Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_16-cv-00200/USCOURTS-casd-3_16-cv-00200-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332in Diversity-Insurance Contract

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

FELIX HERNANDEZ, et al.,

Plaintiffs,

CASE NO. 16cv200-LAB (JLB)

ORDER DISCHARGING ORDER TO

vs. SHOW CAUSE

STATE FARM FIRE & CASUALTY

COMPANY, et al.,

Defendants.

The Court ordered Plaintiffs to show cause why this action should not be dismissed

for lack of jurisdiction and improper venue, to which Plaintiffs filed a response. Two

Defendants also filed unsolicited responses waiving their objections to venue and attempting

to brief the jurisdictional and venue issues for Plaintiffs. The Court, finding Plaintiff’s

response insufficient and unwilling to permit Defendants to amend the complaint for

Plaintiffs, ordered Plaintiffs to file additional briefing (“Response”) on the venue issue, which

they have now done. They also filed an amended complaint.

This order incorporates the reasoning set forth in its earlier two orders. (Docket nos.

6 and 13.) Earlier, Plaintiffs argued only that venue was proper under 28 U.S.C.

§ 1391(b)(2) and (3), and the Court rejected those arguments. In the supplemental briefing,

Plaintiffs argue venue is proper under § 1391(b)(1) and (2). 

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The argument concerning the propriety of venue under § 1391(b)(2) is just as

defective as before. This is an insurance dispute, and the claims arise from State Farm Fire

and Casualty’s alleged practice of steering water mitigation business to two companies that,

by agreement with State Farm Fire and Casualty, limit the amount of restoration work they

perform. Plaintiffs, who reside in the Central District of California, allege that this happened

to them and that, as a result, their water-damaged home was inadequately restored.

There are no allegations in the complaint that any part of the events or omissions

giving rise to the claim occurred in this District. The allegedly wrongful conduct did not begin

or end here, nor were its effects felt here. Instead, some of the communications passed

through this District and some of the workers who conducted water mitigation have their

home base here. In short, no substantial part of the events or omissions giving rise to

Plaintiff’s claims occurred here, and venue is not proper under § 1391(b)(2).

Section 1391(b)(1) is a new argument. This subsection makes venue proper in any

district where any defendant resides, if all defendants reside in the same state. The

residence of the Defendants in this case who are business entities is governed by

§ 1391(c)(2), which provides that those Defendants reside in any judicial district in which

they are subject to the court’s personal jurisdiction with respect to the case in question. 

Of the Defendants in this case, the Response analyzes the residence only of State

Farm Fire & Casualty. With regard to the others, it relies on the same reasoning the Court

rejected before, i.e., that merely because they do business in California, every District Court

in California has general personal jurisdiction over them. (See Response at 5:4–8 (arguing

that certain Defendants are deemed California residents under § 1391(c) “because they are

all licensed (and do business in) California, have the capacity to sue and be sued in

California and are thus subject to the court’s personal jurisdiction.”) After Goodyear Dunlop

Tires Operations, S.A. v. Brown, 131 S.Ct. 2846 (2011) and Daimler AG v. Bauman, 134

S.Ct. 746 (2014), that a company does business in a state — even systematically — is not

enough to establish general personal jurisdiction over the company there. See Martinez v.

Aero Caribbean, 764 F.3d 1062, 1070 (9 Cir. 2014) (quoting Daimler at 760, 761 and n.19) th

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(holding that only in an “exceptional case” would general jurisdiction over a corporation be

available merely because it systematically engages in business within a state).

That being said, different reasoning could explain why venue is proper under

§ 1391(b)(1). Under this subsection, venue is proper in any district in which any defendant

resides, if all defendants reside in the state where the district is located. The individual

Defendants and one corporate Defendant reside in California. Because all the other

Defendants are business entities that allegedly directed their activity towards the Central

District and the harm from their allegedly wrongful actions was felt there, specific personal

jurisdiction over them would be proper there. Under § 1391(c)(2) they are therefore deemed

to “reside” in the Central District. The result would be that all Defendants are deemed

California residents for purposes of venue rules. Venue would therefore be proper in any

district where any Defendant resides, i.e., either in this District or the Central District.

Plaintiffs did not make this argument, however, and if this were a jurisdictional issue,

the Court would be required to dismiss the case. But because the Court is not required to

raise the issue of venue sua sponte, and because two of the Defendants have specifically

waived it, the Court considers it prudent to discharge its order to show cause and allow the

case to proceed without dismissing or transferring.

The order to show cause is therefore DISCHARGED. If the remaining Defendants

wish to challenge venue, or if any party wishes to seek transfer, this order does not preclude

them from doing so.

IT IS SO ORDERED.

DATED: February 29, 2016

HONORABLE LARRY ALAN BURNS

United States District Judge

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