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In June 2016, AmSurg Corp. and Envision Healthcare Holdings, Inc. (Envision) announced they have signed a definitive merger agreement pursuant to which the companies will combine in an all-stock transaction. Upon completion of the merger, which is expected to be tax-free to the shareholders of both organizations, the combined company will be named Envision Healthcare Corporation and co-headquartered in Nashville, Tennessee and Greenwood Village, Colorado. The company's common stock is expected to trade on the New York Stock Exchange under the ticker symbol: EVHC. Bass, Berry & Sims served as lead counsel on the transaction, led by Jim Jenkins. Read more.

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Inside the FCA blogInside the FCA blog features ongoing updates related to the False Claims Act (FCA), including insight on the latest legal decisions, regulatory developments and FCA settlements. The blog provides timely updates for corporate boards, directors, compliance managers, general counsel and other parties interested in the organizational impact and legal developments stemming from issues potentially giving rise to FCA liability.

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Chris Lazarini Discusses Application of Interpleader Statute

Securities Litigation Commentator


July 11, 2016

Bass, Berry & Sims attorney Chris Lazarini discussed the case of UBS Financial Services, Inc. vs. Kaufman in which multiple parties laid claim to the Kaufmans' UBS account. UBS' efforts to get relief in a federal court interpleader action were rejected for lack of subject matter jurisdiction.

Chris provided the analysis for Securities Litigation Commentator (SLC). The full text of the analysis is below and used with permission from the publication. If you would like to receive additional content from the SLC, please visit the SLC website to sign up for the newsletter.

UBS Financial Services, Inc. vs. Kaufman, No. 3:15-cv-00887 (W.D. Ky., 6/7/16) 

*Federal courts are courts of limited jurisdiction.
**The interpleader statute, 28 U.S.C. §1135, grants federal courts jurisdiction where diversity exists between at least two of the adverse claimants.
***The interpleader rule, FRCP 22, does not create jurisdiction; instead, statutory jurisdiction must exist in actions brought under the rule.
****There is a split of authority whether the disinterested stakeholder's citizenship should be considered in examining whether diversity jurisdiction exists in a Rule 22 interpleader action. 

This interpleader action follows various state court and bankruptcy court actions involving Defendants Louis and Debra Kaufman and Defendant Cornerstone Industries. The Kaufmans, who were going through a divorce, and Cornerstone, which had won a $1.8 million judgment against Defendant Louis Kaufman, both laid claim to the Kaufmans' joint account at UBS. UBS sought relief from the Court, and Cornerstone filed a cross-claim against the Kaufmans, asserting its claim to the joint account. Debra Kaufman moved to dismiss UBS' claim for lack of subject matter jurisdiction. The Court agrees.

First, the Court examines whether subject matter jurisdiction exists under the interpleader statute, 28 U.S.C. §1335, which disregards the citizenship of the disinterested stakeholder (UBS) and requires diverse citizenship between at least two of the interpleader defendants. The Court finds no diversity because the Kaufmans and Cornerstone Industries are all Kentucky citizens. Next, the Court considers whether subject matter jurisdiction exists through the interpleader rule, FRCP 22. The Court notes that the rule is a procedural device only, and actions under the rule must be based on a statutory grant of jurisdiction. The issue becomes, the Court explains, whether the disinterested stakeholder's citizenship is considered. If it is, UBS will have established diversity under 28 U.S.C. §1335, because it is a citizen of Delaware and New Jersey, while defendants are citizens of Kentucky. If UBS' citizenship is not considered, however, diversity does not exist.

Finding no binding Sixth Circuit precedent, the Court declines to follow the lead of other appellate courts which used the disinterested stakeholder's citizenship in examining diversity in a rule-based case. It deems it nonsensical and improper to apply different analyses to the same question in statutory and rule interpleader actions. Instead, the Court disregards UBS' citizenship and finds no diversity under 28 U.S.C. §1335, noting that that result is consistent with the prohibition against allowing defendants to remove a state court matter filed in their home state to federal court. Finally, the Court finds that it cannot exercise supplemental jurisdiction over Cornerstone Industries' cross-claim because such jurisdiction must be related to the Court’s original jurisdiction, which does not exist.

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