One Communications Corp. v. Sprint Nextel Corp.

• Decision Date: 11 July 2007
• Docket Number: Civil Action No. 06-12036-RGS.
• Citation: 495 F.Supp.2d 219
• Parties: ONE COMMUNICATIONS CORP. (f/k/a Choice One Communications Inc.), Choice One Communications of Connecticut Inc., U.S. Xchange of Illinois L.L.C., U.S. Xchange of Indiana L.L.C., Choice One Communications of Maine Inc., U.S. Xchange of Michigan L.L.C., Choice One Communications of New York Inc., Choice One Communications of Ohio Inc., Choice One Communications of Pennsylvania Inc., Choice One Communications of Rhode Island, Inc., and U.S. Xchange of Wisconsin L.L.C., Plaintiffs, v. SPRINT NEXTEL CORPORATION, and Sprint Communications Company, L.P., Defendants.
• Court: U.S. District Court — District of Massachusetts

495 F.Supp.2d 219

ONE COMMUNICATIONS CORP. (f/k/a Choice One Communications Inc.), Choice One Communications of Connecticut Inc., U.S. Xchange of Illinois L.L.C., U.S. Xchange of Indiana L.L.C., Choice One Communications of Maine Inc., U.S. Xchange of Michigan L.L.C., Choice One Communications of New York Inc., Choice One Communications of Ohio Inc., Choice One Communications of Pennsylvania Inc., Choice One Communications of Rhode Island, Inc., and U.S. Xchange of Wisconsin L.L.C., Plaintiffs, v. SPRINT NEXTEL CORPORATION, and Sprint Communications Company, L.P., Defendants.

Civil Action No. 06-12036-RGS.

United States District Court, D. Massachusetts.

July 11, 2007.

Mark S. Resnick, The Resnick Law Group, Boston, MA, for Plaintiffs.

Steven M. Cowley, Scott R. Magee, Edwards Angell Palmer Dodge LLP, Boston, MA, Philip R. Schenkenberg, Briggs & Morgan, P.A., Minneapolis, MN, for Defendants.

MEMORANDUM AND ORDER ON MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

STEARNS, District Judge.

Having reviewed the Report prepared by Magistrate Judge Collings, and having considered the objections submitted by plaintiff One Communication Corp. (Choice One), I am persuaded that the Magistrate Judge's jurisdictional analysis is correct. For purposes of diversity jurisdiction, the citizenship of an unincorporated entity is determined by the citizenship of all of its members. C.T. Carden v. Arkoma Assocs., 494 U.S. 185, 195-197, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990). A limited partnership is thus deemed to be a citizen of every state in which any one of its general or limited partners is a citizen. American Fiber & Finishing, Inc. v. Tyco Healthcare Group, LP, 362 F.3d 136, 138 (1st Cir.2004). See also Pramco, LLC ex rel. CFSC Consortium LLC v. San Juan Bay Marina, Inc., 435 F.3d 51, 54-55 (1st Cir.2006) (limited liability companies); Emerald Investors Trust v. Gaunt Parsippany Partners, 492 F.3d 192, 205, 2007 WL 1695342, at *11 (3d Cir.2007) (trustees and beneficiaries of a business trust).

Under the rule of Carden, each of the L.L.C. subsidiaries of plaintiff Choice One is a citizen of Delaware, the state in which Choice One is incorporated. (Choice One has a principal place of business in New York State). Defendant Sprint Nextel Corp. (Sprint Nextel) is a Kansas corporation with a principal place of business in Virginia. Defendant Sprint Communications Company, L.P. (SCC), is a Delaware limited partnership with a principal place of business in Kansas. Because the L.L.C. Choice One plaintiffs share Delaware citizenship with defendant SCC, diversity is defeated and this court lacks subject matter diversity jurisdiction. See Exxon Mobil Corp. v. Allapattah Serv., Inc., 545 U.S. 546, 553-554, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005).¹

Choice One attempts to avoid the inevitable by arguing in its Objections to the Report and Recommendation that the court should disregard the citizenship of SCC by treating it as a mere alter ego of Sprint Nextel. Because Sprint Nextel "pervasively controls" SCC, or so the argument goes, the court should ignore SCC's corporate existence and impute to SCC the attributes of its parent company, including Sprint Nextel's (non-Delaware) citizenship. Massachusetts law, however, is more stringent than most when it comes to piercing of the "corporate veil." "Only in rare instances, in order to prevent gross inequity, will a Massachusetts court look beyond the corporate form." Spaneas v. Travelers Indem. Co., 423 Mass. 352, 354, 668 N.E.2d 325 (1996). While Choice One posits a litany of supposed examples of Sprint Nextel's casual regard for corporate formalities, these do not, singly or collectively, satisfy the multi-factor test of My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 620, 233 N.E.2d 748 (1968).² See also Pepsi-Cola Metro. Bottling Co. v. Checkers, Inc., 754 F.2d 10, 14-16 (1st Cir.1985).³

ORDER

For the foregoing reasons, the Recommendation of the Magistrate Judge is ADOPTED and the Complaint is DISMISSED for want of subject matter jurisdiction.

SO ORDERED.

REPORT AND RECOMMENDATION ON DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION, LACK OF PERSONAL JURISDICTION AND FAILURE TO STATE A CLAIM (# 16)

COLLINGS, United States Magistrate Judge.

