J.M. Woodworth Risk Retention Group, Inc. v. Uni-Ter Underwriting Management Corporation et al

Filing 98

ORDER that 90 Motion for Attorney Fees is DENIED. FURTHER ORDERED that 96 Motion to Seal Exhibits 1 and 3 to its Reply Brief 95 is GRANTED. Signed by Judge Jennifer A. Dorsey on 11/12/14. (Copies have been distributed pursuant to the NEF - MMM)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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J.M. WOODWORTH RISK RETENTION GROUP,
INC., a Nevada Captive Corporation,
Plaintiff,

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vs.

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UNI-TER UNDERWRITING MANAGEMENT
CORPORATION, a Delaware Corporation; UNITER RISK MANAGEMENT SERVICES
CORPORATION, a Delaware Corporation; UNITER CLAIMS SERVICES CORPORATION, a
Delaware Corporation; US RE AGENCIES, INC., a
Delaware Corporation; STATE OF NEVADA,
DIVISION OF INSURANCE OF THE
DEPARTMENT OF BUSINESS AND INDUSTRY;
DOES I- X; and ROE ENTITIES XI through XX,

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Case No.: 13-cv-0911-JAD-PAL
Order Denying Plaintiff’s Motion for
Attorney’s Fees [Doc. 90] and Granting
Motion for Leave to File Exhibits
Under Seal [Doc. 96]

Defendants

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After defendants removed this case to federal court, Plaintiff J.M. Woodworth (“JMW”)

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successfully demonstrated that complete diversity of citizenship did not exist, and I granted JMW’s

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motion to remand. Docs. 88 (minutes), 89, 97. JMW now seeks the attorney’s fees it incurred in

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litigating this action in federal court, arguing that the removal was not objectively reasonable and

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resulted in a considerable degree of jurisdictional discovery that defendants could have easily

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avoided through the exercise of reasonable diligence. See Doc. 90. It also asks me to seal certain

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exhibits. Because removal was premised on an ambiguity in the pleadings that JMW itself created, I

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find defendants’ removal was not objectively unreasonable and deny the motion for fees. I do,

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however, grant JMW’s motion to seal portions of its reply pursuant to the court’s protective order.

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Doc. 96.

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Background

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At the time of removal, JMW’s state court complaint alleged that “JMW is, and was at all

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times relevant hereto, a Nevada corporation, domiciled in Nevada as an associate captive insurer

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under NRS Chapter 694C.” Doc. 1-2 at 2. Defendants, none of whom were incorporated or had
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their principal places of business in Nevada, removed this case to federal court based on diversity of

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citizenship. Doc. 1. JMW then filed an emergency motion to remand the case back to state court,

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Doc. 5, and in its reply argued that its principal place of business is not Nevada. Doc. 15 at 1.

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Critical to the disposition of the remand motion was whether JMW’s principal place of

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business was located in New York, Georgia, or Nevada; only the latter would have established

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diversity of citizenship. After permitting jurisdictional discovery on the topic, I determined that

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under the “nerve center” test promulgated in the 2010 U.S. Supreme Court case of Hertz Corp. v.

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Friend,1 JMW’s principal place of business was in New York, and complete diversity of citizenship

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did not exist. Doc. 97 at 21-26. To reach this conclusion, I relied on the fact that the majority of

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JMW’s board members conducted their meetings remotely from New York. Id. I also rejected

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defendants’ argument that JMW was a “passive” company that had “transplanted” its central

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corporate functions to the defendants such that it had no principal place of business at all and was a

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citizen of its state of incorporation only. Doc. 97 at 22. Consequently, I granted JMW’s motion to

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remand but did not include an attorney-fee award. See Docs. 89, 97.

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Discussion
28 U.S.C. § 1447(c) provides that “[a]n order remanding the case may require payment of

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just costs and any actual expenses, including attorney fees, incurred as a result of the removal.”2 An

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award of attorney fees turns on whether the removal was objectively reasonable,3 with

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reasonableness analogized to whether “the relevant case law clearly foreclosed the defendant’s basis

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of removal.”4 Although the reasonableness of the removal is left to the district court’s discretion,

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“absent unusual circumstances, attorney’s fees should not be awarded when the removing party has

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an objectively reasonable basis for removal.”5

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559 U.S. 77 (2010).

