Opinion
CIVIL 3:23-CV-02106
03-26-2024
FRANK TUFANO, Plaintiff v. JAKE LEVY, et al., Defendants
Mannion, Judge
REPORT AND RECOMMENDATION
Susan E. Schwab, United States Magistrate Judge
I. Introduction.
Because the court is required to consider sua sponte whether it has subjectmatter jurisdiction, Fort Bend Cty., Tex. v. Davis, 139 S.Ct. 1843, 1849 (2019), and because the plaintiff Frank Tufano has not pleaded facts from which it can reasonably be inferred that the court has subject-matter jurisdiction, we recommend that the court dismiss this action without prejudice.
II. Background and Procedural History.
Tufano originally filed a complaint naming four defendants in the caption of his complaint: (1) Jake Levy (“Levy”); (2) Better Life Foods, Inc. (“Better Life”); (3) Legalinc Corporate Services Inc.; and (4) Giannuzzi Lewendon. See doc. 1 at 1. Tufano asserted that this court had subject-matter jurisdiction under 28 U.S.C. § 1332 “because there is a complete diversity of citizenship between each plaintiff and Defendant and the amount in controversy exceeds $75,000.” Id. ¶ 8. By a report and recommendation dated January 17, 2024, we recommended that the court dismiss the complaint because Tufano had failed to adequately plead that this court has diversity jurisdiction. Doc. 7. We further recommended, however, that Tufano be given leave to amend to assert, if he can honestly do so, diversity jurisdiction. Id. at 5. By a separate order dated January 17, 2024, we also deemed withdrawn Tufano's motion for preliminary injunction because Tufano had not filed a brief in support of that motion. See doc. 6.
Thereafter, Tufano filed a motion to disqualify the undersigned, see doc. 8, an amended complaint, see doc. 10, another motion for a preliminary injunction, see doc. 11, and a brief in support of that motion, see doc. 12. He also filed a “Notice to Court” asserting that he attempted to serve defendant Levy at an address in Glen Head, New York; that the service attempt was unsuccessful; that the current owner of the property where service was attempted asserted that Levy had moved out of state two years ago; and that based on shipping addresses that Levy had used to order from Tufano's business as well as Levy's social media posts, Tufano “assumes that Jake Levy has domicile in New York State in Glen Head NY, and a separate apartment in Texas where the supplier for his product resides.” Doc. 9 at 1. He requested “that the court accept this service attempt as adequate given the obvious implications that the owners of the house is [sic] Jake Levy's parents who are trying to delay court proceedings in favor of him operating his business.” Id. at 1-2.
On February 2, 2024, Judge Mannion adopted the report and recommendation, dismissing Tufano's complaint and granting him leave to amend. See doc. 13 at 3. Because Tufano already filed an amended complaint, Judge Mannion deemed that amended complaint filed as of the date of his order. Id. He also denied Tufano's motion to disqualify the undersigned, and he remanded this action to the undersigned for further proceedings, including disposition of Tufano's motion for a preliminary injunction. Id.
In the caption of his amended complaint, Tufano named two defendants: (1) Levy; (2) Better Life. Doc. 10 at 1. Although Tufano asserted that the court had diversity jurisdiction under 28 U.S.C. § 1332, after reviewing his amended complaint, by a report and recommendation dated February 6, 2024 (“second report and recommendation”), we recommended that the court dismiss the complaint because Tufano had failed to adequately plead that this court has diversity jurisdiction. Doc. 14. We noted that Tufano had sufficiently alleged that he is a citizen of Pennsylvania and that Levy is a citizen of New York. But, we explained, Tufano had failed to sufficiently allege the citizenship of defendant Better Life because although a corporation like Better Life is a citizen of the states where it has been incorporated and where it has its principal place of business, Tufano failed to allege where Better Life has its principal place of business. Id. at 7-8. And because Tufano had not sufficiently alleged Better Life's citizenship, he failed to plead that there was completed diversity of citizenship. Id. at 8. Thus, we recommended that the court dismiss this action without prejudice for lack of subject-matter jurisdiction. Id. at 9. Because Tufano had been given prior leave to amend but he still failed to plead that this court has subject-matter jurisdiction, we also recommended that Tufano not be given further leave to amend. Id. at 8.
Tufano alleged that the Better Life is registered in Delaware. We noted, however, that even assuming that allegation was construed as alleging Better Life's state of incorporation, Tufano had alleged nothing regarding Better Life's principal place of business.
