On July 19, 2011, Plaintiff L’Garde Inc.’s Motion to Remand [10] and Defendant Raytheon Space and Airborne Systems, a business of Raytheon Company’s, Motion to Dismiss [7] came on for regular calendar before this Court. The Court having reviewed all papers submitted pertaining to these Motions and having considered all arguments presented to the Court, NOW FINDS AND RULES AS FOLLOWS:
The Court hereby DENIES -both Plaintiff L’Garde, Inc.’s Motion to Remand and Defendant Raytheon Space and Airborne Systems’ Motion to Dismiss.
I. Background
Plaintiff L’Garde, Inc. (hereinafter, “Plaintiff’) filed a Complaint on April 19, 2011 in Los Angeles Superior Court against Defendant Raytheon Space and Airborne Systems, a business of Raytheon Company (hereinafter, “Defendant”). Plaintiff alleged in its Complaint claims against Defendant for breach of contract and fraud.
Defendant states that it was served with the Summons and Complaint on April 29, 2011. (Def.’s Notice of Removal, ¶ 3.) On May 27, 2011, Defendant filed a Notice of Removal of this Civil Action on the basis of diversity and federal question jurisdiction [1].
II. Legal Standards
1. Judicial Notice
Pursuant to Federal Rule of Evidence 201, the Court may take judicial notice of adjudicative facts only. “A judicially noticed fact must be one not subject to reasonable dispute in that it is either (1) generally known within the territorial jurisdiction of the trial court or (2) capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). A court must take judicial notice if a party requests it and supplies the court with the requisite information. Fed. R.Evid. 201(d).
2. Remand
In deciding whether to remand a case, this Court must determine whether the case was properly removed to this Court. The right to remove a case to federal court is governed by 28 U.S.C. § 1441, which in relevant part states that “any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant....” 28 U.S.C. § 1441(a). District courts have diversity jurisdiction over all civil actions between citizens of different states where the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332.
The Court may remand a case to state court for lack of subject matter jurisdiction or defects in removal procedure. 28 U.S.C. § 1447(c). The defendant has the burden of proving that removal is proper and that all of the prerequisites are satisfied. If at any time before final judgment it appears that the district court lacks subject matter jurisdiction over a case that has been removed to federal court, the case must be remanded. 28 U.S.C. § 1447(c).
The Ninth Circuit strictly construes the removal statute against removal jurisdiction and federal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.
Gaus v. Miles, Inc.,
In a Rule 12(b)(6) motion to dismiss, the Court must presume all factual allegations of the complaint to be true and draw all reasonable inferences in favor of the non-moving party.
Klarfeld v. United States,
A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim that would entitle him to relief.
Conley v. Gibson,
Additionally, claims of fraud must satisfy not only Rule 12(b)(6), but also the heightened pleading standard of Rule 9(b). In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Fed. R.Civ.P. 9(b).
The heightened pleading standard of Rule 9(b) is designed “to give defendants notice of the particular misconduct which is alleged to constitute the fraud charged so that they can defend against the charge and not just deny that they have done anything wrong.”
Neubronner v. Milken,
However, “[mjalice, intent, knowledge and other conditions of a person’s mind may be alleged generally.” Fed.R.Civ.P. 9(b);
Walling v. Beverly Enters.,
III. Analysis
1. Judicial Notice
Defendant requests the Court take judicial notice of results of records searches from the California Secretary of State website including: (A) the search results for California corporations with “Raytheon” in their name, (B) the “Business Entity Detail” of Raytheon Company, and (C) the search results for California corporations with “Space and Airborne” in their name. As a preliminary matter, the Court GRANTS Defendant’s Request for Judicial Notice.
In
Hansen Beverage Co. v. Innovation Ventures, LLC,
the District Court for the Southern District of California noted that just as public records and govern
Here, similar to
Hansen Beverage,
Defendant seeks judicial notice of the results of a records search from a government website, one recognized by courts as a source of reliable documentation.
Id.
