ORDER GRANTING PLAINTIFF'S MOTION TO REMAND
EDWARD M. CHEN, United States District Judge
(1) F. Hoffman-La Roche Ltd. ("FHLR").
(2) Hoffman-La Roche, Inc. ("HLR").
(3) Roche Laboratories, Inc. ("Roche Labs").
(4) Genentech, Inc.
(5) Genentech USA, Inc. ("Genentech USA").
The first three defendants above shall hereinafter be referred to collectively as the "Roche Defendants." The last two defendants shall hereinafter be referred to collectively as the "Genentech Defendants." According to Mr. Pool, the Roche Defendants were responsible for manufacturing, marketing, and/or selling an antimalarial drug known as Lariam but failed to adequately warn about its toxic effects and thus are liable to him. He claims that the Genentech Defendants are also liable based on a theory of successor liability.
After Mr. Pool filed suit, four of the five defendants - i.e. , all defendants except for FHLR - removed the case to federal court. See Docket No. 1 (notice of removal). These four defendants shall hereinafter be referred to as the "Removing Defendants." According to Removing Defendants, removal was proper based on diversity jurisdiction, onсe the citizenship of the fraudulently joined defendants (i.e. , the Genentech Defendants) was ignored.
Following removal, all five defendants filed motions to quash and/or dismiss. See Docket No. 8 (FHLR's motion); Docket No. 10 (Genentech Defendants' motion); Docket No. 11 (HLR and Roche Labs' motion). Mr. Pool then filed a motion to remand, and the parties agreed that the motion to remand should be addressed before the five defendants' motions. See Docket No. 32 (stipulation and order). Currently pending before the Court is Mr. Pool's motion to remand.
Having considered the parties' briefs and accompanying submissions, as well as all other evidence of record, the Court hereby GRANTS the motion to remand.
I. FACTUAL & PROCEDURAL BACKGROUND
A. General Allegations in Complaint
In his complaint, Mr. Pool alleges as follows.
Mr. Pool was previously part of the U.S. military. See Compl. ¶¶ 2, 14. The Roche Defendants "marketed and sold Lariam to the U.S. military for service members deployed to Somalia [in the 1990s] for the prevention of malaria." Compl. ¶ 2. Mr. Pool was deployed to Somalia during this time and took Lariam while there. See Compl. ¶ 3; see also Compl. ¶ 14.
Lariam is extremely toxic. See Compl. ¶ 1; see also Compl. ¶ 5 (alleging that, "after taking the drug, a sizeable group of soldier have severe and irreversible symptoms that mimic the symptoms of post-traumatic
In 2013, the FDA "slapped a 'blackbox' warning on the drug." FAC ¶ 11. "After the FDA warning, the U.S. military immediately changed its Lariam prescribing policies," "re-designating Lariam as a drug of last resort after other malaria prevention drugs were found to be ineffective." Compl. ¶ 12.
Mr. Pool seeks to hold the Roche Defendants liable because they were responsible for manufacturing, marketing, and/or selling Lariam. According to Mr. Pool:
• FHLR (a Swiss corporation) was the manufacturer of Lariam. See Compl. ¶ 47.
• HLR (a New Jersey corporation) was the new drug application holder for Lariam, which made it "responsible for the labeling and packaging of Lariam in the United States." Compl. ¶ 47.
• Roche Labs (a Delaware corporation) marketed and sold Lariam to the Department of Defense under a Distribution and Pricing Agreement (also known as a "DAPA"). See Compl. ¶ 48.
Mr. Pool seeks to hold the Genentech Defendants (both Delaware corporations) liable on a successor liability theory. In 2009, Genentech was acquired by a Roche entity. According to Mr. Pool, after the acquisition of Genentech in 2009, Roche Labs essentially transferred its "military-Lariam business" to the Genentech Defendants - i.e. , the Genentech Defendants "became the mere continuation of Roche Lab[s] with respect to the military-Lariam line of business." Compl. ¶ 50.
