712 F. App'x 85
2d Cir.2018Background
- Plaintiff Benihana of Tokyo, LLC sued Angelo, Gordon & Co., L.P. (AGC) and Benihana, Inc. in New York state court alleging tortious interference with contract.
- Defendants removed to federal court asserting complete diversity; Benihana moved to remand arguing AGC is a non-diverse defendant and removal was improper.
- District court concluded AGC had been fraudulently joined to defeat diversity, denied remand, and dismissed the action in full.
- Benihana appealed the remand ruling; the Second Circuit reviewed the remand decision de novo.
- The district court found that Benihana’s own complaint pleaded facts amounting to New York’s economic interest affirmative defense, making a viable state-law claim against AGC legally impossible.
- The Second Circuit affirmed, holding fraudulent joinder warranted disregarding AGC’s citizenship for diversity jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether AGC was fraudulently joined to defeat diversity jurisdiction | Joinder of AGC was proper and case should be remanded to state court | AGC was fraudulently joined; no possibility Benihana could state a claim against AGC under state law | Court held AGC was fraudulently joined and diversity jurisdiction exists; remand denied |
| Whether Benihana’s complaint allows a viable tortious-interference claim against AGC under New York law | Complaint states tortious interference against AGC | Complaint pleads facts that constitute the economic interest affirmative defense, precluding a valid claim | Court held the complaint itself pleaded the economic-interest defense, making recovery against AGC legally impossible |
Key Cases Cited
- Bounds v. Pine Belt Mental Health Care Res., 593 F.3d 209 (2d Cir. 2010) (de novo review of remand decisions)
- Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296 (2d Cir. 2004) (each plaintiff must be diverse from each defendant for diversity jurisdiction)
- Pampillonia v. RJR Nabisco, Inc., 138 F.3d 459 (2d Cir. 1998) (fraudulent joinder doctrine; defendant bears heavy burden to prove it)
- White Plains Coat & Apron Co. v. Cintas Corp., 867 N.E.2d 381 (N.Y. 2007) (New York economic-interest affirmative defense explained)
- Foster v. Churchill, 665 N.E.2d 153 (N.Y. 1996) (economic-interest rule under New York law)