(citing
Paralyzed Veterans of Am. v. McPherson,
No. C 06-4670,
The Court finds that the accuracy of the results of records searches from the Secretary of State for the State of California corporate search website can be determined by readily accessible resources whose accuracy cannot reasonably be questioned. Therefore, the Court hereby GRANTS the Defendant’s request and takes judicial notice of the content referenced in Exhibits A-C attached to Defendant’s Request for Judicial Notice [16]. Specifically, the Court takes judicial notice of Exhibit A: the results of a records search from the Secretary of State for the State of California corporate search website, located at http://kepler.sos.ca.gov, conducted on June 28, 2011, for information on record with the California Secretary of State for corporations containing “Raytheon” in their name; Exhibit B: the “Business Entity Detail” for Raytheon Company, dated June 28, 2011, printed from the Secretary of State for the State of California corporate search website; and Exhibit C: the results of a records search from the Secretary of State for the State of California corporate search website, located at http://kepler.sos.ca.gov, conducted on June 28, 2011, for information on record with the California Secretary of State for corporations containing “Space and Airborne” in their name.
2. Motion To Remand
Plaintiff argues this Case should be remanded to state court because there is (1) a forum selection clause requiring Plaintiffs choice of venue, (2) Defendant has failed to prove diversity jurisdiction, and (3) Defendant has failed to prove there is federal question jurisdiction.
First, Plaintiff argues there is a mandatory forum selection clause in the Letter Subcontract requiring Plaintiffs choice of forum.
“Federal law governs the enforceability of forum selection clauses in cases removed on the basis of diversity jurisdiction.”
See Manetti-Farrow, Inc. v. Gucci Am., Inc.,
The Court finds that the forum selection clause in this Case contains no limiting or exclusivity language; it does
Accordingly, because the Court finds the Letter Subcontract contains a permissive forum selection clause and that Defendant has therefore not expressly waived it’s right to removal, the Court further finds that it may hear this Case so long as it has proper subject matter jurisdiction. As such, the Court DENIES Plaintiffs Motion to Remand based on the forum selection clause.
Second, Plaintiff argues that this Court lacks diversity jurisdiction because there is no complete diversity of citizenship between the Parties.
To determine diversity of citizenship in the context of diversity jurisdiction, a corporation is a citizen of (1) the state under whose laws it is organized or incorporated; and (2) the state of its “principal place of business.” 28 U.S.C. § 1332(c)(1). Recently, in
Hertz Corp. v. Friend,
the Supreme Court held that a corporation’s principal place of business is solely determined by the state of its “nerve center.” _ U.S. _,
Plaintiff L’Garde, Inc. is incorporated in California, and has its headquarters in Tustin, California. Defendant Raytheon Space and Airborne Systems is an unincorporated business division of Raytheon Company. Raytheon Company is incorporated in Delaware. Ninth Circuit precedent holds that, unlike a legally incorporated subsidiary, an unincorporated division of a corporation does not possess the formal separateness required and is therefore not an independent entity for jurisdictional purposes.
See Breitman v. May Co. Calif.,
However, to fully resolve the jurisdictional issue, the Court must also determine in which state Defendant has its principal place of business. As such, the Court next determines, based on the Supreme Court’s guidance as to the nerve center test, whether Defendant has adequately pled the location of its headquarters or its “actual center of direction, control, and coordination.”
Hertz,
California district courts have found that reliance on a single piece of evidence, such as a Secretary of State printout, is insufficient for a party to prove the location of its headquarters under the nerve center test.
See N. Cal. Power Agency v. AltaRock Energy, Inc.,
No. 11-1749,
Specifically, Defendant identifies 870 Winter Street, Waltham, Massachusetts 02451 as the location of its headquarters and pleads that: five of its twelve executive officers, including its CEO, work out of the Waltham office; nationwide operations and control as to its Human Resources, Information Technology, and Finance Departments originate from there; its Board of Directors meet there; and the California Secretary of State and Defendant’s Form 10-K recognize Raytheon Company’s headquarters as Waltham, Massachusetts. (Opp’n to Pl.[’s] Mot. to Remand, Declaration of Woods Abbot, ¶¶ 5-8.) (Req. for Jud. Notice, Ex. B.) (Opp’n to Pl.[’s] Mot. to Remand, Declaration of Aaron Belzer, Ex. A).
