Plaintiffs, OPINION AND ORDER

V.

FUSION MANUFACTURING and : Civ. No. 11-3671 (WHW)(CLW)

MICHAEL FERCHAK,

Defendants.

Walls, Senior District Judge

Plaintiff Codrut Radu Radulescu moves to remand this action to the New Jersey Superior

Court. ECF No. 210. Plaintiff opposes the motion in a letter brief under Local Civil Rule

7.1 (d)(4). The Court decides this motion without oral argument under Fed. R. Civ. P. 78.

Plaintiffs motion is denied.

FACTUAL AND PROCEDURAL BACKGROUND

The facts ofthis case have been recounted in several opinions over the last six years.

See, e.g., ECF Nos. 102, 207. The parties are former business partners in Sync Labs LLC whose

partnership went awry. Following the dissolution ofthe relationship, Mr. Radulescu filed suit in

New Jersey Superior Court on behalf of himself and Sync Labs LLC, against Mr. Ferchak and

his company, Fusion Manufacturing. ECF No. 1. Defendants removed the case to federal court,

where the matter has continued for far longer than the parties’ joint venture. Id. The past six

years of litigation have been hotly contested. The Court has decided multiple motions to dismiss,leading to the dismissal with prejudice of Plaintiff Sync Labs LLC on June 11, 2014, ECF No.

129, and two motions for summary judgment, resulting in the entry ofjudgment on nine ofthe

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complete diversity of citizenship among the parties at the time ofremoval. ECF No. 2 10-4 at 1.

Though Defendants certified in the Notice of Removal that former Plaintiff, Sync Labs LLC, was

a citizen ofNew Jersey because it was both registered and had its principal place of business in

New Jersey, this certification was incorrect because it used the wrong standard to determine the

citizenship of an LLC. Id. at 6 (citing Lincoln Benefit Life Co. v. AEILfe, LLC, $00 f.3d 99, 105

(3d Cir. 2010)). Plaintiff argues that Sync Labs LLC was actually a citizen of both New Jersey

and Florida because a Limited Liability Company is considered a citizen of the state of each of

its members. Id. at 2. Plaintifftherefore maintains that the complete diversity requirements of 2$

U.S.C. § 1332(a) and 28 U.S.C. § 1441(b) were not met at the time ofremoval because

Defendant Ferchak and Plaintiff Sync Labs LLC were both citizens of Florida. Id. Though Sync

Labs was subsequently dismissed with prejudice as a party, Plaintiff contends that dismissal “is

of no consequence to the merit ofthis motion to remand” because the “voluntary-involuntary

rule provides that an involuntary dismissal of a non-diverse party does not create diversity

jurisdiction.” Based on the Court’s lack of complete diversity at the case’s inception, Plaintiff

requests that the Court remand the action to the New Jersey Superior Court. Id.

Defendant responds that complete diversity currently exists between the parties to this

lawsuit, and that the issue of Sync Labs’ citizenship is res judicata as a result of the entry of

judgment against it. ECF No. 211 at 2. Defendant further argues that the voluntary-involuntary

rule is irrelevant to the consideration ofthis motion because “removal in violation of the

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Defendant Ferchek resigned as a member of Sync Labs on April 1, 2010. ECF No. 1 ¶ 49.Defendant does not argue in his letter briefthat he was not a member of Sync Labs LLC at the

time of the filing of this suit, and the Court has not been provided with any documentation to

allow it to identify the members of Sync Labs LLC at the time the Complaint was filed. The

question of whose citizenship constitutes part of the LLC’s citizenship is ultimately governed by

the law of the state of incorporation. See, e.g., Dumann Realty, LLC v. Faust, No. 09 CIV. 7651JPO, 2013 WL 30672, at *2 (S.D.N.Y. Jan. 3, 2013); CR Holding Company, LLP v. Campbell,

No. 11 Civ.2051(JWL), 2011 WL 2357649, at *3 (D.Kan. June 3, 2011). At the time ofFerchek’s resignation from Sync Labs in April 2010, a member of an LLC could resign upon not

less than 6 months’ prior written notice to the limited liability company and each ofits members.

N.J. Stat. Ann. § 42:2B-3$ (repealed March 1, 2014). Absent Sync Lab’s operating agreement,the court cannot determine Sync Lab’s membership as ofthe filing of the Complaint, but it isnotable that Plaintiff Radulescu, the only other Sync Lab member as of April 2010, asserts thatFerchak resigned. There is no question that complete diversity would have existed from the

case’s inception if Ferchek’s resignation had been effective.

