Nastasi & Associates, Inc. v. Bloomberg, L.P.

USONUITTEHDE RSTNA DTIESST RDIICSTT ROIFC TN ECWOU YROTR K

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:

NASTASI & ASSOCIATES, INC., :

:

Plaintiff, : 18-CV-12361 (JMF)

:

-v- : MEMORANDUM OPINION

: AND ORDER

BLOOMBERG, L.P., et al., :

:

Defendants. :

:

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JESSE M. FURMAN, United States District Judge:

Plaintiff Nastasi & Associates, Inc. (“Nastasi”) sues Bloomberg, L.P. and other

Defendants, alleging violations of the Sherman Antitrust Act, the Racketeer Influenced and

Corrupt Organizations (“RICO”) Act, and various state laws. See ECF Nos. 1, 142 (“FAC”). On

June 17, 2019, Defendants moved to dismiss the operative complaint for lack of standing, see

ECF No. 148, at 7-8, citing a parallel state-court lawsuit brought by Nastasi and the Franklin D.

Nastasi Trust (the “FDN Trust”) in which Nastasi alleges that, “[e]ffective January 1, 2017, the

FDN Trust became the owner of all of Nastasi’s assets, including the rights to all of Nastasi’s

account receivables.” ECF No. 155-4 (“NY Compl.”), ¶ 9. In response, Nastasi did not move to

join or substitute the FDN Trust as a plaintiff. Instead, on August 26, 2019, Nastasi opposed

Defendants’ motion. See ECF No. 167 (“Pl.’s Mem.”). To the extent relevant here, Nastasi

conceded that the FDN Trust “may have the rights to Nastasi & Associates’ receivables,” but

denied that the FDN Trust “should be the real party in interest.” Id. at 13. Nastasi pointed to

“documentation” showing that it was “the proper party in interest” — namely, a Statement of

Work executed by Nastasi and Bloomberg L.P. in 2010, ECF No. 142-2, and a letter referring to

work that Nastasi had performed in 2015, ECF No. 142-3. Notably, Nastasi did not submit the

agreement assigning its assets to the FDN Trust or any other evidence that would suggest that the

assignment of “all of Nastasi’s assets” excluded the claims at issues in this case.

In light of these facts, the Court concludes that the case must be dismissed for lack of

standing. Article III of the Constitution limits the jurisdiction of federal courts to “Cases” and

“Controversies.” U.S. Const., Art. III, § 2. The Supreme Court has interpreted this language to

require that all suits filed in federal court be “cases and controversies of the sort traditionally

amenable to, and resolved by, the judicial process.” Steel Co. v. Citizens for a Better Env’t, 523

U.S. 83, 102 (1998). That, in turn, requires the party seeking to invoke federal jurisdiction —

here, Nastasi — to establish that, at the time of filing, it was injured “in fact,” a requirement that

“helps to ensure that the plaintiff has a personal stake in the outcome of the controversy.” Susan

B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014) (internal quotation marks omitted); see

also, e.g., Carter v. HealthPort Techs., LLC, 822 F.3d 47, 55 (2d Cir. 2016) (noting that standing

“must exist at the commencement of the litigation”). A plaintiff cannot establish the requisite

injury in fact where, before filing the lawsuit, it assigns its title or ownership of the claims at

issue to another party. See, e.g., Valdin Invs. Corp. v. Oxbridge Capital Mgmt. LLC, 651 F.

App’x 5, 7 (2016) (summary order); accord Aaron Ferer & Sons Ltd. v. Chase Manhattan Bank,

Nat’l Ass’n, 731 F.2d 112, 125 (1984) (“An unequivocal and complete assignment extinguishes

the assignor’s rights against the obligor and leaves the assignor without standing to sue the

obligor.” (applying New York law)); Clarex Ltd. v. Natixis Sec. Am. LLC, No. 12-CV-722

(PAE), 2012 WL 4849146, at *15-16 (S.D.N.Y. Oct. 12, 2012) (holding that the assignors lacked

Article III standing because they “conferred the right to seek redress” on the assignee). Such a

plaintiff’s “assignment of its rights extinguishe[s] its claims . . . and deprive[s] it of any interest

in th[e] litigation.” Valdin Investments Corp., 651 F. App’x at 7.

