Opinion
No. CV 04-06324 FMC (FMOx).
September 17, 2004
ORDER DENYING MOTION TO REMAND
This matter is before the Court on Plaintiff's Motion to Remand (docket #6). The Court has read and considered the Motion, Opposition (and its supporting declaration) and Reply. The Court deems this matter appropriate for decision without oral argument. See Fed.R.Civ.P. 78; Local Rule 7-15. Accordingly, the hearing set for September 20, 2004, is removed from the Court's calendar. For the reasons set forth below, the Court denies the Motion to Remand
I. Background
This action is before the Court pursuant to its diversity jurisdiction. See 28 U.S.C. § 1332. In its notice of removal, Standard Insurance Company ("Standard") asserts that it is an Oregon corporation with a principal place of business in Oregon. Plaintiff has filed the present Motion to Remand, contending that Standard's principal place of business is in California, citing an unpublished decision in a case in this district that so concludes. See Clayton v. Standard Ins. Co., CV 04-04630 RGK (Ex), July 23, 2004.
II. Principal Place of Business
In determining a corporation's principal place of business, the Ninth Circuit applies a place of operations test. Industrial Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090 (9th Cir. 1990). Courts must determine where the majority of a corporation's business activity takes place; to do so, courts should consider such factors as the location of the corporation's employees, its tangible property, its production activities, its income earning, its purchases, and its sales. Id. If no state contains a substantial predominance of the corporation's business activities, then courts may use an alternative test, the "nerve center" test, which focuses on the location where a corporation's executive and administrative functions are performed. Id.
III. Place of Operations
The Court examines each of the factors relevant to the place of operations test.A. Location of Employees
Standard employs 2,635 employees in 27 states. 78% of those employees are located in Oregon. 2.5% are located in California.
B. Property
82% of Standard's real property is located in Oregon; only 6% of their real property is located in California.
85% of Standard's personal property (mostly office equipment) is located in Oregon; only 2.83% is located in California.
C. Income and Sales
Unquestionably, Standard receives more income from California than from any other state. 14.83% of Standard's revenue from premiums comes from California (12.22% comes from Oregon). Nevertheless, the Court is persuaded by the rationale of other California courts that have concluded that such revenue figures must be considered in the context of the California's large population in comparison to other states. See Arellano v. Home Depot U.S.A., 245 F. Supp. 3d 1102 (S.D. Cal. 2003); Ho v. Ikon Office Solutions, Inc., 143 F. Supp. 2d 1163 (N.D. Cal. 2001).
D. Production Activities
Standard does not manufacture a tangible product that is sold; therefore, its "production activities" cannot be measured by the presence of manufacturing facilities. Nevertheless, analogous activities for the insurance industry would include marketing and claims processing. Standard's marketing activities and its claims processing occur in Oregon.
E. Purchases
Standard's purchases occur in Oregon.
Applying these factors, Standard's business activities substantially predominate in Oregon. Although Standard generates more income in California than Oregon, the Court is persuaded that this fact should be discounted to take into account California's size. All the other Industrial Tectonics factors weigh heavily in favor of a finding that Standard's business activities substantially predominate in Oregon. Accordingly, the Court concludes that Oregon is Standard's principal place of business.
IV. Conclusion
For the reasons set forth above, Standard's principal place of business is located in Oregon. Because Plaintiff is a California resident, the Court has diversity jurisdiction over this action.