Thereafter, Tufano filed an objection to the second report and recommendation asserting, in pertinent part, that “it can be assumed that Better Life Foods, INC. is operating from Jake Levy's temporary apartment in Austin, TX.” Doc. 15 at 2. On February 22, 2024, Judge Mannion overruled Tufano's objection and adopted in part our second report and recommendation. See doc. 17. Judge Mannion adopted the second report and recommendation to the extent he dismissed Tufano's amended complaint for lack of subject-matter jurisdiction. Id. In this regard, although Judge Mannion took judicial notice based on the Delaware Department of State's website that Better Life is incorporated in Delaware, Judge Mannion agreed that the amended complaint failed to specifically allege Better Life's principal place of business. Doc. 16 at 5, 5 n.2.
Judge Mannion also construed Tufano's objection as “an attempt to amend his pleading to include an allegation that Better Life ‘is operating from' Texas.” Id. at 6 (quoting doc. 15 ¶ 8). But he explained that such an amendment would not cure the jurisdictional defect:
Plaintiff's proposed amendment would not cure the jurisdictional defect. He intends only to allege that Better Life operates from Texas; not that Texas is Better Life's principal place of business. Corporations can operate outside their principal place of business. So this allegation does not inform us of Better Life's citizenship. See J&R Ice Cream Corp. v. Cal. Smoothie Licensing Corp., 31 F.3d 1259, 1265 n.3 (“The complaint stated that [the defendant] had ‘a' principal place of business in New Jersey, leaving open the possibility that it had ‘its' principal place of business in Florida. Thus, the complaint did not properly plead diversity jurisdiction.”); Kovacs v. Zumstein, Inc., No. 3: 11-cv-656, 2011 WL 1541297, at *2 (M. D. Pa. 2011).Id. at 6-7. And because federal courts are courts of limited jurisdiction, the party asserting jurisdiction has the burden of showing jurisdiction, and jurisdiction must be alleged affirmatively and cannot be established by inference, even though Tufano is pro se, the jurisdictional “defect cannot be overlooked.” Id. at 7. Judge Mannion thus concluded that “[a]n allegation that Better Life operated from Texas, or from New York, would not affirmatively establish that its principal place of business is not in Pennsylvania[,]” and “[t]he court may not simply infer that fact.” Id. (italics in original). But because “there is no indication in the record that Better Life's principal place of business is in Pennsylvania[,]” he could not conclude that amendment would be futile. Id. (italics in original). Thus, Judge Mannion did not adopt our recommendation that Tufano not be given further leave to amend. Id. at 8. Rather, he granted Tufano further leave to amend. Id. Judge Mannion further ordered that Tufano's motion for a preliminary injunction be held in abeyance pending an amendment establishing jurisdiction, and he remanded the case to the undersigned for further proceedings. Doc. 17. We then ordered that Tufano shall file any second amended complaint on or before March 25, 2024. Doc. 18.
Given that Tufano is a citizen of Pennsylvania, if Better Life's principal place of business were in Pennsylvania, there would not be complete diversity.
On February 28, 2024, Tufano filed a second amended complaint as well as another motion for a preliminary injunction and a brief in support of that motion. See docs. 19-21. In the caption of his second amended complaint, Tufano names two defendants: (1) Levy; (2) Better Life. Doc. 19 at 1. Tufano alleges that Levy “is assumed to be operating under the Corporation ‘Better Life Foods, Inc.' which was advertised on one of his social media pages.” Id. ¶ 5. Although the second amended complaint does not name Giannuzzi Lewendon as a defendant, Tufano alleges that Giannuzzi Lewendon is Levy's “assumed legal representation” given that Tufano “received an email from them after revealing the incident on social media.” Id. Similarly, although the second amended complaint does not name Legalinc Corporate Services Inc. as a defendant, Tufano alleges that “Legalinc Corporate Services is the assumed service [] Levy used to register his Corporation ‘Better Life Foods, Inc.'” Id.
As Tufano does not allege anything further about an incident, it is not clear to what he is referring here.
Tufano alleges that in 2020, he launched a product called “Best Bar,” which combines whey protein powder, beef fat tallow, honey, vanilla, and salt. Doc. 19 ¶¶ 1-2. He alleges that his “bar contains a very unique formulation of ingredients that did not exist before his creation of the product.” Id. ¶ 2. And, he asserts, “[t]he ingredients are so unique it is unlikely that anyone would consider selling a similar product ....” Id.
