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Nix v. Office of Commissioner of Baseball

United States District Court, S.D. New York

July 6, 2017

NEIMAN NIX, et al., Plaintiffs,

          OPINION & ORDER


         On November 9, 2016, Plaintiffs Neiman Nix ("Nix") and DNA Sports Performance Lab, Inc. ("DNA Lab") commenced this action in the New York State Supreme Court, New York County, alleging that Defendants - the Office of the Commissioner of Baseball, doing business as Major League Baseball ("Major League Baseball" or "MLB"), Robert D. Manfred, Allen H. Selig, Neil Boland, and Awilda Santana - violated the Computer Fraud and Abuse Act ("CFAA"), 18 U.S.C. § 1030 and engaged in tortious interference with economic advantage and defamation. (Doc. No. 1-1 ("Compl.").) On February 17, 2017, Defendants removed the case to this Court. (Doc. No. 1.) Now before the Court are Plaintiffs' motions: (1) for leave to voluntarily dismiss their CFAA claim, and (2) to remand this action to the New York State Supreme Court pursuant to 28 U.S.C. § 1447. (Doc. No. 13.) For the reasons set forth below, the motions are GRANTED.

         1. Background[1]

         Nix, a current resident of Texas, played professional baseball within the Milwaukee Brewers and Cincinnati Reds organizations until 2003. (Compi. ¶¶ 1, 9.) In 2006, Nix founded the American Baseball Institute ("ABI"), a player development academy based in Clearwater, Florida. (Id. ¶¶ 13-14, 16.) Plaintiffs aver that in 2011, Defendant Awilda Santana, an MLB investigator, contacted players, coaches, and "other members of ABI and the baseball community"' and falsely accused Nix of "'misrepresenting" himself and certain ABI affiliates as "MLB scouts" and "agents" and "running fake tryouts." (Id. ¶¶ 19-20.) According to Nix, these "rumors" damaged his reputation and resulted in the departure of several players from ABI and the diminution of ABLs value as an enterprise. (Id. ¶¶ 28, 32.) In 2012, Nix established DNA Lab, a Florida corporation headquartered in Miami Beach, Florida that Nix describes as "a state of the art sports science testing facility." (Id. ¶¶ 2, 40.) Although Nix insists that he "never sold testosterone or anabolic steroids" to clients, he alleges that MLB investigators again made false accusations that he sold to players performance-enhancing drugs that had been banned by the MLB. (Id. ¶¶ 54, 57, 64.)

         On February 18, 2014, Plaintiffs filed a complaint against Defendants in Florida state court. (Id. ¶ 77.) Soon after, Defendants allegedly "began hacking/attacking" the DNA Sports Lab's social media accounts, which "severely disrupt[ed] Nix's ability to do business." (Id. ¶ 79.) Plaintiffs also insist that Defendants "hacked into and destroyed" his former attorney's computer in retaliation for filing the complaint. (Id. ¶ 80.)

         After amending the Florida complaint, Plaintiffs missed several initial case management conferences and failed to perfect service for 261 days. On November 6, 2014, the Honorable John W. Thornton, Jr., of the Eleventh Judicial Circuit of Florida, dismissed the case for failure to prosecute in light of Plaintiffs' non-compliance with several court orders and failure to perfect service. (Doc. No. 16-3.) Although Plaintiffs appealed that decision on December 5, 2014 (Doc. No. 16-4), they voluntarily withdrew the appeal on April 24, 2015 (Doc. No. 16-5).

         On July 14, 2016, Nix and DNA Lab filed a separate suit in this District against the same defendants named here, alleging tortious interference with prospective economic advantage and defamation and invoking diversity jurisdiction under 28 U.S.C. § 1332. See Complaint, Nix v. Office of (he Comm 'r of Baseball, No. 16-cv-5604 (ALC) (S.D.N .Y. July 14, 2016). On October 19, 2016, the defendants in that case filed a pre-motion letter regarding their contemplated motions for dismissal pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction and sanctions under Rule 11 of the Federal Rules of Civil Procedure. Id. at Doc. No. 10. After Judge Carter, to whom that case had been assigned, held a brief pre-motion conference on October 27, 2016, Plaintiffs filed amotion for voluntary dismissal without prejudice pursuant to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure on November 3, 2016. Id. at Doc. Nos. 13, 14.

