Alix v. McKinsey & Co.

Decision Date06 July 2020
Docket Number18-CV-4141 (JMF)
Parties Jay ALIX, Plaintiff, v. MCKINSEY & CO., INC., et al., Defendants.
CourtU.S. District Court — Southern District of New York

Michael Edward Petrella, Sean F. O'Shea, Amanda Lynn Devereux, Cadwalader, Wickersham & Taft LLP, New York, NY, for Plaintiff.

Christine H. Chung, Christine H. Chung, PLLC, David Scott Flugman, Faith E. Gay, Jennifer M. Selendy, Joshua Scott Margolin, Maria Ginzburg, Selendy & Gay PLLC, John Gleeson, Erica S. Weisgerber, Nathan Samuel Richards, Andrew J. Ceresney, DeBevoise & Plimpton LLP, Jordan Blake Leader, Mark David Harris, Matthew Jerome Morris, Robert J. Cleary, Steven Michael Kayman, Proskauer Rose LLP, Martin J. Bienenstock, Dewey & LeBoeuf, L.L.P., New York, NY, for Defendants.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

Plaintiff Jay Alix, the founder, thirty-five-percent owner, and director of a company now known as AlixPartners LLP ("AlixPartners"), alleges that McKinsey & Co., Inc. ("McKinsey") and related Defendants obtained bankruptcy-consulting business at the expense of AlixPartners through fraud. In 2019, the Court dismissed Alix's sole federal claims, brought under the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1962(c), for failure to state a claim. See Alix v. McKinsey & Co., Inc. , 404 F. Supp. 3d 827 (S.D.N.Y. 2019). The Court reserved judgment on Alix's pendent state-law claims pending supplemental briefing on whether there was complete diversity between the parties. See id. at 842. Before that briefing was complete, however, the case took a few unexpected turns. First, Alix filed a notice stating that he was voluntarily dismissing his state-law claims under Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure so that he could immediately appeal the Court's dismissal of his RICO claims. Two days later, though, Alix purported to retract his notice of dismissal, and he has since argued that the notice was ineffective in the first instance because it did not dismiss the entire action. The net effect of these maneuvers are complex disputes between the parties about whether and to what extent Alix's claims remain pending and when he can appeal the Court's dismissal of the federal claims, if he can appeal at all.

Alix now moves for three alternative forms of relief: first, entry of a final judgment as to the RICO claims under Rule 54(b); second, leave to amend to reassert the state-law claims; and third, an order precluding him from refiling the state-law claims in federal court. By Alix's own admission, these requests are designed to preserve, or perhaps revive, his ability to appeal the dismissal of the RICO claims. For the reasons discussed below, Alix's motions are DENIED.

BACKGROUND

The Court assumes general familiarity with the background of this litigation, which is described at length in the its prior opinion. See Alix , 404 F. Supp. 3d at 830-32. Briefly stated, on May 9, 2018, Alix filed suit against McKinsey and a range of related corporate Defendants (together with McKinsey, the "McKinsey Defendants") and individual Defendants. ECF No. 1. Alix's operative complaint (the "Complaint"), ECF No. 73 ("Compl."), alleges two sets of claims: First, he brings substantive RICO claims and RICO conspiracy claims against all Defendants; and second, he brings state-law claims for breach of contract, promissory estoppel, and tortious interference with business expectancy (collectively, the "State Law Claims") against only the McKinsey Defendants. The Complaint identifies AlixPartners as the "direct victim and target" of these alleged violations but alleges that AlixPartners "fully and lawfully assigned" its claims to Alix. Compl. at 1; id. ¶¶ 5, 7, 29; see ECF No. 106 ("Alix Decl."), ¶ 23 (asserting that the assignment occurred on August 31, 2017). The Complaint invokes two bases for jurisdiction: federal-question jurisdiction in light of the RICO Claims and diversity of the citizenship between Alix and Defendants. See Compl. ¶¶ 41-42.

On August 19, 2019, the Court dismissed the RICO Claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, holding that the Complaint failed to plausibly allege proximate causation. See Alix , 404 F. Supp. 3d at 834-40. The Court then turned to the State Law Claims. The Court noted that, "[a]bsent an independent basis for federal jurisdiction," it "would ordinarily decline to exercise supplemental jurisdiction over state-law claims" where it had "dismissed all federal claims." Id. at 840. The Court acknowledged Alix's invocation of diversity jurisdiction but noted that he had failed to properly allege his own citizenship and, more importantly, had failed to address whether diversity jurisdiction existed in light of the assignment from AlixPartners. Id. at 841. Accordingly, the Court reserved judgment on the State Law Claims and ordered supplemental briefing on jurisdiction. Id.

