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Strike PCH, LLC v. Stern, 18-00789. (2018)

Court: District Court, D. New Jersey Number: infdco20180227b37 Visitors: 12
Filed: Feb. 26, 2018
Latest Update: Feb. 26, 2018
Summary: OPINION WILLIAM J. MARTINI , District Judge . Plaintiff Strike PCH ("Strike"), on behalf of itself and derivatively on behalf of Sokaor PCH, LLC ("Sokaor"), seeks a preliminary injunction against Isaac Stern and Sokaor pursuant to Federal Rule of Civil Procedure 65(b). Because there is no "reasonable probability" that the action satisfies complete diversity, and because there appears to be no alternative source of subject matter jurisdiction, the motion is DENIED and the action is DISMIS
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OPINION

Plaintiff Strike PCH ("Strike"), on behalf of itself and derivatively on behalf of Sokaor PCH, LLC ("Sokaor"), seeks a preliminary injunction against Isaac Stern and Sokaor pursuant to Federal Rule of Civil Procedure 65(b). Because there is no "reasonable probability" that the action satisfies complete diversity, and because there appears to be no alternative source of subject matter jurisdiction, the motion is DENIED and the action is DISMISSED with prejudice.

A preliminary injunction will not issue unless the Court is "satisfied that there is a reasonable probability of ultimate success on the issue of subject matter jurisdiction." Chambers v. Klein, 419 F.Supp. 569, 576 (D.N.J. 1976), aff'd, 564 F.2d 89 (3d Cir. 1977). Defendants argue that the action fails to satisfy the complete diversity requirement of 28 U.S.C. 1332 because there are opposing parties that share citizenship. The Court agrees.

To begin with, this action is appropriately stylized as a derivative action. Derivative actions are traditionally brought by non-controlling shareholders on behalf of an incorporated entity against management or another third party. HB Gen. Corp. v. Manchester Partners, L.P., 95 F.3d 1185, 1194 (3d Cir. 1996). The same principle enables non-controlling members of an unincorporated entity to enjoin controlling members. See id. Indeed, Sokaor, "like any partnership in a derivative suit, is a necessary party." U.S. Cellular Inv. Co. of Oklahoma City v. Sw. Bell Mobile Sys., Inc., 124 F.3d 180, 182 (10th Cir. 1997) (citing HB Gen. Corp., 95 F.3d at 1194).

An unincorporated entity is a citizen of all states where its members are citizens, not the state where the entity is organized. Lincoln Ben. Life Co. AEI Life, LLC, 800 F.3d 99, 105 (3d Cir. 2015). Strike, on that basis, is a citizen of New York, Texas, and Virginia. Sokaor is a citizen of New Jersey (where Stern resides) and New York, Texas, and Virginia, (where Strike resides). See Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010) (citations omitted) ("[T]he citizenship of unincorporated associations must be traced through however many layers of partners or members there may be to determine [its] citizenship."). As a plaintiff, Sokaor shares New Jersey citizenship with Defendant Stern. And if it were treated as a defendant, Sokaor would be a citizen of New York, Texas, and Virginia—like Plaintiff Strike. The action therefore fails to satisfy complete diversity, and must be dismissed with prejudice.

For the foregoing reasons, Strike's motion for a preliminary injunction is DENIED and the action is DISMISSED.

Source:  Leagle

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