Sheets et al v. F. Hoffmann-La Roche Ltd et al, No. 3:2018cv04565 - Document 45 (N.D. Cal. 2018)

Court Description: ORDER GRANTING MOTION TO REMAND by Judge Jon S. Tigar; granting 10 Motion to Remand. (wsn, COURT STAFF) (Filed on 12/7/2018)
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Sheets et al v. F. Hoffmann-La Roche Ltd et al Doc. 45 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 ANDREW SHEETS, et al., 7 Plaintiffs, 8 ORDER GRANTING MOTION TO REMAND v. 9 F. HOFFMANN-LA ROCHE LTD, et al., 10 Re: ECF No. 10 Defendants. 11 United States District Court Northern District of California Case No. 18-cv-04565-JST 12 13 Defendants Hoffmann-La Roche Inc. (“HLR”) and Genentech, Inc. (together, “Removing 14 Defendants”) removed this action from state court on the basis of diversity jurisdiction. ECF No. 15 1. Before the Court is Plaintiffs’ motion to remand. ECF No. 10. For the reasons below, the 16 Court will grant the motion. 17 I. 18 BACKGROUND Plaintiff Andrew Sheets and his wife, Kristie Sheets, filed this products liability action in 19 the Superior Court for the State of California, County of Sonoma. ECF No. 1 ¶ 1. They assert 20 various tort claims under California law arising out of complications suffered by Mr. Sheets after 21 taking the anti-malarial drug Lariam. See generally ECF No. 1-2 (“Complaint”). According to 22 Plaintiffs, Mr. Sheets was prescribed Lariam upon his Naval deployment to Afghanistan in 2003. 23 ECF No. 1-2 ¶ 13. He had severe nightmares the first night he took the medication. Id. These 24 nightmares have continued to the present, augmented by other symptoms like depression, 25 paranoia, and vision problems as Mr. Sheets’s condition has deteriorated over time. Id. Sheets 26 allegedly did not discover that Lariam toxicity could be causing his condition until May 2017. Id. 27 Plaintiffs do not plead any federal cause of action. See generally Compl. 28 The complaint names as defendants Hoffmann-La Roche Inc. (“HLR,” which Plaintiffs 1 refer to as “U.S. Roche”); Genentech, Inc.; and F. Hoffmann-La Roche Ltd (“FHLR,” which 2 Plaintiffs refer to as “Swiss Roche”). Id. at 8. All three defendants are wholly-owned subsidiaries 3 of Roche Holding Ltd. (“Roche Holding”). ECF No. 18 at 2 (HLR); ECF No. 19 at 2 4 (Genentech); ECF No. 33 at 2 (FHLR). At the time of removal, FHLR had not yet been served. ECF No. 1 ¶ 5. Only HLR and 5 6 7 A. 8 The parties do not dispute that Mr. and Mrs. Sheets live in Cazadero, California, and are 9 United States District Court Northern District of California Genentech filed the notice of removal now before the Court. ECF No. 1 at 2. Citizenship of the Parties thus citizens of California for the purpose of establishing diversity jurisdiction. Id. ¶ 12; ECF No. 10 1-2 ¶¶ 14-15. Similarly, the parties do not dispute that FHLR is a Swiss entity headquartered in 11 Basel, Switzerland. ECF No. 1 ¶ 17; ECF No. 1-2 ¶¶ 16. 12 As for the Removing Defendants, the parties agree that Genentech is a Delaware 13 corporation with its principal place of business in South San Francisco, California. ECF No. 1 ¶ 14 20; ECF No. 1-2 ¶ 18.1 However, HLR’s citizenship is disputed. HLR is incorporated in New 15 Jersey, but the parties disagree about the location of its principal place of business. ECF No. 1 at 16 4; ECF No. 10 at 7. Removing Defendants insist that HLR’s headquarters is in New Jersey, 17 “making it a citizen of New Jersey, only.” ECF No. 1 at ¶ 16. Meanwhile, Plaintiffs argue that 18 HLR relocated its headquarters to South San Francisco when Roche Holding acquired Genentech 19 in 2009 and is now a citizen of California. ECF No. 10 at 7. Plaintiffs also point to evidence that 20 several HLR decisionmakers, including HLR’s CEO and secretary, Sean A. Johnston, work out of 21 South San Francisco to argue that HLR’s activities are directed, controlled, and coordinated out of 22 HLR’s office there. Id. at 8. 23 II. “[A]ny civil action brought in a State court of which the district courts of the United States 24 25 LEGAL STANDARD have original jurisdiction, may be removed by the defendant . . . to the district court of the United 26 27 28 Removing Defendants assert that Genentech’s California citizenship does not defeat diversity jurisdiction because Genentech was fraudulently joined. Because the Court concludes that HLR is a citizen of California, it does not address this argument. 