Opinion
Case No. CV 10-2733 CAS (JCx).
May 27, 2010
CIVIL MINUTES — GENERAL
Proceedings: (Chambers:)PLAINTIFF'S MOTION TO REMAND ACTION TOLOS ANGELES SUPERIOR COURTDEFENDANTS CLOPLAY CORPORATION'S ANDGRIFFON CORPORATION'S MOTION TO DISMISSUNDER FEDERAL RULE OF CIVIL PROCEDURE12(b)(6) and 12(b)(5)
CATHERINE JEANG Not Present N/A _________________________ _________________________ ____________________ Deputy Clerk Court Reporter / Recorder Tape No. Attorneys Present for Plaintiffs: Attorneys Present for Defendants: Not Present Not Present (filed 04/21/10) (filed 4/21/10) The Court finds this motion appropriate for decision without oral argument. Fed.R.Civ.P. 78; Local Rule 7-15. Accordingly, the hearing date of June 7, 2010, is hereby vacated, and the matter is hereby taken under submission.I. INTRODUCTION
The present action was initiated in the Los Angeles County Superior Court on February 5, 2010, by plaintiff Garland Gibbs against defendants Clopay Building Products Company, Inc. ("CBPC"), Clopay Corporation ("Clopay") and Griffin Corporation ("Griffon"). On April 14, 2010, CBPC and Clopay timely removed the action, alleging diversity of citizenship, pursuant to 28 U.S.C. §§ 1332, 1441(a) and (b), and 1446.
On April 21, 2010, plaintiff moved to remand this action to the Los Angeles County Superior Court, and defendants Clopay and Griffon moved to dismiss the complaint pursuant to Rules 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure. Plaintiff filed his opposition to the motion to dismiss on May 14, 2010, and defendants filed their opposition to the motion to remand on May 17, 2010. On May 19, 2010, plaintiff filed his reply in support of the motion to remand. Defendants replied to the opposition to their motion to dismiss on May 24, 2010. The parties' motions are before the Court.
II. LEGAL STANDARD
A. Motion for Remand
A motion for remand is the proper procedure for challenging removal. Remand may be ordered either for lack of subject matter jurisdiction or for any defect in removal procedure. See 28 U.S.C. § 1447(c). The Court strictly construes the removal statutes against removal jurisdiction, and jurisdiction must be rejected if there is any doubt as to the right of removal. See Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). The party seeking removal bears the burden of establishing federal jurisdiction. See Prize Frize, Inc. v. Matrix, Inc., 167 F.3d 1261, 1265 (9th Cir. 1999). The defendant also has the burden of showing that it has complied with the procedural requirements for removal. Judge William W. Schwarzer, et al., California Practice Guide: Federal Civil Procedure Before Trial § 2:609 (The Rutter Group 2007).
Under 28 U.S.C. § 1446(b), the defendant must file the notice of removal within 30 days after being served with a complaint alleging a basis for removal. When there are multiple defendants, all defendants named in the complaint and who have been properly joined and served in the action must also join in the removal. Hewitt v. City of Stanton, 798 F.2d 1230, 1232 (9th Cir. 1986). This is known as the rule of unanimity. See Chicago, Rock Island Pacific Railway v. Martin, 178 U.S. 245 (1900); see also Schwarzer, supra, § 2:905.2. If the defendant's removal notice fails to meet the procedural requirements of § 1446(b), the court may remand the action based on the plaintiff's timely motion. McAnally Enterprises, Inc. v. McAnally, 107 F. Supp. 2d 1223, 1226 (C.D. Cal. 2000). Pursuant to 28 U.S.C. § 1447(c), a motion to remand based on any defect other than subject matter jurisdiction must be made within 30 days after the filing of the notice of removal.
B. Motion to Dismiss
California's long-arm jurisdictional statute is coextensive with federal due process requirements, so that the jurisdictional analysis under state law and federal due process are the same. Cal. Civ. Proc. Code § 410.10; Roth v. Garcia Marquez, 942 F.2d 617, 620 (9th Cir. 1991). In order for a court to exercise personal jurisdiction over a nonresident defendant, that defendant must have "minimum contacts" with the forum state so that the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Depending on the nature of the contacts between the defendant and the forum state, personal jurisdiction is characterized as either general or specific. A court has general jurisdiction over a nonresident defendant when that defendant's activities within the forum state are "substantial" or "continuous and systematic," even if the cause of action is "unrelated to the defendant's forum activities."Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 446-47 (1952); Data Disc, Inc. v. Sys. Tech. Assoc., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977).