Setting the issue of Fercheck’s membership in Sync Labs as of the filing of the

Complaint aside, the Court nevertheless denies Plaintiffs motion to remand this matter to New

Jersey Superior Court.

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111 (3d Cir. 1990), cert. denied, 492 U.S. 1085 (1991).

First, Defendants are correct that the voluntary-involuntary rule plays no role in the

determination ofthis motion, as removal in violation ofthe voluntary-involuntary rule is a

procedural defect, which must be raised within thirty days ofremoval. Hoffman v. Metropolitan

Ins. & Annuity Co., Civ. No. 12-2303, 2012 WL 3185953, *5 (D.N.J. Aug. 2,2012). The

question nevertheless remains whether the case should be remanded when subject matter

jurisdiction did not exist at the time ofremoval, but was created through the involuntary

dismissal of a party that served as an adjudication on the merits, and has existed through theadjudication of nine of the ten causes of action charged in the Amended Complaint.

The Supreme Court has stated that returning a case to a state court based on a

jurisdictional defect that was cured before the entry ofjudgment by a federal district court places

an “exorbitant cost of our dual court system” and is “incompatible with the fair and unprotractedadministration ofjustice.” Caterpillar Inc. v. Lewis, 519 U.S. 61, 77 (1996). In Lewis, a plaintiff

brought a product liability action in state court against a nonresident manufacturer and an in-state

servicer. Id. at 64—65. An in-state insurer then intervened as plaintiff, asserting subrogationclaims against the manufacturer and the servicer. Id. at 65. The manufacturer learned about a

pending settlement between the plaintiff and in-state servicer defendant, and removed the actionto federal court in order to meet the removal deadline. Id. Plaintiffmoved to remand on the

grounds that diversity was defeated by the servicer’s presence, but the district court erroneously

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Supreme Court reversed the Sixth Circuit and upheld the district court judgment, concluding that

though removal was improper, it would pose too great a cost to the dual court system to overturn

an adjudication when federal jurisdictional requirements were met at the time judgment was

entered. See id. at 76—78. In support ofthis conclusion, the Court relied on a series of cases that

stand for the proposition that remand to state court is unnecessary even ifjurisdiction did not

exist at the time ofremoval, so long as the district court had subject matter jurisdiction at the

time of removal. See Grubbs v. General Elec. Credit Corp., 405 U.S. 699, 700 (1972) (holdingthat an erroneous removal need not cause the destruction of a final judgment ifthe requirements

of federal subject matter jurisdiction are met at the time judgment is entered); American fire &

Cas. Co. V. finn, 341 U.S. 6, 17—18 (1951) (holding that the absence of diversity jurisdiction at

the time ofjudgment required the Court of Appeals to vacate a district court’s judgment).

Here subject matterjurisdiction likely did not exist at the time ofremoval, but was later

created due to the dismissal of Sync Labs LLC. Sync Labs never challenged the Court’s lack of

jurisdiction over its dismissal, but PlaintiffRadulescu now raises the improper removal as a

means to ignore approximately six years oflitigation, which has resulted in the adjudication of

nine of his ten claims. Though this case is distinguishable from Lewis so far as the removal error

has been identified by this district court before final adjudication of all of Plaintiffs claims, the

Lewis Court’s reasoning and the line of cases upon which Lewis relies are pertinent. Remanding

i The non-diverse parties were dismissed nearly three years after the case’s removal from state court, creating

subject matter jurisdiction only four months before trial.

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return to state court a case now satisfying all federal jurisdictional requirements, would impose

an exorbitant cost on our dual court system, a cost incompatible with the fair and unprotracted

administration ofjustice.”); see also Knop v. McMahon, 872 F.2d 1132, 1139 n.16 (3d Cir. 1989)(“To permit a case in which there is complete diversity throughout trial to proceed to judgment

and then cancel the effect ofthat judgment and relegate the parties to a new trial in a state court

because of a brieflack of complete diversity at the beginning of the case would be a waste of

judicial resources.”). For these reasons, it is hereby ORDERED that Plaintiffs motion to

remand, ECF No. 210, is denied.

DATE/3/?

District Court Judge

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