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determining that, although “property ownership bear on assessment of domicile,” it is just one of numerous relevant factors
Summary of this case from Elliston v. Wing Enters., Inc.Opinion
MDL No. 13–02428–DPW.
01-02-2015
In re FRESENIUS GRANUFLO/NATURALYTE DIALYSATE PRODUCTS LIABILITY LITIGATION. This Order Relates To: Cases filed in California state court in which Fresenius, U.S.A., Ben Lipps, and/or Walter Weisman have been named as Defendants.
MEMORANDUM AND ORDER
DOUGLAS P. WOODLOCK, District Judge.
A number of Plaintiffs whose cases have been transferred to this Court by the Judicial Panel for Multidistrict Litigation seek remand of their cases to the California state courts, where they had originally filed their complaints.
Defendants removed these cases from state court to federal court pursuant to 28 U.S.C. § 1441(a) on the grounds of diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Defendants' removal of these cases was predicated on three factual assertions creating diversity: (1) Defendant Fresenius USA is a citizen of Massachusetts, rather than California, as alleged by the Plaintiffs; (2) Defendant Ben Lipps has been a citizen of Massachusetts and Nevada during the relevant time periods, but again, not a citizen of California; and (3) Defendant Walter Weisman, who is a citizen of California, was fraudulently joined as a defendant in these action.
If Defendants' contentions are correct, complete diversity exists between Defendants and Plaintiffs, who are citizens of California. As a consequence, this Court would properly have jurisdiction over the instant cases in diversity. 28 U.S.C. § 1332. If any properly joined defendants are citizens of California, however, removal to this Court would be unavailable on two grounds: first, by the absence of diversity jurisdiction, and second by the forum defendant rule, codified as 28 U.S.C. § 1441(b)(2). For the reasons discussed below, I find that remand is unwarranted because the diversity requirement is satisfied here. In so doing, I find that Mr. Weisman was fraudulently joined and accordingly will grant his motions to dismiss.
I. LEGAL STANDARD FOR REMOVAL
A defendant has a limited statutory right to remove a case filed in state court to federal court. See 28 U.S.C. §§ 1441, 1446. At a minimum, the federal court must have original jurisdiction over the action, and the defendant must comply with a variety of procedural requirements. See id.; Samaan v. St. Joseph Hosp., 670 F.3d 21, 27 (1st Cir.2012). A federal district court has original jurisdiction over civil actions between citizens of different states in which the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). Diversity must be complete—that is, the citizenship of each plaintiff must be different from that of each defendant. Toste Farm Corp. v. Hadbury, Inc., 70 F.3d 640, 642 (1st Cir.1995).
Although a defendant may generally remove to federal court “any civil action brought in a State court of which the district courts of the United States have original jurisdiction,” 28 U.S.C. § 1441(a), a civil action otherwise removable solely on the basis of the diversity jurisdiction “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2). In other words, if any properly joined defendant here is a citizen of California, removal to federal court is not permitted. This is known as the forum defendant rule. Thus, lack of diversity or the presence of an in-forum defendant produce the same result of requiring remand due to improper removal. As the removing parties, Defendants bear the burden of establishing federal jurisdiction. In re Pharm. Indus. Average Wholesale Price Litig., 431 F.Supp.2d 109, 116 (D.Mass.2006) ; see Hertz Corp. v. Friend, 559 U.S. 77, 96, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010). The removal statute is strictly construed, and any doubts about the propriety of removal are resolved in favor of remand to the state forum. Pharm. Indus., 431 F.Supp.2d at 116 ; see 28 U.S.C. § 1447.
II. THE CITIZENSHIP OF FRESENIUS USA
A. Background and Legal Standard
For diversity purposes, a corporation is deemed to be a citizen of both the state where it is incorporated and the state in which it maintains its principal place of business. 28 U.S.C. § 1332(c)(1). Citizenship is determined as of the date of the commencement of the lawsuit; here, the first of these complaints was filed in July 2013, and all others in either the remainder of 2013 or 2014. See Toste Farm Corp. v. Hadbury, Inc., 70 F.3d 640, 642 (1st Cir.1995). Fresenius USA is and at all relevant times has been incorporated in Massachusetts. The parties disagree, however, about whether the principal place of business of Fresenius USA is located in Massachusetts, as Defendants contend, or in California, as Plaintiffs argue.
In Hertz, 559 U.S. at 92–93, 130 S.Ct. 1181, the Supreme Court held that “ ‘principal place of business' is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities”—“the corporation's ‘nerve center.’ ” The court recognized that in practice this will “normally be the place where the corporation maintains its headquarters—provided that the headquarters is the actual center of direction, control, and coordination, i.e., the ‘nerve center,’ and not simply an office where the corporation holds its board meetings.” Id.
B. The Principal Place of Business of Fresenius USA
Defendants have presented sufficient evidence that Fresenius USA's principal place of business is in Waltham, Massachusetts. Ben Lipps, the founder and first chief executive officer (CEO) of Fresenius USA who served as the Rule 30(b)(6) deponent, credibly stated the following facts. Fresenius USA was headquartered in California until 1996, when it merged with National Medical Care, a larger company located in Massachusetts. After that merger, some manufacturing activity and equipment remained in California, but headquarter functions of Fresenius USA and other Fresenius entities, including the office of the chief executive and the legal and accounting functions, were moved to Massachusetts. Mr. Lipps, as the CEO of the newly formed company, also moved to Massachusetts.
Mark Costanzo, the President of the Renal Therapies Group of Fresenius Medical Care North America and the President of Fresenius USA, whose office is located in Waltham, corroborated these facts in his affidavit. He explained that the manufacturing facility in Walnut Creek, California is one of several such facilities owned by Fresenius USA across the United States. Mr. Costanzo further stated that “[a]ll significant corporate decisions for the Walnut Creek operation and Fresenius USA, Inc. are subject to review and approval by managers and corporate officers ... all of whom have their offices in Waltham, Massachusetts.”
As the statements of Mr. Lipps and Mr. Costanzo make clear, only certain limited operational activities remain in California. The direction and management of those activities, however, occurs in Massachusetts. This makes Massachusetts the “nerve center” and therefore the location of the “principal place of business” of Fresenius USA. See Hertz, 559 U.S. at 92–93, 130 S.Ct. 1181.
C. Fresenius USA's Contrary Statements Regarding Its Principal Place of Business
1. Prior Statements
Most of Fresenius USA's statements that its principal place of business was in California appeared in court filings prior to 2010. For example, in a complaint filed by Fresenius USA on April 4, 2001, Fresenius USA alleged that “Plaintiff Fresenius USA, Inc.... is, and at all times herein mentioned was, a corporation organized and existing under the laws of the Commonwealth of Massachusetts with its principal place of business in Walnut Creek, Contra Costa County, California. [Fresenius USA] is qualified to do business in California and has a research and manufacturing facility in Walnut Creek, California.” Similarly, in a filing on November 11, 2006, Fresenius admitted that it “is a Massachusetts Corporation with its principal place of business in Walnut Creek, California.”