Based on, inter alia , the above allegations, Mr. Pool has asserted the following causes of action:
(1) Strict products liability - failure to warn.
(2) Negligence.
(3) Deceit by concealment in violation of California Civil Code §§ 1709 - 10.
(4) Fraud.
(5) Negligent misrepresentation and concealment.
B. Allegations in Complaint Related to Citizenship
As noted above, the Removing Defendants removed this case to federal court on the basis of diversity jurisdiction. Thus, citizenship of the рarties is a critical issue.
Mr. Pool is a citizen of California. He alleges that most of the other defendants are also citizens of California (and thus there is not complete diversity), not because of their state of incorporation but rather because of their principal places of business.
For example, Mr. Pool alleges that HLR and Roche Labs both have their principal places of business in South San Francisco, California, and not Little Falls, New Jersey (as the Removing Defendants claim).
Mr. Pool also alleges that the Genentech Defendants have their principal places of business in South San Francisco - a fact that the Removing Defendants do not dispute. However, the Removing Defendants claim that the Genentech Defendants have been fraudulently joined to this case and thus their California citizenship should be disregarded.
A. Legal Standard
Title
In light of the above, the Removing Defendants bear the burden of proving the diversity of citizenship between HLR/Roche Labs and Mr. Pool in the instаnt case. See Sheets ,
As for fraudulent joinder (as noted above, here, the Removing Defendants argue that the California citizenship of the Genentech Defendants may be disregarded because they were fraudulently joined to the lawsuit), the Ninth Circuit has noted that
[t]here are two ways to establish fraudulent joinder: "(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court." Hunter v. Philip Morris USA ,, 1044 (9th Cir. 2009) .... Fraudulent joinder is established the second way if a defendant shows that an "individual[ ] joined in the action cannot be liаble on any theory." Ritchey v. Upjohn Drug Co. , 582 F.3d 1039 , 1318 (9th Cir. 1998). But "if there is a possibility that a state court would find that the complaint states a cause of action against any of the resident defendants, the federal court must find that the joinder was proper and remand the case to the state court." Hunter , 139 F.3d 1313 582 F.3d at 1046 .... A defendant invoking federal court diversity jurisdiction on the basis of fraudulent joinder bears a "heavy burden" since there is a "general presumption against [finding] fraudulent joinder."Id. (citations omitted).
We have upheld rulings of fraudulent joinder where a defendant demonstrates that a plaintiff is barred by the statute of limitations from bringing claimsagainst that defendant. See Ritchey , 139 F.3d at 1320 ; Hamilton Materials, Inc. v. Dow Chem. Corp. ,, 1206 (9th Cir. 2007). We have also upheld such rulings where a defendant presents extraordinarily strong evidence or arguments that a plaintiff could not possibly prevail on her claims against the allegedly fraudulently joined defendant. See McCabe v. Gen. Foods Corp. , 494 F.3d 1203 , 1339 (9th Cir. 1987) (defendant's conduct was privileged under state law); United Comput. Sys. Inc. v. AT & T Corp. , 811 F.2d 1336 , 761 (9th Cir. 2002) (plaintiff's claims against alleged sham defendant were all predicated on a contract to which the defendant was not a party); Kruso v. Int'l Tel. & Tel. Corp. , 298 F.3d 756 , 1426-27 (9th Cir. 1989) (same). We have declined to uphold fraudulent joinder rulings where a defendant raises a defense that requires a searching inquiry into the merits of the plaintiff's case, even if that defense, if successful, would prove fatal. See Hunter , 872 F.2d 1416 (holding that an implied preemption affirmative defense was not a permissible ground for finding fraudulent joinder). 582 F.3d at 1046
GranCare, LLC v. Thrower ,
Notably, in GranCare , the Ninth Circuit underscored that a fraudulent joinder analysis is not the same as a 12(b)(6) analysis, although there are "some similarities."
