Kenneth D Malamed v. First Western Capital Management Company, 2:16-cv-07735

Plaintiff Kenneth D. Malamed, a California citizen and former principal owner of Financial Management Advisors (FMA), sued First Western Capital Management Company (FWCM) in Los Angeles Superior Court after his termination and related conduct.
FWCM removed the action to federal court asserting diversity jurisdiction, asserting its principal place of business (nerve center) was Colorado.
Plaintiff amended his complaint adding employment-related claims; he moved to remand, arguing FWCM’s nerve center was in California.
Relevant facts: FWCM succeeded California-based FMA; many key management and the President/CIO operated from FWCM’s Los Angeles office; FWCM’s Form ADV (signed under penalty of perjury shortly before removal) listed FWCM’s principal office in Los Angeles.
FWCM countered that most officers (CEO, CFO, Secretary) and certain administrative functions were located in Denver, pointed to corporate bylaws and a Colorado principal-office listing in some filings, and characterized the Form ADV Los Angeles listing as erroneous.
The Court held the remand motion granted because FWCM failed to carry its burden to show the nerve center was in Colorado, leaving doubt as to diversity jurisdiction.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal diversity jurisdiction exists based on FWCM’s principal place of business (nerve center)	FWCM’s nerve center is in California: many senior managers and key decisionmakers worked in Los Angeles; FWCM’s Form ADV listed Los Angeles as principal office	FWCM’s nerve center is Colorado: CEO/CFO/majority of directors resided in Colorado; bylaws and some filings list Denver; key administrative functions performed in Colorado	Court held FWCM did not meet its burden to show nerve center was in Colorado; remand granted
Whether the timing and nature of public filings (Form ADV) can be credited in determining nerve center	Form ADV, signed under penalty of perjury shortly before removal, truthfully identified Los Angeles as the principal office and reflects where officers direct and control activities	Form ADV entry was an error and should be given little weight; Hertz warns against relying heavily on public filings	Court gave significant weight to the Form ADV and its proximity to removal; absence of evidence disproving it undermined FWCM’s claim of Colorado nerve center
Burden of proof on removal and effect of doubt about citizenship at filing	Remand where doubt exists; plaintiff emphasized the strict construction of removal statute	FWCM bears burden to prove diversity and nerve center location	Court reiterated removing party’s burden; resolved doubts in favor of remand

Moore-Thomas v. Alaska Airlines, Inc., 553 F.3d 1241 (9th Cir. 2009) (procedural standard for remand challenges)
ARCO Envtl. Remediation, LLC v. Dep’t of Health & Envtl. Quality of Mont., 213 F.3d 1108 (9th Cir. 2000) (improperly removed cases must be remanded)
Gaus v. Miles, Inc., 980 F.2d 564 (9th Cir. 1992) (removal statute strictly construed; doubt resolved in favor of remand)
Hertz Corp. v. Friend, 559 U.S. 77 (2010) (nerve center test for corporation's principal place of business)
Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376 (9th Cir. 1988) (subject-matter jurisdiction determined as of filing)
Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129 (9th Cir. 2002) (once jurisdiction attaches, later change of citizenship cannot destroy diversity)
Wis. Dep’t of Corrections v. Schacht, 524 U.S. 381 (1998) (party cannot defeat jurisdiction by subsequent change of citizenship)