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Id.

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3

Martin v. Franklin Capital Corp., 546 U.S. 132, 136-41 (2005).

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Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1066 (9th Cir. 2006).

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Id. at 136-41.

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JMW argues, inter alia, that because defendant Uni-Ter had been “providing services” to

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JMW since 2006, helped JMW file documents with the Nevada Department of Insurance, and had

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access to JMW’s corporate records at the time the complaint was filed, it knew or should have

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known that the majority of its board members lived in New York and conducted meetings while in

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New York, such that complete diversity of citizenship did not exist and the extensive jurisdictional

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discovery which ultimately followed removal would be unnecessary. Doc. 90 at 5. Defendants

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counter by pointing out that after removal, JMW seemingly contradicted its own complaint—by

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arguing in support of its remand motion that its principal place of business was not Nevada, but

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either New York or Georgia. Doc. 93 at 5-6 (citing Doc. 15 at 1).

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The confusion over JMW’s principal place of business was one of its own making. At the

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time of removal, JMW’s state court complaint alleged that “JMW is, and was at all times relevant

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hereto, a Nevada corporation, domiciled in Nevada as an associate captive insurer under NRS

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Chapter 694C.” Doc. 1-2 at 2 (emphasis added). For corporations, “domicile” is routinely

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analogized to “state of incorporation” or “principal place of business.”6 A fair reading of JMW’s

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complaint suggests that JMW intended the word “domicile” to mean “principal place of business,”

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because if JMW’s use of “domicile” in its complaint was meant to refer to its state of incorporation

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and not its principal place of business, its use of the word “domicile” would be duplicative. At best,

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JMW’s intention in using both “domicile” and “Nevada corporation” in the same sentence of its

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complaint was unclear.

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JMW later exacerbated this ambiguity, stating in its reply to its motion to remand that its

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principal place of business is “not Nevada.” Doc. 15 at 1. “Factual assertions in pleadings and

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pretrial orders, unless amended, are considered judicial admissions conclusively binding on the party

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who made them.”7 “[S]tatements of fact contained in a brief may be considered admissions of the

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See, e.g., J. McIntyre Machinery, Ltd. v. Nicastro, 131 S.Ct. 2780, 2787 (2011); Juntilla v. Resi Home
Loans IV, LLC, 2012 WL 3761932, at *2 (D. Nev. Aug. 29, 2012); Young v. American Family Mutual Ins. Co.,
2010 WL 2571351, at *1 (D. Nev. June 23, 2010).
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American Title Insurance Co. v. Lacelaw Corp., 861 F.2d 224, 226 (9th Cir. 1988).

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party in the discretion of the district court.”8 Where a party “tried to benefit” from a statement in a

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brief, that statement can be properly considered as a judicial admission.9 But “the party making an

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ostensible judicial admission explains the error in a subsequent pleading or by amendment, the trial

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court must accord the explanation due weight.”10 It’s clear that JMW “tried to benefit” from its

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post-complaint assertion that its principal place of business was “not Nevada,” as it used that

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assertion to support its request to remand this matter to the forum of its choosing. And after

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defendants pointed out this muddled state of affairs in their response to the motion for attorney’s

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fees, JMW neither clarified it or even addressed it in reply. See Doc. 95.

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In taking JMW’s pleading at face value and pursuing jurisdictional discovery after remand,

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defendants did not act in an objectively unreasonable manner because, under the controlling law,

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defendants had at least some basis to argue that JMW’s “nerve center” could be located in Nevada.

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Hertz noted that “[I]n practice [the “nerve center”] should normally be the place where the

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corporation maintains its headquarters—provided that the headquarters is the actual center of

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direction, control, and coordination . . . and not simply an office where the corporation holds its

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board meetings (for example, attended by directors and officers who have traveled there for the

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occasion).”11 The “nerve center” test focuses on where corporate decisions are actually made, as

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opposed to where the decisions are carried out.12 Other trial courts in this district, applying Hertz,

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have engaged in a fact-specific inquiry to find that a company’s principal place of business was the

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location of all but one of its officers and directors, even if the sole “outlying” officer was the

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company president who managed the company’s day-to-day operations from another jurisdiction,

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Id. at 227 (emphasis in original).