2 1 United States District Court Northern District of California 1 States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 2 1441(a). “It is to be presumed,” however, “that a cause lies outside [the] limited jurisdiction [of 3 the federal courts] and the burden of establishing the contrary rests upon the party asserting 4 jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (internal 5 citation omitted); see also Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (stating that the 6 Ninth Circuit “strictly construe[s] the removal statute against removal jurisdiction”). “Federal 7 jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance.” 8 Gaus, 980 F.2d at 566. “The strong presumption against removal jurisdiction means that the 9 defendant always has the burden of establishing that removal is proper.” Id. (internal quotation 10 marks omitted). District courts must “resolve[ ] all ambiguity in favor of remand to state court.” 11 Hunter v. Philip Morris USA, 582 F.3d 1039, 1042 (9th Cir. 2009). If the district court determines 12 that it lacks jurisdiction, the action must be remanded back to the state court. Martin v. Franklin 13 Capital Corp., 546 U.S. 132, 134 (2005). Generally, the existence of federal subject matter jurisdiction may be premised on either 14 15 diversity of the parties or a federal question. See Wayne v. DHL Worldwide Express, 294 F.3d 16 1179, 1183 & n.2 (9th Cir. 2002). Diversity jurisdiction exists where an action is between citizens 17 of different states and more than $75,000 is in dispute. 28 U.S.C. § 1332(a). “A civil action 18 otherwise removable solely on the basis of [diversity] may not be removed if any of the parties in 19 interest properly joined and served as defendants is a citizen of the State in which such action is 20 brought.” Id. § 1441(b). For diversity purposes a corporation is a citizen of the state of its 21 incorporation and the state where it maintains its “principal place of business.” Id. § 1332(c)(1). 22 The principal place of business is usually “the place where the corporation maintains its 23 headquarters – provided that the headquarters is the actual center of direction, control, and 24 coordination, i.e., the ‘nerve center,’ and not simply an office where the corporation holds its 25 board meetings.” Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010). 26 III. 27 28 DISCUSSION The principal question here is whether HLR is a California citizen. If it is, the Court must remand because its presence would destroy complete diversity of the parties, 28 U.S.C. § 1332, 3 1 and because a defendant may not remove to federal court if it is a citizen of the forum state, 28 2 U.S.C. 1441(b). Having considered the competing evidence presented by the parties,2 the Court 3 concludes that the Removing Defendants have not met their burden to establish diversity 4 jurisdiction, because they have failed to rebut evidence presented by Plaintiffs indicating that 5 HLR’s “nerve center” is located in California rather than New Jersey. The Plaintiffs have submitted considerable evidence showing that HLR’s operational, United States District Court Northern District of California 6 7 administrative, and executive functions shifted from New Jersey to California once Roche Holding 8 acquired Genentech in 2009. See ECF No. 10 at 14-17. For instance, a Roche-branded press 9 release from 2009, entitled “Bringing a successful partnership to the next level,” describes HLR’s 10 intent to transplant its manufacturing, commercial, and executive functions to California. See ECF 11 No. 10-2 at 16; id. at 19 (describing “[r]elocat[ion of the] commercial headquarters [from Nutley, 12 NJ] to South San Francisco” as part of the “combined organization” of HLR and Genentech); id. at 13 20 (announcing a “[m]ove to new South San Francisco HQ” which will “[c]onsolidate HQ 14 functions” there). Similarly, a letter from the Roche Holding Chairman and CEO to Genentech 15 employees describing the merger identifies a commitment to “locating the combined company’s 16 U.S. headquarters at Genentech’s current facility in South San Francisco.” ECF No. 10-4 at 2; see 17 also ECF No. 10-19 at 2 (Roche Holding investor update describing “South San Francisco site to 18 become headquarters of combined U.S. commercial