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United States District Court, Southern District of New York

April 8, 2003


The opinion of the court was delivered by: Richard Conway Casey, United States District Judge


I. Background

Thomas E. Arnold ("Plaintiff") commenced this action in New York State Supreme Court on June 27, 2002 against Towers Perrin, Richard L. Mitarotonda and Daniel R. Colello (collectively, "Defendants"). Plaintiff alleges that Defendant Towers Perrin breached its employment agreement with him in February 2002, when he was summarily terminated from his position at Towers Perrin. Plaintiff's complaint therefore includes claims of breach of contract and oral contract as against Defendant Towers Perrin and intentional misrepresentation, fraud and promissory estoppel as and against all Defendants. See Compl. ¶¶ 89-131. Relying on diversity grounds, Defendants subsequently removed the case to this Court. Defendants maintain that complete diversity exists as to all of the parties and that no Defendant resides in New York.*fn1 Therefore, Defendants maintain that the case was properly removed. Plaintiff, however, contends that Towers Perrin is a New York citizen because it has represented itself as such on its website and to employee recruiting databases and consumer reporting agencies. On this ground, Plaintiff moves to remand this case to the New York State Supreme Court and for attorneys fees and costs incurred in making this motion. For the following reasons, Plaintiff's motion is denied.

II. Analysis

A defendant sued in state court may remove a case to federal court if the Court's federal question or diversity jurisdiction is properly invoked. In this case, the Court must determine whether the latter predicate for removal jurisdiction exists.

Under 28 U.S.C. § 1441(b), when a case predicated upon diversity grounds is removed from state to federal court, the removal is proper only if none of the defendants is a citizen of the state in which the action is brought. 28 U.S.C. § 1441(b); see also Circle Indus. USA Inc. v. Parke Constr. Group, Inc., 183 F.3d 105, 108 (2d Cir. 1999). Plaintiff believes that Towers Perrin's principal place of business is New York and therefore for diversity purposes Towers Perrin would be a New York citizen. On the other hand, Defendants contend that removal was proper because Towers Perrin's principal place of business is and has, since the filing of the action in state court, been Stamford, Connecticut. In sum, the central question for the Court is whether Towers Perrin's principal place of business is New York or Connecticut.

A federal court presented with a motion to remand is limited solely to the jurisdictional question of its authority to hear the case consistent with the restrictions of the removal statute. See Bagley v. Maho Bay Camps, Inc., 850 F. Supp. 172 (E.D.N.Y. 1994). Whether an action should be remanded to state court must be resolved by the district court with reference to the complaint, the notice of removal, and the state court record when the notice of removal was filed. The burden is on the removing party to establish its right to a federal forum by "competent proof." R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir. 1979). The district court, sitting without a jury, decides all questions of fact raised by the motion to remand. See Underwood v. Trans World Airlines, 710 F. Supp. 78 (S.D.N.Y. 1989).

For purposes of diversity jurisdiction, a corporation is a citizen of its state of incorporation and of the state that serves as its principal place of business. 28 U.S.C. § 1332(c). Here, Towers Perrin is incorporated in Pennsylvania. See Chinn Decl., Ex. 1. Therefore, removal was proper unless New York qualifies as Towers Perrin's principal place of business.

The Second Circuit has recognized two separate tests to determine the location of a corporation's principal place of business, namely the "nerve center" and the "place of operations" tests. The parties assert that the nerve center test should be applied here because Towers Perrin activities are decentralized and spread across numerous states.

