Tepley v. Gro Intelligence, Inc.

Background

Allison Tepley filed this action in New York state court against Gro Intelligence, Inc. and Sara Menker. She alleged state-law claims for discrimination, retaliation, and a hostile work environment connected to her prior employment as a marketing executive at Gro. The defendants removed the case to the U.S. District Court for the Southern District of New York based on diversity jurisdiction. Tepley moved to remand, meaning she asked the federal court to return the case to state court.

Tepley had previously filed a similar federal case against the defendants that included the same state-law claims and additional federal claims. She voluntarily dismissed that earlier federal case without prejudice and filed this state-court action instead. The defendants removed the new action on April 22, 2024, before either defendant had been served.

Diversity Jurisdiction

Federal diversity jurisdiction generally requires complete diversity between the parties and more than $75,000 in controversy. The parties agreed that the defendants were citizens of New York and Delaware and that the amount in controversy exceeded $75,000. They disagreed about Tepley’s citizenship when the complaint was filed.

The court held that Tepley was a citizen of Tennessee for diversity-jurisdiction purposes. The complaint stated that she moved from New York to Tennessee in September 2021 and later traveled to New York to work in the office every four to six weeks. The record also suggested that she had purchased a home with her partner in Nashville shortly before the move. The court concluded that these facts meant she could not claim New York citizenship. It therefore found that diversity jurisdiction existed.

Forum-Defendant Rule and Removal

The forum-defendant rule generally prevents removal based only on diversity jurisdiction when a properly joined and served defendant is a citizen of the state where the lawsuit was filed. Gro and Menker were citizens of New York, the forum state. But neither defendant had been served when the case was removed.

Relying on binding Second Circuit precedent, the court held that the forum-defendant rule did not prevent removal because the defendants had not yet been properly served. The court rejected Tepley’s arguments that the defendants had actual notice of the lawsuit, that removal produced an unreasonable result, and that the case should remain before the judge who handled her earlier federal case. The court stated that notice was not the same as service under New York law and that the statute’s service-based rule had to be applied as written.

Disposition and Other Case Management Rulings

The court DENIED Tepley’s motion to remand. It also denied her request to transfer the case to Judge Ho, explaining that there was no basis for doing so because no related case was pending before him.

The court extended the mediation deadline until 30 days after new defense counsel appeared. It also directed Tepley to respond to the defendants’ pending motions to dismiss within 14 days after new defense counsel for Gro filed a notice of appearance, with defendants’ replies due seven days later.