Malekar v. Birley

1

SHIRISH MALEKAR, Plaintiff, v. VINCE BIRLEY, et al., Defendants.

No. 22-cv-06187-HSG

United States District Court, N.D. California

May 1, 2023

ORDER DENYING MOTION TO REMAND AND GRANTING MOTION TO DISMISS Re: Dkt. Nos. 16, 17

HAYWOOD S. GILLIAM, JR. UNITED STATES DISTRICT JUDGE

Before the Court is Plaintiff Shirish Malekar's motion to remand, Dkt. No. 16, and Defendant Mohammed Baki's motion to dismiss for lack of personal jurisdiction, Dkt. No 17. For the reasons below, the Court DENIES the motion to remand and GRANTS the motion to dismiss. I. FACTUAL ALLEGATIONS

Plaintiff is a former employee of Vident Financial, a financial management company. Dkt. No. 1-1 (“Compl”) ¶¶ 15-16. Plaintiff alleges that Defendant Vince Birley, the CEO, and Defendant Mohammed Baki, an executive conspired to defraud him out of his earned equity in Vident Investment Advisory, owned in whole or in part by Vident Financial. See id. ¶¶ 28, 39-68. By the end of his employment in 2018, Plaintiff had a 3.75% vested membership interest (out of a possible 5%) in Vident Investment Advisory. Id. ¶¶ 15, 38. According to Plaintiff, Defendants persistently discouraged him from exercising his vested options, sometimes by making promises and reassuring him that no further action was needed. Id. ¶¶ 39, 41-43, 45-46, 50, 52 58, 63-64. Then, in 2021, Defendants informed Plaintiff that he did not own the membership interest because he had not formalized the exercise of his vested options. Id. ¶ 67.

Plaintiff now brings claims for fraud and breach of contract against Birley, Vident Financial, and Vident Investment Advisory, and one claim of conspiracy against Baki, who he alleges contacted him on Birley's behalf to discourage Plaintiff from exercising his vested options. Id. ¶¶ 50, 69-137.

Plaintiff initially filed this case in San Francisco County Superior Court in July 2022, and Defendants removed it in October 2022. Plaintiff now moves to remand. Dkt. No. 16. Additionally, Defendant Baki moves to dismiss the claim against him for lack of personal jurisdiction, or in the alternative, failure to state a claim. Dkt. No. 17.

II. MOTION TO REMAND

A. Legal Standard

“Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed” to federal court. 28 U.S.C. § 1441(a). District courts have original jurisdiction over civil actions between citizens of different states in which the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1). To properly invoke diversity jurisdiction, the defendant bears the burden of proving that the parties in the action are completely diverse, meaning that “each plaintiff must be of a different citizenship from each defendant.” Grancare, LLC v. Thrower, 889 F.3d 543, 548 (9th Cir. 2018). If the district court lacks jurisdiction over an action, a plaintiff may seek remand to state court. 28 U.S.C. § 1447(c).

B. Discussion

Plaintiff does not challenge the amount in controversy requirement, but contends that Defendants have not established complete diversity of citizenship. Dkt. No. 16 at 3-4. The Court disagrees.

1. Plaintiff's Citizenship

Defendants assert that Plaintiff was a citizen of California or Nevada at the time of filing and provided public records of Plaintiff's active addresses in both states. Dkt. No. 22 at 8; Dkt. No. 22-1 at 6-7. Plaintiff's argument to the contrary boils down to a refusal to disclose where he resided at the time this case was filed, but Plaintiff “cannot try to defeat diversity jurisdiction by refusing to say where he is from.” Wang v. BMW of N. Am., LLC, No. 21-CV-06573-VC, 2021 WL 5576152, at *1 (N.D. Cal. Nov. 30, 2021). And he “cannot hide behind abstract and reactionary burden of proof arguments without producing any evidentiary support to the contrary.” Nguyen v. BMW of N. Am., LLC, No. 20-CV-02432JLSBLM, 2021 WL 2411417, at *3 (S.D. Cal. June 14, 2021). In his complaint, Plaintiff repeatedly refers to himself as a “citizen of California,” states that he was always employed in San Francisco, and alleges that the acts in the complaint occurred there. See Compl. ¶¶ 1, 15, 50-51, 58. Plaintiff simply could have filed a declaration stating where he resides, but he chose not to, and he has not offered any documentation demonstrating that his residence changed. Thus, the Court finds that Plaintiff is a citizen of California or Nevada for purposes of diversity jurisdiction.

