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Suit against Private Prison Operator for Self-Dealing Remanded
On July 8, 2011, the U.S. Court of Appeals for the Tenth Circuit reversed and remanded for further proceedings a shareholder action brought against a private prison operator.
Ravenswood Investment Company (RIC), a limited partner to Avalon Correctional Services, sued Avalon alleging that the CEO of Avalon, Donald Smith, had been engaging in impermissible self-dealing to the detriment of Avalon.
At some point during the suit, the parties began to question whether they were completely diverse for diversity of jurisdiction purposes. The district four attempted to save jurisdiction over the matter by allowing the parties to bring three different suits, each based on differing theories.
The Tenth Circuit held this was improper. “There is not authority for the proposition that creating multiple federal actions is a permissible way to cure a jurisdictional defect in a diversity case,” the court wrote.
The judgment of the district court was accordingly reversed and remanded. See: Ravenswood Investment Company v. Avalon Correctional Services, No.10-6190 (10th Cir. 2011).
Ravenswood Investment Company (RIC), a limited partner to Avalon Correctional Services, sued Avalon alleging that the CEO of Avalon, Donald Smith, had been engaging in impermissible self-dealing to the detriment of Avalon.
At some point during the suit, the parties began to question whether they were completely diverse for diversity of jurisdiction purposes. The district four attempted to save jurisdiction over the matter by allowing the parties to bring three different suits, each based on differing theories.
The Tenth Circuit held this was improper. “There is not authority for the proposition that creating multiple federal actions is a permissible way to cure a jurisdictional defect in a diversity case,” the court wrote.
The judgment of the district court was accordingly reversed and remanded. See: Ravenswood Investment Company v. Avalon Correctional Services, No.10-6190 (10th Cir. 2011).
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Related legal case
Ravenswood Investment Company v. Avalon Correctional Services
| Year | 2011 |
|---|---|
| Cite | No.10-6190 (10th Cir. 2011) |
| Level | Court of Appeals |
| Injunction Status | N/A |