Nan Hanks & Associates, Inc. v. Original Footwear Company, Inc.

Filing 25

ORDER signed by District Judge Troy L. Nunley on 8/17/17 ORDERING this Court lacks subject matter jurisdiction pursuant to section 1441(b)(2) because at the time the action commenced Defendant was a resident of the forum state. This action is hereby REMANDED to the Superior Court of California, County of San Joaquin; Copy of remand order sent to other court. CASE CLOSED (Becknal, R)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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NAN HANKS & ASSOCIATES, INC.,

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No. 2:17-cv-00027-TLN-KJN

Plaintiff,
ORDER GRANTING PLAINTIFF’S
MOTION TO REMAND

v.
THE ORIGINAL FOOTWEAR
COMPANY, INC.,
Defendant.

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This matter is before the Court on Plaintiff Nan Hanks & Associates LLC’s (“Plaintiff”)

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Motion to Remand Action to State Court. (ECF No. 16.) Defendant The Original Footwear

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Company Inc. (“Defendant”) opposes the motion. (ECF No. 22.) Having reviewed the

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arguments raised by both parties and for the reasons set forth below, the Court hereby GRANTS

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Plaintiff’s motion to remand.

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Plaintiff filed this action in the Superior Court of California, County of San Joaquin on

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November 28, 2016. (Notice of Removal, ECF No. 1.) The complaint asserts eleven causes of

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action against Defendant for violations of the laws of various states. At the time of filing the

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original complaint, Defendant was incorporated under the laws of California. (ECF No. 22 at 7.)

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Defendant merged with its Tennessee sister corporation on December 30, 2016. (ECF No. 22 at

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7.) Defendant then removed the action to this Court on January 5, 2017. (ECF No. 1.) On
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January 12, 2017, Defendant moved to transfer this case to the Eastern District of Tennessee.

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(ECF No. 4.) Plaintiff filed the instant motion to remand on February 3, 2017. (ECF No. 16.)

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“[A]ny civil action brought in a State court of which the district courts of the United

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States have original jurisdiction, may be removed by the defendant or the defendants, to the

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district court of the United States for the district and division embracing the place where such

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action is pending.” 28 U.S.C. § 1441(a). The district court has original jurisdiction over civil

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actions between citizens of different states in which the alleged damages exceed $75,000. 28

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U.S.C. § 1332(a)(1). An action otherwise removable shall not be removed if any of the parties

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properly joined and served as defendants is a citizen of the state in which such action is brought.

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28 U.S.C. § 1441(b)(2). The party asserting federal jurisdiction bears the burden of proving

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diversity. Lew v. Moss, 797 F.2d 747, 749 (9th Cir. 1986) (citing Resnik v. La Paz Guest Ranch,

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289 F.2d 814, 819 (9th Cir. 1961)). Diversity is determined as of the time the complaint is filed

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and removal effected. Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d 1129, 1131 (9th Cir.

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2002). Removal statutes are to be strictly construed against removal. Gaus v. Miles, Inc., 980

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F.2d 564, 566 (9th Cir. 1992).

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Defendant asserts 28 U.S.C. § 1441(b) only requires that diversity be examined at the time

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of removal. (ECF No. 22 at 8.) Defendant argues it was not a resident of the forum state at the

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time of removal and therefore, removal was proper. (ECF No. 22 at 8.) Defendant further

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contends the forum defendant exception requires diversity be checked at the time of removal.

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Defendant’s argument has no basis in the law. (ECF No. 22 at 8.) A multitude of courts,

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including the Ninth Circuit and United States Supreme Court, have continuously held that

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diversity should be determined at the time of removal and the time the complaint is filed. See

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Strotek Corp., 300 F.3d at 1131; Stevens v. Nichols, 130 U.S. 230, 231–31 (1889); Petrop v.

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Lassen Art Publications, Inc., 939 F. Supp. 742, 744 (D. Haw. 1995) (requiring diversity at time

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of removal and time of filing complaint for jurisdiction pursuant to section 1441(b)); Schwinn

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Bicycle Co. v. Brown, 535 F. Supp. 486, 487 (W.D. Ark. 1982) (same); Atlanta Shipping Corp. v.

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International Modular Housing, Inc., 547 F. Supp. 1356, 1360 (S.D. N.Y. 1982) (same);

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Aynesworth v. Beech Aircraft Corp., 604 F. Supp. 630, 633 (W.D. Tex. 1985) (same); Hubbard v.
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Tripp, 611 F. Supp. 895, 896 (E.D. Va. 1985) (same). Defendant does not present a single case

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that holds the opposite when evaluating a 1441(b) argument. The cases Defendant does present

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are wholly distinguishable from the instant case and largely deal with defendants added after

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removal to defeat diversity or with defendants not yet served at the time of removal. (See ECF

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No. 22 at 9–11.)

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Defendant does not dispute that it was incorporated in California and therefore a resident

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of the forum state at the time the action commenced. Furthermore, Defendant admits it did not

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merge with its sister corporation in Tennessee until December 30, 2017, a month after Plaintiff

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filed its complaint in state court. (ECF No. 22 at 7.) Accordingly, this Court lacks subject matter

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jurisdiction pursuant to section 1441(b)(2) because at the time the action commenced Defendant

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was a resident of the forum state. This action is hereby REMANDED to the Superior Court of

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California, County of San Joaquin.

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IT IS SO ORDERED.

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Dated: August 17, 2017

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Troy L. Nunley
United States District Judge

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