James Harris v. Lee Rand
682 F.3d 846
9th Cir.2012Background
- Plaintiffs sued in federal court under 28 U.S.C. § 1332(a)(2) and later amended to § 1332(a)(3) to preserve jurisdiction.
- District court OSC noted the jurisdictional averments were patently insufficient and asked for principal places of business of corporate defendants.
- Hertz v. Friend held nerve center is the corporation's principal place of business for diversity purposes but did not create a heightened pleading standard.
- Plaintiffs responded with nerve centers in Louisiana and Hungary and provided corporate information; district court granted leave to amend.
- FAC alleged principal places of business consistent with Form 7(a); district court dismissed FAC without prejudice for lack of jurisdiction, citing lack of nerve centers and proof.
- Plaintiffs sought rehearing and alternative relief; district court denied and case appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Hertz require a heightened pleading standard? | Harris argued Hertz did not require more than Form 7(a) framework | District court treated nerve center proof as mandatory factual proof | Hertz did not impose heightened pleading standard |
| Was the FAC properly dismissed for lack of subject matter jurisdiction? | FAC satisfied Form 7(a) and provided nerve centers | Lack of proof of citizenship defeated jurisdiction | Dismissal reversed; vacated and remanded |
| May a court require proof of jurisdictional facts after Hertz without prejudice to amendment? | Court could require proof; but orders were inconsistent | Court may demand jurisdictional proof when doubts exist | Court may require proof, but here orders were inconsistent; remand warranted |
Key Cases Cited
- Hertz Corp. v. Friend, 130 S. Ct. 1181 (U.S. 2010) (nerve center test for principal place of business; not heightened pleading standard)
- Twombly, 550 U.S. 544 (U.S. 2007) (pleading must include factual allegations—no mere conclusions)
- Iqbal, 556 U.S. 662 (U.S. 2009) (rules requiring plausible, fact-based pleading)
- McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178 (U.S. 1936) (preponderance of evidence standard for jurisdictional facts)
- Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (jurisdictional facts may be established by preponderance of evidence)
- Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 1187 (9th Cir. 1970) (requirement to allege state of incorporation and principal place of business)
- American Motorists Ins. Co. v. American Employers Ins. Co., 600 F.2d 15 (5th Cir. 1979) (pleading state of incorporation and principal place of business)