Opinion
02 Civ. 0425 (LAK).
February 22, 2002
ORDER
This action was commenced in New York Supreme Court, New York County. The complaint alleges that plaintiff is a resident of New York, that defendant Charles Schwab Co., Inc. ("Schwab") is a New York corporation with its principal place of business in New York, and that defendant National Association of Securities Dealers, Inc. ("NASD") is an unincorporated association organized and existing under New York law with its principal place of business in New York. Defendants removed the action to this Court on the basis of diversity of citizenship. They allege that plaintiff is a resident of New York, Schwab a Delaware corporation with its principal place of business in California, and NASD a Delaware corporation with its principal place of business in the District of Columbia.
Plaintiff has moved to remand for lack of subject matter jurisdiction, asserting blithely that complete diversity is lacking. Given defendants' allegations as to citizenship, the motion is almost surely baseless. The qualification stems from the fact that it is citizenship, not residence, that is controlling, and the notice of removal therefore is not technically sufficient. Defendants, however, may file an amended notice of removal no later than March 1, 2002 alleging, if they can, that plaintiff is a citizen of New York, in which case their allegations would be sufficient to establish subject matter jurisdiction. If plaintiff then disputes any of defendants' jurisdictional allegations, the issue can be resolved on summary judgment or at trial.
Despite the fact that there is this minor insufficiency in the removal notice, plaintiff's actions on this motion are very troublesome. Certainly he never noticed the defect noted by the Court. Rather, he simply relied on the allegations of the defendants' citizenship from his own complaint, allegations that appear to be entirely baseless. It is virtually inconceivable that plaintiff responsibly could allege that NASD is an unincorporated association in view of the fact that its name, as set forth in the complaint, contains the abbreviation for "incorporated" that is used by corporations. Indeed, a simple search on the public web site of the New York Department of State would have yielded the information that NASD is a foreign not-for-profit corporation organized in Delaware. Nor can the Court see any possible basis for his allegation that either defendant is a New York corporation with its principal place of business here.
The motion to remand is denied. Plaintiff's counsel, David A. Zelman, is directed to show cause, on or before March 6, 2002, why he should not be sanctioned for violating Fed.R.Civ.P. 11(b), on the ground that the allegation that the "parties are not completely diverse," made in paragraph 6 of the affirmation in support of plaintiff's motion to remand, was not made after inquiry reasonable under the circumstances and is unsupported, and unlikely to be supported, by any evidence. See id. Rule 11(b)(3), 11(b)(4).
SO ORDERED.