A claim against a defendant may fail under Rule 12(b)(6), but that defendant has not necessarily been fraudulently joined. We emphasized in Hunter that a federal court must find that a defendant was properly joined and remand the case to state court if there is a "possibility that a state court would find that the complaint states a cause of action against any of the [non-diverse] defendants." Hunter ,(emphasis added) (internal quotations and citation omitted) .... This standard accords with that adоpted by a majority of our sister circuits.... 582 F.3d at 1046
A standard that equates fraudulent joinder with Rule 12(b)(6) conflates a jurisdictional inquiry with an adjudication on the merits. Because the purpose of the fraudulent joinder doctrine is to allow a determination whether the district court has subject matter jurisdiction, the standard is similar to the "wholly insubstantial and frivolous" standard for dismissing claims under Rule 12(b)(1) for lack of federal question jurisdiction. Bell v. Hood ,, 682-83, 327 U.S. 678 , 66 S. Ct. 773 (1946) ; Franklin v. Murphy , 90 L.Ed. 939 , 1227 n.6 (9th Cir. 1984) ("A paid complaint that is 'obviously frivolous' does not confer federal subject matter jurisdiction."). The relative stringency of the standard accords with the presumption against removal jurisdiction, under which we "strictly construe the removal statute," and reject federal jurisdiction "if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc. , 745 F.2d 1221 , 566 (9th Cir. 1992) (per curiam). 980 F.2d 564
Id. at 549-50. In other cases, the Ninth Circuit has also held that "[f]raudulent joinder must be proven by clear and convincing evidence. " Hamilton Materials Inc. v. Dow Chem. Corp. ,
B. Defect in Notice of Removal
As an initial matter, the Court addresses Mr. Pool's argument that the motion to remand can be easily granted because the Removing Defendants' notice of removal was defective. More specifically, Mr. Pool asserts that the notice failed to allege what the citizenship of Roche Labs
Mr. Pool is correct that the original notice of removal failed to address the citizenship of Roche Labs. But he is incorrect that a defective allеgation of jurisdiction cannot be cured. Title
To the extent Mr. Pool suggests that a defect may be cured only within the thirty-day period for removing a case to federal court, he is also incorrect. He does have a district court case to support his position (although, as noted above, that case failed to discuss § 1653 ). See Contreras v. BMS of N. Am., LLC , No. CV 18-8014 PA (MAAx),
A defendant seeking to remove a case to federal court must do so within thirty days of being served with the complaint. See28 U.S.C. § 1446 (b). The Notice of Removal "cannot be amended to add a separate basis for removal jurisdiction after the thirty day period." O'Halloran v. University of Washington ,, 1381 (9th Cir. 1988). However, a defendant may amend the Notice of Removal after the thirty day window has closed to correct a "defective allegation of jurisdiction." See 856 F.2d 1375 28 U.S.C. § 1653 ; see also 16 Moore's Federal Practice§ 107.30[2][a][iv] ("Amendment may be permitted after the 30-day period if the amendment corrects defective allegations of jurisdiction, but not to add a new basis for removal jurisdiction.").
ARCO Envtl. Remed., L.L.C. v. Dep't of Health & Envtl. Quality ,
Accordingly, the notice of removal was not procedurally defective.
C. Genentech Defendants and Successor Liability
Although the defect in the removal notice is curable, Mr. Pool ultimately prevails on the merits on his motion to remand. The Court addresses first the issue of whether the Genentech Defendants - who are undisputedly California citizens - were fraudulently joined to this lawsuit.
As noted above, Mr. Pool maintains that the Genentech Defendants are liable based on a successor liability theory. The main case on which Mr. Pool relies with respect to successor liability is Cleveland v. Johnson ,
Several years after entering into the agreement, the plaintiffs were told that the Internet project failed. See id. at 1321,
On appeal, the defendants contested the successor liability theory. The court rejected the defendants' argument:
Defendants can prevail in this case only if, as a matter of law, there can never be successor liability when a corporation takes over a specific line of business that was operated separately by another corporation - that is where, as here, the assets of a separately maintained business or division (The Central Connection) of a company (ISI) are transferred to a new company (IS West). Where there may be circumstances under which successor liability in that situation would be in appropriate, that conclusion does not follow as a matter of law. Here, the facts were sufficient to support successor liability.