Accordingly, based on the totality of the above referenced facts, the Court finds that Raytheon Company’s principal place of business is in Waltham, Massachusetts. As Defendant Raytheon SAS is an unincorporated division of Raytheon Company, it does not possess citizenship independent of its parent corporation, Raytheon Company.
See Breitman,
The Court also notes that this Action is analogous to the Southern District Court of California’s recent decision,
In re Hydroxycut Marketing and Sales Practices Litigation,
No. 09MD2087,
Therefore, the Court finds that because there is complete diversity of citizenship between the Parties, and the amount in controversy requirement is not disputed, the Court has proper subject matter jurisdiction to hear this Case. As such, the Court DENIES Plaintiffs Motion to Remand on the basis of diversity jurisdiction.
Third, Plaintiff argues this Court lacks federal question jurisdiction and should apply California common law to resolve the Case at bar. Defendant argues, in Opposition, that this Case implicates unique federal interests and requires the application of uniform federal common law thereby giving this Court federal question jurisdiction.
28 U.S.C. § 1331 provides that “[t]he district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. The burden of establishing federal question jurisdiction falls on the party invoking the removal statute.
Williams v. Caterpillar Tractor Co.,
Thus, federal common law jurisdiction replaces existing state law in this Case “only if (1) the dispute implicates a uniquely federal interest and (2) a significant conflict exists between an identifiable federal policy or interest and the application of state law to the dispute or the application of state law would frustrate specific objectives of federal legislation.”
Texas Indus., Inc. v. Radcliff Materials, Inc.,
Under
Erie Railroad v. Tompkins,
having found diversity jurisdiction proper, this Court would ordinarily apply California state law to resolve the claims at issue in this Action.
Defendant asserts this Case involves a uniquely federal interest because the dispute involves performance of a subcontract under a government defense procurement contract, containing standard federal con
Defendant relies principally on the Ninth Circuit case of
New SD, Inc. v. Rockwell Int’l Corp.,
Furthermore, Defendant argues that this Case requires the imposition of federal common law because “significant federal interests” may be affected and it’s defense will rely on Federal Acquisition Regulation (hereinafter, “FAR”) clauses incorporated into the Letter Subcontract. Additionally, Defendant avers that if found liable for breach of contract to Plaintiff, it may be able to pass on its damages to the United States Government through the prime contractor on the “ISIS” project. 2
The Court finds Defendant’s arguments unpersuasive. The underlying issue in this Case is whether Defendant promised to enter into a definitive subcontract with Plaintiff. Plaintiff alleges Defendant took advantage of its “small business” status in order to win the bid from Lockheed Martin, the prime contractor for the ISIS project. Plaintiff argues Defendant breached a contract to negotiate a future definitive subcontract in good faith, and that Defendant committed fraud because it never intended to honor the agreement between the Parties.
The fact that Defendant may rely on FAR clauses in its defense, and may try to pass off damages it incurs to the United States Government does not satisfy either of the requirements set forth in
Boyle
that a removing party must show (1) the dispute implicates a uniquely federal interest and (2) there is a significant conflict between an identifiable federal policy or interest and the application of state law to the dispute, or that the application of state law would frustrate specific objectives of federal legislation.
This Case is factually analogous to
Northrop Corp. v. AIL Systems, Inc.,
Thereafter, the Ninth Circuit held the
New SD
and
Northrop
decisions to be in harmony because the source of the
Northrop
dispute arose from the “teaming agreement,” not the actual “subcontracts which govern actual work being performed on federal projects that implicate federal interests much more directly.”
