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H.K. Huilin International Trade Co. v. Kevin Multiline Polymer Inc.

United States District Court
907 F. Supp. 2d 284 (2012)
ELI5:

Rule of Law:

The 1988 amendment to 28 U.S.C. § 1332(a), which deemed an alien admitted for permanent residence a citizen of the state in which they are domiciled, was intended to restrict federal diversity jurisdiction, not expand it. It therefore does not create jurisdiction over a suit between a non-resident alien on one side and a group of defendants including a permanent resident alien on the other.


Facts:

  • Plaintiff, a manufacturer of plastic goods, is a corporation organized under the laws of the People's Republic of China with its principal place of business in Hong Kong.
  • Chao Ming Zhen, an individual residing in New York, allegedly operated three New York corporations: Kevin Multiline Polymer Inc. ('KM Polymer'), K.M. Packaging, Inc. ('KM Packaging'), and JBM Trading Inc. ('JBM').
  • Zhen, acting through KM Polymer and KM Packaging, ordered goods from the Plaintiff.
  • Plaintiff alleges that Zhen and his companies failed to pay for the ordered goods.
  • Plaintiff further alleges that after KM Polymer and KM Packaging became insolvent, Zhen formed JBM to avoid the obligation to pay for the goods.

Procedural Posture:

  • Plaintiff, a foreign corporation, filed suit in the U.S. District Court for the Eastern District of New York against Chao Ming Zhen and several corporations he allegedly operated.
  • Plaintiff asserted subject matter jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332.
  • Defendants Zhen and K.M. Packaging, Inc. filed a motion to dismiss for failure to state a claim, or in the alternative, for summary judgment.
  • Plaintiff opposed the defendants' motion and filed its own cross-motion for summary judgment.
  • Before ruling on the parties' motions, the district court raised, on its own, the question of whether it possessed subject matter jurisdiction over the case.

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Issue:

Does the 1988 amendment to 28 U.S.C. § 1332(a), which deems a permanent resident alien a citizen of their state of domicile, expand federal diversity jurisdiction to permit a suit between a non-resident alien plaintiff and a defendant group consisting of U.S. citizens and a permanent resident alien?


Opinions:

Majority - Nicholas G. Garaufis, District Judge

No. The 1988 amendment to 28 U.S.C. § 1332(a) does not expand diversity jurisdiction to permit a suit between a non-resident alien and a permanent resident alien. The court held that the plaintiff failed to carry its burden of establishing subject matter jurisdiction because it did not allege the citizenship of defendant Zhen, only his residency. The court reasoned that the purpose of the 1988 amendment was to eliminate jurisdiction over 'suits between neighbors'—a U.S. citizen suing a permanent resident alien domiciled in the same state—not to create jurisdiction where it did not previously exist. Allowing a suit between a foreign citizen and a permanent resident alien would contradict this legislative intent and raise constitutional concerns under Article III. The court found its interpretation was supported by the majority of courts in the Second Circuit and by the subsequent passage of the Federal Courts Jurisdiction and Venue Clarification Act of 2011, which explicitly repealed the ambiguous 1988 provision and clarified its restrictive purpose.



Analysis:

This decision solidifies the restrictive interpretation of the 1988 amendment to the diversity jurisdiction statute, aligning with the majority view that its purpose was to curtail, not expand, federal jurisdiction. The case is significant for its methodology, using a subsequent clarifying statute (the 2011 Clarification Act) as strong evidence of the original legislative intent behind an ambiguous prior law. This approach reinforces the principle that courts may look beyond a statute's literal text to avoid results that contradict clear legislative purpose or raise constitutional questions. For future cases, it serves as a strong precedent against attempts to establish alienage jurisdiction in suits involving permanent resident aliens on both sides of a dispute, or between a non-resident alien and a permanent resident alien.

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