         On November 9, 2016, Plaintiffs filed the instant suit against Defendants, this time in New York Supreme Court, alleging tortious interference with business relations, defamation, and violations of the CFAA. (Doc. No. 1-1.) On February 17, 2017, Defendants removed the case to this Court pursuant to 28 U.S.C. § 1441(a), asserting that this Court had: (1) original jurisdiction pursuant to the 28 U.S.C. § 1331 over Plaintiffs' CFAA claim, and (2) supplemental jurisdiction over Plaintiffs' state law tort claims pursuant to 28 U.S.C. § 1367. (Doc. No. 1.) On February 27, 2017, the case was assigned to my docket. That same day, the Court issued an order directing Plaintiffs, no later than March 29, 2017, to file either: (1) a motion to remand, pursuant to 28 U.S.C. § 1447(c), or (2) an amended complaint conforming to the pleading standards under Rule 8 of the Federal Rules of Civil Procedure. (Doc. No. 6.) On March 29, 2017, Plaintiffs moved to voluntarily dismiss their CFAA claim and remand this case to New York State Supreme Court pursuant to 28 U.S.C. § 1447. (Doc. No. 13.) On April 12, 2017, Defendants filed their opposition brief and declaration. (Doc. Nos. 15, 16.) The motion was fully briefed on April 19, 2017, when Plaintiffs submitted their reply. (Doc. No. 18.)

         II. Discussion

         A. Dismissal Under Rule 41

         Plaintiffs have submitted a proposed stipulation voluntarily dismissing their CFAA claim with prejudice and without costs to any party pursuant to Rule 41(a)(1)(A)(ii). (Doc. No. 13-4.) Under that provision, "the plaintiff may dismiss an action without a court order by filing a stipulation of dismissal signed by all parties who have appeared." Fed.R.Civ.P. 41(a)(1)(A)(ii); (see also Doc. No. 13-4). Since Defendants have not yet joined that stipulation, it has no legal effect. Nevertheless, Plaintiffs have also requested leave to voluntarily dismiss their CFAA claim pursuant to Rule 41 (a)(2), which allows a court to grant a motion to voluntarily dismiss a complaint or cause of action "upon such terms and conditions as the court deems proper." Catanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001) (quoting Fed.R.Civ.P. 41(a)(2)). Of course, "[v]oluntary dismissal without prejudice is . . . not a matter of right, " Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990) (emphasis added), and before granting dismissal under Rule 41(a)(2), a court must "evaluat[e] whether substantial prejudice would result from a dismissal without prejudice, " S.E.C. v. Chakrapani, No. 09-cv-1043 (RJS), 2010 WL 2605819, at *2 (S.D.N.Y. June 29, 2010); accord Kwan v. Schlein, 634 F.3d 224, 230 (2d Cir. 2011). Even so, "courts have generally subjected motions for voluntary dismissal with prejudice to far less scrutiny, " Commercial Recovery Corp, v. Bilateral Credit Corp., LLC, No. 12-cv-5287 (CM), 2013 WL 8350184, at *5 (S.D.N.Y. Dec. 19, 2013), although the Court must still inquire as to whether the voluntary dismissal "will be unduly prejudicial to the defendants, "Lan v. Time Warner, Inc., No. 1 l-cv-2870 (AT) (JCF), 2016 WL 6778180, at *6 (S.D.N.Y. Oct. 18, 2016), report and recommendation adopted, 2016 WL 6779526 (S.D.N.Y. Nov. 15, 2016) (citation omitted); accord Lakah v. UBS AG, No. 07-cv-2799 (LAP), 2016 WL 4257527, at *6 (S.D.N.Y. July 29, 2016).

         Here, Plaintiffs are willing to dismiss their CFAA claim with prejudice (Doc. No. 13-4), and Defendants have not even attempted to articulate any harms they will suffer as a result of such a dismissal of the CFAA claim (see Doc. No. 15). And even though, as discussed in the next section, the dismissal of the CFAA claim will result in remanding this case to state court, "nearly all courts grant" dismissal under Rule 41 (a)(2) "when defendant's only argument against dismissal is that the plaintiff manifestly seeks to defeat federal jurisdiction." Katzman v. Am, Airlines, Inc., No. 97-cv-8321 (JSM), 1997 WL 752730, at *1 (S.D.N.Y. Dec. 4, 1997) (collecting cases). Put simply, "[c]ourts have uniformly held that defendants are not prejudiced under Rule 41(a)(2) by having to face trial in state court." Id., Accordingly, the Court dismisses Plaintiffs' CFAA claim with prejudice and without costs.[2]

         B. Remand

         The Court next turns to Plaintiffs' motion to remand. A civil action brought in state court may be removed to a federal district court "only if it could have originally been commenced in federal court on either the basis of federal question jurisdiction or diversity jurisdiction." Philip v. Deutsche Bank Nat, Tr. Co., No. 1 l-cv-8960 (PGG), 2012 WL 2354242, at *2 (S.D.N.Y. June 20, 2012) (quoting A udi of Smithtown, Inc. v. Volkswagen of Am., Inc., No. 08-cv-1773 (JFB) (AKT), 2009 WL 385541, at *3 (E.D.N.Y. Feb. 11, 2009) and citing 28 U.S.C. § 1441(a)). If a case is removed and a federal district court determines that it lacks jurisdiction over the matter, it must be remanded. See 28 U.S.C. ยง 1447. When ...

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