Xene Corporation v. Nouryon USA LLC
| Xene Corporation |
| Nouryon USA LLC and Akzo Nobel |
| 2:2022cv05527 |
| September 15, 2022 |
| US District Court for the Eastern District of New York |
| Gary R Brown |
| Pamela K Chen |
| Lee G Dunst |
| Marcia M Henry |
| Contract: Other |
| 28 U.S.C. § 1441 Petition for Removal- Breach of Contract |
| Defendant |
Docket Report
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| Filing 18 Letter To Judge Chen re ECF No. 16 by Nouryon USA LLC (Mooney, Kyle) |
| Filing 17 Letter Joint Letter Per Oct 24 2022 Order by Xene Corporation (Choe, Jerry) |
| Filing 16 Second MOTION to Dismiss with prejudice against sole defendant Nouryon USA LLC by Xene Corporation. (Choe, Jerry) |
ORDER: The Court denies Plaintiff's request to dismiss this action with prejudice as to Defendant Nouryon USA LLC because subject matter jurisdiction remains contested in this case. "[W]here a court lacks subject matter jurisdiction, it also lacks the power to dismiss with prejudice." Hernandez v. Conriv Realty Assocs., 182 F.3d 121, 123 (2d Cir. 1999). At a minimum, Plaintiff's request is premature. Plaintiff may renew its motion once the issue of jurisdiction is settled. Ordered by Judge Pamela K. Chen on 10/27/2022. (YB)
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| Filing 15 First MOTION to Dismiss with prejudice against sole defendant Nouryon USA LLC by Xene Corporation. (Choe, Jerry) |
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ORDER: The Court is in receipt of the #12 , #13 , and #14 Letters, supporting and opposing Plaintiff's #11 Motion to dismiss pursuant to Fed. R. Civ. P. 41(a)(2). The Court denies the #11 Motion. It is well-established that once a defendant has answered, a plaintiff may no longer dismiss an action on its own accord, and the decision whether to allow such "dismissal [rests] at the district court's discretion." D'Alto v. Dahon California, Inc., 100 F.3d 281, 283 (2d Cir. 1996). Dismissal is only allowed where "the defendant will not be prejudiced thereby." Id. The Second Circuit has articulated the following factors for courts to consider when determining prejudice to the defendant: " #1 the plaintiff's diligence in bringing the motion; #2 any 'undue vexatiousness' on plaintiff's part; #3 the extent to which the suit has progressed, including the defendant's efforts and expense in preparation for trial; #4 the duplicative expense of relitigation; and #5 the adequacy of plaintiff's explanation for the need to dismiss." Id. First, because the first factor focuses on whether the "motion [was brought] within a reasonable amount of time after an event that led to [plaintiff's] decision to stop pursuing the action," Plaintiff's decision to move to dismiss one day after the Court indicated removal was proper weighs in favor of dismissal. See Allstate Ins. Co. v. Khotenok, No. 18-CV-5650 (FB) (RER), 2022 WL 2467014, at *3 (E.D.N.Y. Mar. 29, 2022), report and recommendation adopted, 2022 WL 2713722 (E.D.N.Y. July 13, 2022). Second, because vexatiousness can be shown by "evidence to suggest that the case was brought to harass the defendant," Hinfin Realty Corp. v. Pittston Co., 206 F.R.D. 350, 356 (E.D.N.Y. 2002), the Court finds that Plaintiff's behavior was vexatious. Plaintiff filed nearly identical actions in two different courts and vigorously opposed the removal of its state court action to this District (and presumably its consolidation with its prior claim). (Dkt. 5.) Furthermore, while Plaintiff's removal Complaint seeks more than six billion dollars in damages (Dkt. 1-1), Plaintiff now represents to the Court that it "believes that the liability of [Defendant] is little to none," suggesting that its original filing was nothing but frivolous. (Dkt. 12, at 3.) Third, as this suit is still at its early stages, the third factor supports granting the #11 Motion. Fourth, as relitigation is not "unlikely", see Allstate Ins., 2022 WL 2467014, at *6, the Court finds that the fourth factor favors denying the motion. Notably, Plaintiff nowhere represents that it will not refile this case (presumably in state court), but merely states that it has lost interest in doing so based on its realization that Defendant was not