Opinion
Case No. 1:00-CV-476
April 5, 2001
OPINION
This matter is before the Court on Plaintiffs' Motion to Remand this suit pursuant to 28 U.S.C. § 1441(b). This Motion was timely filed within thirty days of removal. The Motion argues, among other things, that removal was improper because one of the Defendants, Smith Industries Aerospace Defense Systems, Inc. ("SIADS"), is a citizen of the forum state of Michigan. The Motion has been fully briefed and the Court determines that it can resolve the matter without oral hearing in light of the briefing and the issues presented.
I. FACTS
Plaintiffs to this action include the estates of many, if not all, of the 74 people killed in the crash of an airplane flight to Buenos Aires, Argentina on October 10, 1997 (Austral Air Flight 2553). Defendants SIADS and Smith Industries, Inc. ("Smiths") are alleged to have negligently manufactured aeronautics equipment used on and allegedly responsible for the fatal flight.
Plaintiffs filed the instant suit in the Circuit Court for Kent County, Michigan on or about May 26, 2000. Defendants were served with the Complaint in early June 2000. Defendants then filed a joint Notice of Removal with this Court on June 30, 2000. Thereafter, Plaintiffs moved to remand the action on July 28, 2000. Consideration of the Motion has been delayed for circumstances outside of the control of the parties and the Court.
The magistrate assignment of this case was changed because of the appointment of the Hon. Ellen Carmody, United State Magistrate Judge. After her appointment, the matter was scheduled for her hearing, but she determined, just prior to hearing, that she could not adjudicate the matter because of an ethical conflict.
As indicated in the parties' briefings, the essential facts are as follows: Defendant SIADS is incorporated in the State of Delaware. It conducts its business activities in 12 states and the District of Columbia. Its business activities occur at 19 different facilities and utilize a decentralized system of management. ( See Defendants' Exhibit A; Plaintiffs' Exhibit E.) Of these 19 different facilities, the largest employer, by far, is the facility located in Grand Rapids, Michigan, which employed 884 employees as of November 2000, which is 29 percent of the company's total workforce. (Plaintiffs' Exhibit E; Defendants' Exhibit A.) The next largest employee site is the facility located in Whippany, New Jersey, which employed 285 employees as of November 2000. ( Id.) Sales figures for 1999-2000 show that 25 percent of sales was generated out of the Michigan facility. The next largest state in company sales is Florida-which has two facilities accounting for 23 percent of company sales. (Defendants' Exhibit A; Plaintiffs' Exhibit E.) According to company records, Defendant SIADS pays the State of Michigan $1,117,487 yearly in property taxes, which is one and one-half the amount paid to the next largest taxing state. (Plaintiffs' Exhibit E.)
Plaintiffs' Directors, as indicated in the briefing, come from several different states: four from Virginia, one from Florida, one from Michigan, one from Illinois, and one from London, England. (Defendants' Exhibit A.) The Board of Directors customarily holds its meetings in different states at different times of the year, with the last meeting before this lawsuit occurring on May 4, 2000 in Washington, D.C. (Plaintiffs' Exhibit B; Defendants' Exhibit A.) Plaintiffs' President, according to corporate records filed with the State of Delaware, operates out of the facility in Grand Rapids, Michigan. (Plaintiffs' Exhibits B and C.) Corporate administrative documents for SIADS are prepared out of their Valleybrook, Pennsylvania facility. (Defendants' Exhibit A.) SIADS has operated a website in which it represented to the public (at least as of May 22, 1997) that its Grand Rapids facility is its "headquarters" and that other locations are "additional sites." (Plaintiffs' Exhibit D.)
II. LEGAL STANDARDS
In order to invoke the district court's removal jurisdiction, a defendant must show that the district court has original jurisdiction over the action. Long v. Bando Mfg. of America, Inc., 201 F.3d 754, 757 (6th Cir. 2000); see also 28 U.S.C. § 1441 (a). The burden of showing that the district court has original jurisdiction is on the party seeking removal. Id. (citing Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir. 1989)). Furthermore, because they implicate federalism concerns, removal statutes are to be narrowly construed. Id. (citing Shamrock Oil Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)).
In this case, the alleged basis for removal jurisdiction is diversity of citizenship pursuant to 28 U.S.C. § 1332. This being the case, the limitation of removal jurisdiction expressed in 28 U.S.C. § 1441(b) applies — namely, that "none of the parties in interest properly joined and served as defendants is a citizen of the State in which the action is brought." "Title 28 United States Code Section 1441(b) makes diversity jurisdiction in removal cases narrower than if the case were originally filed in federal court by the plaintiff. A defendant may not remove to federal court on the basis of diversity if any of the defendants is a citizen of the state where the action was filed." Hurt v. Dow Chemical Co., 963 F.2d 1142, 1145 (8th Cir. 1992); see also 14B Wright, Miller Cooper, Federal Practice and Procedure, § 3723 (citing cases).
Pursuant to federal statute, a corporation is deemed to be a citizen of both its state of incorporation and its principal place of business. 28 U.S.C. § 1332(c)(1). Under the holding of the Sixth Circuit Court of Appeals in Gafford v. General Electric Co., 997 F.2d 150, 161 (6th Cir. 1993), "[b]y common sense and by law, a corporation can have only one principal place of business" — no matter how far flung its operations. Moreover, under the holding in Gafford, the "principal place of business," at least in the Sixth Circuit Court of Appeals, is determined by applying a "total activities test" — which combines the nerve-center test (asking about the place of corporate decision making) and the place of activities test (asking about the place of production and delivery of services). Id. at 162-63. In Gafford, the Sixth Circuit explained that the "total activities test" was the most appropriate way for determining a principal place of business in that when dealing with far-flung businesses the determination in "[each case depends upon its own special circumstances." Id. (quoting Continental Coal Corp. v. Roszelle Bros., 242 F. 243, 246 (6th Cir. 1917)).
III. LEGAL ANALYSIS
In this case, Plaintiff urges that Michigan is Defendant SIADS' principal place of business. Defendant SIADS, to the contrary, maintains that it is someplace other than Michigan.
Under the "total activities test" mandated by Gafford, the Court determines that Defendant SIADS' principal place of business is in Michigan. The Michigan (self-described) "headquarters" of SIADS serves as the office of the corporation's President and, therefore, more so than any other state, is the place where daily decision making of the corporation takes place. Michigan is also, more so than any other state, the place of Defendant's greatest production, sales and employment of workers. Together these factors indicate beyond any significant question that Michigan is SIADS' principal place of business. As such, this matter will be remanded consistent with 28 U.S.C. § 1441(b).
CONCLUSION
Accordingly, an Order of Remand shall issue granting Plaintiffs' Motion to Remand and remanding this matter to the Circuit Court for Kent County, Michigan. Costs and attorney fees, having not been requested, are not assessed.
ORDER OF REMAND
In accordance with the Opinion of this date;IT IS HEREBY ORDERED that Plaintiffs' Motion to Remand (Dkt. No. 9) is GRANTED and this matter is REMANDED to the Circuit Court for Kent County, Michigan.