The standard for establishing general jurisdiction is "fairly high" and requires that the defendant's contacts be substantial enough to approximate physical presence. Bancroft Masters, Inc. v. Augusta Nat'l Inc., 223 F.3d 1082, 1086 (9th Cir. 2000). "Factors to be taken into consideration are whether the defendant makes sales, solicits or engages in business in the state, serves the state's markets, designates an agent for service of process, holds a license, or is incorporated there." Id. (finding no general jurisdiction when the corporation was not registered or licensed to do business in California, paid no taxes, maintained no bank accounts, and targeted no advertising toward California). Occasional sales to residents of the forum state are insufficient to create general jurisdiction.See Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986).
A court may assert specific jurisdiction over a claim for relief that arises out of a defendant's forum-related activities.Rano v. Sipa Press, Inc., 987 F.2d 580, 588 (9th Cir. 1993). The test for specific personal jurisdiction has three parts:
(1) the defendant must perform an act or consummate a transaction within the forum, purposefully availing himself of the privilege of conducting activities in the forum and invoking the benefits and protections of its laws;
(2) the claim must arise out of or result from the defendant's forumrelated activities; and
(3) exercise of jurisdiction must be reasonable.Id.; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985). The plaintiff bears the burden of satisfying the first two prongs, and if either of these prongs is not satisfied, personal jurisdiction is not established. Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004).
The purposeful availment prong is treated differently in a contracts case. Because a contract is "ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction," a court must evaluate four factors to determine whether this prong is met: (1) prior negotiations, (2) contemplated future consequences, (3) the terms of the contract, (4) the parties' actual course of dealing.Burger King, 471 U.S. at 478-79.
If the plaintiff establishes the first two prongs regarding purposeful availment and the defendant's forum-related activities, then it is the defendant's burden to "present a compelling case" that the third prong, reasonableness, has not been satisfied. Schwarzenegger, 374 F.3d at 802 (quoting Burger King, 471 U.S. at 477). The third prong requires the Court to balance seven factors: (1) the extent of the defendant's purposeful availment, (2) the burden on the defendant, (3) conflicts of law between the forum state and the defendant's state, (4) the forum's interest in adjudicating the dispute, (5) judicial efficiency, (6) the plaintiff's interest in convenient and effective relief, and (7) the existence of an alternative forum. Roth v. Garcia Marquez, 942 F.2d 617, 623 (9th Cir. 1991).
Where, as here, a court decides a motion to dismiss for lack of personal jurisdiction without an evidentiary hearing, the plaintiff need only make a prima facie showing of jurisdictional facts to withstand the motion to dismiss. Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995); Doe v. Unocal Corp., 27 F. Supp. 2d 1174, 1181 (C.D. Cal. 1998), aff'd, 248 F.3d 915 (9th Cir. 2001). Plaintiff's version of the facts is taken as true for purposes of the motion if not directly controverted, and conflicts between the parties' affidavits must be resolved in plaintiff's favor for purposes of deciding whether a prima facie case for personal jurisdiction exists. AT T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996); Unocal,supra, 27 F. Supp. 2d at 1181.
Rule 12(b)(5) of the Federal Rules of Civil Procedure authorizes a defendant to move for dismissal due to insufficient service of process. See Fed.R.Civ. 12(b)(5). "A federal court does not have jurisdiction over a defendant unless the defendant has been served properly [with the summons and complaint] under Fed.R.Civ.P. 4. . . . [w]ithout substantial compliance with Rule 4 neither actual notice nor simply naming the defendant in the complaint will provide personal jurisdiction.'" Direct Mail Specialists, Inc. v. Eclat Computerized Technologies, 840 F.2d 685, 687 (9th Cir. 1988) (citations omitted); Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986), amended by, 807 F.2d 1514 (9th Cir. 1987); see also Mississippi Publ'g Corp. v. Murphree, 326 U.S. 439, 444-45 (1946) ("[S]ervice of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served."). Once service of process is challenged, the "plaintiff [] bear[s] the burden of establishing that service was valid." Brockmeyer v. May, 383 F.3d 798, 801 (9th Cir. 2004). If the plaintiff is unable to satisfy its burden of demonstrating effective service, the court has discretion to either dismiss or retain the action. See Stevens v. Sec. Pac. Nat'l Bank, 538 F.2d 1387, 1389 (9th Cir. 1976).
III. DISCUSSION
A. Motion to Remand
Plaintiff seeks remand based on three arguments. First, plaintiff contends that the removal is defective because Griffon was served on March 18, 2010, but did not join in the removal petition filed on April 14, 2010. Mot. at 5. Defendants respond that because service of process on Griffon was defective, Griffon was not required to join in the removal. Opp'n at 1-2. Second, plaintiff argues that there is no admissible evidence that the amount in controversy exceeds $75,000, and as a consequence, jurisdiction based on diversity of citizenship cannot attach.
