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stating that "the court in effect never exercised jurisdiction with respect to entry of the voluntary dismissal because it was effective automatically without court approval" (citing Hester, 160 F.3d at 916)
Summary of this case from Teva Pharmaceuticals USA, Inc. v. Food Drug Admin.Opinion
89 Civ. 7990 (JFK)
August 13, 2002
MILBANK TWEED HADLEY McCLOY LLP, New York, New York, Of Counsel: Andrew E. Tomback, Esq., For Plaintiff
WILLKIE FARR GALLAGHER, New York, New York, Of Counsel: John R. Oller, Esq., For Defendant
OPINION and ORDER
Before the Court is plaintiff Jeffrey Steiner's ("Steiner") motion to vacate, pursuant to Fed.R.Civ.P. 60(b), a voluntary dismissal with prejudice filed on February 12, 1990 and to remand this case to the Supreme Court of the State of New York, New York County. Defendant Atochem, S.A. ("Atochem") opposes the motion. The motion is fully submitted, and Steiner, with the consent of Atochem, withdrew his request for oral argument on it. For the reasons stated herein, the Court denies Steiner's motion to vacate the dismissal and to remand the case.
See Letter to Court dated May 29, 2002, from Andrew E. Tomback, Esq.
Background
The sole issue presented by this motion is whether the Court should set aside a voluntary dismissal of the case with prejudice filed by Steiner over twelve years ago. In support of his motion, Steiner argues that this Court must vacate his voluntary dismissal as void pursuant to Fed.R.Civ.P. 60(b)(4) because the Court had no jurisdiction to so order the notice of dismissal. Alternatively, Steiner contends that the alleged efforts of Atochem's parent, Elf Aquitaine ("Elf"), to renege on a settlement agreement with Steiner warrant vacatur of the dismissal under Fed.R.Civ.P. 60(b)(6).
Back on November 1, 1989, Steiner brought this breach of contract suit against Atochem to enforce his purported right to a finder's fee in connection with a certain corporate acquisition by Atochem. See Declaration of Andrew E. Tomback, Esq., dated September 11, 2001 ("Tomback Decl.") ¶ 2; Ex. A. Steiner originally commenced the action in the Supreme Court of the State of New York, New York County. See id. ¶ 2. On December 1, 1989, Atochem removed the case to this forum on the basis of federal diversity jurisdiction pursuant to 28 U.S.C. § 1332 and 1446. See id. ¶ 3; Ex. B. In the notice of removal, Atochem indicated that it "was and still is a corporation organized and existing under the laws of France with its principal place of business in France" and that "[u]pon information and belief, plaintiff is a citizen of Austria." Id. In his complaint, Steiner alleged that he had "a residence and business office in the City, County and State of New York." Compl. ¶ 1. Steiner's complaint also asserted: "Venue is proper in New York County, since Steiner resides in New York County." Id. ¶ 4. Based on the record, Steiner neither contested the removal, nor moved for remand of the case (not until now, that is).
Shortly after removal, on December 7, 1989, Atochem filed a motion to dismiss the complaint based on forum non conveniens or, in the alternative, for failure to state a claim for relief pursuant to Rule 12(b)(6). See Affidavit of John R. Oller, Esq., dated October 9, 2001 ("Oiler Aff."), ¶ 1; Ex. 1 (copy of the docket sheet in this action). Thereafter, on December 19, 1989, Steiner served a brief in opposition to Atochem's motion to dismiss, and on January 10, 1990, Atochem filed a reply memorandum in further support of its motion. See id. The Court scheduled oral argument on the motion for January 22, 1990. See id. ¶ 6; Ex. 6.
In the meanwhile, in early December of 1989, Steiner broached the topic of a possible settlement of the case with executives of Elf, including its chairman, Loik Le Floch-Prigent. See Steiner Decl. ¶ 4; Ex. A. In reaction to initial settlement overtures, Atochem's lawyer indicated that he "doubted that [Atochem] has any interest in making a settlement offer." Id. Despite the misgivings of counsel, Mr. Le Floch-Prigent agreed to meet with Steiner on January 29, 1990, apparently in an effort to settle the case. See Oller Aff. ¶ 10; Ex. 10 (a January 22, 1990 memorandum from Atochem's counsel to Atochem). In regard to that meeting, Atochem's lawyer advised that:
We understand that Jeffrey Steiner has scheduled a meeting with the Chairman of Elf Acquitaine for January 29, 1990 (possibly postponed to January 31, 1990). This action is somewhat unusual while litigation is in progress and although it is not improper, in these circumstances all contacts, particularly anything relating to settlement discussions, would normally take place through the parties' lawyers.
Id.