2

That is what happened here. Nastasi does not dispute that, before it filed this suit in

2018, it assigned all of its assets to the FDN Trust. Nor could it, as Nastasi itself affirmatively

pleaded in its state-court complaint that, “[e]ffective January 1, 2017, the FDN Trust became the

owner of all of Nastasi’s assets.” NY Compl. ¶ 9 (emphasis added). That broad language

encompasses Nastasi’s claims in this case. See, e.g., Ellington Credit Fund, Ltd. v. Select

Portfolio Servs., Inc., No. 08-CV-2437 (RJS), 2012 WL 13065889, at *2 (S.D.N.Y. Feb. 3,

2012) (“[A] valid assignment of ‘all assets’ includes an assignment of causes of action accrued to

the assignor.”); Int’l Design Concepts, LLC v. Saks Inc., 486 F. Supp. 2d 229, 237 (S.D.N.Y.

2007) (“The assignment of ‘all assets of [AGI]’ is broad enough to encompass all causes of

action owned by AGI.”). And all of those claims are assignable. See Nat’l Asbestos Workers

Med. Fund v. Philip Morris, Inc., 74 F. Supp. 2d 213, 217 (E.D.N.Y. 1999) (“RICO claims are

assignable.”); Cordes & Co. Fin. Servs., Inc. v. A.G. Edwards & Sons, Inc., 502 F.3d 91, 99-100

(2d Cir. 2007) (stating that antitrust claims are assignable); OneWest Bank, FSB v. Joam LLC,

No. 10-CV-1063 (JG) (SMG), 2011 WL 6967635, at *4 (E.D.N.Y. July 26, 2011) (same as to

New York negligent supervision claims); 7 W. 57th St. Realty Co., LLC v. Citigroup, Inc., 771 F.

App’x 498, 502 (2d Cir. 2019) (summary order) (noting that the plaintiff’s Sherman Act,

Donnelly Act, and RICO claims had been assigned by its “predecessor in interest”). It follows

that Nastasi did not have “any interest” in this litigation when it filed suit and the Court lacks

subject-matter jurisdiction. Valdin Investments Corp., 651 F. App’x at 7.1

1 Some courts have treated the defect at issue here as an issue under Rule 17 of the Federal

Rules of Civil Procedure rather than a matter of Article III standing. See, e.g., QS Holdco Inc. v.

Bank of Am. Corp., No. 18-CV-824 (RJS), 2019 WL 3716443, at *18 (S.D.N.Y. Aug. 6, 2019).

That view is hard to square with Second Circuit decisions. See Valdin, 651 F. App’x at 7 (citing

Aaron Ferer and concluding that “the District Court lacked subject-matter jurisdiction”); see also

In re Century/ML Cable Venture, 311 F. App’x 455, 456 (2d Cir. 2009) (summary order)

3

The strongest counterargument — although, conspicuously, it is not one made by Nastasi

— is that the assignment here is not explicit enough to encompass the claims in this case. After

all, there are cases in which courts have held that the assignment of “all assets” does not

encompass legal claims or causes of action. See, e.g., DNAML Pty, Ltd. v. Apple Inc., No. 13-

CV-6516 (DLC), 2015 WL 9077075, at *5 (S.D.N.Y. Dec. 16, 2015); see also, e.g., Sullivan v.

Nat’l Football League, 34 F.3d 1091, 1106 (1st Cir. 1994). But the facts of these cases are

distinguishable. See DNAML Pty, 2015 WL 9077075, at *5 (relying on another provision in the

agreement explicitly transferring certain claims, but excluding the ones at issue); Sullivan, 34

F.3d at 1106 (construing a provision transferring “‘all other assets’ . . . besides those specifically

listed and those specifically excluded”). And the Second Circuit has made clear that no “specific

boilerplate” is required to assign claims, as long as there is proof of “an intention of transferring

the chose in action to the assignee.” Banque Arabe et Internationale D’Investissement v.