Id. at 1326,
The court explained that, for purposes of successor liability,
"the purchaser does not assume the seller's liabilities unless (1) there is an express or implied agreement of assumption, (2), the transaction amounts to a consolidation or merger of the two corporations, (3) the purchasing corporation is a mere continuation of the seller, or (4) the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller's debts."
Id. at 1327,
For the third successor liability theory above - i.e. , the mere continuation theory, "it has long been held that 'corporations cannot escape liability by a mere change of name or a shift of assets when and where it is shown that the new corporation is, in reality, but a continuation of the old.' "
Further, Ray v. Alad [, 19 Cal. 3d 22 , 136 Cal.Rptr. 574 (1977) ] tells us, "... California decisions holding that a corporation acquiring the assets of another corporation is the latter's mere continuation and therefore liable for its debts have imposed such liability only upon a showing of one or both of the following factual elements: (1) no adequate consideration was given for the predecessor corporation's assets and made available for meeting the claims of its unsecured creditors; (2) one or more persons were officers, directors, or stockholders of both corporations." 560 P.2d 3
The court went on to note that the jury was instructed on the mere continuation theory and the question before it was essentially "one of law: may the doctrine of successor liability be applied to a corporatiоn that succeeds to the assets of an unincorporated, but clearly separate, line of business of another corporation?" Id. at 1328,
These cases establish that the principles underlying the "mere continuation" theory of successor liability are not confined to corporations. A corporation may be a "mere continuation" of a partnership .... The very similar principles of alter ego liability will be applied where "the recognition of the fiction of separate corporate existence would foster an injustice or further a fraud ...."
Id. at 1329,
The court also rejected the defendants' argument that successor liability should not apply because "doing business under a fictitious business name [i.e. , The Central Connection] does not create a separate legal entity" from ISI. Id. at 1330,
[s]uccessor liability issues are equitable issues to be examined "on their own unique facts," and defendants offer no authority for the proposition that it "is simply a legal impossibility" for IS West to be the successor of ISI doing business as The Central Connection. In short, thecontrolling point is that successor liability, like alter ego and similar principles, is an equitable doctrine. As with other equitable doctrines, "it is appropriate to examine successor liability issues on their own unique facts" and "[c]onsiderations of fairness and equity apply." On the facts established in this casе, we see no basis to conclude that, as a matter of law, a corporation (IS West) may not be found to be a "mere continuation" of a separately operated line of business (ISI doing business as The Central Connection).
Defendants refer us to several cases they say support the proposition that a corporation like IS West "cannot be subjected to 'successor' liability where the seller [ (ISI) ] retained its separate corporate identity and continued to operate after the asset transfer." But this claim, too, presupposes the point we have just rejected: the assertion that there can never be successor liability as between a separately operated division of a company and a new corporation. The equitable principles we have described compel rejection of that assertion under the circumstances of this сase.
Id. at 1330-31,
In his complaint, Mr. Pool makes allegations that map the legal landscape on the successor liability/mere continuation theory laid out in Cleveland. To wit:
47. At all relevant times, [FHLR] was the manufacturer of Lariam. At all relevant times, [HLR] was the new drug application holder, rendering it responsible for the labeling and packaging of Lariam in the United States.
48. Before the acquisition of Genentech by the Roche Group, Roche Lab[s] [a subsidiary of HLR] marketed and sold Lariam to the Department of Defense under a Distribution and Pricing Agreement ("DAPA"). A DAPA obligated Roche Lab[s] to offer Lariam for sale to the Defense Logistics Agency ("DLA") at the prices set forth in the DAPA. Roche did in fact sell Lariаm to the military under these agreements up until the Genentech acquisition in or around 2009....
....