liable all along. The Court places little confidence in Plaintiff's sudden epiphany, not least given its statements that a settlement was required to prevent it from "re-fil[ing] against all [other defendants.]" (Dkt. 13-5, at 2.) Fifth, and relatedly, the only explanation that Plaintiff provides for its need to dismiss this matter is its belated discovery that Defendant is, in effect, an innocent party. While courts "frequently conclude that economic considerations constitute a reasonable explanation for seeking dismissal without prejudice," Allstate Ins., Plaintiff's new economic assessment is vague and self-serving. Specifically, Plaintiff says it now realizes (with little explanation) that Defendant is liable for less than "$75,000" and includes a footnote of a case where a court remanded a matter based on the removing party's failure to prove that jurisdiction was proper. Thus, the Court gives no credit to Plaintiff's bare, conclusory argument in assessing whether there is good reason to dismiss. As three out of five of the factors weigh against dismissal, the Court denies the #11 Motion. By October 31, 2022, the Parties shall file "a joint letter advising the Court whether limited discovery is necessary to establish Nouryon USA LLC's citizenship." (See 09/28/2022 Docket Entry.) Ordered by Judge Pamela K. Chen on 10/24/2022. (YB)
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| Filing 14 REPLY in Support re #13 Letter, Scheduling Order,,,,,,,, Scheduling Order, #12 Memorandum in Support, #11 Notice of Voluntary Dismissal by Court Order Because Filed in State Prior to Answer filed by Xene Corporation. (Attachments: #1 Exhibit A- September 19, 2022 State Discontinuance) (Choe, Jerry) |
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SCHEDULING ORDER: The Court is in receipt of the #13 Letter, to which Plaintiff Xene Corporation may reply by October 17, 2022. Ordered by Judge Pamela K. Chen on 10/12/2022. (YB) Modified on 10/12/2022 to add omitted word. (FG)
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| Filing 13 Letter in Response to Plaintiff's October 5, 2022 Letter by Nouryon USA LLC (Attachments: #1 Exhibit A (2022-06-07 Mooney Ltr. to Jerry Choe), #2 Exhibit B (2022-07-07 Mooney Email re 7-5 Choe Email), #3 Exhibit C (2022-08-19 Choe Email to Mooney re Global Settlement), #4 Exhibit D (2022-09-28 Choe Email to Mooney Re Scheduling Order), #5 Exhibit E (2022-10-04 Mooney Email to Choe RE Xene v. Nouryon)) (Mooney, Kyle) |
| Filing 12 MEMORANDUM in Support re #11 Notice of Voluntary Dismissal under Rule 41(a)(2) against Nouryon USA LLC filed by Xene Corporation. (Choe, Jerry) |
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SCHEDULING ORDER: The Court is in receipt of the #10 and #11 Notices of Dismissal. It is established law that, Xene Coroporation, and other plaintiffs are "entitled to file a valid Rule 41(a) notice of voluntary dismissal for any reason, and the fact that [they] d[o] so to flee the jurisdiction or the judge does not make the filing sanctionable." Wolters Kluwer Financial Services, Inc. v. Scivantage, 564 F.3d 110, 115 (2d Cir. 2009). However, as Defendant Nouryon USA LLC has already filed its #6 Answer, Court approval is required for Plaintiff to dismiss its claims against it, as opposed to its claims against all other Defendants. By October 5, 2022, Plaintiff Xene Corporation shall file a letter explaining, with reference to applicable case law, whether there is good cause for the Court to grant its request to dismiss. In his letter, Plaintiff shall discuss why judicial economy would not be best served by preserving its claim in this Court, given its request to dismiss without prejudice and in light of the real probability that Plaintiff will refile this action in state court and Defendant will again seek to remove it to this Court. Defendant may reply to Plaintiff's letter by October 10, 2022. The Parties are otherwise admonished for their practice of filing multiple, unauthorized, sur-replies and sur-sur-replies. See generally SEC v. Xia, No. 21-CV-5350 (PKC) (RER), 2022 WL 2784871, at *1 (E.D.N.Y. July 15, 2022) (noting that "the decision whether to permit a sur-reply rests in the Court's sound discretion," and that "[c]ourts in this circuit grant leave to file sur-replies sparingly."). Finally, in the event the Court denies the request #11 to dismiss Nouryon USA LLC, the Parties will thereafter be required to file a joint letter advising the Court whether limited discovery is necessary to establish Nouryon USA LLC's citizenship. Ordered by Judge Pamela K. Chen on 9/28/2022. (Ben-Gigi, Yanai)