I. Introduction

On November 7, 2006, plaintiff One Communications Corp. ("Choice One") and its subsidiaries in eleven jurisdictions (together with Choice One, "the plaintiffs") filed a complaint against Sprint Nextel Corp. ("Sprint Nextel"). Approximately four months later on March 1, 2007, the plaintiffs filed a first amended complaint (# 27) which deleted one plaintiff, Choice One Communications of Massachusetts, and added a defendant, Sprint Communications Company L.P. ("SCC" or, together with Sprint Nextel, "the defendants"). The claims alleged against the defendants are as follows: breach of tariff (Count I), quantum meruit (Count II), violation of Massachusetts General Laws chapter 93A (Count III), and unjust enrichment (Count IV).

In due course the defendants filed a motion to dismiss (# 16) the amended complaint in its entirety for lack of subject matter jurisdiction pursuant to Rule 12(b)(1), Fed.R.Civ.P., or, in the alternative for lack of personal jurisdiction under Rule 12(b)(2), Fed.R.Civ.P., or to dismiss Count III for failure to state a claim pursuant to Rule 12(b)(6), Fed.R.Civ.P. Accompanying the dispositive motion were a supporting memorandum (# 17) and affidavit with exhibits (# 18). The plaintiffs filed a memorandum in opposition to the defendants' motion to dismiss (# 21) together with affidavits in opposition (## 22, 23, 24) and exhibits (## 25, 26). With leave of court, the defendants filed a reply memorandum (# 29) with an affidavit and exhibits (# 30) to which the plaintiffs then filed a sur-reply memorandum (# 33).

At this juncture the record on the motion to dismiss is complete and the dispositive motion stands ready for decision.

II. The Pertinent Facts

Because this motion can be decided with some dispatch, the recitation of facts shall be abbreviated. Plaintiff Choice One is a Delaware corporation with a principal place of business in Rochester, New York. (# 27 ¶ 4) Plaintiff Choice One Communications of Connecticut Inc. is a Delaware corporation presumably with a principal place of business in Connecticut. (# 27 ¶ 5) Plaintiff U.S. Xchange of Illinois L.L.C., a wholly owned subsidiary of Choice One, is alleged to be "a limited liability company formed under the laws of the State of Delaware." (# 27 ¶ 6) Plaintiff U.S. Xchange of Indiana L.L.C., a wholly owned subsidiary of Choice One, is alleged to be "a limited liability company formed under the laws of the State of Delaware." (# 27 ¶ 7) Plaintiff Choice One Communications of Maine Inc. is a Delaware corporation presumably with a principal place of business in Maine. (# 27 ¶ 8) Plaintiff U.S. Xchange of Michigan L.L.C., a wholly owned subsidiary of Choice One, is alleged to be "a limited liability company formed under the laws of the State of Delaware." (# 27 ¶ 9) Plaintiff Choice One Communications of Ohio Inc. is a Delaware corporation presumably with a principal place of business in Ohio. (# 27 ¶ 10) Plaintiff Choice One Communications of Pennsylvania Inc. is a Delaware corporation presumably with a principal place of business in Pennsylvania. (# 27 ¶ 11) Plaintiff Choice One Communications of Rhode Island Inc. is a Delaware corporation presumably with a principal place of business in Rhode Island. (# 27 ¶ 12) Plaintiff U.S. Xchange of Wisconsin L.L. C., a wholly owned subsidiary of Choice One, is alleged to be "a limited liability company formed under the laws of the State of Delaware." (# 27 ¶ 13) Plaintiff Choice One Communications of New York is a Delaware corporation presumably with a principal place of business in New York. (# 27 ¶ 14)

Defendant Sprint Nextel Corp. (hereinafter "Sprint Nextel") is a Kansas corporation with a principal place of business in Reston, Virginia. (# 27 ¶ 15) Defendant Sprint Communications Company L.P. (hereinafter "SCC") is a Delaware limited partnership with a principal place of business in Kansas. (# 27 ¶ 16)

III. The Law

The defendants seek dismissal pursuant to Rule 12(b)(1), Fed.R.Civ.P., based on lack of federal subject matter jurisdiction. Because federal courts are considered courts of limited jurisdiction, "federal jurisdiction is never presumed." Viqueira v. First Bank, 140 F.3d 12, 16 (1st Cir. 1998). Rather, "the party invoking the jurisdiction of a federal court carries the burden of proving its existence.'" Murphy v. United States, 45 F.3d 520, 522 (1st Cir.), cert. denied, 515 U.S. 1144, 115 S.Ct. 2581, 132 L.Ed.2d 831 (1995) (quoting Taber Partners, I v. Merit Builders, Inc., 987 F.2d 57, 60 (1st Cir.), cert. denied sub. nom, Desarrollos Metropolitanos, Inc. v. Taber Partners I, 510 U.S. 823, 114 S.Ct. 82, 126 L.Ed.2d 50 (1993)). The burden is triggered when a motion is filed pursuant to Rule 12(b)(1), Fed.R.Civ.P. See Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 86 L.Ed. 951 (1942); Aversa v. United States, 99 F.3d 1200, 1209 (1st Cir.1996); Murphy, 45 F.3d at 522.

The First Circuit has held that the proponent must clearly indicate the grounds upon which the Court may properly exercise jurisdiction over the matter presented: "`[i]t is black-letter law that jurisdiction must be apparent from the face of the plaintiffs' pleading'." PCS 2000 LP v. Romulus Telecomms., Inc., 148 F.3d 32, 35 (1st Cir.1998) (quoting Viqueira, 140 F.3d at 18). Hence, if the plaintiff fails to show a basis for either diversity or federal question jurisdiction, the district court must grant the defendant's Rule 12(b)(1) motion.

Subject matter jurisdiction in this case is premised upon diversity under 28 U.S.C. § 1332. Complete diversity is required; each plaintiff must be diverse to every defendant for each claim. The Supreme Court recently noted that

The Court ... has adhered to...