50. After the Genentech acquisition, Roche Lab[s] transferred the military-Lariam business to Genentech USA and Genentech USA became the mere continuation of Roche Lab[s] with respect to the military-Lariam line of business. At that time, Roche Lab[s] had terminated or withdrawn from its DAPA agreement to offer Lariam for sale to the U.S. military. Concurrently therewith, Genentech USA succeeded to the DAPA agreement and became the official DAPA holder of Lariam for the Roche Group , meaning Genentech USA was the only entity in the Roche Group capable of offering Lariam for sale to the U.S. military.
51. Genentech USA paid Roche Lab[s] nothing for the military-Lariam line of business. It gave Roche Lab[s] no consideration for this line of business. Moreover, Genentech USA had a common stock holder with Roche Lab[s].... [Both] entities were owned by Roche Holdings, Inс. [And] Genentech USA had common officers and directors withRoche Lab[s] ... at all relevant times. In sum, Genentech USA was a mere continuation and thus successor of Roche Lab[s] with respect to the military-Lariam line of business, and the military was the single largest customer of Lariam for the Roche Group.
Compl. ¶¶ 47-51 (emphasis added).
Given these allegations in the complaint, it is possible that a state court would find in Mr. Pool's favor on the successor liability/mere continuation theory, and therefore remand is appropriate. See GranCare ,
The Removing Defendants' arguments to the contrary are not persuasive. For example, the Removing Defendants assert that there can be no successor liability where the predecessor company (here, HLR and/or Roche Labs) still exists. But Cleveland indicates otherwise - i.e. , there, only a line of business was transferred from ISI to IS West, but the court still considered the possibility of successor liability.
The Removing Defendants also make much of the fact that the Genentech Defendants never sold Lariam. See, e.g. , Docket No. 1-4 (Gray Decl. ¶¶ 2-3) (testifying that "[t]he last lots of Lariam for U.S. distribution were manufactured in December of 2005" and that the last lots "expired in December 2008," i.e. , before Genentech was acquired in 2009); Docket No. 1-3 (letter, dated February 2019, from Defense Logistics Agency, in response to a FOIA request, stating that "the product [Lariam ] was no longer purchased after September 2008," i.e. , before Genentech was acquired in 2009)
Finally, the Removing Defendants maintain that "the facts of the instant case are so far removed from those present in Cleveland that successor liability cannot, as a matter of fact and law, be applied." Opp'n at 17. But Cleveland explains that successor liability is ultimately about equity. Here, it is possible that a state court could find, as an equitable matter, that the Genentech Defendants should have successor liability because the relevant Roche parent made a decision to spin off HLR or Roche Labs' commercial operations - or at least the military line of business - into the Genentech Defendants without adequate consideration being given to HLR or Roche Labs. The Removing Defendants argue that successor liability makes no sense here because Mr. Pool is "attempt[ing] to аpply the reverse of successor liability (i.e., he attempts to impute liability to the purchased corporation [Genentech] ), whereas successor liability imputes the liability of the purchased corporation to the purchasing corporation [a Roche entity]." Opp'n at 17 (emphasis added). Although, as a formal matter, a Roche
That a Genentech Defendant could be a mere continuation is suggested by not only the allegations in the complaint but also by evidence submitted by Mr. Pool. More specifically, Mr. Pool has offered evidence indicating that a Roche parent made a purposeful decision to spin off HLR/Roche Labs' commercial operations to a Genentech entity in South San Francisco. For example:
• A document found on the www.roche.com website, dated February 9, 2009, and titled "Bringing a successful partnership to the next level." The document addresses the acquisition of Genentech by a Roche entity. See Creed Decl., Ex. 1 (Document at 3) ("Roche makes a tender offer to acquire all publicly held shares in Genentech."). The document states that there will be "[r]eloc[ation] [of] commercial headquarters to South San Francisco by combining marketing and support services." Creed Decl., Ex. 1 (Document at 18). The document also stаtes that there will be "[c]onsolidat[ion] [of] HQ functions in South San Francisco." Creed Decl., Ex. 1 (Document at 18).
