Carly E. Simon v. Starbucks Corporation, No. 2:2009cv09074 - Document 11 (C.D. Cal. 2009)
Court Description: REQUEST FOR JUDICIAL NOTICE re MOTION to Stay Case pending Decision by the United States Supreme Court on a Controlling Issue of Law 10 filed by Defendant Starbucks Corporation. (Kapur, Theane)
Download PDF
<![CDATA[
Case 2:09-cv-09074-GW-PLA Document 11 1 2 3 4 Filed 12/14/09 Page 1 of 20 GIBSON, DUNN & CRUTCHER LLP ORIN SNYDER (Pro Hac Vice Application Pending) osnyder@gibsondunn.com 200 Park Avenue, 47th Floor New York, New York 10166-0193 Telephone: (212) 351-4000 Facsimile: (212) 351-4035 5 6 7 8 9 10 THEANE EVANGELIS KAPUR, SBN 243570 tkapur@gibsondunn.com KATIE TOWNSEND, SBN 254321 ktownsend@gibsondunn.com 333 South Grand Avenue Los Angeles, California 90071-3197 Telephone: (213) 229-7000 Facsimile: (213) 229-7520 Attorneys for Defendant, Starbucks Corporation 11 UNITED STATES DISTRICT COURT 12 CENTRAL DISTRICT OF CALIFORNIA 13 WESTERN DIVISION 14 15 CARLY E. SIMON, CASE NO. CV09-09074 GW (PLAx) 16 Plaintiff, DEFENDANT STARBUCKS CORPORATION S REQUEST FOR JUDICIAL NOTICE STARBUCKS CORPORATION, [Motion to Stay Pending Decision by the United States Supreme Court on Controlling Issue of Law Filed Concurrently] 17 v. 18 19 Defendant. 20 21 22 Date: Time: Place: Judge: January 7, 2010 8:30 a.m. Courtroom 10 Hon. George H. Wu 23 24 25 26 27 28 Gibson, Dunn & Crutcher LLP DEFENDANT STARBUCKS CORPORATION S REQUEST FOR JUDICIAL NOTICE Case 2:09-cv-09074-GW-PLA Document 11 Defendant Starbucks Corporation ( Starbucks ) respectfully requests that this 1 2 Filed 12/14/09 Page 2 of 20 Court take judicial notice of the following documents attached hereto: 3 4 I. DOCUMENTS OF WHICH JUDICIAL NOTICE IS REQUESTED 5 Exhibit A: A true and correct copy of the Northern District of California s decision in 6 Beck v. Starbucks Corporation, C-08-2930 MMC, 2008 U.S. Dist. LEXIS 111053 7 (N.D. Cal. Sept. 19, 2008). 8 Exhibit B: A true and correct copy of the June 12, 2007 Order Remanding Civil 9 Action to Superior Court entered by the United States District Court for the Central 10 District of California in Mbalati v. Starbucks Corporation, CV 07-3267 RGK (FFMx). 11 Exhibit C: A true and correct copy of excerpts of the November 10, 2009 oral 12 argument before the United States Supreme Court in Hertz Corporation v. Friend, 08- 13 1107. 14 Exhibit D: A true and correct copy of a November 11, 2009 news article, published on 15 Law.com, by Tony Mauro entitled Justices Sympathetic to Applying Headquarters 16 Standard to Corporate Jurisdiction. II. ARGUMENT 17 18 Defendant Starbucks requests that the Court take judicial notice of the 19 documents listed above under Rule 201 of the Federal Rules of Evidence, which 20 provides that [a] court may take judicial notice of facts not subject to reasonable 21 dispute, and shall take judicial notice if requested by a party and supplied with the 22 necessary information. 23 A fact can be judicially noticed if it is capable of accurate and ready 24 determination by resort to sources whose accuracy cannot be reasonably questioned. 25 Fed. R. Evid. 201. Exhibits A, B, and C are records of judicial proceedings and 26 matters of public record. Those exhibits consist of, specifically (1) a June 12, 2007 27 remand order entered by the United States District Court for the Central District of 28 California in Mbalati v. Starbucks Corporation, CV 07-3267 RGK (FFMx), Gibson, Dunn & Crutcher LLP DEFENDANT STARBUCKS CORPORATION S REQUEST FOR JUDICIAL NOTICE Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 3 of 20 1 ( Mbalati ), (2) a September 19, 2008 decision, entered by the Northern District of 2 California in Beck v. Starbucks Corporation, C-08-2930 MMC, ( Beck ), and (3) the 3 transcript of the November 10, 2009 oral argument before the United States Supreme 4 Court in Hertz Corporation v. Friend, 08-1107 ( Hertz ). Under Rule 201 of the 5 Federal Rules of Evidence, [m]aterials from a proceeding in another tribunal are 6 appropriate for judicial notice. Biggs v. Terhune, 334 F.3d 910, 916 (9th Cir. 2003). 