United States District Court, D. New Jersey
THOMAS R TOMEI, individually and derivatively on behalf of H&H Manufacturing Company, Inc., Plaintiffs,
RIFE & ASSOCIATES MANAGEMENT CONSULTING, LLC, KEVIN RIFE, MOMENTUM ADVISORS SERVICES, LLC, STEPHEN JUDGE, JOSEPH ZAKORCHEMNY, PATRICK STEWART, Defendants.
J. E. LEDERER OBERMAYER REBMANN MAXWELL & HIPPEL LLP
MATTHEW ADAM GREEN On behalf of Plaintiffs
LAWRENCE M. KELLY MINTZER, SAROWITZ, ZERIS, LEDVA &
MEYERS JOSEPH B. SILVERSTEIN GREEN, SILVERSTEIN & GROFF,
LLC On behalf of Defendants
L. HILLMAN, U.S.D.J.
August 29, 2017, Defendants removed Plaintiff's case from
New Jersey Superior Court to this Court,  and the purported
basis for subject matter jurisdiction in Defendants'
notice of removal was based on the diversity of citizenship
of the parties and an amount in controversy in excess of $75,
000, exclusive of interests and costs, pursuant to 28 U.S.C.
§ 1332(a). On September 7, 2017, the Court issued an
Order to Show Cause (Docket No. 4), which screened
Defendants' notice of removal to determine whether
subject matter jurisdiction had been properly averred.
complaint provided that Plaintiff, Thomas R. Tomei, who is a
citizen of New Jersey, was asserting claims on his own
behalf, and derivatively on behalf of H&H Manufacturing
Company, Inc. (“H&H”), which “is a
corporation incorporated under the laws of the Commonwealth
of Pennsylvania with a principal business address of 2 Horne
Drive, Folcroft Industrial Park, Folcroft, PA 19032, ”
and of which Tomei holds 95% of the issued capital stock.
Defendants' notice of removal did not, however, aver
whether the citizenship of H&H should be considered in
the jurisdictional analysis. That factor was important
because H&H's citizenship is
Pennsylvania and all Defendants are citizens of
response to the Court's Order to Show Cause, Defendants
filed an amended notice of removal (Docket No. 6), which
cured the deficiencies in pleading the citizenship of the two
limited liability company Defendants. The notice also argued that
the Court should not consider H&H's citizenship in
determining subject matter jurisdiction. Around the same
time, Defendants filed a motion to dismiss Plaintiff's
complaint for lack of personal jurisdiction. (Docket No. 5.)
Soon thereafter, Plaintiff filed a motion to remand, arguing
that H&H's citizenship should be considered, and the
Court therefore lacks subject matter jurisdiction over the
matter. (Docket No. 8.) Plaintiff also sought attorney's
fees and costs relative to the improvident removal of his
case. Those motions are still pending.
January 26, 2018, Plaintiff filed a motion for leave to amend
his complaint. (Docket No. 21.) In his motion, Plaintiff
related that he originally brought his action individually
and derivatively on behalf of H&H because the dispute
over the ownership of H&H was ongoing. On November 30,
2017, a Pennsylvania state court ruled in Plaintiff's
favor by ending the receivership of H&H and placing
H&H in Plaintiff's hands, and as a result, he no
longer needed to act derivatively on H&H's behalf.
Defendants, without waving any rights to substantively
contest the amended complaint, did not object to its filing.
(Docket No. 24.) The Magistrate Judge granted Plaintiff's
motion to file an amended complaint on February 20, 2018.
(Docket No. 25.)
February 28, 2018, Plaintiff filed an amended complaint,
which names H&H as a stand-alone plaintiff, rather than a
plaintiff derivatively. (Docket No. 28.) On March 19, 2018,
the parties filed a “stipulation to remand and to
extend time to file a response to complaint, ” which
states “the above-captioned matter will be remanded to
the New Jersey Superior Court, Camden County, ” and
also includes agreements as to fees and costs and
jurisdictional discovery. (Docket No. 29.)
filing of Plaintiff's amended complaint does not defeat
subject matter jurisdiction if such jurisdiction existed at
the time Defendants removed Plaintiff's original
complaint. It has been long and well-established that in
determining whether a federal court may exercise jurisdiction
based upon diversity of citizenship, the court must look to
“the state of things at the time of the action
brought.” Mollan v. Torrance, 22 U.S. 537, 539
(1824), quoted in Grupo Dataflux v. Atlas Global Grp.,
L.P., 541 U.S. 567, 570 (2004); see also St. Paul
Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294-95
(1938) (“It uniformly has been held that in a suit
properly begun in the federal court the change of citizenship
of a party does not oust the jurisdiction. The same rule
governs a suit originally brought in a state court and
removed to a federal court.”).
Grupo, the Supreme Court drove home the point:
This time-of-filing rule is hornbook law (quite literally)
taught to first-year law students in any basic course on
federal civil procedure. It measures all challenges to
subject-matter jurisdiction premised upon diversity of
citizenship against the state of facts that existed at the
time of filing - whether the challenge be brought shortly
after filing, after the trial, or even for the first time on
Grupo, 541 U.S. at 570-71.
the Court must determine not whether diversity of citizenship
exists by way of Plaintiff's amended complaint, but
rather at the time Defendants removed Plaintiff's
jurisdiction cannot be conferred upon the federal courts by
the parties' own determination of who are plaintiffs and
who defendants. It is [a court's] duty to look beyond the
pleadings and arrange the parties according to their sides in
the dispute.” Swanson v. Traer, 354 U.S. 91,
99-100 (1957) (quotations and citations omitted). It is the
“‘general rule'  that the corporation in a
derivative suit should be aligned as a plaintiff because the
action is brought for the benefit of the corporation and any
judgment favorable to the plaintiff shareholder will inure to
the benefit of the corporation.” Ono v.
Itoyama, 884 F.Supp. 892, 900 (D.N.J. 1995). Because,
however, a “real collision in interests” is
required, “the final alignment of the parties ...