• A message dated August 23, 2018, to Genentech employees from Roche Chairman Franz Humer and Roche CEO Severin Schwan. The message states: "We remain committed to maintaining the Genentech brand name in the U.S. and locating the combined company's U.S. headquarters at Genentech's current facility in South San Francisco." Creed Decl., Ex. 3 (Message at 1).
• A webpage available on the www.roche.com website, titled "tale of two sites." The webpage discusses employees working in Basel, Switzerland, and San Francisco. It states: "Basel is home to the Roche company headquarters; South San Francisco to Genentech, the US headquarters." Creed Decl., Ex. 7 (Webpage at 2). The webpage also states: "The Genentech site in California, Roche's North America hub, ... also serves as the headquarters of Roche Commercial Operations for North America." Creed Decl., Ex. 7 (Webpage at 2).
• A document found on the www.roche.com website, dated April 14, 2009, and titled "Investor Update." The update states: "Pascal Soriot will be appointed as CEO Genentech. In his new role he will lead all Pharma activities in the US and report directly to Group CEO Severin Schwan.... [¶] [T]he combined commercial operations of Roche Pharma North America and Genentech will be headquartered in South San Francisco. Pascal Soriot will directly lead this function." Creed Decl., Ex. 21 (Update at 1-2). The update continues: "George Abercrombie, CEO and President of [HLR], has agreed to support the integration through the end of 2009. In this role he will assist Pascal Soriot with the transition of the US Commercial Headquartersfrom Nutley [New Jersey] to South San Francisco." Creed Decl., Ex. 21 (Update at 2).
• A webpage found on the website www.roche-nutley.com. The webpage states: "The former [HLR] site in Nutley, NJ, was sold in 2016 and is no longer operational. THIS WEBSITE IS ONLY ABOUT THE ENVIRONMENTAL REMEDIATION OF THE FORMER ROCHE NUTLEY SITE.... [¶] For all other information, use the following contacts. ROCHE PHARMACEUTICAL INQUIRIES: Roche's North American pharmaceutical headquarters is Genentech in South San Francisco." Creed Decl., Ex. 22 (Webpage at 1).
The Removing Defendants protest that the above evidence is hearsay. Cf. M.E.S., Inc. v. Snell ,
Accordingly, the Court holds that, because the Removing Defendants have failed to carry its heavy burden of proving that the Genentech Defendants were fraudulently joined, there is no diversity of citizenship and thus removal of the instant case was not proper.
D. Citizenship of HLR and Roches Labs
There is a second, independent basis that also supports remand. More specifically, the Removing Defendants have failed to meet their burden of showing that HLR and La Roche are not citizens of California. Or, to state the matter somewhat differently, the Removing Defendants have failed to establish that the principal places of business for the two companies are in Little Falls, New Jеrsey.
1. Supreme Court's Hertz Decision
In evaluating what are the principal places of business for HLR and Roche Labs, the Court first takes into account the Supreme Court's decision Hertz Corp. v. Friend ,
we place primary weight upon the need for judicial administration of a jurisdictional statute to remain as simple as possible. And we conclude that the phrase "principal place of business" refers to the place where the corporation's high level officers direct, control, and coordinate the corporation's activities. Lower federal courts have often metaphorically called that place the corporation's "nerve center. "
should normally be the place where the corporation maintains its headquarters - рrovided that the headquarters is theactual center of direction, control, and coordination, ... and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).
Notably, the Supreme Court rejected the proposition that a corporation's principal place of business is determined by "the amount of a corporation's business activity State by State" - i.e. , "[i]f the amount of activity is significantly larger or substantially predominates in one State, then that State is the corporation's principal place of business" and, only "[i]f there is no such State, then the principal place of business is the corporation's nerve center, i.e. , the place where the majority of its executive and administrative functions are performed."
The Supreme Court acknowledged "there will be hard cases" even under the nerve center test - e.g. , "in this era of telecommuting, some corporations may divide their command and coordinating functiоns among officers who work at several different locations , perhaps communicating over the Internet"; nevertheless, the Court still found the nerve center test more appropriate than the more general business activities test:
[O]ur test ... points courts in a single direction, toward the center of overall direction, control, and coordination. Courts do not have to try to weigh corporate functions, assets, or revenues different in kind, one from the other. Our approach provides a sensible test that is relatively easier to apply, not a test that will, in all instances, automatically generate a result.