On September 3, 2019, Alix submitted his supplemental briefing, as well as a declaration discussing the assignment. See ECF Nos. 105-06. But the same day, Alix also filed a letter stating that his "top priority is to pursue an immediate appeal of the Court's dismissal of the RICO claims, while simultaneously moving forward on [his] state law claims." ECF No. 107, at 1. Accordingly, Alix "opted to voluntarily withdraw his state law claims only pursuant to Rule 41(a)(1)(A)(i) of the Federal Rules of Civil Procedure without prejudice to refiling those claims and pursuing them separately in state court." Id. Alix noted in his letter that there was "a split of authority in this Circuit concerning whether Rule 41(a)(1)(A)(i) can be used to withdraw individual claims, as opposed to an entire action," but argued that a partial withdrawal of individual claims was permissible. Id. Along with the letter, Alix filed a formal notice of voluntary dismissal of the State Law Claims. See ECF No. 108.

On September 4, 2019, the Court called for a response from Defendants. See ECF No. 109. The Court noted that Defendants should address whether, if dismissal of individual claims was inappropriate under Rule 41(a)(1)(A)(i), the Court should treat the notice of voluntary dismissal as being made under Rule 41(a)(2) instead. Id. But the very next day, before Defendants even responded, Alix filed another letter, stating that he was "concerned" about the possibility that the Court would treat his notice of voluntary dismissal as being made under Rule 41(a)(2). ECF No. 111. He further noted that, after conducting additional research, he had come to the conclusion that his previously filed "notice of partial voluntary dismissal" was "ineffective." Id. Accordingly, Alix sought to withdraw the notice and requested "that the Court proceed with briefing on the issue of diversity jurisdiction as contemplated by its August 19 Order." Id. To that end, and pursuant to the Court's prior instruction that he submit supplemental allegations "[t]o the extent ... necessary to establish ... jurisdiction," Alix also filed a proposed second amended complaint. Alix , 404 F. Supp. 3d at 841 ; see ECF No. 112.

In response, the Court ordered that "the notice of voluntary dismissal at ECF No. 108" was "deemed withdrawn" and "VACATED." ECF No. 113. But on September 6, 2019, the McKinsey Defendants filed a letter stating that they were "examining the consequences, under Second Circuit law, of the Plaintiff's notice of voluntary dismissal of claims in this case, and whether those consequences survive an attempt to withdraw the notice." ECF No. 114. Then, on September 19, 2019, the McKinsey Defendants filed a supplemental brief arguing that Alix's notice of voluntary dismissal "immediately removed the claims from the Court's jurisdiction," and thus could not "be withdrawn or amended." ECF No. 119 ("Defs.’ Dismissal Mem."), at 1. Accordingly, the McKinsey Defendants argued that Alix would have to refile the State Law Claims, either in state court or in federal court under a new case number. Id. at 6. The McKinsey Defendants further argued that Alix had forfeited his right to appeal the Court's dismissal of the RICO claims because "Second Circuit precedent holds that a voluntary without-prejudice withdrawal of some claims for the purpose of accelerating an appeal of other, already-dismissed claims deprives the appellate court of jurisdiction." Id. at 1.

On October 3, 2019, Alix filed another brief, arguing that his notice of voluntary dismissal had been ineffective because "[t]he vast weight of authority ... holds that a notice pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i) cannot dismiss fewer than all claims against any defendant because the Rule only authorizes dismissal of ‘actions,’ not ‘claims.’ " ECF No. 122 ("Alix Dismissal Mem."), at 2. Alix argued, therefore, that "the State Law Claims remain in this action." Id. at 10. The same day, Alix also filed a motion for an order pursuant to Rule 54(b) "certifying as final the dismissal of [the RICO Claims]." ECF No. 123 ("Alix Rule 54(b) Mot."), at 1. Alix sought this relief "[i]rrespective of whether the Court finds the Notice [of voluntary dismissal] effective." ECF No. 124 ("Alix Rule 54(b) Mem."), at 3. In the alternative, Alix sought leave to amend the Complaint to "reinstate" the State Law Claims or an order precluding him from re-refiling the State Law Claims in any federal court so that he could take an appeal of the Court's dismissal of the RICO Claims. Alix Rule 54(b) Mot. 1-2. Alix acknowledged that all of these requests were designed to "create or preserve appellate jurisdiction" over the Court's decision dismissing the RICO Claims. Alix Rule 54(b) Mem. 14.

DISCUSSION

As noted, Alix now moves for three forms of relief: first, entry of a final judgment as to the RICO Claims under Rule 54(b); second, leave to amend to reassert the State Law Claims; and third, an order precluding him from refiling the State Law Claims in federal court. The Court will address...

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