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| Filing 11 NOTICE of Voluntary Dismissal by Xene Corporation Voluntary Dismissal By Court Order (Choe, Jerry) |
| Filing 10 NOTICE of Voluntary Dismissal by Xene Corporation against all defendants except Nouryon USA LLC (Choe, Jerry) |
| Filing 9 Letter in Response to Plaintiff's September 23, 2022 Letter by Nouryon USA LLC (Mooney, Kyle) |
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SCHEDULING ORDER: The Court is in receipt of the #1 Notice of Removal, #5 Opposition, #7 Reply, #8 Sur-Reply, and #9 Sur-Sur-Reply. The Court denies the motions in part, grants them in part, and authorizes expedited discovery. First, the Court notes that while a substantially related case is now pending before it, see Xene Corp. v. Nouryon B.V. et al, No. 22-cv-02850 (PKC) (MMH) (E.D.N.Y. May 16, 2022) whose consolidation with this matter would be proper, the Second Circuit has held that consolidation does not replace, or resolve, the obligation to ensure subject-matter jurisdiction. See Cole v. Schenley Indus., Inc., 563 F.2d 35, 38 (2d Cir. 1977) ("Consolidation... is a procedural device designed to promote judicial economy [which] cannot [a]ffect a merger of the actions or the defenses of the separate parties... [and] therefore [the court must] consider the jurisdictional basis of each complaint separately."). Second, the Court rejects Plaintiff's argument that Defendants are not allowed to remove before they were served. See Cutrone v. Mortgage Electronic Registration Systems, Inc., 749 F.3d 137, 147 (2d Cir. 2014) (noting that nothing in 28 U.S.C. 1446(b) "indicate[s] that the two 30-day periods listed therein are the exclusive authorizations of removal."); see also Veleron Holding, B.V. v. Stanley, No. 14 CIV. 7874 (CM), 2014 WL 6386733, at *2 (S.D.N.Y. Nov. 13, 2014) (finding that removal based on diversity was timely before service). As Plaintiff himself notes, the 1442(b)(2) "home state defendant" rule does not apply, as Defendants do not assert that they are New York citizens. (See Dkt. 8, at 1.) Third, the Court rejects Defendants' argument that the fact that the contracts in question bear a meaningful connection to patent law confers federal jurisdiction on this Court or brings this case within the "artful pleading doctrine." See Sullivan v. Am. Airlines, Inc., 424 F.3d 267, 272 (2d Cir. 2005) ("The artful pleading doctrine allows removal where federal law completely preempts a plaintiff's state-law claim" (citing Rivet v. Regions Bank of La., 522 U.S. 470, 475 (1998))); Marcus v. AT&T Corp., 138 F.3d 46, 52 (2d Cir. 1998) ("Generally, a complaint that pleads only state law causes of action may not be removed to federal court even where Congress has chosen to regulate the entire field of law in the area in question."); Dupervil v. All. Health Operations, LCC, 516 F. Supp. 3d 238, 249 (E.D.N.Y. 2021) ("Even if some of these claims implicate or are preempted by federal law by way of an affirmative defense, such defenses do not appear on the face of the well-pleaded complaint, and accordingly do not authorize removal to federal court."), vacated on other grounds, 2022 WL 3756009 (2d Cir. Aug. 1, 2022). Though the resolution of the federal patent infringement claims may have an impact on the claims in this action, these state law claims are not preempted by federal patent law. Fourth, the Court agrees that Plaintiff's voluntary suspension of his state law action, four days after it was removed, does not affect this dispute. Finally, the Parties err when attempting to establish the citizenship of certain Defendants, limited liability corporations, by reference to their place of incorporation or headquarters. See Catskill Lit. Trust v. Park Place Entmt Corp., 169 F. App'x 658, 659 (2d Cir. 2006) ("[T]he citizenship of a limited liability