Court any explicit written consent to removal.

         On May 26, 2016, the GIA Defendants submitted a pre-motion letter in anticipation of filing a motion to dismiss the complaint, (Doc. 6), and on May 31, 2016, the Rapaport Defendants submitted a pre-motion letter in anticipation of filing a motion to dismiss, for summary judgment, or, in the alternative, to change venue or sever claims, (Doc. 8). The Rapaport Defendants explained that their pre-motion letter had erroneously been filed in state court on May 26, 2016. (Doc. 9.) I set a pre-motion conference for July 7, 2016 to address the motions. (Doc. 14.)

         On June 17, 2016, Plaintiffs filed a motion to remand, along with an accompanying memorandum of law with exhibits. (Docs. 16-17.) Upon receiving the motion, I set a briefing schedule and adjourned the pre-motion conference to September 1, 2016. (Doc. 18.) In accordance with that schedule, the Rapaport Defendants filed an opposition on July 18, 2016, (Doc. 22), and on August 1, 2016, Plaintiffs filed their reply, (Doc. 24).

         On August 31, 2016, I issued an order instructing the parties to be prepared to address specific questions in connection with the motion to remand, mainly involving whether the rule of unanimity, requiring the consent of all defendants to removal, had been satisfied. (See Doc. 25.) In that order, I also directed the parties to the case of Bedminster Financial Group, Ltd. v. Umami Sustainable Seafood, Inc., No. 12 Civ. 5557(JPO), 2013 WL 1234958 (S.D.N.Y. Mar. 26, 2013), and asked that the parties be prepared to discuss the case's relevance to the questions posed, (Doc. 25). After the conference was held on September 1, 2016 and for the reasons set forth during the conference, I set deadlines for the parties to submit additional, focused arguments by letter addressing the questions raised in my order and during the conference. (See Dkt. Entry Sept. 1, 2016.) In accordance with those deadlines, the GIA Defendants submitted a letter on September 16, 2016 together with an accompanying declaration and exhibit, which stated that, among other things, counsel for Rapaport Defendants had received the consent of all Defendants by telephone prior to filing the notice of removal. (Docs. 26-27.) On that same day, the Rapaport Defendants filed a similar letter. (Doc. 28.) On September 30, 2016, Plaintiffs filed a response to those letters, (Doc. 29), and on October 7, 2016, the GIA Defendants and the Rapaport Defendants, respectively, filed their replies, (Docs. 32, 33).

         II. Legal Standard

         “[A]ny civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441(a). A defendant seeking removal of a civil action from State court must file “in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.” 28 U.S.C. § 1446(a). The notice of removal “shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.” 28 U.S.C. § 1446(b)(1). When an action is removed pursuant to 18 U.S.C. § 1441(a), “all defendants who have been properly joined and served must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2)(A); see also Ortiz v. City of N.Y., No. 13 Civ. 136(JMF), 2013 WL 2413724, at *1 (S.D.N.Y June 4, 2013).

         “Usually, an action brought in state court may only be removed if federal jurisdiction would have been proper at the outset.” McCullogh Orthopaedic Surgical Servs., PLLC v. Cigna Health & Life Ins. Co., No. 15 Civ. 2244(CM), 2015 WL 3526951, at *3 (S.D.N.Y. June 3, 2015); see also Fax Telecommunicaciones Inc. v. AT & T, 138 F.3d 479, 485-86 (2d Cir. 1998). The existence of federal subject matter jurisdiction is “normally to be determined as of the time of removal.” Warburton v. John Jay Coll. of Criminal Justice of City Univ. of ...


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