Overview
Judge Castel today issued an order to show cause why plaintiffs' claims should not be dismissed and plaintiffs' counsel not sanctioned under Rule 11 for failing to properly allege diversity jurisdiction in a suit brought against social media web site Pinterest and an early investor. The three page opinion, issued sua sponte by Judge Castel, is worth a read as a cautionary tale for both plaintiff and defense counsel. Some highlights:
Though the Amended Complaint is signed by three members of the bar of this Court, the pleading shows little understanding of the requirements to invoke diversity jurisdiction. Defendants' counsel-two sizable law firms-complain of much in their March 14,2013 letters, including a claimed lack of standing, but defects in the allegations of diversity jurisdiction are not among them.
*** Since Strawbridge v. Curtiss, 3 Cranch 267 (U.S. 1806) (Marshall, J.), a precedent more than a hundred years older than plaintiffs' counsel's century-old law firm, it has been settled that complete diversity of citizenship is required. Seeslo Coal Co. v. Blatchford, 78 U.S. 172 (1870). On the face of plaintiffs' own pleading, there is not complete diversity of citizenship. It is difficult to imagine how three members of the bar of this Court could not understand this requirement. Did they count on the defect going undetected? Were they inattentive (an exceedingly polite tern for a shortcoming commonly described in other words)? I must say that it is also distressing that neither set of defendants' counsel noticed or reported the defect. When the time and attention of a judge is diverted by reason of a circumstance such as this, it is not the judge who suffers. He or she will still put in a full day of work. But judicial resources are diverted from the needs of an injured plaintiff or indigent defendant in order to attend to lawyers' lapses in fundamental pleading requirements that should be mastered by first-year law students.