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Damian J. Cioni v. Globe Specialty Metals

December 14, 2010


The opinion of the court was delivered by: Hon. Dennis M. Cavanaugh




This matter comes before the Court upon Malcolm Appelbaum's ("Defendant") motion to dismiss for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P. 12(b)(1), and Damien Cioni's ("Plaintiff") cross-motion for entry of default judgment pursuant to Fed. R. Civ. P.55. Pursuant to Fed. R. Civ. P. 78, no oral argument was heard. After considering the submissions of the parties, and based upon the following, it is the decision of this Court that Defendant's motion to dismiss is denied, and the Court reserves decision on Plaintiff's motion forentry of default judgment pending an evidentiary hearing to address issues of service of process pursuant to Fed. R.Civ. P. 4.


Plaintiff Damien Coini was employed by Defendant Globe Specialty Metalsas their Vice-President of Tax from June 29, 2009 until his termination on November 13, 2009. Before taking the job with Defendant, Plaintiff received a letter, dated April 29, 2009, which memorialized Plaintiff's compensation package, and outlined the severance he would be entitled to if he were terminated "for any reason other than gross negligence or willful misconduct."(See ECF Doc. 2-1, page ID 32, Exhibit "A" of Plaintiff's Complaint). Although Plaintiff's previous employer made a generous counter-offer with a significant stock component, Plaintiff chose to work for Defendant, and accepted their offer on April 30, 2009.

In addition to a base salary of $210,000 per annum and a bonus in the range of 20-40% of that base salary, Defendant's offer of employment described that "a key component of your compensation package at Globe will be participation in our long term equity appreciation. You will be awarded 30,000 stock options under and subject to the terms and conditions of our stock plan upon acceptance of the position." (Id. at page ID 32). Plaintiff avers that he never received the options as promised, and that in October, 2009 he was told by Defendant Applebaum that he would not, in fact, receive the options. The parties met on November 9, 2009, but were unable to resolve the situation. On November 12, 2009 Plaintiff retained counsel, and on November 13, 2009, his employment with Defendant was terminated.This action was commenced with the filing of a complaint on March 16, 2009.


A. Subject Matter Jurisdiction

The question of subject matter jurisdiction that the Court is asked to decide involves the interpretation of terms that are slippery and hard to pin-down. "Citizen," "resident," and "domicile" are often, perhaps regrettably for purposes of legal clarity, defined in relation to one another and even used interchangeably. On the one hand "a natural person is deemed to be a citizen of the state where she is domiciled," Gilbert v. David, 235 U.S. 561, 569, 35 S. Ct. 164, 59 L.Ed. 360 (1915). On the other hand, "tax statutes frequently speak in terms of residence, intending it to be the equivalent of domicile. For example, the New York estate tax speaks in terms of residence and non-residence. Similarly ... , the United States imposes an estate tax on any resident or citizen of the U.S. Although both statutes use the term 'residence,' its usage has been construed to mean 'domicile.' " Robert C. Lawrence III, International Tax and Estate Planning 1.03(a)(4), at 8--9 (1989). Contrast that with the Court's language in Mas v. Perry, 489 F. 2d 1396 (5th Cir.,1970) in which "to be a citizen of a State within the meaning of section 1332, a natural person must be both a citizen of the United States, See Sun Printing & Publishing Association v. Edwards, 194 U.S. 377, 383, 24 S.Ct. 696, 698, 48 L.Ed. 1027 (1904);U.S.Const.Amend. XIV, 1, and a domiciliary of that State. See Williamson v. Osenton, 232 U.S. 619, 624, 34 S.Ct. 442, 58 L.Ed. 758 (1914); Stine v. Moore, 5 Cir., 1954, 213 F.2d 446, 448.*fn2 For diversity purposes, citizenship means domicile; mere residence in the State is not sufficient." See Wolfe v. Hartford Life & Annuity Ins. Co., 148 U.S. 389, 13 S.Ct. 602, 37 L.Ed 493 (1893); Stine v. Moore, 5 Cir., 1954,213 F.2d 446, 448.

The First Circuit took a different approach to this question, and quite reasonably held in In re Mailman Steam Carpet Cleaning Corp. 196 F.3d 1, 5 -6 (C.A.1 (Mass.),1999), that "affirmative pleading of the precise statutory basis for federal subject matter jurisdiction is not required as long as a complaint alleges sufficient facts to establish jurisdiction." Moreover, the Court continued, "federal subject matter jurisdiction may be established by reading a complaint holistically, " (Id. at 5), especially in light of the fact that "in evaluating a Rule 12(b)(1) motion to dismiss, the court must first determine whether to treat the motion as a facial or factual challenge to the court's subject-matter jurisdiction." Gould Elecs., Inc. v. United States, 220 F.3d 169, 176 (3d Cir.2000) (citing Mortensen v. First Fed. Sav. and Loan Ass'n, 549 F.2d 884, 891 (3d Cir.1977). A facial challenge "attack[s] the complaint on its face," while a factual challenge "attack[s] the existence of subject matter jurisdiction in fact, quite apart from any pleading." Mortensen v. First Fed. Sav. & Loan Assn., 549 F.2d 884, 891 (3rd Cir., 1977). "In reviewing a facial attack, the court must only consider the allegations of the complaint and documents referenced therein and attached thereto, in the light most favorable to the plaintiff." Gould Elecs., Inc., 220 F.3d at 176. Nonetheless, "the basis upon which jurisdiction depends must be alleged affirmatively and distinctly and cannot be established argumentatively or by mere inference," S. Freedman & Co. v. Raab, 180 Fed.Appx. 316, 320-21 (3d Cir.2006) (quoting 5 C. Wright & A. Miller, Federal Practice and Procedure § 1206, at 78-79 (1969 & Supp.2005)) (citations omitted).

B. Service of Process and Default

Although the e-mail correspondence between the parties in this case incontrovertibly demonstrates that Defendants were aware of the pending lawsuit, "notice cannot by itself validate an otherwise defective service." Grand Entertainment Group Ltd. v. Star Media Sales Inc., 988 F.2d 476, 492(3rd Cir.1993). On the other hand, Courts are instructed to use their "judicial experience and common sense." See Ashcroft v. Iqbal, 29 S. Ct. 1937, 1950 (U.S. 2009). "Rule 4(d)(3) does not require that the delivery of process be accomplished during a face to face meeting with the person upon whom service is to be effected. Nor does it require that it be surrounded by medieval formalism." O'Connor v. Altus, 67 N.J. 106, 127-128, 335 A.2d 545, 556 (N.J. 1975). Moreover, if Plaintiff's allegation that Defendants evaded service is accurate, "to allow defendant to prevail would be to countenance evasion of process and contravene the intent of the Rules to hold technicalities to a minimum and decide cases on the merits." (Id. at 556). Additionally, the Court notes that "the determination of whether default judgment is appropriate is committed to the discretion of the trial court. "Jackson v. Beech, 636 F.2d 831, 836 (D.C.Cir.1980). "For default judgment, defendant must be ...

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