2. Defendants' Citizenship

Defendants assert that Vident Financial and Vident Investment Advisory are citizens of Delaware and Georgia, because they are incorporated in Delaware and have their principal place of business in Georgia. See Dkt. No. 1 ¶¶ 10-13; Dkt. No. 22-3 ¶¶ 3, 4, 6. Plaintiff responds that jurisdiction for limited liability companies is based on the citizenship of each of its members or owners. Dkt. No. 16 at 3-4. Plaintiff is correct, but that makes no difference on the facts here. See NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 612 (9th Cir. 2016). Defendants attest that Vident Financial is the sole member of Vident Investment Advisory. Dkt. No. 22-3 ¶ 3. In turn, Vident Financial's sole member is Vident Investors Oversight Trust, a Delaware statutory trust. See id. ¶ 5; Dkt. No. 22 at 11. A trust's citizenship for diversity jurisdiction is based either on the citizenship of its members or trustees, depending on the type of trust. Americold Realty Tr. v. ConAgra Foods, Inc., 577 U.S. 378, 382-83 (2016). Here, the trust's sole member is Vident Holdings, incorporated and headquartered in Georgia. See Dkt. No. 22 at 13; Dkt. No. 22-3 ¶ 7. There are four trustees: (1) Birley, who is a citizen of Georgia, (2) Baki, who is a citizen of Ecuador, (3) Brian Shepler, who is a citizen of Georgia, and (4) the Delaware Trust Company, a citizen of Delaware. See Dkt. No. 22-3 ¶ 6. Either way, there is complete diversity between the parties.

Plaintiff offers no substantive response, and instead makes evidentiary objections^[1] and argues that the initial notice of removal was defective. See Dkt. No. 24. But as Defendants point out, formal defects in a notice of removal can be cured through opposition to a motion to remand.

Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002) (“The district court did not err in construing Petsmart's opposition as an amendment to its notice of removal”) (citing Willingham v. Morgan, 395 U.S. 402, 407 n.3 (1969) (“it is proper to treat the removal petition as if it had been amended to include the relevant information contained in the later-filed affidavits”)). Thus, the Court may consider the evidence provided in support of the opposition. See, e.g., Bratton v. FCA U.S. LLC, No. 17-CV-01458-JSW, 2017 WL 11687946, at *7 (N.D. Cal. June 22, 2017).

The Court finds that because the parties are completely diverse, it has diversity jurisdiction over this matter, and accordingly DENIES the motion to remand.

III. MOTION TO DISMISS

A. Legal Standard

“When a defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating that the court has jurisdiction over the defendant.” Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1154 (9th Cir. 2006). Where a state, like California, “allows the exercise of personal jurisdiction to the full extent permissible under the U.S. Constitution,” federal courts ask whether the exercise of jurisdiction over a defendant “comports with the limits imposed by federal due process.” Daimler AG v. Bauman, 571 U.S. 117, 125 (2014); Cal. Civ. Proc. Code § 410.10 (providing that California's long-arm statute is coextensive with the federal due process clause). The Due Process Clause requires that the defendant have “certain minimum contacts” with the forum “such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.” Int'l Shoe Co. v. State of Washington, 326 U.S. 310, 316 (1945) (citations and internal quotation marks omitted). There are two types of personal jurisdiction: “general or all-purpose” and “specific or case-linked.” Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011).

B. Discussion

Defendant Baki moves to dismiss the claim against him for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). See Dkt. No. 17. The Court finds that it does not have personal jurisdiction over Baki and GRANTS the motion to dismiss.^[2]

1. General Jurisdiction

“General jurisdiction . . . permits a court to hear any and all claims against a defendant, whether or not the conduct at issue has any connection to the forum.” Ranza v. Nike, Inc., 793 F.3d 1059, 1068 (9th Cir. 2015) (quotation omitted). A court may exercise general jurisdiction over a defendant when that defendant's activities are so “continuous and systematic as to render them essentially at home in the forum State.” Daimler, 571 U.S. at 127. “For an individual, the paradigm forum for the exercise of general jurisdiction is the individual's domicile.” Goodyear, 564 U.S. at 924. Individuals are domiciled in their “permanent home,” or the place where they “inten[d] to remain or to which [they intend] to return.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).

At most, Plaintiff establishes that Baki took frequent trips to California for business and to visit family, which is insufficient to confer general jurisdiction. Dkt. No. 21-1 (“Malekar Decl.”) ¶¶ 7-8. Baki asserts that at the time of filing, he was-and continues to be-domiciled in Ecuador. Dkt. No. 1-4 (“Baki Decl.”) ¶ 2; Dkt. No. 23-2 (“Baki Reply Decl.”) ¶¶ 1-3. Baki states that before that he was domiciled in Lebanon, where he was caring for his father,...