Lucas v. Verizon Commc'ns, Inc.
| Decision Date | 31 March 2021 |
| Docket Number | 20-cv-5542 (AJN) |
| Parties | Jeff Lucas, Plaintiff, v. Verizon Communications, Inc., et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff Jeff Lucas initiated this action in the New York Supreme Court, alleging a variety of state law claims against Verizon Communications, Inc. and Verizon Media, Inc., his former employer. Defendants removed the case to federal court on July 17, 2020. Dkt. No. 1. Presently before the Court are Plaintiff's motion to remand and Defendants' motion to dismiss under Rule 12(b)(3) or, in the alternative, to transfer the case to the United States District Court for the District of New Jersey. For the reasons that follow, Plaintiff's motion to remand is GRANTED, and Defendants' motion to dismiss or transfer is DENIED.
Plaintiff Jeff Lucas was hired by Oath Inc., now known as Verizon Media, in April 2018 to work as Vice President, Head of Advertising Sales. Dkt. No. 5-2 at 33-58 ("Am. Compl.") ¶¶ 24-25; see also Dkt. No. 10, Lucas Decl., ¶ 2; Dkt. No. 11, Cavaleri Decl., Ex. 1; Dkt. No. 23 at 2. Verizon Media is an indirectly wholly owned subsidiary of Verizon Communications. See Dkt. No. 24, Johnstone Decl., ¶ 5. Plaintiff's compensation package included, among other things, an equity incentive award of restricted stock units. Dkt. No. 11, Ex. 1, at 3. In September 2018, Plaintiff entered into the 2018 Restrictive Stock Unit Agreement with Verizon in which he agreed, among other things, to be bound by noncompetition, nonsolicitation, and confidentiality obligations in exchange for restricted stock units. Dkt. No. 14, Ex. 2, 2018 Agreement § B. The 2018 Agreement also included a forum selection clause that indicated that "the parties consent to the non-exclusive jurisdiction and venue of the courts of the State of New Jersey, and the federal courts of the United States of America located in the State of New Jersey, over any action, claim, controversy or proceeding arising under this Exhibit B [to the 2018 Agreement], and irrevocably waive any objection they may now or hereafter have to the non-exclusive jurisdiction and venue of such courts." Dkt. No. 14, Ex. 1, 2018 Agreement § B(7). He reaffirmed those contractual obligations twice in 2019, and both 2019 contracts included the same noncompetition obligations and forum selection clauses. See Dkt. No. 14, Ex. 2, 2019 Agreements.
According to the Amended Complaint, Plaintiff soon became dissatisfied with the opportunities that were available to him in the company. Among other things, his compensation structure included a certain amount that was tied to the sales of premium content. Am. Compl. ¶ 28. But once he was at the company, he found that Verizon Media was not creating sufficient premium content to allow him to realize the amount of sales necessary to reach his bonus target; Plaintiff also alleges that while he brought this to the attention of Verizon Media executives, they failed to rectify the situation. Id. ¶ 32-43. In part because of that dissatisfaction, around two years after he was hired, Plaintiff sought a new employment opportunity with WarnerMedia to oversee advertising sales for premium television content. Am. Compl. ¶¶ 44-47, 55-56, 63. According to Plaintiff, executives at Verizon declined to waive the non-compete provision of the RSU Agreements. Am. Compl. ¶¶ 57-68.
On June 22, 2020, Plaintiff sued Defendants Verizon Communications and Verizon Media in the New York Supreme Court, County of New York, Commercial Division, seeking a declaratory judgment that the noncompetition restrictions in the 2018 and 2019 RSU Agreements were unenforceable. Dkt. No. 5-2 at 4-28. Two days later, he sought a temporary restraining order to enjoin enforcement of the restrictive covenant. Dkt. No. 5-3. On June 29, 2020, the motion for a temporary restraining order was denied, as Justice Jennifer Schecter found that Plaintiff had not demonstrated irreparable harm because he would be able to recover monetary damages in the form of lost earnings on a claim for tortious interference with business relations. Dkt. No. 5-2 at 29. On July 17, 2020, Plaintiff amended his complaint to seek damages for what he alleges was a tortious interference with the WarnerMedia employment opportunity. Dkt. No. 5, Ex. 2 at 33-58. That same day, Defendants removed the case to this Court, asserting that this Court had diversity jurisdiction over the action. Dkt. No. 1.
