Opinion
Civil Action No. 07-40029-FDS.
July 27, 2007
MEMORANDUM AND ORDER ON MOTION TO REMAND TO STATE COURT
On January 12, 2007 plaintiff, Wachusett Potato Chip Co., Inc., filed a complaint in Fitchburg District Court alleging that defendant, Mohawk Beverage, Inc., owed it payments for goods purchased from plaintiff. Defendant removed the case to this Court on February 8, 2007. Pending before the Court is plaintiff's motion to remand the matter to state court pursuant to 28 U.S.C. § 1447. In support of this motion, plaintiff contends that removal to federal court was improper because there is not complete diversity of citizenship under 28 U.S.C. § 1332.
I. Analysis
The district courts of the United States have original jurisdiction over actions between citizens of different states when the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a). Here, there is no dispute that the amount in controversy exceeds $75,000. Instead, federal jurisdiction hinges upon whether complete diversity of citizenship exists.
In its complaint, plaintiff seeks to recover $1,169,098.94 against defendant.
Plaintiff is a Massachusetts corporation. Defendant was incorporated in, and maintains a principal place of business in, New York. For purposes of the diversity statute, corporations are deemed to be citizens of the state in which they are incorporated and have a principal place of business. 28 U.S.C. 1332(c)(1). Plaintiff contends that defendant's relationship with a non-party Massachusetts company, Polar Beverage, destroys diversity of citizenship for two reasons: (1) through the relationship, defendant made the minimum contacts necessary for Massachusetts courts to exercise personal jurisdiction over defendant and (2) there is "a likely commonality of ownership" between defendant and Polar Beverage. Even if true, these allegations fail to destroy diversity jurisdiction.
First, in suggesting that defendant's contacts with Massachusetts destroy diversity, plaintiff conflates the tests for personal jurisdiction and citizenship under the diversity statute. The fact that a Massachusetts court may have personal jurisdiction over a defendant does not mean that defendant is somehow converted into a Massachusetts citizen. Indeed, personal jurisdiction over a defendant may (and often does) exist in multiple states.
If this were true, federal courts could never exercise diversity jurisdiction, as there must be personal jurisdiction over the defendant in the state in which the federal court sits.
Second, it is unclear what, if any, bearing the alleged commonality of ownership between defendant and Polar Beverage has on defendant's citizenship. The record contains defendant's federal tax returns and documents from the New York Department of State, both of which indicate that defendant has a principal place of business in Schenectady, New York. Even if Polar Beverage is defendant's parent company, or even if it shares common owners with it — and there is no evidence in the record to establish either point — defendant does not thereby become a Massachusetts citizen. See de Walker v. Pueblo Int'l, Inc., 569 F.2d 1169, 1173 (1st Cir. 1978) (holding that parent's ownership of 100% of the subsidiary's stock did "not justify ignoring the otherwise separate character of the two corporations"). 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.'" Topp v. CompAir, Inc., 814 F.2d 830 (1st Cir. 1987) (quoting 1 Moore's Federal Practice ¶ .77 at 717.10 (2d ed. 1986)). The First Circuit has "repeatedly held that, where there is no evidence that the integrity of the corporate form has been violated, the separate corporate identities of a parent and subsidiary should be honored when determining either one's principal place of business." Taber Partners v. Merit Builders, Inc., 987 F.2d 57 (1st Cir. 1993).
Accordingly, because the amount in controversy exceeds $75,000 and there is complete diversity of citizenship, the requirements of 28 U.S.C. 1332 have been satisfied. The motion to remand will therefore be denied.
II. Conclusion
Plaintiff's motion to remand the case to state court is DENIED.