Maryland Nat’l Bank, 57 F.3d 146, 151-52 (2d Cir. 1995) (internal quotation marks omitted); see

also Lerman v. Joyce Int’l, Inc., 10 F.3d 106, 112 (3d Cir. 1993) (“As a general rule, terms of art

are not required for a valid assignment.” (internal quotation marks omitted)). That intention can

be inferred here from Nastasi’s own assertion that it broadly assigned “all . . . assets,” NY

Compl. ¶ 9, particularly since it did so in the wake of its self-described “collapse.” FAC ¶ 157;

see Pl.’s Mem. 12 (noting that Nastasi was “destroyed”).2 As the Second Circuit has observed,

(analyzing the validity of an assignment of claims in terms of Article III standing). In any event,

even if the issue were analyzed under Rule 17, dismissal would still be required here, as Nastasi

had a “reasonable time . . . for the real party in interest to ratify, join, or be substituted into the

action.” Fed. R. Civ. P. 17(a)(3). Despite that, Nastasi fails to proffer any “semblance of any

reasonable basis” for not adding or substituting the FDN Trust, see Dekalb Cnty. Pension Fund

v. Transocean Ltd., 817 F.3d 393, 412 (2d Cir. 2016) (internal quotation marks omitted),

particularly given that the FDN Trust is Nastasi’s co-plaintiff in the parallel state case.

2 Needless to say, Nastasi is privy to the actual contractual language underlying the

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“[a] party about to become defunct has little incentive to reserve transactional rights when

transferring its interests to [a surviving corporation].” Banque Arabe, 57 F.3d at 152.

The arguments that Nastasi does make are even more easily rejected. First, presumably

seizing on the reference in the state-court complaint to “all of Nastasi’s account receivables,” NY

Compl. ¶ 9, Nastasi suggests that the assignment was limited to its receivables, see Pl.’s Mem.

12-13. But the state-court complaint refers to “all of Nastasi’s assets, including the rights to all

of Nastasi’s account receivables,” NY Compl. ¶ 9 (emphasis added), making plain that

receivables are merely a subset, not the whole, of what was assigned, see, e.g., Chickasaw Nation

v. United States, 534 U.S. 84, 89 (2001) (“To ‘include’ is to ‘contain’ or ‘comprise as part of a

whole.’” (quoting Webster’s Ninth New Collegiate Dictionary 609 (1985)). Second, Nastasi

insists that it is “the proper plaintiff in this case” because it “participated in all of the acts which

gave rise to” the claims in the operative complaint, citing as proof its 2010 contract with

Bloomberg L.P. and a letter about work it performed in 2015. Pl.’s Mem. 12-13. That may be

so, but it misses the point because standing “must exist at the commencement of the litigation.”

Carter, 822 F.3d at 55. Nastasi’s own allegations in the state-court complaint establish that,

between the acts that gave rise to the claims it asserts and its filing of the lawsuit, it assigned its

claims to the FDN Trust. That deprived Nastasi “of any interest in this litigation,” which means

assignment (whereas Defendants and the Court are not). One can infer — and the Court does

infer — that if the actual language supported Nastasi, it would have shared the language in its

opposition to Defendants’ motion. Because the actual language is known to Nastasi, there is also

no need to engage in jurisdictional discovery to obtain the contract. See, e.g., Amidax Trading

Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 149 (2d Cir. 2011) (affirming the district court’s denial

of jurisdictional discovery because “Amidax, not the defendants, is in control of the relevant

jurisdictional evidence” and therefore “Amidax had ample opportunity to uncover and present

evidence” (internal quotation marks omitted)).

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that it “lacks standing” and, in turn, that the Court “lack[s] subject-matter jurisdiction to reach

the merits.” Valdin Investments Corp., 651 F. App’x at 7.

For the foregoing reasons, Defendants’ motion to dismiss 1s granted for lack of standing

and the operative complaint is dismissed in its entirety without prejudice. See, e.g., Hernandez v.

Conriv Realty Assocs., 182 F.3d 121, 123 (2d Cir. 1999) (holding that dismissal for lack of

subject-matter jurisdiction must be without prejudice). The Clerk of Court is directed to

terminate ECF No. 147 and close the case.

SO ORDERED.

Dated: March 11, 2020

New York, New York ESSE M@-FURMAN

nited States District Judge