7 These materials are directly relevant to Starbucks concurrently filed Motion to Stay 8 Pending Decision by the United States Supreme Court on Controlling Issue of Law 9 ( Motion ). By its Motion, Starbucks seeks a temporary stay of proceedings pending a 10 decision by the United States Supreme Court in Hertz, which is expected to provide 11 guidance as to the appropriate test for determining Starbucks citizenship for purposes 12 of federal diversity jurisdiction, a significant threshold issue in this case. As 13 explained in more detail in Starbucks Motion, the proceedings in Beck and Mbalati 14 illustrate the conflicting conclusions that California district courts have reached 15 regarding Starbucks diversity, and thus the need for a stay pending clear guidance 16 from the United States Supreme Court in Hertz. Exhibit C is further evidence of the 17 expected impact that the Court s forthcoming decision in Hertz will have on this 18 Court s exercise of jurisdiction over this matter pursuant to 28 U.S.C. §§ 1332 and 19 1441. 20 Exhibit D is a news account of the November 10, 2009 oral argument before the 21 United States Supreme Court in Hertz. This article is the appropriate subject of 22 judicial notice, as [t]his court may take judicial notice of adjudicative facts appearing 23 in newspapers. Crowder v. Kitagawa, 81 F.3d 1480, 1492 (9th Cir. 1996). This news 24 account is relevant to Starbucks Motion as it, like Exhibit C, illustrates the significant 25 impact that the Hertz decision likely will have on this action, and thus the propriety of 26 a stay pending that decision. 27 28 Gibson, Dunn & Crutcher LLP 3 DEFENDANT STARBUCKS CORPORATION S REQUEST FOR JUDICIAL NOTICE Case 2:09-cv-09074-GW-PLA Document 11 III. CONCLUSION 1 2 Filed 12/14/09 Page 4 of 20 Neither party can reasonably dispute the authenticity of these exhibits, which are 3 capable of accurate and ready determination by resort to sources whose accuracy 4 cannot be reasonably questioned. See Fed. R. Evid. 201. Due to their relevance to 5 Starbucks concurrently filed Motion, Defendant Starbucks respectfully requests that 6 this Court take judicial notice of the documents attached as Exhibits A through D. 7 DATED: December 14, 2009 8 Theane Evangelis Kapur GIBSON, DUNN & CRUTCHER LLP 9 10 11 12 By: Theane Evangelis Kapur Attorneys for Defendant Starbucks Corporation 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Gibson, Dunn & Crutcher LLP 4 DEFENDANT STARBUCKS CORPORATION S REQUEST FOR JUDICIAL NOTICE Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 5 of 20 EXHIBIT A Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 6 of 20 Page 1 FOCUS - 2 of 2 DOCUMENTS WHITNEY BECK, Plaintiffs, v. STARBUCKS CORPORATION, et al., Defendants No. C-08-2930 MMC UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA 2008 U.S. Dist. LEXIS 111053 September 19, 2008, Decided September 19, 2008, Filed COUNSEL: [*1] For Whitney Beck, Plaintiff: E. Denise Schissler, Robert Charles Hubbs, LEAD ATTORNEYS, Kneisler, Schondel & Hubbs, Santa Rosa, CA; Jonmi Nai On Koo, Rao Ongaro Burtt & Tiliakos LLP, San Francisco, CA. that plaintiff is seeking damages in excess of $ 75,000. Although Starbucks acknowledges that a second defendant, Christina Carroll ("Carroll"), is a California citizen, Starbucks asserts that Carroll's citizenship can be disregarded, for the reason she is a "sham" defendant, (see Notice of Removal [*2] P 9), i.e., she was fraudulently joined as a defendant. For Starbucks Corporation, Defendant: David Raymond Ongaro, Jonmi Nai On Koo, LEAD ATTORNEYS, Rao Ongaro Burtt & Tiliakos LLP, San Francisco, CA. "Joinder of a non-diverse defendant is deemed fraudulent, and the defendant's presence in the lawsuit is ignored for purposes of diversity, [i]f the