New SD,
Here, the Plaintiffs Complaint is devoid of any question of unique federal interest and simply alleges a dispute over the meaning of the Letter Subcontract’s provision requiring the Parties to negotiate in good faith a subsequent definitive subcontract. Thus, Plaintiffs claims are based on its right to be a potential subcontractor of later phases of the ISIS subcontract.
On balance, this is not a case, like
New SD
or
American Pipe
“[w]here the federal interest requires that ‘the rule must be uniform throughout the country,’ [and determining that the] ‘entire body of state law applicable to the area conflicts and is replaced by federal rules.’ ”
New SD,
While Defendant has cited several FAR clauses present in the Letter Subcontract, Defendant has not shown that an understanding and interpretation of such clauses requires application of federal common law. Nor has Defendant alleged in what way the application of California state law offends the proper resolution of this matter. Defendant’s bald assertion that it “may be able to pass on to the Government” its potential damages owed to Plaintiff, also falls short of satisfying the
Boyle
standard in which the Supreme Court contrasted cases where Government liability was merely speculative versus actual and imminent, thereby requiring the application of federal common law.
See Boyle,
Here, unlike in
New SD,
but consistent with
Northrop,
Defendant has not pled any facts indicating that the cost of National Security stands to be increased should it be held liable under Plaintiffs breach of contract and fraud claims. Moreover, Defendant has failed to persuade the Court that applying California law to resolve the current matter will conflict with a significant federal policy or interest. Defendant claims that several FAR clauses are implicated and will form the basis of “one of its major defenses” (Opp’n to Pl.[’s] Mot. to
However, the Court still finds it has subject matter jurisdiction on the basis of diversity to hear the present matter. Accordingly, the Court DENIES Plaintiffs Motion to Remand.
3. Motion To Dismiss
Defendant argues that Plaintiff has failed to satisfy the heightened pleading requirements of Rule 9(b) as to its second cause of action for fraud.
Under California law “[t]he elements of fraud, which give rise to the tort action for deceit, are (a) misrepresentation (false representation, concealment, or nondisclosure); (b) knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance; (d) justifiable reliance; and (e) resulting damage.”
Lazar v. Super. Ct.,
While the substantive elements of a fraud claim are determined by state law, the procedural requirements are governed by Rule 9(b)’s heightened pleading standard.
Vess,
The Court finds that Plaintiff has pled with particularity the elements of fraud under California law. Plaintiffs Complaint pleads with particularity facts
indicating Defendant made material misrepresentations as to its intent to contract with Plaintiff a long term definitive subcontract, and that Plaintiff reasonably relied on these misrepresentations to its detriment. Contrary to Defendant’s argument, the Court finds Plaintiff need not plead an exact amount of damages in its Complaint.
See Toscano v. Ameriquest Mortg. Co.,
No. CIV-F-07-0957,
The Court finds that Plaintiff has also sufficiently pled the scienter requirement of fraud by averring generally facts which indicate Defendant knew its misrepresentations were false at the time of contracting.
See Locke v. Warner Bros., Inc.,
Therefore, the Court finds Plaintiff has pled with particularity the elements of a fraud claim under Rule 9(b), and Defendant’s Motion to Dismiss for failure to state a claim for fraud is hereby DENIED.
IV. Conclusion
For the reasons heretofore stated, the Court DENIES both Plaintiffs Motion to Remand, and Defendant’s Motion to Dismiss Plaintiffs second cause of action for fraud pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b).
IT IS SO ORDERED.
Notes
. The clause states, "Any controversy or claim ... aris[ing] out of or in connection with this Purchase Order ... may be resolved by submitting the claim to a court of competent jurisdiction.” (Pl.['s] Mot. to Remand, Declaration of Brian Donovan, II2, Ex. 1, at 2.)
. The goal of the ISIS project is to develop an airship capable of operating for long periods of time at "stratospheric altitudes” with fixed radars "capable of tracking small missiles, vehicles and persons in a manner” beyond the Government's current capabilities. (Compl. ¶ 5).