United States District Court, S.D. Ohio, Western Division
MICHAEL R. BARRETT, JUDGE
matter is before the Court on Magistrate Judge Stephanie K.
Bowman's August 24, 2018 Report and Recommendation (Doc.
13) relating to a lawsuit filed pro se by Plaintiffs
Exceller Software Corporation and Ergun Fikri against their
former attorneys, Jeff Dine, Mark Hyland, Jack Yoskowitz, and
the Law Firm of Seward & Kissel LLP. The Magistrate
Judge has recommended that Plaintiffs' case be dismissed
sua sponte for lack of subject matter jurisdiction.
parties received proper notice under Fed.R.Civ.P. Rule 72(b)
(id. at PageID 135), which included notice that the
parties would waive further appeal if they failed to file
objections to the R&R in a timely manner. See United
States v. Walters, 638 F.2d 947, 949-50 (6th Cir. 1981).
As permitted under the rule, Plaintiffs filed timely
objections (Doc. 16) and Defendants filed a response (Doc.
17). Plaintiffs then filed a “sur-reply” to
Defendants' response (Doc. 18) without seeking leave of
Court to do so. Out of an abundance of caution, the Court
has considered the points raised in both Plaintiffs'
objections and their “sur-reply.”
STANDARD OF REVIEW
the assigned district court judge receives objections to a
magistrate judge's R&R on a dispositive matter, the
district judge “must determine de novo any part of the
magistrate judge's disposition that has been properly
objected to.” Fed.R.Civ.P. 72(b)(3). After that review,
the district judge “may accept, reject, or modify the
recommended decision; receive further evidence; or return the
matter to the magistrate judge with instructions.”
case closely relates to a prior civil action between the same
parties that this Court dismissed for lack of subject matter
jurisdiction. Exceller Software Corp. v. Dine, No.
1:17-cv-277, 2018 WL 542252 (S.D. Ohio Jan. 23, 2018),
report and recommendation adopted by 2018 WL 925401
(S.D. Feb. 16, 2018) (“Prior Civil
Action”). On the motion to dismiss of Defendants,
Magistrate Judge Karen L. Litkovitz concluded there was not
complete diversity of citizenship between Plaintiffs and
Defendants and, hence, this Court lacked subject matter
jurisdiction. 2018 WL 542252, at **1-3. No objections were
filed to the Magistrate Judge's R&R, which this Court
subsequently adopted. 2018 WL 925401, at *1. Here, Magistrate
Judge Bowman also has found that this case should be
dismissed for lack of subject matter jurisdiction,
notwithstanding Plaintiffs' allegations in the Amended
Complaint that this “new” civil action arises
under both diversity and federal question jurisdiction.
Plaintiffs object to both findings, which will be discussed
This Court Lacks Diversity Jurisdiction
on the reasons expressed by Magistrate Judge Litkovitz in the
Prior Civil Action, Magistrate Judge Bowman has correctly
concluded that the Court does not have diversity
jurisdiction. Mr. Fikri is under the mistaken impression that
he can assert diversity jurisdiction as to the controversy
between himself and Defendants and federal question
jurisdiction as to the one between Exceller and Defendants.
(See Doc. 16 at PageID 140, Doc. 18 at PageID 162,
and Doc. 3 at PageID 55-58, 62). He is unequivocally wrong.
The phrase “between . . . citizens of different
States” means complete diversity between all
plaintiffs and all defendants. Caterpillar Inc.
v. Lewis, 519 U.S. 61, 68 (1996) (the general diversity
statute “applies only to cases in which the
citizenship of each plaintiff is diverse from the
citizenship of each defendant”) (emphasis added));
see V & M Star, LP v. Centimark Corp., 596 F.3d
354, 355 (6th Cir. 2010) (under the general diversity
statute, “there must be complete diversity such that
no plaintiff is a citizen of the same state as any
defendant”) (emphasis added) (citing Lincoln Prop.
Co. v. Roche, 546 U.S. 81, 89 (2005)). Mr. Fikri may
indeed be diverse from Defendants, but Exceller, being a
citizen of both New York and Ohio,  plainly is not.
Plaintiffs' objection as to diversity jurisdiction,
therefore, is overruled.
This Civil Action Does Not Arise Under Federal Copyright
noted by the Magistrate Judge, Plaintiffs assert federal
question jurisdictionbased on the premise that their malpractice
claim against Defendants arises out of Defendants'
alleged course of conduct in a copyright infringement case
litigated in the Southern District of New York. (See
Doc. 13 at PageID 132-33). Citing Gunn v. Minton,
568 U.S. 251 (2014) and Auto-Owners Ins. Co. v.
Ergonomics Plus, Inc., 63 F.Supp.3d 754 (E.D. Mich.
2014) (discussing Gunn), the Magistrate Judge
determined that those underlying facts were “not
sufficient to invoke federal question jurisdiction in this
Court.” (Id. at PageID 133).
to Plaintiffs, the Magistrate Judge is “wrong”
and has made a “clear mistake” because the
Amended Complaint presents a “case within a case”
over which federal jurisdiction can be exercised. (Doc. 16 at
PageID 139). They argue that the Magistrate Judge
misinterpreted Gunn and urge this Court to follow a
Florida appellate court decision, Solar Dynamics, Inc. v.
Buchanan Ingersoll & Rooney, PC, 211 So.3d 294 (Fl.
Ct. App. 2017). Upon review of the case law, however, the
Court determines that it is Plaintiffs who are wrong.
analyzing application of Gunn, or Solar
Dynamics as Plaintiffs urge, the Court, as a preliminary
matter, takes judicial notice of the underlying Southern
District of New York litigation to which Plaintiffs refer in
their Amended Complaint. See supra n.3. In that
litigation, Defendants represented Plaintiff Exceller against
Pearson Education and Addison-Wesley Longman, bringing claims
for a declaration of joint authorship and for an accounting,
copyright infringement, breach of contract, and unfair
competition. Exceller Sofware Corp. v. Pearson Education,
Inc., No. 1:10-cv-00381-PGG, ECF# 6 (S.D.N.Y. Jan. 15,
2010). That matter settled-on the record in open court after
mediation-for $400, 000. (Doc. 3 at PageID 90-95).
Gunn, a patent owner brought a malpractice claim in
state court against his attorneys over a failed patent
infringement lawsuit litigated in federal court. Having lost
at the trial court level, on appeal he argued that the state
court lacked subject matter jurisdiction to decide his
malpractice claim. The success of his claim, he reasoned,
relied on a question of federal patent law, over which
federal courts have exclusive jurisdiction under 28 U.S.C.
§ 1338. 568 U.S. at 253-56. Eventually the Supreme
Court granted certiorari, and ultimately ruled that §
1338(a) “does not deprive the state courts of subject
matter jurisdiction.” Id. at 264. To quote
Chief Justice Roberts, “we are comfortable concluding
that state legal malpractice claims based on underlying
patent matters will rarely, if ever, arise under federal
patent law for purposes of § 1338(a).”
Id. at 258. While resolution of a federal patent
question was “necessary” to the underlying
malpractice case-a “case within a case”-it was
not “substantial in the relevant sense.”
Id. at 259, 260. ...