Mot. at 6. Defendants respond that they have no duty to prove that the amount in controversy is less than $75,000; rather, they argue that the amount in controversy is to be determined by looking at the face of the complaint which in this case alleges that plaintiff was wrongfully terminated and suffered lost wages and emotional distress. Opp'n at 5-6. Plaintiff further seeks punitive damages. Third, plaintiff argues that this case should be remanded because defendants have failed to demonstrate that their principal places of business are outside California, and therefore, defendants have failed to demonstrate that complete diversity exists. Mot. at 7-9. Defendants respond that all three defendants are incorporated in Delaware, and defendants CBPC and Clopay have their headquarters and principal place of business in Ohio. Decl. of Shasta Rodenhauser ("Rodenhauser Decl.") ¶¶ 5-8; Decl. of Millard Holiga ("Millard Decl.") ¶¶ 4-8. Griffon has its headquarters and principal place of business in New York. Rodenhauser Decl. ¶¶ 7-8.
The motion to remand should be denied. As to the amount in controversy, defendants demonstrate that plaintiff was terminated on or about July 23, 2008, and is claiming more than 20 months of lost wages. Because plaintiff earned approximately $61,000, not including fringe benefits, for the last year of his employment by CBPC, the face of the complaint alleges economic damages of almost $100,000. See Ellenburg v. Spartan Motors Chassis, Inc., 519 F.3d 192, 200 (4th Cir. 2008) (finding that "it was inappropriate for the district court to have required a removing party's notice of removal to meet a higher pleading standard than the one imposed on a plaintiff in drafting an initial complaint"); see also Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997) (where the existence of diversity jurisdiction depends on the amount in controversy, "the district court may consider whether it is facially apparent from the complaint that the jurisdictional amount is in controversy"). Plaintiff does not seek to limit his damages. The Court therefore finds that the complaint seeks damages in excess of $75,000.
As to the question of whether complete diversity exists, the Court finds that defendants have established that none of them has its principal place of business in California. As such, complete diversity exists.
Finally, with regard to the assertion that the removal is not effective because Griffon did not join in the removal, the answer depends on whether Griffon was validly served with the summons and complaint on March 18, 2010, as contended by plaintiff.
Defendants challenge the validity of the service made on Clopay and Griffon. Plaintiff purported to serve Clopay and Griffon by serving Stephanie Lebs at the Santa Fe Springs facility of CBPC. According to defendants, Lebs is employed by CBPC which is an indirect subsidiary of Clopay and Griffon. Rodenhauser Decl. ¶¶ 9-10. Therefore service having been effectuated pursuant to Cal. Code. Civ. Pro. § 416.10(a) and (b), was improper because Lebs, a customer service representative, was not a registered agent for service of process, an officer of Clopay or Griffon, or someone otherwise authorized by Clopay and Griffon to accept service. While plaintiff replies that Griffon was required to join in the removal simply because of a proof of service on Griffon was filed, the law is to the contrary. "Ordinarily, under 28 U.S.C. § 1446(a), all defendants in a state action must join in the petition for removal, except for nominal, unknown or fraudulently joined parties. This general rule applies, however, only to defendants properly joined or served in the action."Emrich v. Touche Ross Co., 846 F.2d 1190, 1193 n. 1 (9th Cir. 1988); see also Mitchell v. Paws Up Ranch, LLC, 597 F. Supp. 2d 1132, 1139 (D. Mont. 2009) ("If the 'failure to serve' exception to the rule of unanimity is met, there is no obligation on the non-removing and non-served defendant to join in the removal.") (internal citations omitted).
For each of the foregoing reasons, the motion to remand is DENIED.
B. Motion to Dismiss
Defendants Clopay and Griffon move to dismiss the complaint for lack of personal jurisdiction and for ineffective service of process pursuant to Rules 12(b)(2) and 12(b)(5) of the Federal Rules of Civil Procedure. As discussed above, plaintiff attempted to effectuate service on both Clopay and Griffon by serving Lebs, an employee of Clopay and Griffon's indirect subsidiary, CBPC in Santa Fe Springs, California. Lebs, however, is a low-level customer service representative of CBPC, and has no relationship with Clopay or Griffon. Nor was Lebs authorized to accept service on behalf of Clopay or Griffon.
Plaintiff responds that Griffon does not have standing to bring this motion because it failed to join in the removal petition. Mot. at 3. Plaintiff cites no authority in support of this argument. See id. Because the removal petition serves to remove the entire action to this Court, it appears that Griffon is a party-defendant with standing to move to dismiss.
In light of plaintiff's failure to effectuate valid service on Clopay and Griffon, the Court GRANTS the motion to dismiss.
Clopay and Griffon alternatively argue that they are not subject to personal jurisdiction in California. In light of the Court's finding that these moving defendants should be dismissed because they were not property served, the Court declines to reach this argument.
IV. CONCLUSION
In accordance with the foregoing, the Court hereby DENIES plaintiff's Motion for Remand and GRANTS defendants' Motion to Dismiss without prejudice.
IT IS SO ORDERED.