Our final post on the Volokh Conspiracy highlights a potential pleading problem under Rule 17: at least two of the Plaintiffs are not the true parties in interest, because, by all accounts, they are only part owners of the businesses in question.
First, Ryan Eric Goode, by all accounts, is not “the owner” of various hotels and restaurants in Manhattan:
Based on publicly available records, it appears Goode is only a part-owner of the various hospitality establishments described in the second amended complaint. For example, the Observer reported that Sean MacPherson partnered with Goode to open the Ludlow Hotel as well as the Park restaurant. The New York Times noted that MacPherson and Goode are “behind the revamped Waverly Inn,” as well as the Bowery Hotel. Likewise, New York magazine observed that Goode and MacPherson are behind the Jane hotel, the Maritime Hotel and the Lafayette House. Eatermagazine boasted that the Gemma restaurant is “run by Eric Goode and Sean MacPherson of, among others …” Based on these reports, it would appear that all of the hotels and restaurants mentioned in the second amended complaint are not owned solely by Goode but are joint enterprises with his business partner, MacPherson.
Further, in Campos v. Goode, a class of workers at the Gemma restaurant brought a laborp suit in the Southern District of New York against Goode, MacPherson and a series of LLCs. The second amended class-action complaint in Campos v. Goode — drafted and redrafted after extensive research into the corporate structure — explains that “Defendants Eric Goode, Sean MacPherson, Garden Café Associates LLC, Sulcata Corp, Bowery F&B LLC, Bowery Hotel LLC, and BD Stanhope, LLC operate as part of a single integrated enterprise” (paragraph 30). In her opinion, Magistrate Judge Debra Freeman observed that Gemma and other “restaurants are owned and operated by Defendants Eric Goode, Sean MacPherson, and several corporate entities, including Defendants Garden Café Associates LLC, Sulcata Corp., Bowery F & B LLC, Bowery Hotel LLC, and BD Stanhope LLC.” Campos v. Goode, No. 10 CIV. 0224 DF, 2011 WL 9530385, at *1 (S.D.N.Y. Mar. 4, 2011). Campos v. Goode is recent authority within the Southern District of New York that the plaintiffs have to account for.
These facts were not difficult to find. Indeed, the Post story that announced the second amended complaint, in three places referred to Goode as “part-owner” of New York hotels and restaurants. Pulitzer Prize winner David A. Fahrenthold was careful enough not to state that Goode was the sole “owner” of these hotels. The second amended complaint, however, does not make this critical distinction.
There are additional problems with CREW’s pleading. ROC asserts an injury on behalf of “‘COLORS’ restaurant,” which, according to the second amended complaint, “competes with restaurants owned by Defendant.” Here, too, it isn’t clear that ROC is the real party in interest. A search of the New York State Liquor Authority’s database for “Colors Restaurant” lists seven principals: Fekkah Mamdouh, Sarumathi Jayaraman, Sarita Gupta, Jennifer Herman, Morgan Simon, Imar Hutchins and finally, Restaurant Opp Cntr United. The New York Department of State also lists an entry for Colors NY Restaurant LLC. The second amended complaint in CREW v. Trump simply states that “ROC United also owns and operates the restaurant COLORS in New York City.” The second amended complaint does not specify the ownership stakes of any other reported principals or entities, nor does it explain the relationship between the (purported) injury suffered by Colors restaurant and ROC United.
These issues can be raised by the court sua sponte:
The Justice Department failed to raise these arguments under Rule 17. No matter. One court, equating the shareholder-standing doctrine to a “nonconstitutional lack of standing,” concluded that a judge “can notice an error and reverse on the basis of it even though no party has noticed.” During oral arguments on Oct. 18, the district court should inquire about alleged injuries to ROC United and Goode.