plaintiff fails to state a cause of action against [the non-diverse] defendant, and the failure is obvious according to the settled rules of the state." Morris v. Princess Cruises, Inc., 236 F. 3d 1061, 1067 (9th Cir. 2001) (internal quotation and citation omitted). JUDGES: MAXINE M. CHESNEY, United States District Judge. OPINION BY: MAXINE M. CHESNEY OPINION The sole claim alleged by plaintiff against Carroll, who is alleged to be a "store manager" of a Starbucks located in Santa Rosa, California, (see Compl. PP 4-5), is a claim of retaliation under § 12940(h) of the California Government Code. According to Starbucks, plaintiff's joinder of Carroll is fraudulent in light of Jones v. Lodge at Torrey Pines Partnership, 42 Cal. 4th 1158, 72 Cal. Rptr. 3d 624, 177 P.3d 232 (2008). In Jones, an opinion issued several months after plaintiff filed her complaint in state court, the California Supreme Court, in a 4-3 decision, held that "nonemployer individuals" may not be held liable for retaliation under § 12940(h). See id. at 1173. ORDER REMANDING ACTION Before the Court is defendant Starbuck Corporation's ("Starbucks") Notice of Removal, filed June 12, 2008, 1 by which Starbucks removed from state court plaintiff Whitney Beck's complaint on the asserted ground of diversity of citizenship. 1 The matter was reassigned to the undersigned on September 12, 2008. In its Notice, Starbucks alleges sufficient facts to support a finding that Starbucks is a citizen of Washington, that plaintiff is a citizen of California, and Where a defendant removes an action on the basis of 5 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 7 of 20 Page 2 2008 U.S. Dist. LEXIS 111053, *2 diversity jurisdiction, a district [*3] court has "subject matter jurisdiction" over the matter only if diversity exists "both when the state [complaint] is filed and when the petition for removal is filed." See Ryan v. Schneider Nat'l Carriers, 263 F. 3d 816, 819 (8th Cir. 2001); see also Koenigsberger v. Richmond Silver Mining Co., 158 U.S. 41, 49-50, 15 S. Ct. 751, 39 L. Ed. 889 (1895) (holding where federal court "takes jurisdiction of a suit already pending [in state court] the requisite citizenship must have existed at the time of its commencement"; referring to such requirement as one of "jurisdiction"). An exception to this rule exists where, although diversity did not exist when the complaint was filed, the plaintiff, by amending the complaint or otherwise, voluntarily dismisses the non-diverse party or parties. See Self v. General Motors Corp., 588 F. 2d 655, 659 (9th Cir. 1978). As the Ninth Circuit has explained, under the "'voluntary-involuntary' rule," a complaint not removable when filed must "remain in state court unless a 'voluntary' act of the plaintiff brings about a change that renders the case removable." See id. at 657. Thus, where a state court dismisses a non-diverse defendant "without [the plaintiff's] assent," the complaint [*4] is not removable on diversity grounds. See id. at 658; see, e.g., Whitcomb v. Smithson, 175 U.S. 635, 637-38, 20 S. Ct. 248, 44 L. Ed. 303 (1900) (holding where state court directed verdict in favor of non-diverse defendant, remaining diverse defendant could not thereafter remove case on ground of diversity jurisdiction). establish that diversity was subsequently accomplished as a result of a voluntary act on the part of plaintiff; rather, under Starbucks' [*5] theory, the parties became diverse as a result of the California Supreme Court's decision in Jones, which decision cannot in any respect be considered a voluntary act on the part of plaintiff. 2 2 After Jones was issued, counsel for Starbucks inquired of plaintiff if she would dismiss Carroll to avoid Carroll's having to file a demurrer in light of Jones, and plaintiff responded she was willing to dismiss Carroll and requested Starbucks prepare a stipulation of dismissal for plaintiff's review. (See Notice of Removal Ex. C.) The record does not disclose whether Starbucks prepared such proposed stipulation, but, in any event, plaintiff did not subsequently dismiss Carroll. