Ceglia v. Zuckerberg

Brief Fact Summary.

Plaintiff sued Defendants in New York state court. Defendants removed the lawsuit to federal court based on diversity jurisdiction. Plaintiff sought to remand the lawsuit back to New York state court.

Synopsis of Rule of Law.

For diversity jurisdiction purposes, changing domicile requires residence in a new domicile with intent to remain there indefinitely.

Facts.

Ceglia claimed he owned an 84 percent interest in Facebook, asserting that he and Zuckerberg had entered into a contract granting him this stake. Zuckerberg and Facebook moved the case from New York state court to federal court based on diversity jurisdiction.

Ceglia sought to have the case remanded back to state court, arguing that both he and Zuckerberg were residents of New York, which would negate the federal court’s diversity jurisdiction.  In a previous case, Zuckerberg had claimed New York as his domicile in September 2004, although he was living in California at that time. By 2010, Zuckerberg contended his domicile had changed to California, citing continuous residence, voter registration, tax filings, and his significant personal and business ties there.

Ceglia countered that Zuckerberg had not established the intent to remain in California indefinitely, implying his domicile remained in New York, which would affect the jurisdiction. The court had to determine Zuckerberg’s true domicile to decide if the case could remain in federal court based on diversity of citizenship.

Issue.

For diversity jurisdiction purposes, does changing domicile require residence in a new domicile with intent to remain there indefinitely?

Held.

Yes. The court denied Plaintiff’s motion to remand the case to New York state court, holding that there was diversity jurisdiction as the facts showed that Zuckerberg intended to reside in California indefinitely.

Discussion.

For diversity jurisdiction purposes, changing domicile requires residence in a new domicile with intent to remain there indefinitely. Federal courts have diversity jurisdiction over cases with a minimum amount in controversy between litigants who are citizens of different states. In most cases, courts require complete diversity. Citizenship for diversity purposes depends on domicile. The law presumes that an established domicile continues unless evidence show otherwise. Changing domicile requires a person to live in a new domicile and intend to remain there indefinitely. Courts consider objective factors to determine if the person intends to remain there indefinitely, including current residence, voting registration, real property ownership, financial account locations, local associations memberships, place of employment or business, driver’s license, car registration, and payment of taxes. Courts consider all the circumstances, with no single dispositive factor.

Here, that test supported Zuckerberg’s claim of domicile in California. He had resided only in California since summer of 2004 and had a driver’s license and car registered there. He paid taxes, voted, maintained financial accounts, and received mail in California. Although he received mail in multiple zip codes, they all began with the prefix for northern California. Just because Zuckerberg declared New York his domicile as a college student in 2004 did not mean that his domicile couldn’t have changed since then. He decided to stay in California to run Facebook sometime in 2006 as its founder and CEO. Meanwhile, Facebook grew to a multi-billion-dollar corporation with over 1,600 employees and a principal place of business within walking distance of Zuckerberg’s residence in California. Those facts overwhelmingly established Zuckerberg had changed his domicile to California and intended to live there indefinitely. It was not reasonable to think Zuckerberg intended to leave his life and his company to live in New York near his parents. Ample evidence showed Zuckerberg had changed his domicile to California. Accordingly, Plaintiff’s motion to remand the case to New York state court was denied.