Lannunziata v. Am. Stock Transfer & Tr. Co.

• Decision Date: 27 January 2021
• Docket Number: Civil Action No. 3: 20 - CV - 1865 (CSH)
• Court: U.S. District Court — District of Connecticut
• Parties: LYNN LANNUNZIATA, Plaintiff, v. AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, AND TELADOC HEALTH, INC., Defendants.

LYNN LANNUNZIATA, Plaintiff, v. AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC,AND TELADOC HEALTH, INC., Defendants.

Civil Action No. 3: 20 - CV - 1865 (CSH)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT

JANUARY 27, 2021

ORDER RE: SUBJECT MATTER JURISDICTION

I. BACKGROUND

Plaintiff Lynn Lannunziata brings this action against Defendants American Stock Transfer & Trust Company, LLC ("American Stock") and Teladoc Health, Inc. ("Teladoc") for damages due to breach of fiduciary duty, negligence, breach of contract, and unfair trade practices regarding common stock of Teladoc. Plaintiff, an employee of Teladoc, had purchased such stock under the terms of an employee stock incentive plan; and Defendant American Stock allegedly "held her Teladoc shares" as contractual administrator of Teladoc's Employee Stock Option Plan. Doc. 1, at 3 (¶ 13).

According to her Complaint, "[i]mmediately upon moving" to a new residence in Hamden, Connecticut, Plaintiff "updated her mailing address with the United States Post Office" and "updated her home address with Teladoc." Id. (¶ 11). Moreover, after eventually leaving her employment with Teladoc, Plaintiff continued to hold her Teladoc shares with American Trust. Id. at 4 (¶ 15). However, in early 2020, she contacted American Trust and learned that it no longer held her shares. Id. (¶ 16). These shares, Plaintiff's intended "retirement nest egg," had been deemed "unclaimed property" and sent to the State of Connecticut. Id. (¶¶ 16-17). Plaintiff's Teladoc stock was then sold by the Office of the Connecticut State Treasurer, Unclaimed Property Division. Id. at 4-5 (¶¶ 17-18). Plaintiff alleges that at all relevant times, both Teladoc and American Stock "had [her] current address of record on file." Id. at 5 (¶ 19). She thus concludes that "the transfer and sale of [her] shares would not have occurred but for Teladoc's and/or [American Stock]'s failure to contact [her] regarding the possible abandonment and sale of her Teladoc shares." Id.

In the pending action, Plaintiff bases the Court's subject matter jurisdiction on diversity of citizenship under 28 U.S.C. § 1332(a).¹ Id. at 1-2 (¶ 2). Specifically, Plaintiff alleges that she brings this action under the diversity statute, "asserting that this is an action between citizens of the States [sic] of Connecticut on the one hand and a corporations [sic] with principal places of business in New York on the other, and the amount in controversy exceeds $75,000, exclusive of interest and costs." Id. However, as set forth below, Plaintiff's allegations are insufficient to establish diversity jurisdiction.

II. DISCUSSION

A. Subject Matter Jurisdiction

Pursuant to Article III of the Constitution, a federal court has limited jurisdiction. Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541(1986) (citing Marbury v. Madison, 1 Cranch (5 U.S.) 137, 173-80 (1803)). In general, it may only exercise subject matter jurisdiction if either: (1) the plaintiff sets forth a colorable claim arising under the Constitution or federal statute, creating "federal question" jurisdiction, 28 U.S.C. § 1331; or (2) there is complete diversity of citizenship between plaintiff and all defendants and the amount in controversy exceeds $75,000, exclusive of interest and costs, 28 U.S.C. § 1332(a)(1). Strawbridge v. Curtiss, 3 Cranch 267, 1806 WL 1213, at *1 (February Term 1806). See also Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir. 2000) (delineating two categories of subject matter jurisdiction).

It is incumbent on a federal court to determine with certainty whether it has subject matter jurisdiction over a case pending before it. If necessary, the court must consider its subject matter jurisdiction sua sponte - "on its own initiative, at any stage in the litigation, even after trial and the entry of judgment." Arbaugh v. Y&H Corp., 546 U.S. 500, 506 (2006). Courts thus "have an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party." 546 U.S. at 514. See also, e.g., Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party has suggested that we lack appellate jurisdiction, we have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte."); Promisel v. First Am. Artificial Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991) ("Although we would not normally consider an issue not raised below, the lack of subject matter jurisdiction may be raised at any time, by the parties, or by the court sua sponte.").