corporation is determined by reference to the citizenship of its members."). Thus, as the Parties do not dispute that the Removal Complaint alleges more than $75,000 in damages, the Court authorizes expedited discovery to resolve the citizenship of Defendants Akzo Nobel Inc., Akzo Nobel Chemicals Inc., and other domestic Nouryon limited liability companies ("Diversity Defendants"). On September 28, 2022, the Parties shall submit a joint expedited, 14-day discovery schedule for the purposes of determining Diversity Defendants' citizenship. By October 17, 2022, Diversity Defendants and Plaintiff shall each file a letter, supported by relevant and correct case-law and all relevant exhibits, contesting or supporting jurisdiction under 28 U.S.C. 1332. Ordered by Judge Pamela K. Chen on 9/26/2022. (Ben-Gigi, Yanai)
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| Filing 8 REPLY in Opposition re #7 Reply in Support of Pre-service Removal under Gibbons filed by Xene Corporation. (Attachments: #1 Exhibit A Google Searches Principal Place Business) (Choe, Jerry) |
| Filing 7 REPLY in Support re #5 Reply in Opposition, #1 Notice of Removal, Letter Response to Xenes September 20, 2022 Letter filed by Nouryon USA LLC. (Mooney, Kyle) |
| Filing 6 ANSWER to Complaint by Nouryon USA LLC. (Mooney, Kyle) |
| Filing 5 REPLY in Opposition re #1 Notice of Removal, as Untimely, w/o Jurisdiction, Moot filed by Xene Corporation. (Attachments: #1 Exhibit A- Nouryon Chemicals New York Principal Office, #2 Exhibit B- Seven Nouryon New York Defendants, #3 Exhibit C- State Discontinuance) (Choe, Jerry) |
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ORDER REASSIGNING CASE. Case reassigned to Judge Pamela K. Chen and Magistrate Judge Marcia M. Henry (as related to 22-cv-2850) for all further proceedings. Judge Gary R. Brown, Magistrate Judge Lee G. Dunst no longer assigned to case Please download and review the Individual Practices of the assigned Judges, located on our #website. Attorneys are responsible for providing courtesy copies to judges where their Individual Practices require such.Ordered by Chief Judge Margo K. Brodie on 9/20/2022. (Davis, Kimberly)
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| Filing 4 Notice of Related Case: The Civil Cover Sheet filed in this civil action indicates a related case. 22-CV-5527-GRB-LGD (Landow, Concetta) |
| Filing 3 In accordance with Rule 73 of the Federal Rules of Civil Procedure and Local Rule 73.1, the parties are notified that if all parties consent a United States magistrate judge of this court is available to conduct all proceedings in this civil action including a (jury or nonjury) trial and to order the entry of a final judgment. Attached to the Notice is a blank copy of the consent form that should be filled out, signed and filed electronically only if all parties wish to consent. The form may also be accessed at the following link: #http://www.uscourts.gov/uscourts/FormsAndFees/Forms/AO085.pdf. You may withhold your consent without adverse substantive consequences. Do NOT return or file the consent unless all parties have signed the consent. (Landow, Concetta) |
| Filing 2 This attorney case opening filing has been checked for quality control. See the attachment for corrections that were made, if any. (Bowens, Priscilla) (Additional attachment(s) added on 9/16/2022: #1 Correction Notice - Additional) (Landow, Concetta). |
| Case Assigned to Judge Gary R. Brown and Magistrate Judge Lee G. Dunst. Please download and review the Individual Practices of the assigned Judges, located on our #website. Attorneys are responsible for providing courtesy copies to judges where their Individual Practices require such. (Landow, Concetta) |
| Filing 1 NOTICE OF REMOVAL by Nouryon USA LLC from Supreme Court of New York Nassau County, case number 606363/2022. ( Filing fee $ 402 receipt number ANYEDC-15944794) Was the Disclosure Statement on Civil Cover Sheet completed -Yes (Attachments: #1 Exhibit A State Court Summons and Complaint, #2 Exhibit B State Court Notice re Removal, #3 Civil Cover Sheet, #4 Declaration of Jared Zane) (Mooney, Kyle) Modified on 9/16/2022 (Landow, Concetta). |
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