Tour Strategy LLC v. Star-Telegram, Inc. et al

Filing 27

Memorandum Opinion and Order: Therefore, for the foregoing reasons, The court ORDERS that plaintiff's motion 13 to remand be, and is hereby, denied. (Ordered by Judge John McBryde on 4/16/2018) (edm)

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APR ,, 6 2018

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NO. 4:18-CV-074-A

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STAR-TELEGRAM,

INC., ET AL.,

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Defendants.

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MEMORANDUM OPINION
and
ORDER
Came on for consideration the motion of plaintiff, Tour
Strategy LLC d/b/a Redan Bilingual Media, to remand the abovecaptioned action to the state court from which it was removed.
Having considered such motion, the responses of defendants, StarTelegram, Inc.

("STI") and McClatchy U.S.A.,

thereto, plaintiff's reply,

Inc.

("McClatchy")

the record, and applicable legal

authorities, the court finds that plaintiff's motion to remand
should be denied.
I.

Background
Plaintiff initiated the above-captioned action on May 23,
2016, by the filing of an original petition in the District Court
of Dallas County, Texas, 116th District.

The original petition

named as defendant "Star-Telegram, d/b/a/ Fort Worth Star
Telegram/La Estrella En Casa."

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Plaintiff,

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IN THE UNITED STATES DISTRICT CO,:URT
NORTHERN DISTRICT OF TEXAS I
FORT WORTH DIVISION
TOUR STRATEGY LLC,
D/B/A REDAN BILINGUAL MEDIA,

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On November 4, 2016, the action

was transferred to the District Court of Tarrant County, Texas,
153rd Judicial District.

On December 5, 2016, plaintiff filed

its first amended petition, naming as defendant STI.

On December

18, 2017, plaintiff again amended its pleading by the filing of a
second amended petition, this time adding as defendants McClatchy
and Valassis Sales and Marketing Services, Inc.

("Valassis") .

After being served with the second amended petition, McClatchy
filed on February 2, 2018, its notice of removal based on
diversity of citizenship, to which STI.and Valassis consented.
The notice of removal alleged complete diversity of citizenship
and the requisite amount in controversy as to plaintiff's claims
against the defendants.
II.
Grounds of the Motion
Plaintiff contends that remand of this action is proper
because this court lacks subject matter jurisdiction over the
claims alleged by plaintiff.

Plaintiff argues that plaintiff and

STI are both citizens of Texas,' with the result that complete
diversity of citizenship between the parties does not exist. 2
More specifically, plaintiff contends that STI's principal place

'The parties do not dispute that ST! is also a citizen of Delaware, its state of incorporation.
2

The parties appear to be in agreement that diversity of citizenship exists between plaintiff,
McClatchy, and Valassis.

2

of business is in Texas, and bases such position on various
facts,

including that "[t]he critical functions that go into

making the Star-Telegram are directed and carried out in [Texas] ,
and its meaningful decision-makers are here."

Doc. 3 14 at 1.

STI and McClatchy contend that STI's principal place of business
is not in Texas, but rather in California, where its "nerve
center" is located.
III.
Applicable 1,egal Principles

Pursuant to 28 U.S.C.

§

1441(a), a defendant may remove to

federal court any state court action over which the federal
district court would have original jurisdiction.

"The removing

party bears the burden of showing that federal subject matter
jurisdiction exists and that removal was proper."
Prudential Prop. Cas. Ins. Co., 276 F.3d 720, 723
2001) .

Manguno v.
(5th Cir.

"Moreover, because the effect of removal is to deprive

the state court of an action properly before it, removal raises
significant federalism concerns, which mandate strict
construction of the removal statute."

Carpenter v. Wichita Falls

Indep. Sch. Dist., 44 F.3d 362, 365-66 (5th Cir. 1995)

3

(citation

The "Doc._" references are to the number assigned to the referenced items on the docket in this
action, No. 4: 18-CV-74-A.

3

omitted) .

Any doubts about whether removal jurisdiction is

proper must therefore be resolved against the exercise of federal
jurisdiction.

Acuna v. Brown & Root Inc., 200 F.3d 335, 339 (5th

Cir. 2000).
B.

Principal Place of Business Under 28 U.S.C.

§

1332(c) (1)

For purposes of diversity jurisdiction, •a corporation shall
be deemed to be a citizen of every State and foreign state by
which it has been incorporated and the State or foreign state
where it has its principal place of business."
§ 1332(c) (1).

28 u.s.c.

The Supreme Court has adopted the •nerve center"

test for determining where a corporation's •principal place of
business" lies.

Hertz Corp. v. Friend, 559 U.S. 77, 80

(2010).

Under this test, a corporation's •principal place of business" is
defined as the place where "a corporation's officers direct,
control, and coordinate the corporation's activities."

Id.

Typically, this place is "where the corporation maintains 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."
93.

Id. at

In adopting the "nerve center" test, the Court recognized

that at times, application of the "nerve center" test would
result in counterintuitive results, particularly in instances
when command of a corporation is geographically dispersed.

4

Id.

at 96.