The Supreme Court also
recognize[d] that the use of a "nerve center" test may in some cases produce results that seem to cut against the basic rationale for28 U.S.C. § 1332 [i.e. , protecting out-of-state defendants from local prejudice]. For example, if the bulk of a company's business activities visible to the public take place in New Jersey, while its top officers direct those activities just across the river in New York, the "principal place of business" is [still] New York. One could argue that members of the public in New Jersey would be less likely to be prejudiced against the corporation than persons in New York - yet the corporation will still be entitled to remove a New Jersey state court to federal court. And note too that the same corporation would be unable to remove a New York state case to federal court, despite the New York public's presumed prejudice against the corporation.
2. Judge Tigar's Sheets Decision
Judge Tigar's Sheets case is instructive on the issue of principal place of business. See Sheets v. F. Hoffmann-La Roche Ltd. , No. 18-cv-04565-JST,
Judge Tigar held that the removing defendаnts (HLR and Genentech) failed to meet their burden of showing that removal was proper: "The Plaintiffs have submitted considerable evidence [such as Roche-branded press releases, internal documents, and public websites] showing that HLR's operational, administrative, and executive functions shifted from New Jersey to California once Roche Holding acquired Genentech in 2009." Id. at *2,
Judge Tigar continued: "By contrast, the evidence in support of HLR having its nerve center in New Jersey is both slight and equivocal." Id. at *3,
offer[ed] filings before the New Jersey Treasury Department and California Secretary of State, both of which name New Jersey as HLR's principal place of business[,] ... the Supreme Court has explicitly "reject[ed] suggestions ... that the mere filing of a form ... would, without more, be sufficient proof to establish a corporation's 'nerve center.' " Allowing such self-serving allegations to be determinative of jurisdiction "would readily permit jurisdictiоnal manipulation" - for instance, where "the alleged 'nerve center' is nothing more than a mail drop box, [or] a bare office with a computer."
Id. at *3,
Finally, Judge Tigar addressed the defendants' contention that
"Plaintiff's [e]vidence fails to disprove that HLR is a New Jersey [c]itizen." The argument misses the point.... [T]he burden with regard to citizenship rests with HLR, not Plaintiffs. "The strong presumption against removal jurisdiction means that the defendant always has the burden of establishing thatremoval is proper." And any ambiguity in the parties' evidence must be resolved "in favor of remand to state court." As set forth аbove, HLR has not met this burden.
Id. at *3,
The Sheets decision itself is not dispositive here. Mr. Pool does not argue that HLR and Roche Labs are subject to collateral estoppel because of Sheets. In addition, the record being presented to the Court here appears to be somewhat different from that presented to Judge Tigar in Sheets (although, admittedly, Mr. Pool presents much of the same evidence). Nevertheless, Sheets is instructive on whether the Removing Defendants satisfied their burden of proving the principal places of HLR and Roche Labs are in Little Falls, New Jersey rather than South San Francisco, California.
3. Nerve Center
As noted above, in Hertz , the Supreme Court held that "principal place of business" means the corporation's nerve center, i.e. , "the place where the corporation's high level officers direct, control, and coordinate the corporation's activities." Hertz ,
should normally be the place where the corporation mаintains its headquarters - provided that the headquarters is the actual center of direction, control, and coordination, ... and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).