In June 2023, Levy placed his first of several orders for some of Tufano's “Best Bars.” Id. ¶¶ 4, 6. In November 2023, Tufano became aware of a product called “Whey Better Bar” that contained the same formulation as his “Best Bar.” Id. ¶ 3. The “Whey Better Bar” also comes in the same flavors as Tufano's “Best Bar,” has a similar name to Tufano's “Best Bar,” and is subject to a similar marketing campaign as Tufano's “Best Bar.” Id. Levy is the owner of the “Whey Better Bar.” Id. ¶ 4. According to Tufano, Levy ordered his “Best Bar” to do research with the “malicious intent to copy and replicate his unique formula, product line, and marketing ideas.” Id. ¶¶ 4, 6. Although Tufano had difficulty marketing his “Best Bar,” Levy has had “massive success” with his “Whey Better Bar,” with total sales estimated to be between $150,000 and $250,000 to date. Id. ¶¶ 7-8.
Tufano asserts that this court has subject-matter jurisdiction under 28 U.S.C. § 1332 “because there is a complete diversity of citizenship between each plaintiff and Defendant and the amount in controversy exceeds $75,000.” Id. ¶ 9. He alleges that his residence and domicile is in Carbondale, Pennsylvania. Id. ¶ 10. He alleges that Levy's residence and domicile is in Glen Head, New York. Id. ¶ 11. And he alleges that Better Life “is registered in Middletown, DE, but is operating from Austin, TX, as evident by another order placed on [] Tufano's business where [] Levy had [] Tufano's ‘Best Bar' product shipped so that he could bring the bar to a production facility nearby to replicate.” Id. ¶ 12.
Tufano presents four claims under Pennsylvania law. Claims One and Two are based on Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq. Id. ¶¶ 13-17. Claim Three is a state-law claim for misappropriation of trade secrets. Id. ¶¶ 21-23. And Claim Four is for unjust enrichment. Id. ¶¶ 24-26. As relief, Tufano seeks compensatory damages of no less than $150,000 as well as punitive damages. Id. ¶ 27(b). He also seeks an order to the defendants to “[c]ease and desist of all business operations relating to ‘Whey Better Bar,' ‘Better Life Foods Inc.,' or any identical product derived from” his “Best Bar.” Id. ¶ 24(c).
In connection with his second claim, citing 231 Pa. Code § 4003.8, Tufano requests what he calls pre-complaint discovery. Id. ¶¶ 18-20. In this regard, asserting that he believes that “Levy may have received funding from [] Tufano's business competitors[,]” and that his “Best Bar” was sent to the manufacturer of the “Whey Better Bar” to be replicated, Tufano requests that a “subpoena be issued for [] Levy's business email correspondence from 8/01/2023-2/01/2024 to reveal the source of funding for the business as well as email correspondence.” Id.
A claim of misappropriation of trade secrets can be made under either Pennsylvania law or federal law. Because Tufano does not mention federal law, because he asserts that the court has diversity jurisdiction, and because he sets forth this trade secret claim between other state law claims, we construe his trade secret claim as brought under Pennsylvania law.
III. Discussion.
Although Tufano asserts that the court has diversity jurisdiction under 28 U.S.C. § 1332, he again has failed to plead diversity jurisdiction.
As we explained in our prior reports and recommendations, the court has diversity jurisdiction over civil actions where the matter in controversy exceeds the sum or value of $75,000 and is between inter alia citizens of different states. 28 U.S.C. § 1332. Section 1332 requires complete diversity. Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996). There is complete diversity only when “the citizenship of each plaintiff is diverse from the citizenship of each defendant.” Id. “A plaintiff invoking a federal court's diversity jurisdiction bears the burden of stating ‘all parties' citizenships such that the existence of complete diversity can be confirmed.'” Kissi v. Gillespie, 348 Fed.Appx. 704, 705-06 (3d Cir. 2009) (quoting Chem. Leaman Tank Lines, Inc. v. Aetna Cas. & Sur. Co., 177 F.3d 210, 222 n. 13 (3d Cir. 1999)).
