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United States District Court, Southern District of New York

March 26, 2003


The opinion of the court was delivered by: Gerard E. Lynch, United States District Judge.


This action arises out of an insurance contract between plaintiff insurers, and defendants, a multi-national group of companies affiliated or partnered with BP Amoco P.L.C. Plaintiffs seek a declaratory judgment that certain insurance claims submitted by defendants are not covered by the contract, and initially filed suit in New York state court. Defendants removed the case to this Court on the basis of diversity jurisdiction. See 28 U.S.C. § 1332. Plaintiffs now move to remand the case to state court, alleging that complete diversity does not exist. For the reasons stated below, the motion will be denied.

The federal removal statute, 28 U.S.C. § 1441 (a), allows defendants sued in state court to remove the action to federal court if the federal court would have original jurisdiction over the action. For this Court to have diversity jurisdiction over the action, all defendants must be citizens of different states than the plaintiffs, and the amount in controversy be at least $75,000. Colon v. Rent-A-Center, Inc. 13 F. Supp.2d 553, 556 (S.D.N.Y. 1998). If the Court determines that it does not have original jurisdiction over a case removed from state court, it must remand the case back to state court. 28 U.S.C. § 1447 (c). The burden of establishing jurisdiction rests on the removing parties, and the Court must view all evidence in the light most favorable to the parties seeking remand. Vasura v. Acands, 84 F. Supp.2d 531, 533 (S.D.N.Y. 2000). Plaintiffs have named as defendants 126 corporations, and the parties agree that all defendants except one, Nippon Oil USA Limited ("Nippon Oil"), are completely diverse in citizenship from the plaintiffs. (Pls. Mem. at 4; Defs. Mem. at 3.) Thus, this Court's jurisdiction over the action turns on the citizenship of Nippon Oil.

At the outset, the parties dispute what evidence the Court may consider. Defendants contend that plaintiffs submitted new evidence pertaining to Nippon Oil's citizenship with their reply brief, which they could have submitted with their initial motion papers. (Defs. Req. at 2.) Thus, defendants seek leave to file a supplemental affidavit that responds to plaintiffs' reply brief. Plaintiffs oppose the request, arguing that any sur-reply affidavit is not timely, because they did not improperly present any new evidence in their reply papers. (Pls. Opp. at 3.) Plaintiffs do not contend, however, that if given the opportunity, they would or could offer any additional evidence to rebut defendants' sur-reply affidavit, or that they are prejudiced by defendants' offering false or misleading information with no further opportunity for the plaintiffs to respond. Indeed, far from revealing bad faith on either side, an examination of the briefs in the sequence in which they were submitted indicates that the issues relating to Nippon Oil's citizenship simply became further refined as both sides presented their evidence and responded to each previous submission. Thus, since there is no evidence of prejudice to plaintiffs or bad faith on defendants' part, and the parties will be best served by the Court's deciding the jurisdictional issue presented to it on the most complete factual basis possible, the Court will consider the evidence contained in defendants' supplemental affidavit.

For purposes of determining diversity, a corporate defendant is considered a citizen both of the state in which it is incorporated, and of the state in which its principal place of business is located. R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 654 (2d Cir. 1979). The parties agree that Nippon Oil is incorporated under the laws of Delaware (Defs. Mem. at 3), but disagree as to its principal place of business. Plaintiffs argue that Nippon Oil is principally based in New York, which would render it a non-diverse party, since plaintiff National Union Fire Insurance Company is also a citizen of New York. (Pls. Mem. at 4.) Defendants contend that Nippon Oil's principal place of business is in California, and that it is therefore diverse. (Defs. Mem. at 6.)

Nippon Oil has only two offices, one in New York and one in California. (Nakaya Aff. ¶ 7-10.) In order to ascertain its principal place of business, therefore, the Court must determine

"the state in which the corporation has its most extensive contacts with, or greatest impact on, the general public." Center for Radio Information, Inc. v. Herbst, 876 F. Supp. 523, 525 (S.D.N.Y. 1995) (stating that "public impact" test is to be used to determine principal place of business of corporations with only a few offices). This test emphasizes a corporation's interactions with the public, through its business contacts, marketing, public relations, and sales revenues. See, e.g., id. at 526; Tucker Anthony, Inc. v. Bankers Trust Co., No. 93 Civ. 0257 (SWK), 1994 WL 9683, at *4 (S.D.N.Y. Jan. 10, 1994).

Defendants have established that Nippon Oil's principal place of business is in California. Nippon Oil purchases and sells crude oil and crude oil products. (Nakaya Aff. ¶ 8.) It transferred its headquarters to the California office in November 2001, after ChevronTexaco, its oil supplier, moved to California, and it does not use its New York office for oil purchase or sale. (Id. ¶ 6, 8.) The company's sales department, as well as its crude oil service department, are located in the California office, and the "majority" of its business dealings are conducted from that office. (Id.) These facts, taken together, suggest that the majority of Nippon Oil's contacts with the public — its interactions with clients or customers, and any marketing that it may do — occur in the California office. In contrast, the New York office apparently does not take part in selling or marketing Nippon Oil's products, suggesting that it has little or no impact on the public. See Tucker Anthony, 1994 WL 9683, at *4.

Plaintiffs have not proffered any evidence that refutes the conclusion that the California office is Nippon Oil's principal place of business. Plaintiffs do note, and defendants concede, that Nippon Oil's California corporate filings identify the New York office as its "principal executive office[]." (Pls. Reply at 4-5; Nakaya Supp. Aff. ¶ 4.) Defendants argue that the filing is not probative of citizenship, because Nippon Oil's corporate headquarters are now located in California, and its executives simply neglected to update their California filings after Nippon Oil shifted its center of operations from New York to California. (Id.) Defendants also proffer corporate resolutions, post-dating plaintiffs evidence and pre-dating the instant dispute, transferring the corporate headquarters to California. (Nakaya Aff. Ex. A.) Even if Nippon Oil's principal executive offices were still located in New York, however, a corporation's headquarters and policy-making apparatus do not necessarily constitute its principal place of business, since the operative inquiry is where the corporation actually does its business with the public. While defendants' evidence is less complete than may be ideal, they have established, in the absence of any contrary facts, that the Nippon Oil's principal place of business is the California office, regardless of where its headquarters may be. See Inland Rubber Corp. v. Triple A Tire Serv., Inc., 220 F. Supp. 490, 492 (S.D.N.Y. 1963) (finding corporation's principal place of business to be New York even though corporate headquarters were located in Ohio).

Thus, Nippon Oil is a citizen of Delaware and California for the purposes of determining diversity of citizenship, and as the parties are therefore completely diverse, this Court has subject matter jurisdiction over the action. Accordingly, plaintiffs' motion to remand is denied.



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