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." See 28 U.S.C. § 1447(c). Here, for the reasons discussed above, the parties were not diverse at the time the complaint was filed, and the parties did not subsequently become diverse as a result of a voluntary act on the part of plaintiff. Consequently, the Court lacks diversity jurisdiction over the instant action. See Koenigsberger, 158 U.S. at 49-50; 95); Ryan, 263 F. 3d at 819. Accordingly, [*6] the instant action is hereby REMANDED, for lack of subject matter jurisdiction, to the Superior Court of California, in and for the County of Sonoma. Here, at the time the complaint was filed in December 2007, there was no settled California rule precluding a finding of personal liability against an individual for retaliation under § 12940(h). Indeed, a number of California courts had expressly held that such a claim was viable. See Jones, 42 Cal. 4th at 1162 (citing, in opinion dated March 3, 2008, prior California Court of Appeal opinions so holding). Under such circumstances, it cannot be said that, at the time the initial complaint was filed in state court, plaintiff's naming Carroll as a defendant constituted a fraudulent joinder. Consequently, the parties were not diverse at the time the initial complaint was filed, because both plaintiff and Carroll are citizens of California. Further, Starbucks cannot IT IS SO ORDERED. Dated: September 19, 2008 /s/ Maxine M. Chesney MAXINE M. CHESNEY United States District Judge 6 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 8 of 20 EXHIBIT B Case 2:07-cv-03267-RGK-FFM Document 10 Case 2:09-cv-09074-GW-PLA Document 11 + 1 2 3 4 ENTERED - IIT~' :: etE!lI<. u.s DISTRICTCOU .~ 6 7 'l ~ 5 ~ ~ , ,," ~; JUN \ 2 2007,~ Priority Send --tEnter -'!L... Close~-/ JS-S/ S- ~ JS·2 - 3 _ Scan Only_ Filed 12/14/09 Page 9 of 20 2 Filed 06/11/2007 Page 1 of r:C:l:::-ER--~FILii'Eno----,;:::, K. US. DISTRICT COURT JUN 1 1 2007 I;i '". ,,'t: ,~, 1/, ~;NTRAl DISTRICT OF , L_~=~::-;:;;<t, e· \!~i't~T..J;:.f+...;..._.::;;;;..;...,r'llTED STATES DISTRICT COURT t CENTRAL DISTRICT OF CALIFORNIA 8 9 ABRAHAM MBALA TI, 10 11 12 13 14 ) CASE NO. CV 07-3267 RGK (FFMx) ) Plaintiff, ~ ,St!.. 3lpt?330 ) vs. ST ARBUCKS CORPORATION, a Washington Corporation, and DOES 1 through 50, inclusive, Defendants. ) ) ORDER REMANDING CIVIL ACTION TO SUPERIOR COURT ) ) ) { ~ 15 16 17 18 , '\ , '-- I 19 20 21 :!'," 22 23 24 On May 17, 2007, Defendants Starbucks Corporation ("Defendant") removed this action from Superior Court for the State of California, County of Los Angeles, to the United States District Court for the Central District of Cali fomi a pursuant to 28 U.S.C. § 1332(d). On May 22,2007, the Court issued an Order to Show Cause Re Remand to State Court ("OSC"), which required Defendant to submit evidence establishing that this Court has jurisdiction over the matter. Defendant timely responded to the Court's Order. 25 26 For the following reasons, this Court finds that it does not have jurisdiction over this matter. 27 28 7 ----- ---------------- Case 2:07-cv-03267-RGK-FFM Document 11 Case 2:09-cv-09074-GW-PLA 10 1 Filed 12/14/09 PagePage 2 of 2 Filed 06/11/2007 10 of 20 In its OSC, the Court requested infonnation regarding three main categories of business: number of i:,?J high~st 2 employees, gross revenue, and tangible property. In all categories but one, California ranks 3 percentage. As to number of employees, California employs 27% of the total U.S. workforce, over~i'OO% .."' , in I~ ..) I",". 