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Gospel Missions of America v. City of Los Angeles, 328 F.3d 548, 557 (9th Cir. 2003) (finding that
party’s prior statement regarding privity was a judicial admission).

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Sicor Ltd. v. Cetus Corp., 51 F.3d 848, 859-60 (9th Cir. 1995).

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Hertz, 559 U.S. at 93.

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United States v. Chao Fan Xu, 706 F.3d 965, 976 (9th Cir. 2013).

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which also served as the side of the defendant’s homebuilding operations.13 I pursued the same

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course in my order on JMW’s motion to remand, focusing on the location of the majority of JMW’s

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board members at the time board meetings were conducted. Even if all of these facts were

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ultimately in defendants’ possession prior to the time jurisdictional discovery began, application of

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these facts to the law was not so open-and-shut as to foreclose any reasonable argument that JMW’s

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“nerve center” was located in Nevada.
Based on both the self-created ambiguity surrounding JMW’s principal place of business,

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and the fact-specific “nerve center” inquiry necessary to determine where JMW’s corporate

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decisions were made, it cannot be said that defendants’ removal of the case was “objectively

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unreasonable.” I did not award attorney’s fees to JMW at the time I granted its motion to remand,

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and I find no reason to award them now.

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B.

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Motion to Seal [Doc. 96]
JMW also moves to seal (1) biographical affidavits of its initial directors, and (2) its board

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meeting materials, under the protective order already entered in this case. Doc. 96 at 3. JMW

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claims that the biographical affidavits contain “sensitive personal information for each of JMW’s

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initial officers and directors . . . . The documents also contain proprietary or otherwise confidential

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business information relating to JMW’s corporate structure and internal governance.” Id. As to the

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board meeting materials, JMW claims they contain, inter alia, “details about JMW’s proprietary

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business plan, operations, practices, and organizational listings.” Id. No response to the motion has

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been filed, suggesting the defendants’ consent to the granting of the motion.14

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The public has a “general right to inspect and copy public records and documents, including

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judicial records and documents.”15 But when a party’s trade secrets and proprietary business

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operations are placed at issue, the court may permit sealing if the requesting party overcomes the

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See Dawson v. Richmond American Homes of Nevada, Inc., 2013 WL 1405338, at *2 (D. Nev. Apr.

5, 2013).
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This district’s Local Rule 7-2(b) states, “The failure of an opposing party to file points and authorities
in response to any motion shall constitute a consent to the granting of the motion.” Id.
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Nixon v. Warner Comm., Inc., 435 U.S. 589, 597 & n.7 (1978).

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“strong presumption” favoring public access to court documents.16

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I previously entered a protective order in this case that permitted the parties to designate as

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“confidential” and file under seal “any information or document produced by a producing party that

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in good faith believes constitutes a trade secret or other confidential or proprietary business,

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technical or financial information subject to protection under Rule 26(c) of the Federal Rules of

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Civil Procedure.” Doc. 39 at 2. Rule 26(c)(1)(G) provides that “The Court, may, for good cause,

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issue an order to protect a party or person from embarrassment, oppression, or undue burden or

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expense, including one or more of the following . . . (G) requiring that a trade secret or other

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confidential research, development, or commercial information not be revealed or be revealed only

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in a specified way.”17 Based on the language in the parties’ stipulated protective order, Doc. 39, the

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reasons articulated in the motion to seal, Doc. 96, and the lack of opposition, I grant the motion to

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seal.

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Conclusion
Accordingly, it is HEREBY ORDERED that JMW’s Motion for Attorney’s Fees [Doc. 90] is
DENIED.
It is FURTHER ORDERED that JMW’s Motion to Seal Exhibits 1 and 3 to its Reply Brief
(Docs. 95-1) [Doc. 96] is GRANTED.
DATED: November 12, 2014.

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_________________________________
Jennifer A. Dorsey
United States District Judge

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See Kamakana v. City and County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006).

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Id.

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