KORSINSKY & KLEIN, LLP SUCCEEDS IN REVERSING A DISMISSAL IN THE SECOND CIRCUIT FOR IMPROPER SUBJECT MATTER JURISDICTION

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New York, New York – On May 17, 2022, by Summary Order, the United States Court of Appeals for the Second Circuit found in favor of Appellants, represented by Korsinsky & Klein, LLP, reversing the District Court. (Docket: Scripts Wholesale, Inc. v. Mainspring Distrib. LLC – Case 21-1775)

The underlying Plaintiffs filed a Complaint against Defendants for breach of contract, unjust enrichment, money had and received, breach of fiduciary duty and conversion seeking damages upwards of $4 million. The Complaint invoked the Court’s jurisdiction under 28 U.S.C. § 1332, the diversity jurisdiction statute.

Following several sua sponte orders finding diversity lacking, the United States District for the Eastern District of New York dismissed the action, with prejudice, for lack of subject matter jurisdiction.

Upon appeal, the Second Circuit found that,

“The district court clearly erred. First, even if the district court lacked subject matter jurisdiction, the complaint should not have been dismissed with prejudice.”

Additionally, siding with Appellants’ arguments, the Appeals Court found that,

“More fundamentally, the district court erred in concluding that Plaintiffs had failed to establish [Defendant’s] citizenship and that [Defendant] was therefore “stateless.”

“Considering this record as a whole, all of which was before the district court at the time of its ruling, we conclude that Plaintiffs met their burden of establishing that Edvin was a citizen of California on November 19, 2018. And because the existence of diversity jurisdiction hinged on whether Plaintiffs and Edvin were completely diverse, we further conclude that the district court had subject matter jurisdiction over this action. We therefore reverse the district court’s order of dismissal and remand so the case may proceed on the merits.”

Accordingly, the case has been remanded and continues before the Eastern District of New York.

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