Ceglia v. Zuckerberg

United States District Court, W.D. New York
772 F.Supp.2d 453 (2011)

ELI5:

Rule of Law:

A person's domicile for diversity jurisdiction purposes is changed by residing in a new state with the intent to remain there indefinitely. This intent is determined by the totality of the circumstances, and can be proven by clear and convincing objective evidence such as place of employment, voter registration, tax filings, and property location, even if it contradicts a prior statement of intent.

Facts:

In 2003, Paul Ceglia and Mark Zuckerberg entered into a contract that later became the subject of a legal dispute.
Zuckerberg, originally domiciled in New York, moved to California in the summer of 2004 while on a leave of absence from Harvard University to work on his company, Facebook.
In a separate 2004 legal proceeding, Zuckerberg asserted that his domicile was New York, stating an intention to eventually return.
Zuckerberg never returned to Harvard or New York, instead remaining in California to serve as the Chairman and CEO of Facebook as it grew into a major corporation headquartered in Palo Alto.
From 2004 to June 2010, Zuckerberg continuously resided in a rented apartment in Palo Alto, California.
During this six-year period in California, Zuckerberg obtained a California driver's license (2006), purchased and registered a vehicle (2007), registered to vote and voted (since 2007), and paid California resident income taxes (since 2004).
Zuckerberg's bank and brokerage accounts listed his California residence, and he maintained a sworn affidavit stating his intent to live in California indefinitely.

Procedural Posture:

Paul Ceglia filed a breach of contract lawsuit against Mark Zuckerberg and Facebook, Inc. in New York State Supreme Court.
Defendants Zuckerberg and Facebook removed the case to the U.S. District Court for the Western District of New York, claiming federal jurisdiction based on diversity of citizenship.
Plaintiff Ceglia filed a motion to remand the case back to New York state court, arguing that complete diversity was lacking because he and defendant Zuckerberg were both domiciliaries of New York.

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Issue:

Does a person change their domicile from New York to California for the purposes of diversity jurisdiction when they continuously reside and work in California for six years, run a major corporation there, and manifest intent to remain through numerous objective indicators, despite having a prior domicile in New York?

Opinions:

Majority - Arcara, J.

Yes. A person changes their domicile for diversity jurisdiction purposes by residing in a new state with the intent to remain there indefinitely. The court found that although Zuckerberg's domicile was New York in 2004, he successfully changed it to California by the time this lawsuit was filed in June 2010. The evidence for this change was 'overwhelming,' based on the totality of the circumstances. Objective indicators, such as his continuous residence in California since 2004, his role as CEO of Facebook headquartered there, his California driver's license, voter registration, and tax filings, clearly and convincingly demonstrated his intent to remain in California indefinitely. The court found it 'incomprehensible' that he would abandon his company and life in California to return to New York.

Analysis:

This case provides a modern and clear application of the classic two-part test for changing domicile, crucial for establishing federal diversity jurisdiction. It underscores that a person's actions and established life patterns are far more persuasive evidence of intent than prior statements, even those made in previous legal proceedings. The court's heavy reliance on objective, concrete ties—such as long-term employment, tax payments, and voting—establishes a strong precedent that significant professional and personal commitments in a new state can provide 'overwhelming' evidence to overcome the presumption of a prior domicile.

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