Unlike personal jurisdiction, "[s]ubject-matter jurisdiction can never be waived or forfeited." Gonzalez v. Thaler, 565 U.S. 134, 141 (2012). "[W]hen a federal court concludes that it lacks subject-matter jurisdiction, the court must dismiss the complaint in its entirety." Arbaugh, 546 U.S. at 514 (citation omitted). See Fed. R. Civ. P. 12(h)(3)( If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action."). See also, e.g., Kontrick v. Ryan, 540 U.S. 443, 455 (2004) ("Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action."); Daly v. Citigroup Inc., 939 F.3d 415, 425 (2d Cir. 2019) ("A case is properly dismissed for lack of subject matter jurisdiction . . . when the district court lacks the statutory or constitutional power to adjudicate it.")(quoting Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)), cert. denied, 140 S. Ct. 1117, 206 L. Ed. 2d 185 (2020); Thompson v. United States, 795 F. App'x 15, 17 (2d Cir. 2019)("Dismissal of a complaint for lack of subject matter jurisdiction is proper 'when the district court lacks the statutory or constitutional power to adjudicate it.'") (quoting Makarova, 201 F.3d at 113), cert. denied, 140 S. Ct. 2675, 206 L. Ed. 2d 826 (2020); Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 700-01 (2d Cir. 2000) (If subject matter jurisdiction is lacking, the action must be dismissed."); Manway Const. Co. v. Hous. Auth. of City of Hartford, 711 F.2d 501, 503 (2d Cir. 1983)("It is common ground that in our federal system of limited jurisdiction any party or the court sua sponte, at any stage of the proceedings, may raise the question of whether the court has subject matter jurisdiction; and, if it does not, dismissal is mandatory.") (citations omitted).

In the case at bar, Plaintiff has included solely state law claims in her Complaint. Therefore, there is no arguable basis upon which the Court may assert "federal question" subject matterjurisdiction over this action, 28 U.S.C. § 1331.² As discussed above, Plaintiff alleges that the alternate jurisdictional basis of "diversity of citizenship" exists under 28 U.S.C. § 1332(a). That statute provides, in relevant part:

The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between -

(1) citizens of different States . . . .

28 U.S.C. § 1332(a)(1).

In order for diversity of citizenship to exist in this action, all plaintiffs' citizenship must be diverse from that of all defendants. See, e.g., St. Paul Fire and Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80 (2d Cir. 2005) ("Diversity is not complete if any plaintiff is a citizen of the same state as any defendant.") (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)). Moreover, "diversity must exist at the time the action is commenced." Universal Licensing Corp. v. Lungo, 293 F.3d 579, 581 (2d Cir. 2002). See also Wolde-Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d 59, 62 (2d Cir.1999) ("Satisfaction of the § 1332(a) diversity requirements (amount in controversy and citizenship) is determined as of the date that suit is filed - the 'time-of-filing' rule.").

In addition, there must be a minimum amount in controversy exceeding "$75,000, exclusive of interest and costs," 28 U.S.C. § 1332(a). Plaintiff must allege in good faith that she sustained sufficient damages to invoke the Court's subject matter jurisdiction based on diversity ofcitizenship.³

B. Diversity of Citizenship

1. Citizenship of Plaintiff Lynn Lannunziata

As to her own citizenship, Plaintiff alleges that she, Lynn Lannunziata, is "an individual who was at all relevant times residing in the city of Hamden, Connecticut."⁴ Doc. 1, at 2 (¶ 6). With respect to an individual's citizenship, it is "well-established that allegations of residency alone cannot establish citizenship." Canedy v. Liberty Mut. Ins. Co., 126 F.3d 100, 102-03 (2d Cir. 1997) (citing Leveraged Leasing Admin. Corp. v. PacifiCorp Capital, Inc., 87 F.3d 44, 47 (2d Cir. 1996)). This is because an individual's citizenship for diversity purposes is determined by his or her domicile, as opposed to residence. See Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000). See also John Birch Soc. v. Nat'l Broad. Co., 377 F.2d 194, 199 (2d Cir.1967) ("[I]t has long been held that a statement of residence, unlike domicile, tells the court only where the parties are living and not of which state they are citizens"). "In general, the domicile of an individual is his true, fixed and permanent home and place of habitation"—i.e, "the place to which, whenever he is absent, he has the intention of returning." Martinez v. Bynum, 461 U.S. 321, 331 (1983).

Because Plaintiff has simply alleged her residence in Hamden, Connecticut, she has not established her citizenship. Plaintiff has not pled sufficient facts to prove her citizenship on the datethis action commenced.

2. Citizenship of Defendants

a. American Stock Transfer & Trust Company, LLC

With respect to the citizenship of American Stock, Plaintiff alleges that American Stock is "a business entity based out of New York that in the ordinary course of business regularly, on...