The U.S. District Court for the Northern District of Texas has granted HDNet's emergency motion to remand its lawsuit against Zuffa to Texas State Court.
Zuffa had removed the declaratory judgment action concerning Randy Couture promotional contract to Federal Court last month. Wednesday's ruling represents a procedural victory for HDNet and Couture.
The issue at the center of the ruling was whether or not HDNet's use of a Nevada corporation as party to the suit was done solely to maneuver around Federal Court jurisdiction by destroying diversity of citizenship, which exists when parties in a lawsuit are from different states.
HDNet entered into contract with Couture through a Nevada LLC owned by a Nevada corporation established shortly before the lawsuit was filed. In support of the case's removal to federal court Zuffa alleged that the action represented a collusive manipulation of the court's jurisdiction and asked the court to look beyond the company's legal citizenship in Nevada.
In his order granting the motion to remand, Senior Judge A. Joe Fish wrote that the "timing and circumstances surrounding the formation of the HDNet Nevada entities presents circumstantial evidence of collusive manipulation, but without more the defendant has not discharged this heavy burden."
Judge Fish went on to state that the court found that "though the circumstantial evidence suggests the plaintiff might have been motivated in part by the underlying lawsuit … the court also finds the plaintiff ‘was also influenced by other factors unrelated to jurisdiction.'"
The action now returns to District Court in Dallas.