“The citizenship of a natural person is the state where that person is domiciled.” GBForefront, L.P. v. Forefront Mgmt. Grp., LLC, 888 F.3d 29, 34 (3d Cir. 2018). An individual's domicile ‘“is his true, fixed and permanent home and place of habitation. It is the place to which, whenever he is absent, he has the intention of returning.”' McCann v. Newman Irrevocable Tr., 458 F.3d 281, 286 (3d Cir. 2006) (quoting Vlandis v. Kline, 412 U.S. 441, 454 (1973)). “To acquire a domicile, a person must be physically present in a state and intend to remain in that state.” Pierro v. Kugel, 386 Fed.Appx. 308, 309 (3d Cir. 2010) (emphasis in original).
Here, Tufano has sufficiently alleged that he is a citizen of Pennsylvania. See doc. 19 ¶ 10. And, he has sufficiently alleged that Levy is a citizen of New York. Id. ¶ 11. But Tufano has not sufficiently alleged the citizenship of defendant Better Life. Tufano identifies Better Life as a corporation. See doc. 19 ¶¶ 5, 12. A corporation is a citizen of “every State . . . by which it has been incorporated and of the State . . . where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). A corporation's principal place of business is the corporation's “nerve center,” which is “the place where a corporation's officers direct, control, and coordinate the corporation's activities.” Hertz Corp. v. Friend, 559 U.S. 77, 92-93 (2010).
Here, Tufano alleges that Better Life “is registered in Middletown, DE, but is operating from Austin, TX, as evident by another order placed on [] Tufano's business where [] Levy had [] Tufano's ‘Best Bar' product shipped so that he could bring the bar to a production facility nearby to replicate.” Doc. 19 ¶ 12. As Judge Mannion previously noted, the court can take judicial notice that Better Life is incorporated in Delaware. See doc. 16 at 5, 5 n.2. But Tufano still has not alleged where Better Life's principal place of business is. Instead, he alleges Better Life is “operating from” Texas. Doc. 19 ¶ 12. But, as set forth above, Judge Mannion has already explained that because “[corporations can operate outside their principal place of business[,]” such an “allegation does not inform us of Better Life's citizenship.” Doc. 16 at 6. And “[a]n allegation that Better Life operated from Texas, or from New York, would not affirmatively establish that its principal place of business is not in Pennsylvania[,]” and “[t]he court may not simply infer that fact.” Id. at 7. (italics in original). Because Tufano alleges only that Better Life is operating from Texas, an allegation that Judge Mannion has already determined is insufficient to plead where Better Life's principal place of business is, we again conclude that Tufano has not sufficiently alleged Better Life's citizenship. Thus, he has failed to plead that there is diversity of citizenship. Accordingly, this court lacks subject-matter jurisdiction.
Even though Tufano was given two prior opportunities to amend, he still has failed to plead that this court has diversity jurisdiction. Thus, at this point, further leave to amend would be futile.
Because this court lacks subject-matter jurisdiction, we will recommend that the court dismiss this case without prejudice. See Mohn v. United States, No. 231023, 2023 WL 4311609, at *2 (3d Cir. July 3, 2023) (observing that “when a district dismisses claims for lack of subject matter jurisdiction, the dismissal should be without prejudice”); Merritts v. Richards, 62 F.4th 764, 772 n.4 (3d Cir. 2023) (noting that “a dismissal with prejudice on a threshold ground [such as lack of subject-matter jurisdiction] should ordinarily be vacated and remanded with instructions for the claim to be dismissed without prejudice”). And because the court lacks subject-matter jurisdiction, we make no recommendation as to Tufano's motions for a preliminary injunction.
IV. Recommendation.
Based on the foregoing, it is recommended that the court dismiss this action without prejudice for lack of subject-matter jurisdiction.
The Parties are further placed on notice that pursuant to Local Rule 72.3:
Any party may object to a magistrate judge's proposed findings, recommendations or report addressing a motion or matter described in 28 U.S.C. § 636 (b)(1)(B) or making a recommendation for the disposition of a prisoner case or a habeas corpus petition within fourteen (14) days after being served with a copy thereof. Such party shall file with the clerk of court, and serve on the magistrate judge and all parties, written objections which shall specifically identify the portions of the proposed findings, recommendations or report to which objection is made and the basis for such objections. The briefing requirements set forth in Local Rule 72.2 shall apply. A judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made and may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge. The judge, however, need conduct a new hearing only in his or her discretion or where required by law, and may consider the record developed before the magistrate judge, making his or her own determination on the basis of that record. The judge may also receive further evidence, recall witnesses or recommit the matter to the magistrate judge with instructions.