The Court gave the following illustration of when such a

counterintuitive result might arise:
[T]he use of a "nerve center" test may in some cases
produce results that seem to cut against the basic
rationale for 28 U.S.C. § 1332 . . . . For example, if
the bulk of a company's business activities visible to
the public take place in [one state], while its top
officers direct those activities [from another], the
"principal place of business" is [the second state] .
Id.

The court went on to explain that even a counterintuitive

result should be recognized as correct:
We understand that such seeming anomalies will
arise. However, in view of the necessity of having a
[clear] rule, we must accept them. Accepting
occasionally counterintuitive results is the price the
legal system must pay to avoid overly complex
jurisdictional administration while producing the
benefits that accompany a more uniform legal system.

IV.
Analysis
With this in mind, and having reviewed the applicable papers
on file in this action, the court is satisfied that McClatchy and
STI, who consented to McClatchy's notice of removal and responded
to plaintiff's motion, have met their burden of establishing that
complete diversity of citizenship between the parties in this
action exists.'

'Although Valassis consented to McClatchy removing this action, it did not respond to plaintiffs
motion to remand.

5

Plaintiff .contends that STI's principal place of business is
in Texas because its operations related to the creation, editing,
publishing, and circulation of various publications, including
the star-Telegram, take place in Fort Worth.

To support this

position, plaintiff attached the affidavit of plaintiff's
managing partner, Brent Murphy, printouts from the website for
the Star-Telegram, a printout of STI's Better Business Bureau
profile, and a printout of STI's Bloomberg Profile.
Those documents establish among other facts that

See Doc. 15.

(1) STI

publically lists as its address 808 Throckmorton Street in Fort
Worth, Texas 76102;

(2) STI creates, edits; publishes, and

circulates the Star-Telegram and various other publications in
Fort Worth;

(3) Sean Burke, current president and publisher of

the Star-Telegram maintains his office in Fort Worth; and (4) a
variety of editors, reporters, and other high-ranking STI
employees also maintain their offices in Fort Worth.

Id.

Although these documents have some probative value as to the
question of where STI's principal place of business lies, none of
the facts established thereby, alone or together, are sufficient
to overcome a finding that STI's headquarters, principal place of
business, and nerve center, are in Sacramento, California.
Hertz, 559 U.S. at 95

(describing •a corporation's general

business activities" as insufficient for determining its

6

See

"principal place of business"); Elizondo v. Keppel Amfels,
L.L.C., No. 1:14-CV--220, 2015 WL 1976434, at *7 (S.D. Tex. May 1,
2015) (stating that "the fact that one of the three board members
of the [c]orporation in this case works primarily in [the main
office]

is not conclusive; rather,

it is where the officers who

retain the ultimate control and authority and/or coordinate the
big-picture activities [are]"); Balachander v. AET Inc. Ltd., No.
H-10-4805, 2011 WL 4500048, at *10 (S.D. Tex. Sept. 27,
2011) ("Hertz's clear emphasis is on where the corporation is
actually controlled, not where buildings are located, or where
the bulk of the corporation's operations are located.").
The evidence shows it is true that many daily and other
tactical decisions take place at the STI's Fort Worth, Texas
office.

The court is nevertheless satisfied that the evidence in

the record establishes that STI's principal place of business, or
"nerve center," is in Sacramento, California.

The court makes

this determination based on the evidence submitted to the court
by STI and McClatchy.

All of STI's officers and directors, with

the exception of Sean Burke, reside and conduct Star-Telegram
business in Sacramento, California.

Doc. 24 at 5-6, ' ' 9-10.

From that location, all "important policy and high level
decisions concerning [STI] are made."

Doc. 24 at 6-7, '

12.

In

other words, the officers and directors from Sacramento "direct,

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control, and coordinate the corporation's activities."
Hertz, 559 U.S. at 80.

See

The decisions made in Sacramento dictate

STI's corporate strategy, company budget, accounting and
finances, key personnel and human resources, and hiring, firing,
and appointment of STI officers and other key personnel.
at 2, , 3; Doc. 24 at 6-7, , 12, & 12, , 3.

Doc. 22

All decisions made

by STI's president in.Fort Worth are in furtherance of the
decisions made in Sacramento.
,, 5-7.
7,

, 13.

Id. at 7, ,, 13 & 15, & 12-13,

His authority to make decisions is limited.

Doc. 24 at

Any decision made by him, or any other Fort Worth

employee, is subject to review, reversal, and modification by
STI's board members and officers in Sacramento. Id.
Based on this evidence, the court is satisfied that STI and
McClatchy have met their burden of showing that STI's principal
place of business is in California, with the result that
diversity of citizenship exists between the parties and that the
exercise of subject matter jurisdiction by this court is proper.
This result may seem counterproductive given that almost all of
STI's employees are located in Fort Worth and that most, if not
all, of STI's visible business activities occur here as well, but
such facts are not controlling for purposes of determining where
STI's principal place of business lies for purposes of 28 U.S.C.
§

1332(c) (1).

Hertz, 559 U.S. at 91.

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The deciding factor is

only "where the corporation's high level officers direct,
control, and coordinate the corporation's activities."
80.

Id., at

The court is satisfied that Sacramento, California is that

place.

v.
Order
Therefore, for the foregoing reasons,
The court ORDERS that plaintiff's motion to remand be, and
is hereby, denied.
SIGNED April 16, 2018.

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