United States District Court for the Western District of New York - 772 F. Supp.2d 453, 772 F. Supp. 2d 453
In the 2011 case Ceglia v. Zuckerberg, the US District Court for the Western District of New York examined a breach of contract and ownership dispute concerning Facebook. Mark Zuckerberg and Facebook originally transferred the case from the New York State Supreme Court to a federal court, based on diversity jurisdiction. However, plaintiff Paul Ceglia attempted to return it to state court, arguing that both he and Zuckerberg were New York residents.
The central issue was whether diversity jurisdiction applied. The court decided it did because Zuckerberg was a California resident, not a New York one, at the time of the move. To establish diversity jurisdiction, the parties must have different citizenship and an amount in controversy over $75,000. Citizenship here depends on one's domicile or state of permanent residence, determined through factors like living address, voter registration, driver's license, tax payments, business activities, and intent.
The court used a multi-factor test and determined that Zuckerberg's domicile had changed from New York to California in 2004 and hadn't switched back. This case is significant because it demonstrates how courts interpret diversity jurisdiction, apply multi-factor tests to figure out domicile, and resolve disputes over citizenship when parties have ties to multiple states. Judge Arcara wrote the opinion in this recent federal civil procedure case.
The plaintiff filed a breach of contract claim against the defendants in New York State Supreme Court, claiming an 84% interest in Facebook. The defendants removed the case to federal court based on diversity jurisdiction, arguing that the plaintiff and Zuckerberg were not domiciled in the same state. The plaintiff moved to remand, arguing that both parties were domiciled in New York. The court found that diversity jurisdiction existed because Zuckerberg was domiciled in California. The plaintiff seeks remand due to a lack of diversity jurisdiction, which requires complete diversity between the parties. Citizenship for diversity purposes is based on domicile, which is the place where a person has their true fixed home and principal establishment, and to which they intend to return. To change domicile, two elements are required: residence in a new domicile and the intention to remain there indefinitely. The burden of proving a change in domicile is on the person asserting it and must be proven by clear and convincing evidence.
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