4 more than Washington, the next highest state, which has 10%. As to gross revenue, California generates 25% 5 of the total gross revenue, more than 300% more than the next highest states, Texas and New York, which 6 each generate 6%. As to tangible property, Defendant operates 27% of its retail stores in California, more 7 than 200% more than Texas, which has 7% of Defendant' s retail stores. As to non-retail space, Washington 8 ranks highest, with 52%. California's non-retail space, at 3%, does not rank among the top three states. 9 Based on these statistics, the Court finds that the overall predominance of business activity occurs in 10 California. As a result, diversity jurisdiction does not exist. 11 12 13 In light of the foregoing, the above-entitled case is ordered remanded to Superior Court for all further proceedings for lack of subject matter jurisdiction. 14 15 16 17 ~JUN 11 2007 DATED: 18 YKL USNER D STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28 2 8 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 11 of 20 EXHIBIT C Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 12 of 20 Official - Subject to Final Review 1 IN THE SUPREME COURT OF THE UNITED STATES 2 - - - - - - - - - - - - - - - - - x 3 THE HERTZ CORPORATION, : 4 Petitioner : 5 v. : 6 MELINDA FRIEND, ET AL. 7 No. 08-1107 : - - - - - - - - - - - - - - - - - x 8 Washington, D.C. 9 Tuesday, November 10, 2009 10 11 The above-entitled matter came on for oral 12 argument before the Supreme Court of the United States 13 at 11:07 a.m. 14 APPEARANCES: 15 SRI SRINIVASAN, ESQ., Washington, D.C.; on behalf of 16 17 18 the Petitioner. TODD M. SCHNEIDER, ESQ., San Francisco, Cal.; on behalf of the Respondents. 19 20 21 22 23 24 25 1 Alderson Reporting Company 9 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 13 of 20 Official - Subject to Final Review 1 corporations are local corporations, so we are really 2 just talking about - 3 JUSTICE STEVENS: -- of an interstate 4 business who are commonly defendants in a lot of 5 lawsuits -- in a personal injury suit, and the question 6 is, can I easily decide what the place of incorporation 7 of that defendant is. 8 9 MR. SCHNEIDER: Stevens. That's correct, Justice And because most of those entities are public 10 corporations, there is a lot of information available in 11 FCC filings, et cetera, as to where they are actually 12 doing business. 13 and figure out whether have I seen a lot of Hertz 14 outlets where I am. You can also simply look out your door 15 CHIEF JUSTICE ROBERTS: 16 the Ninth Circuit test, where is -- what is the 17 principal place of business of Starbucks? 18 MR. SCHNEIDER: Where is -- under Under the Ninth Circuit 19 test, the principal place of Starbucks, there is a case 20 that says Starbucks is in California. 21 Mr. Chief Justice - 22 JUSTICE SCALIA: 23 (Laughter.) 24 MR. SCHNEIDER: Let me give you, 25 well. That's a surprise. I was -- I was surprised as But -- but let me give you the numbers so that it 44 Alderson Reporting Company 10 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 14 of 20 Official - Subject to Final Review 1 makes sense, because I have read the case. 2 JUSTICE GINSBURG: 3 headquarters. 4 5 MR. SCHNEIDER: Washington. 6 7 10 Headquarters is in Seattle, But over -- that's correct, Your Honor. JUSTICE SOTOMAYOR: That's the very first little shop was there. 8 9 Where is -- where is its MR. SCHNEIDER: yes. That's my understanding, However, over 100 percent more workers from Starbucks are in California than Washington. 11 JUSTICE SOTOMAYOR: 12 100 percent means? 13 inconsequential? 14 Can you tell me what talking about 1,000 in - 15 16 Are the number of workers in Seattle Is there one worker there or are we MR. SCHNEIDER: I don't know the total numbers of the workers. 17 JUSTICE SOTOMAYOR: Isn't that important? 18 As Justice Scalia said that per capita California is 19 going to dwarf anybody anywhere if you are going to have 20 a multi-location place of business. 21 to know the raw numbers? 22 MR. SCHNEIDER: So don't you have I -- I don't know the raw 23 numbers from Starbucks, I'm sorry. 24 opinion. 