Qatalyst Inc. v. Pipes.AI, LLC
Attorneys Brad Barrios and David Hayes successfully represented the Appellees and Defendants in the District Court case. The Plaintiff, Qatalyst Inc., brought suit derivatively, on behalf of Expect Quest, LLC. Qatalyst and Rob Graham Enterprises, LLC (“RGE”) were each 50% members of Expect Quest. Qatalyst alleged that the Defendants aided and abetted RGE in breaching its fiduciary duties owed to Qatalyst and Expect Quest. Qatalyst also brought claims for tortious interference, alleging that the Defendants interfered with relationships that belonged to Expect Quest.
Brad and David raised several arguments on a motion to dismiss, including that the federal court lacked subject matter jurisdiction because Expect Quest was improperly aligned and the parties lacked complete diversity. The District Court agreed and dismissed the case. Qatalyst appealed.In a decision issued on November 7, 2025, the Eleventh Circuit affirmed the dismissal of the case for lack of subject matter jurisdiction. The Court agreed with Brad and David’s position that diversity jurisdiction was absent because both Qatalyst and Expect Quest were citizens of Florida. The panel held that Expect Quest—originally named as a nominal defendant and later realigned as a plaintiff—was in fact properly aligned as a defendant, given its antagonistic relationship with Qatalyst.
The Eleventh Circuit’s opinion reaffirmed the principle that party alignment in derivative actions must reflect the true interests of the parties, and that federal jurisdiction cannot be created through strategic pleading.