In the instant case, where the center of direction, control, and coordination is complicated by the fact that the high-level officers are not all in one location. See
For HLR, the Removing Defendants have submitted a declaration from HLR's Assistant Secretary, Gerald Bohm, in which he testifies that the company's aсting officers "include" five persons, four of whom are based in Little Falls, New Jersey, and one of whom is based in Nutley, New Jersey. See Bohm Decl. ¶ 15. But this declaration fails to tell the whole story. While the acting officers technically "include" these five people, a declaration that Mr. Bohm submitted in the Sheets case makes clear that HLR actually has "seven directors and officers." Creed Decl., Ex. 24 ( Sheets Bohm Decl. ¶ 6 & Ex. A) (HLR's 2018 Annual Report). And notably, the two people that Mr. Bohm failed to mention in the declaration submitted to this Court are both based in South San Francisco, California - i.e. , Sean A. Johnston (Director, Secretary, and Vice President) and Bruce Resnik (Vice President). See Creed Decl., Ex. 24 ( Sheets Bohm Decl., Ex. A).
The Court acknowledges that, when all seven people are considered, the sheer numbers do weigh in favor of Little Falls, New Jersey, over South San Francisco, California (four to two). But sheer numbers are not dispositive. Without an understanding of what each director or officer actuаlly does for HLR as a practical matter, where the nerve center of the company is cannot be determined. For example, if Mr. Johnston and Mr. Resnik were primarily responsible for the direction, control, and coordination of HLR, and the remaining individuals simply
That Mr. Bohm states in his declaration that HLR's "decisions are made out of Little Falls," Bohm Decl. ¶ 11, is not sufficient to show that Little Falls is in fact the nerve center of the company. That statement is entirely conclusory in nature. As for Mr. Bohm's statement in his removal declaration that "HLR's corporate activities are run by myself in Little Falls, New Jersey via unanimous consent of HLR's Officers and Directors," Docket No. 1-5 (Bohm Decl. ¶ 6), the Court does not understand this to mean that Mr. Bohm is, in effect, the sole decisionmaker of HLR. Such testimony could not be squared with testimony in his former declaration, indicating that there are other HLR officers who also perform substantive job functions. See Bohm Decl. ¶¶ 15-16 (testifying that five of the seven officers "perform[ ] [their] job functions" in New Jersey). Nor does it appear to account for the fact that Mr. Johnston, in California, has been identified as the CEO.
As for Roche Labs, the Removing Defendants again rely on the Bohm declaration, wherein Mr. Bohm testifies that the company's acting officers "include" three persons, all based in Little Falls, New Jersey, and one of whom is based in Nutley, New Jersey. See Bohm Decl. ¶ 15. But, as above, this declaration is less than forthcoming because it omits Mr. Johnston. And similar to above, Mr. Johnston is listed in a California state filing as the CEO of Roche Labs. See Creed Decl., Ex. 25 (Statement of Information, filed with the California Secretary of State).
Given the above doubts about the propriety of removal, the Court finds - as Judge Tigar did in Sheets - that a remand is appropriate, more specifically, on the basis that the Removing Defendants failed to meet their burden of proving that the nerve center is in fact Little Falls for HLR and Roche Labs. The Court need not consider whether Mr. Pool should be given jurisdictional discovery to explore the issue of nerve center precisely because it is the Removing Defendants' burden to prove diversity of citizenship and, clearly, the Removing Defendants should have had in their possession, custody, or control information about where the nerve center is for HLR and Roche Labs but failed to produce sufficient persuasive evidence. See Sheets ,
E. Attorney's Fees and Costs
For the reasons stated above, the Court grants Mr. Pool's motion to remand. The only question remaining is whether Mr. Pool is entitled to attorney's fees and costs. See
III. CONCLUSION
For the foregoing reasons, the Court hereby GRANTS the motion to remand.
The Clerk of the Court is ordered to remand the case back to state court and close the file in the case.
This order disposes of Docket No. 31.
IT IS SO ORDERED.
Notes
In terms of timing, the complaint was served on the Removing Defendants on January 23, 2019. The Removing Defendants removed on February 22, 2019. The Removing Defendants then filed their notice of errata and amended notice of removal on March 12, 2019.
See also Cleveland ,
Mr. Pool has objected to this evidence. However, the objection is essentially moot because, even taking the evidence into account, the Court ultimately finds in Mr. Pool's favor on the merits of the remand motion.