Evidently against this advice, Mr. Le Floch-Prigent met privately with Steiner, and the two of them reached a confidential settlement agreement on February 6, 1990, whereby Elf agreed to pay Steiner $5,000,000. Pursuant to the agreement, the $5,000,000 figure covered "all interventions or propositions on [Steiner's] part which have been or might have been made regarding any one of the companies of the ELF AQUITAINE group before the date of this letter" (which presumably covers the instant matter), as well as the performance of some future services by Steiner. Steiner Decl. ¶ 5; Ex. B. The settlement agreement was signed on behalf of Société Nationale Elf Aquitaine by Loïk Le Floch-Prigent, as Chief Executive. See id.
Later that day, February 6, 1990, Steiner's lawyer informed Atochem's lawyer that their respective clients "have met in Paris, have had a mutually satisfactory discussion and have agreed informally to cooperate in future business ventures. Accordingly, Mr. Steiner has instructed me to withdraw the above-titled lawsuit." Steiner Decl. Ex. C. In accord with that letter, on February 12, 1990, counsel for Steiner filed a notice of dismissal with the Court pursuant to Fed.R.Civ.P. 41(a) (2), dismissing all claims by Steiner against Atochem with prejudice. See Tomback Decl. ¶ 4; Ex. C. This Court so ordered the notice of dismissal on February 13, 1990, and the Clerk of Court entered it on February 15, 1990. See id.; see also Oiler Aff. ¶ 1; Ex. 1. At the time, Atochem had neither answered the complaint nor moved for summary judgment (though its motion to dismiss was pending, which became moot by virtue of the dismissal)
Then, at the end of 1993, French governmental authorities issued a report with respect to an investigation relating to misuse of the corporate assets of Elf by its top executives, including Mr. Le Floch-Prigent, who resigned as chairman in 1993. See Steiner Decl. ¶ 6. In the wake of that report, French authorities commenced a criminal investigation before three Juges d'Instruction (Examining Magistrates) of the Tribunal de Grande Instance de Paris. See id. In accordance with French procedural law, in April of 1995, Elf joined the ongoing investigative proceeding as a partie civile, claiming civil damages stemming from the alleged corporate abuses. See id. Thereafter, in June of 1998, Elf named Steiner in this proceeding, claiming that he had wrongfully received certain funds, including the $5,000,000 settlement amount. See id. Now, Steiner wishes to revive this suit in the event that Elf prevails in the proceedings against him in France.
According to Atochem, "[p]ursuant to Article 2 of the French Penal Procedure Code any person or entity who/which suffered a personal prejudice resulting directly from an offense may file a complaint in which it states its intention to be a `civil party' (`parte civile') in the investigation." Atochem Opp. Br. at 8, n. 7 (citing Alfadda v. Fenn, 966 F. Supp. 1317, 1322 (S.D.N.Y. 1997)).
Discussion
A. Rule 60(b) Standard
Rule 60(b) contains six subsections that set forth various grounds under which a court may relieve a party from a final judgment, order, or proceeding: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence; (3) fraud, misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged; or (6) any other reason justifying relief from operation of the judgment. See Fed.R.Civ.P. 60(b). With respect to a Rule 60(b)(4) challenge, there is no set time limit for making such a motion, in contrast to the reasonable time limitations imposed under other provisions of Rule 60(b). See Velez v. Vassallo, 203 F. Supp.2d 312, 318 (S.D.N.Y. 2002) ("[A]lthough a Rule 60(b)(4) motion must be made `within a reasonable time,' courts have been exceedingly lenient in defining the term `reasonable time,' and have refused to apply the doctrine of laches as a bar to relief under the rule." (internal quotation marks omitted)). Moreover, unlike with motions based upon other Rule 60(b) subsections, a court has no discretion with respect to motions to vacate void judgments under Rule 60(b)(4), so that, if void, the court must vacate the judgment. See Tuff-N-Rumble Management, Inc. v. Sugarhill Music Pub. Inc., 99 F. Supp.2d 450, 455 (S.D.N.Y. 2000).
(1)Rule 60(b)(4) Relief
Steiner argues that the voluntary dismissal he filed in this case over 12 years ago is void under Rule 60(b)(4) because this Court had no diversity jurisdiction over the controversy given that both parties were (and still are) aliens. Rule 60(b)(4) authorizes relief from a final judgment when the judgment is void, that is, when the court rendering the judgment lacked subject matter jurisdiction over the action, personal jurisdiction over the defendant, or rendered the judgment in a manner that is inconsistent with due process. See Jaffe Asher v. Van Brunt, 158 F.R.D. 278, 279 (S.D.N.Y. 1994). Even assuming arguendo that the Court lacked jurisdiction over the case because Atochem improperly removed the litigation, that would not make the so-ordered dismissal notice per se void. See Nemaizer v. Baker, 793 F.2d 58, 64 (2d Cir. 1986) ("Although appellees correctly argue that this case was improperly removed to federal court, it does not logically or necessarily follow that every judgment rendered after an improper removal must be classified as a nullity and therefore void."). Quite the contrary, only in the rare instance where there is a plain usurpation of power by the given court will a final judgment, order, or proceeding be rendered void. See id. at 65. In Nemaizer, the Second Circuit explained that a court usurps power in this sense only when there is "a "total want of jurisdiction and no arguable basis on which [the court] could have rested a finding that it had jurisdiction." Id.