25 Starbucks has 10 percent of its employees in Washington I just read the And what the opinion tells us is that 45 Alderson Reporting Company 11 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 15 of 20 Official - Subject to Final Review 1 and 27 percent in California. 2 its gross revenue comes from California than any other 3 State, 200 percent more of its retail stores are in 4 California than in any other State. 5 Over 300 percent more of CHIEF JUSTICE ROBERTS: 6 mail order houses? 7 What about, I guess, of business of Eddie Bauer? 8 9 I mean, what's the principal place MR. SCHNEIDER: It would -- it would be, Your Honor, wherever there is a substantial predominance 10 of its people and property. 11 don't know the facts of Eddie Bauer, but I would assume 12 Eddie Bauer has a central location from which it does 13 its sales, which it does its factory work, where it is 14 shipping things from. 15 I would assume -- and I CHIEF JUSTICE ROBERTS: Would -- would it 16 make a difference if, say -- it may well be the case, 30 17 percent of their business is in California? 18 19 MR. SCHNEIDER: No. But by business you mean revenue, Your Honor? 20 CHIEF JUSTICE ROBERTS: 21 MR. SCHNEIDER: 22 Honor, focuses on people and property. 23 look first to the location of employees, tangible 24 properties and production activities, and then second to 25 income earned, purchases made and where sales take The test we posit, Your 46 Alderson Reporting Company 12 Yes. The test would Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 16 of 20 Official - Subject to Final Review 1 place. 2 3 Mr. Chief Justice, did the Court have interest in the jurisdictional argument? 4 CHIEF JUSTICE ROBERTS: 5 (Laughter.) 6 CHIEF JUSTICE ROBERTS: 7 one member of the Court, and that one doesn't. 8 9 MR. SCHNEIDER: Okay. I don't know. I can only speak for Then if the Court has any questions about the -- our jurisdictional argument, 10 I would be happy to answer them. 11 questions - And without further 12 CHIEF JUSTICE ROBERTS: 13 Mr. Srinivasan, you have four minutes 14 15 16 17 18 Thank you, counsel. remaining. REBUTTAL ARGUMENT OF MR. SRI SRINIVASAN ON BEHALF OF THE PETITIONER MR. SRINIVASAN: Your Honor, just one point and I will be brief. 19 The idea that corporations would switch 20 their -- location of their headquarters in order to 21 achieve jurisdictional results hasn't been borne out in 22 any example in which I'm aware. 23 fundamental reason why. 24 25 And there is a When a corporation decides to relocate its headquarters, it's making a very important business 47 Alderson Reporting Company 13 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 17 of 20 Official - Subject to Final Review 1 decision about what is the location from which its 2 direction and control is going to emanate. 3 a gamesmanship decision. 4 about where its headquarters are going to be located and 5 where its most important decision -- business decisions 6 are going to be made. That is not That's a bona fide decision 7 If the Court has no further questions - 8 JUSTICE SCALIA: 9 That means that its principal officers and their families have to move. 10 MR. SRINIVASAN: It does. 11 JUSTICE SCALIA: That's the biggest 12 disincentive it seems to me. 13 MR. SRINIVASAN: 14 If the Court has no further questions. 15 CHIEF JUSTICE ROBERTS: 16 The case is submitted. 17 (Whereupon, at 11:56 a.m., the case in the 18 Absolutely, Justice Scalia. Thank you, counsel. above-entitled matter was submitted.) 