Opinion
M8-85.
April 9, 2009
Attorneys for Petitioner, HOGAN HARTSON LLP, New York, NY, By: David Dunn, Esq., Frank T. Spano, Esq.
Attorneys for Respondent, WITHERS BERGMAN LLP, New York, NY, By: Hollis Gonerka Bart, Esq., Chaya F. Weinberg-Brodt, Esq.
OPINION
Petitioner Calyon ("Petitioner" or "Calyon") has moved by Order to Show Cause, pursuant to Section 7 of the Federal Arbitration Act ("FAA"), to quash a subpoena ad testificandum and a subpoenaduces tecum served on it by Respondent Francois Pages ("Respondent" or "Pages"). Because this Court lacks subject matter jurisdiction over this controversy, the motion is denied.
Petitioner filed the instant Order to Show Cause on March 31, 2009. Oral argument was held on April 8, 2009, before this Court in its Part One capacity.
In brief, Calyon, a French corporation with an office in New York, objects to subpoenas served by Pages, a French citizen and permanent resident of the United States, in connection with an ongoing FINRA arbitration proceeding, and seeks an order quashing those subpoenas from this Court.
Respondent argues that since the Court lacks subject matter jurisdiction over Calyon's claims, Petitioner's motion to quash must be denied.
Both the Supreme Court and the Court of Appeals for this Circuit have held that Section 7 of the FAA, the statute under which Calyon brings the instant motion, does not, without more, confer subject matter jurisdiction on the federal courts. See Hall St. Assocs., L.L.C. v. Mattel, Inc., 128 S. Ct. 1396, 1402 (2008) ("As for jurisdiction over controversies touching arbitration, the Act does nothing, being `something of an anomaly in the field of federal-court jurisdiction' in bestowing no federal jurisdiction but rather requiring an independent jurisdictional basis." (citing Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25 n. 32 (1983));Stolt-Nielsen SA v. Celanese AG, 430 F.3d 567, 572 (2d Cir. 2005) (same). Indeed, the Court of Appeals has been explicit that in circumstances such as these, "parties invoking Section 7 must establish a basis for subject matter jurisdiction independent of the FAA." Stolt-Nielsen SA, 430 F.3d at 572.
Calyon argues that despite the fact that this controversy arises between two French citizens, diversity jurisdiction provides the necessary basis for this Court's exercise of subject matter jurisdiction. See U.S. Const. Art. III, § 2 ("The judicial power shall extend to . . . Controversies . . . between a State, or the Citizens thereof, and foreign States, Citizens or Subjects."). The 1988 amendment (the "Amendment") to the diversity jurisdiction statute provides that "an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such an alien is domiciled." 28 U.S.C. § 1332(a). Accordingly, Calyon argues, Respondent is deemed a citizen of New York for jurisdictional purposes and therefore complete diversity exists between Pages and Calyon for the purposes of Article III.
Despite the plain language of the statute, "[c]ourts are divided as to whether the Amendment applies when a resident alien is in litigation with a non-resident alien." Phoenix Four, Inc., v. Strategic Res. Corp., 446 F. Supp. 2d 205, 212 (S.D.N.Y. 2006). The Court of Appeals has not weighed squarely in on the issue. Id.; see Steiner v. Atochem, S.A., 70 F. App'x 599, 600 n. 3 (2d Cir. 2003) ("Since 1990, we have implied, and several district courts in this circuit have held, that the 1988 amendment does not confer such jurisdiction [between a permanent resident alien and an alien]." (internal citations omitted)).
The majority of courts in this District, however, have held that § 1332(a) does not create diversity jurisdiction in circumstances such as these. See Lloyds Bank PLC v. Norkin, 817 F. Supp. 414, 416 (S.D.N.Y. 1993) (concluding that "Congress did not intend the amendment to confer subject matter jurisdiction over an action brought by an alien against a citizen of a state and a permanent resident alien domiciled in a state" and dismissing action on those grounds); A.T.X. Export, Ltd. v. Mendler, 849 F. Supp. 283, 284 (S.D.N.Y. 1994) (citing Lloyds Bank to dismiss complaint between two citizens of Israel, one of whom was also a permanent resident of New York); Buti v. Impressa Perosa, S.R.L., 935 F. Supp. 458, 463-62 (S.D.N.Y. 1996) (rejecting "literal application" of Amendment and holding that court did not have diversity jurisdiction over suit between citizens of a foreign sovereign); Marcus v. "Five J" Jewelers Precious Metals Indus. Ltd., 111 F. Supp. 2d 445, 448 (S.D.N.Y. 2000) (agreeing with "the prior decisions of other judges of the Southern District of New York" in declining to apply 1332(a) to alien-resident alien controversies); Khan v. State Bank of India, No. 01 Civ. 1305 (SAS), 2001 WL 1463783 at *2 (S.D.N.Y. Nov. 15, 2001) (citing "exception to [the] general rule . . . that the 1988 Amendment does not apply where an alien plaintiff names one or more alien defendants"); see also Intec USA, LLC v. Engle, 467 F.3d 1038 (7th Cir. 2006); Saadeh v. Farouki, 107 F.3d 52 (D.C. Cir. 1997). But see Bank of India v. Subramanian, No. 06 Civ. 2026 (WHP), 2007 WL 1424668 (S.D.N.Y. May 15, 2007) ("deeming" permanent resident citizen for diversity purposes under § 1332(a)); Singh v. Daimler-Benz AG, 9 F.3d 303, 311 (3d Cir. 1993) (finding diversity jurisdiction in cases between aliens under 1332(a) where U.S. citizen is also a party, but not reaching "potential unconstitutional application of the deeming provision . . . [in] situations in which a permanent resident alien sues as the sole defendant either a permanent resident alien domiciled in another state or a nonresident alien").
Because this Court agrees with both the reasoning and conclusions reached by the majority of courts in this District that § 1332(a) does not confer diversity jurisdiction over an alien and a permanent resident alien, Calyon's motion is denied for lack of subject matter jurisdiction.
It is so ordered.