Summary
stating the general rule that a subsidiary corporation which is incorporated as a separate entity from its parent corporation is considered to have its own principal place of business
Summary of this case from State Auto Fin. Acq. Corp. v. State Auto. Mutual Ins. Co.Opinion
Case No. 01-CV-73913-DT
February 19, 2002
MEMORANDUM OPINION AND ORDER
BACKGROUND
On August 29, 2001, Plaintiff Terence J. Bogusz filed his Complaint with the Macomb County Circuit Court alleging a one-count Complaint under the Michigan's Persons With Disabilities Civil Rights Act, M.C.L. § 37.1101 et seq. against Defendant MPW Container Management Corporation of Michigan ("MPW Michigan"). Defendant MPW Michigan was served with the Complaint on September 17, 2001 and filed a timely Notice of Removal to this Court on October 15, 2001. Defendant MPW Michigan claims there is complete diversity of citizenship between Plaintiff and Defendant.
This matter is now before the Court on Plaintiffs Motion to Remand. A response has been filed and a hearing held on the matter.
ANALYSIS
Federal courts are courts of limited jurisdiction conferred by Article III of the United States Constitution and the Acts of Congress. Gross v. Hougland, 712 F.2d 1034, 1036 (6th Cir. 1983). Actions brought before the state court may be removed to the federal court only if the suit could have been originally brought before the federal court. 28 U.S.C. § 1441; See Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 10 (1983). Federal district courts have original jurisdiction over diversity cases and cases which "arise under" the federal Constitution or laws. 28 U.S.C. § 1331, 1332. In a diversity jurisdiction action, complete diversity is required between the plaintiff and all defendants. City of Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69-70 (1941). A corporation can be a citizen of two states: 1) its state of incorporation and 2) the state of its principal place of business. 28 U.S.C. § 1332(c). The court must apply the "total activity test" delineated by the Sixth Circuit to determine a corporation's place of business. Gafford v. General Elec. Co., 997 F.2d 150, 163 (6th Cir. 1993). The court must take into consideration all relevant factors and weigh them in light of the facts of each case. Id. at 163. The "total activity test" is a combination of the "nerve center" test which emphasizes the situs of corporate decision-making authority and overall control and the "corporate activities"/"place of activity" test which emphasizes the location of production activities or service activities. Id. at 162. The removing party has the burden of proving that the court has jurisdiction. Id. at 155. This burden is a difficult one to overcome; removal statutes "are strictly construed," and any ambiguities "must be resolved in favor of the non-removing party." Alexander v. Electronic Data Systems Corp., 13 F.2d 940, 949 (6th Cir. 1994).
Plaintiff claims there is no complete diversity of citizenship between the parties because MPW Michigan is a Michigan corporation. Plaintiff claims Defendant MPW Michigan is incorporated in Michigan and has its corporate resident agent in East Lansing, Michigan. Plaintiff argues that Plaintiffs offer of employment came from Defendant "MPW Container Management Corporation of Michigan," and signed by "Joseph P. Seletscky, General Manager, MPW Container Management Corp. of Michigan." (Ex. B, Plaintiffs Brief) Plaintiff further argues that the offer of employment never mentioned a parent corporation. The employment ad in the Macomb Daily notes that MPW Container Management Corp. of Michigan is located in Chesterfield, Michigan. (Ex. C, Plaintiffs Brief) Plaintiff does not cite any case law to support his argument that because no mention was made of a parent corporation in an offer letter or advertisement, then that company must be considered a resident of Michigan for purposes of a diversity jurisdiction analysis.
In response, Defendant MPW Michigan admits that MPW Michigan is incorporated in Michigan but claims that its principal place of business is in Ohio, rather than its state of incorporation. Defendant claims that MPW Michigan is a wholly owned subsidiary of MPW Industrial Services, Inc. ("MPW Industrial") which is an Ohio corporation with its principal place of business in Ohio. Defendant MPW Michigan argues that the Sixth Circuit has recognized and approved the "alter ego rule" as noted in Schwartz v. Electronic Data Systems, Inc., 913 F.2d 297 (6th Cir. 1990). The general rule is that a subsidiary corporation which is incorporated as a separate entity from its parent corporation is considered to have its own principal place of business. Id. at 283. However, under certain facts, the corporate parent's citizenship will control. Id. Defendant MPW Michigan claims that although it is a separate legal entity from MPW Industrial, it does not operate separately. Defendant DPW Michigan claims that it operates more as a division of MPW than as a separate company. In support of its position, DPW Michigan submitted an affidavit of Mike Byington. He states that as the Operations Manager at MPW Michigan, he has personal knowledge that MPW Michigan is a wholly owned subsidiary of MPW Industrial. (Byington Aff., ¶¶ 1-2) The officers and directors of MPW Michigan are also the officers and directors of MPW industrial. (Byington Aff., ¶ 2) The human resources policies of MPW Michigan are issued by MPW Industrial from Ohio. ( Id.) The health care benefits of MPW Michigan's employees are administered by MPW from Ohio. ( Id.) The paychecks of the employees are issued by MPW Industrial in Ohio. ( Id.) MPW Industrial of Ohio is the named lessee of the building in which MPW Michigan operates. ( Id.) Defendant MPW Michigan also cites Toms v. County Quality Meats, Inc., 610 F.2d 313 (5th Cir. 1980) and Jeong v. Onoda Cement Co., 2000 U.S. Dist. LEXIS 7985, 5 (C.D. Ca. 2000) to support its position.
There is no dispute that MPW Michigan is incorporated in Michigan. Other than noting that both the offer letter to Plaintiff and the ad placed in the Macomb Daily indicate that MPW Michigan is located in Michigan, Plaintiff has not submitted any evidence to rebut the affidavit submitted by Defendant MPW Michigan indicating that MPW Industrial in Ohio controls the activities of MPW Michigan. Under the "total activities test" set forth by the Sixth Circuit, Defendant MPW Michigan has fulfilled the "nerve center test" — that the Ohio parent corporation controls the activities of MPW Michigan. At oral argument, counsel indicated MPW Industrial has actual "services" located in various states including Ohio where it also has its "executive offices." Defendant MPW Michigan has carried its burden that for the purposes of the removal and jurisdiction statutes, its activities are controlled by the Ohio executive offices and that its principal place of business is in Ohio. See Gafford, 997 F.2d at 162 (the principal place of business of a far-flung corporation will generally be its nerve center).
CONCLUSION
For the reasons set forth above, Plaintiffs Motion to Remand the case to Macomb County Circuit Court is denied.
Accordingly,
IT IS ORDERED that Plaintiffs Motion Remanding the Case to Macomb County Circuit Court ( Docket No. 3, filed November 14, 2001) is DENIED. The Court will issue a Scheduling Order in this matter.