19 20 21 22 23 24 25 48 Alderson Reporting Company 14 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 18 of 20 EXHIBIT D Law.com: Justices Sympathetic to Applying Headquarters Standard to Corporate Jurisdict... Page 1 of 2 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 19 of 20 Select 'Print' in your browser menu to print this document. Copyright 2009. ALM Media Properties, LLC. All rights reserved. Page printed from: http://www.law.com Back to Article Justices Sympathetic to Applying Headquarters Standard to Corporate Jurisdiction Tony Mauro 11-11-2009 For a corporation, the U.S. Supreme Court's axiom may soon be: Home is where the headquarters is. The Court heard oral arguments Tuesday in Hertz Corp. v. Friend, which raises a seemingly simple but vexing question crucial for corporations: For purposes of diversity jurisdiction, where is a company's principal place of business? The answer will be crucial in determining whether a corporation can be sued in federal court, as it might prefer, or in plaintiff-friendly state courts. Acting in a class action by Hertz employees over wages and hours filed in California, the 9th U.S. Circuit Court of Appeals determined that, even though its headquarters is in New Jersey, Hertz is a citizen of California because more business activities occur there than in any other state. With both sides deemed to be from California, there was no federal diversity jurisdiction, so the case went to state court. Hertz appealed to the high court. Hertz's lawyer, Sri Srinivasan of O'Melveny & Myers' Washington office, argued for a simpler test, namely where a company's headquarters is, or "the site from which a corporation directs and controls all the company's operations throughout all of its locations." That is a "relatively straightforward" determination that the public can easily ascertain, Srinivasan said, and it also preserves diversity jurisdiction in all but a company's headquarters state. Srinivasan cited the example of Wal-Mart Stores Inc., which is "universally recognized to be an Arkansas corporation." But under the 9th Circuit's standard, it might be viewed as a Texas company, because it has more stores and employees there than any other state. Justices seemed sympathetic, with Justice Anthony Kennedy stating that "not all diversity suits have major law firms in them" that would be able to make the calculations necessary to locate a company's citizenship under the "complex tests" of the 9th and other circuits. 15 http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202435341216 11/11/2009 Law.com: Justices Sympathetic to Applying Headquarters Standard to Corporate Jurisdict... Page 2 of 2 Case 2:09-cv-09074-GW-PLA Document 11 Filed 12/14/09 Page 20 of 20 Todd Schneider of San Francisco's Schneider Wallace Cottrell Brayton Konecky, who argued for the Hertz workers, defended the 9th Circuit test as a fairer assessment of where a company's "people and property are." But Justice Ruth Bader Ginsburg objected that, under that standard, "California is going to be the big winner in this. It's going to be able to keep all those cases in its state court because so many multistate corporations, I would imagine, would come out, just the way Hertz does." Schneider's argument was not helped when Chief Justice John Roberts Jr. asked him where the principal place of business for Starbucks would be under the 9th Circuit test. Schneider confessed that a court had already answered that question as California, because Starbucks Corp. has more than 100 percent more employees in California than in Washington state, where its headquarters is. "That's a surprise," Justice Antonin Scalia said sarcastically. Though most of the Court appeared to embrace some version of a headquarters standard, some justices appeared concerned about the possibility that it might result in abuse by corporations seeking to avoid state courts. "There has to be something more to the test," said Justice Sonia Sotomayor. "There has to be some form of activity in that place." She suggested a compromise whereby a company's principal place of business would presumptively be its headquarters or "nerve center," but the opposing party would be able to challenge that designation. "You can rebut it if it is a shell headquarters." 16 http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202435341216 11/11/2009
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