Where corporations are centralized, courts determine a corporation's principal place of business by examining the location from which the corporation has its greatest contacts, or impact on, the general public. Krauth v. Executive Telecard, Ltd., 887 F. Supp. 641, 647 (S.D.N.Y. 1995). This test for centralized corporations is called the place of operations test. Id. see also Center for Radio Info., Inc. v. Herbst, 876 F. Supp. 523, 525 (S.D.N.Y. 1995). In contrast, when a corporation's operations are widespread across numerous states or countries, courts apply the nerve center test, which identifies the place where overall policy originates. See Scot Typewriter Co. v. Underwood Corp., 170 F. Supp. 862, 865 (S.D.N.Y. 1959); R.G. Barry Corp., 612 F.2d at 655; Krauth, 887 F. Supp. at 646-47. Here, Towers Perrin is a company with operations around the world. In fact, Towers Perrin engages in its varied activities through approximately seventy offices located in twenty states and twenty-three countries. Giaquinto Decl. ¶ 2. The "nerve center" test therefore applies. See Krauth, 887 F. Supp. at 646. Accordingly, Towers Perrin's principal place of business is the "nerve center" from which "it radiates out to its constituent parts and from which its officers direct, control and coordinate all activities without regard to locale, in furtherance of the corporate objective." Scott Typewriter, 170 F. Supp. at 865; see Ellis v. Provident Life & Accident Ins. Co., 929 F. Supp. 751, 753-54 (S.D.N.Y. 1996).

Plaintiff contends that because: (1) press releases are issued through Towers Perrin's New York office; (2) at the date of the filing of the Complaint, Towers Perrin's website listed New York as its headquarters; and (3) Towers Perrin holds itself out to employee recruiting career websites and consumer reporting agencies as a New York corporation, Towers Perrin's should be deemed a citizen of New York. However, in a nerve center analysis, these factors are not determinative. See Krauth, 887 F. Supp. at 647 (holding that although a corporation's marketing and customer services originated in Denver and press releases were issued from Denver, New York was corporation's principal place of business because corporate decisions were made in New York). Moreover, Towers Perrin's inadvertent website designation which has since been changed to indicate that Connecticut is Towers Perrin's headquarters, is also not a dispositive factor under the nerve center test. See id. at 647-48 (holding that "nerve center" was in New York, despite designation in SEC filing that "principal executive offices" were in Denver); Uniroyal, Inc. v. Heller, 65 F.R.D. 83, 86-87 (S.D.N.Y. 1974) (holding that a corporation's designation of its "principal executive offices" as New York in an SEC filing, was not dispositive and that the "nerve center" was in fact Connecticut, where the executive officers were located). The dispositive inquiry under the nerve center test focuses on the actual location from which a corporation's officers direct, control and coordinate the corporate activities.

Under this inquiry, the Court determines that for the following reasons Towers Perrin's nerve center is its Stamford, Connecticut office. First, a majority of Towers Perrin's executives officers and Executive Council are located in Stamford. Giaquinto Decl. ¶¶ 5-8. Towers Perrin's Chief Executive Officer and Chairman of the Board, as well as its Chief Financial Officer and Chief Administrative Officer have their offices in Stamford, Connecticut. Id. Second, a majority of Towers Perrin's Executive Council, which exercises overall responsibility for managing Towers Perrin's portfolio of business, have their offices in Stamford, Connecticut. Id. ¶ 9. Third, a majority of Towers Perrin's Line of Business Leaders are in the Connecticut office. Towers Perrin has ten major lines of business, each headed by employees with the title Line of Business Leader. Of these ten Line of Business Leaders, seven are located in Stamford. Id. ¶ 11. Finally, Towers Perrin's Board of Directors has overall responsibility for governance of the company. of the Board of Directors, a majority work from the Connecticut office. It is where a majority of the executive officers, Executive Council, Line of Business Leaders and Board of Directors work where decisions to control and direct Towers Perrin's operations are made. See e.g., Powers v. Fox Television Stations, Inc., 907 F. Supp. 719, 722 (S.D.N.Y. 1992); Kubin v. Miller, 801 F. Supp. 1101, 1112 (S.D.N.Y. 1992). Therefore, overall policy originates from Towers Perrin's Stamford, Connecticut office. See R.G. Barry, 612 F.2d at 655. Because this inquiry is dispositive under the nerve center test, the Court concludes that Towers Perrin's principal place of business is Stamford, Connecticut. Accordingly, for purposes of diversity jurisdiction, Towers Perrin is a citizen of Pennsylvania and Connecticut. Removal was therefore proper as no defendant is a citizen of New York.

III. Conclusion

For the foregoing reasons, the Court determines that Towers Perrin is a citizen of Pennsylvania and Connecticut. Removal was appropriate under 28 U.S.C. § 1441(b). Plaintiff's motion to remand is therefore denied. The case is retained on the Court's docket.

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