operations”). Moving to the present day, 19 Roche’s public website includes a page entitled, “Tale of Two Sites,” that calls the Genentech site 20 in South San Francisco “Roche’s North America hub” and “the headquarters of Roche 21 Commercial Operations for North America.” ECF No. 10-12 at 3. The website of Genentech – a 22 Roche subsidiary – states plainly, “Following our March 2009 merger with Roche, Genentech’s 23 South San Francisco campus became the headquarters for Roche pharmaceutical operations in the 24 United States.” ECF No. 10-24 at 2 (emphasis added). By contrast, the evidence in support of HLR having its nerve center in New Jersey is both 25 26 27 28 Removing Defendants object to Plaintiffs’ submission of new evidence on reply without offering them an opportunity to respond. ECF No. 37. The Court sustains the objection and does not consider the exhibits attached to Plaintiffs’ reply. See, e.g., Provenz v. Miller, 102 F.3d 1478, 1483 (9th Cir. 1996). 4 2 1 slight and equivocal. Defendants primarily offers filings before the New Jersey Treasury 2 Department and California Secretary of State, both of which name New Jersey as HLR’s principal 3 place of business. ECF No. 17-2 at 2; ECF No. 17-3 at 2. However, the Supreme Court has 4 explicitly “reject[ed] suggestions . . . that the mere filing of a form . . . would, without more, be 5 sufficient proof to establish a corporation’s ‘nerve center.’” Hertz Corp., 559 U.S. at 97. 6 Allowing such self-serving allegations to be determinative of jurisdiction “would readily permit 7 jurisdictional manipulation” – for instance, where “the alleged ‘nerve center’ is nothing more than 8 a mail drop box, [or] a bare office with a computer.” Id. United States District Court Northern District of California 9 As further support, HLR offers a declaration from Gerald Bohm, HLR’s assistant 10 secretary, which provides little more than conclusory allegations: for instance, the claim that 11 “[f]rom January 1, 2018 through the date of this declaration, HLR operated and conducted its 12 corporate affairs from the State of New Jersey.” ECF No. 17-1 ¶ 5. The Bohm declaration further 13 alleges that “HLR’s Board of Directors, with the exception of Sean A. Johnston, has its annual 14 meetings in HLR’s Little Falls, NJ office.” ECF No. 17-1 ¶ 7. As previously noted, however, the 15 principal place of business is usually “not simply an office where the corporation holds its board 16 meetings,” but rather “the actual center of direction, control, and coordination, i.e., the ‘nerve 17 center[.]’” Hertz, 559 U.S. at 93 (emphasis added); see also id. at 96 (the “nerve center” test 18 “points courts in a single direction, toward the center of overall direction, control, and 19 coordination”). 20 Defendants also assert that “Plaintiff’s [e]vidence fails to disprove that HLR is a New 21 Jersey [c]itizen.” ECF No. 17 at 13. The argument misses the point. For one thing, no one 22 disputes that HLR is a New Jersey citizen by virtue of its incorporation there; the question is 23 whether HLR is also a citizen of California for diversity purposes because its principal place of 24 business is in South San Francisco. Moreover, the burden with regard to citizenship rests with 25 HLR, not Plaintiffs. “The strong presumption against removal jurisdiction means that the 26 defendant always has the burden of establishing that removal is proper.” Gaus, 980 F.2d at 566. 27 And any ambiguity in the parties’ evidence must be resolved “in favor of remand to state court.” 28 Philip Morris USA, 582 F.3d at 1042. As set forth above, HLR has not met his burden. 5 For the foregoing reasons, the Court will grant the motion to remand.3 1 CONCLUSION 2 Because Defendants have failed to demonstrate that HLR is not a California citizen, they 3 4 have failed to carry their burden to show that removal is proper. Plaintiffs’ motion is granted and 5 the Court hereby remands this action to the Sonoma County Superior Court. Plaintiffs’ request for 6 jurisdictional discovery is denied as moot. IT IS SO ORDERED. 7 8 Dated: December 7, 2018 ______________________________________ JON S. TIGAR United States District Judge 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In light of the Court’s conclusion regarding HLR’s citizenship, it need not reach the parties’ remaining arguments. 6 3