On July 24, 2020, Plaintiff moved to remand the case back to the New York Supreme Court, alleging that there was no complete diversity between the parties and that, as a result, this Court lacks subject matter jurisdiction. See Dkt. Nos. 9-12. Plaintiff is a resident of New York, and Verizon Communications is a Delaware corporation with its principal place of business in New Jersey. See Am. Compl. ¶¶ 4, 5; Def. Opp. Br. at 8. It is also undisputed that Verizon Media is also a Delaware corporation. See Am. Compl. ¶ 6; Def. Opp. Br. at 1, 8. The parties disagree, however, as to Verizon Media's principal place of business. In addition, Defendants contend that Verizon Media is merely a nominal defendant whose citizenship can be disregarded for purposes of assessing whether this Court has subject matter jurisdiction under 28 U.S.C. § 1332.
Also on July 24, 2020, Defendants moved to dismiss under Rule 12(b)(3) or, in the alternative, to transfer the case to the United States District Court for the District of New Jersey. Dkt. Nos. 13-14. Defendants allege that the forum selection clause of the RSU Agreements binds the parties to litigate this dispute in a New Jersey court. See Dkt. No. 14 at 5-11. Plaintiff contests that the forum selection clause is exclusive. See Dkt. No. 22 at 5-13.
Both motions are fully briefed, see Dkt. Nos. 22, 23, 25, 26.
The parties dispute whether this Court has subject matter jurisdiction. Plaintiff contends that complete diversity does not exist because Plaintiff is a resident of New York and Verizon Media, Inc. has its principal place of business in New York. See Dkt. No. 12 ("Pl. Br.") at 4-6. Defendants contend that Verizon Media, Inc. is a nominal defendant whose domicile should be disregarded for purposes of assessing whether complete diversity exists, and they argue that Verizon Media, Inc.'s principal place of business is in New Jersey. Dkt. No. 23 ("Def. Opp. Br.") at 5-11. The Court concludes that Verizon Media is not a nominal defendant and that its principal place of business is in New York. Accordingly, this Court lacks subject matter jurisdiction over this action, and Plaintiff's motion to remand is granted.
Where a motion to remand challenges the Court's subject matter jurisdiction to hear the case, courts ordinarily address it first. See Calingo v. Meridian Res. Co. LLC, No. 7:11-CV-628 (VB), 2011 WL 3611319, at *3 (S.D.N.Y. Aug. 16, 2011); People of New York ex rel. Cuomo v. First Am. Corp., No. 07-CV-10397 (LTS) (HP), 2008 WL 2676618, at *1 (S.D.N.Y. July 8, 2008) ( ).
"[F]ederal courts are courts of limited jurisdiction," and they "lack the power to disregard such limits as have been imposed by the Constitution or Congress." Durant, Nichols, Houston, Hodgson, & Cortese-Costa, P.C. v. Dupont, 565 F.3d 56, 62 (2d Cir. 2009) (quotation omitted). Under the federal removal statute, a defendant may "remove an action to the United States District Court in any civil action brought in a State court of which the district courts of the United States have original jurisdiction." Purdue Pharma L.P. v. Kentucky, 704 F.3d 208, 213 (2d Cir. 2013) (citation and internal quotation marks omitted). "Congress has granted district courts original jurisdiction over cases in which there is a federal question . . . and certain cases between citizens of different states, so long as the requirements of complete diversity and amount in controversy are met[.]" Purdue Pharma L.P. v. Kentucky, 704 F.3d 208, 213 (2d Cir. 2013) (citing 28 U.S.C. §§ 1331, 1332).
"A party seeking removal bears the burden of showing that federal jurisdiction is proper." Montefiore Med. Ctr. v. Teamsters Local 272, 642 F.3d 321, 327 (2d Cir. 2011). "Where, as here, jurisdiction is asserted by a defendant in a removal petition, it follows that the defendant has the burden of establishing that removal is proper." United Food & Commercial Workers Union v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir. 1994). "[R]emoval statutes are to be strictly construed against removal and all doubts should be resolved in favor of remand." Am. Standard, Inc. v. Oakfabco, Inc., 498 F. Supp. 2d 711, 715 (S.D.N.Y. 2007) (citations omitted); see also Purdue Pharma L.P., 704 F.3d at 213.
In opposing Plaintiff's motion to remand, Defendants argue that Verizon Media, is merely a nominal defendant whose citizenship should be disregarded for purposes of assessing whether this Court has subject matter jurisdiction over this action. See Def. Opp. Br. at 6-8. Plaintiff contests this point, arguing instead that Verizon Media, as the company that employed him, is a real party in interest.
"The Supreme Court has held that 'the 'citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy,'" and as a result "courts 'must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.'" Purdue Pharma L.P., 704 F.3d at 218 (quoting Navarro Sav. Ass'n v. Lee, 446 U.S. 458, 460-61 (1980)). A party is deemed "nominal" when "that party has little or no interest in the outcome of the litigation and no...
To continue reading
Request your trial