As Steiner points out, diversity jurisdiction is defeated where alien parties are on both sides of the lawsuit. See Franceskin v. Credit Suisse, 214 F.3d 253, 258 (2d Cir. 2000). But the jurisdictional issue here is not so clear-cut, at least it was not at the time of the removal motion. This is so because back then a recent amendment to the diversity statute created confusion and uncertainty with respect to the issue of alienage jurisdiction. In 1988, Congress amended 28 U.S.C. § 1332(a) to include the following provision: "For the purposes of this section . . ., an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled." 28 U.S.C. § 1332(a). In light of the amendment, some courts concluded that a federal court has subject matter jurisdiction over an action brought by a permanent resident alien against a nonresident alien. See, e.g., Lee v. Trans Am. Trucking Serv., Inc., 111 F. Supp.2d 135, 139-40 (E.D.N.Y. 1999) (discussing the differing interpretations); Khan v. State Bank of India, No. Civ. 1305, 2001 WL 1463783, at *3, n. 5 (S.D.N.Y. Nov. 15, 2001) (same); see also Singh v. Daimler-Benz AG, 9 F.3d 303, 305-307 (3d Cir. 1993). Under this reading, the Court could have concluded that an arguable basis over the subject matter of this suit did exist given that the wording of the complaint tends to imply that Steiner may have resident alien status. See Compl. ¶¶ 1, 4.
In addition to that, in another passage highly significant to the instant matter, the Nemaizer court stated:
We assume without deciding that appellees correctly claim that this case was improperly removed and the district court improperly exercised its jurisdiction when it "so ordered' the stipulation. Nonetheless, the judgment entered in federal court was not void. Appellees could have moved to remand the action to state court after its improper removal to federal court, or challenged the district court's exercise of jurisdiction on direct appeal . . . Because they did neither, they are now barred by principles of res judicata and the interest in finality of judgments from mounting a collateral attack on a prior judgment in the present action.
Id. at 64.
This reasoning applies with equal force to the present case because Steiner neither contested the removal, nor moved for remand of the matter during the 60-plus day time period between the removal and the entry of the voluntary dismissal notice. The Court finds Steiner's argument that even if he knew about the jurisdictional defect, he had no opportunity or incentive to raise it because settlement negotiations commenced immediately after removal of the case unconvincing. This is so in light of the fact that the parties zealously litigated the suit by fully briefing a motion to dismiss. Based on the reasoning in Nemaizer, the Court finds that there was no plain usurpation of jurisdiction in this case so as to warrant vacatur of the dismissal notice as void under Rule 60(b)(4).
In any case, the Court construes the voluntary dismissal here as one pursuant to Fed.R.Civ.P. 41(a)(1) insofar as Atochem had neither answered the complaint nor moved for summary judgment. The Court views the reference to Fed.R.Civ.P. 41(a)(2) in the dismissal notice as a misnomer and considers the "so ordered" endorsement as legally superfluous. Given this, the Court in effect technically never exercised jurisdiction with respect to entry of the voluntary dismissal because it was effective automatically without court approval. See Hester Indus., Inc. v. Tyson Foods, Inc., 160 F.3d 911, 916 (2d Cir. 1998) (citing cases); see also University of S. Ala. v. American Tobacco Co., 168 F.3d 405, 409 (11th Cir. 1999) ("Voluntary dismissal, moreover, normally may precede any analysis of subject matter jurisdiction because it is self-executing and moots all pending motions, obviating the need for the district court to exercise its jurisdiction."); Concha v. London, 62 F.3d 1493, 1506 (9th Cir. 1995) ("The [voluntary] dismissal is effective on filing and no court order is required"). As such, Steiner cannot seek relief under Rule 60(b)(4).
(2)Rule 60(b)(6) Relief
Steiner further argues that the alleged efforts of Elf to renege on the settlement agreement by naming him in the French action constitute extraordinary circumstances so as to warrant relief pursuant to Fed.R.Civ.P. 60(b)(6). The Court, however, finds that Steiner has failed to bring his motion within a reasonable time as required by Rule 60(b)(6) inasmuch as Elf named him in the actione civile back in June of 1998, more than three years before Steiner made the instant motion. See Truskoski v. ESPN, Inc., 60 F.3d 74, 77 (2d Cir. 1995) (Rule 60(b)(6) motion made eighteen months after entry of judgment did not comply with the reasonable time limitation of the Rule). Accordingly, Steiner cannot obtain relief under Rule 60(b)(6).
Conclusion
For the reasons set forth above, the Court denies Steiner's motion to vacate the voluntary dismissal and to remand the case. Consequently, this case remains closed.