Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_08-cv-01516/USCOURTS-casd-3_08-cv-01516-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition For Removal--Other Contract

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1 08cv1516 BTM (POR)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

WANDA PODGURSKI,

Plaintiff,

CASE NO. 08cv1516 BTM (POR)

ORDER DECLINING TO REMAND

vs. CASE

FEDERAL INSURANCE CO., et al.,

Defendant.

On November 17, 2008, the Court ordered Defendants in this case to show cause why

the case should not be remanded to California Superior Court. Specifically, the Court

requested that Defendants file a statement setting forth their principal places of business as

a basis for diversity jurisdiction. 

On December 1, 2008, Defendants Federal Insurance Company (“Federal”) and

Pacific Indemnity Company (“Pacific”) filed their response. The Court is satisfied that

Defendants have demonstrated that their principal places of business are not located in

California.

Federal courts generally use either the “place of operations” test or the “nerve center”

test to determine a corporation’s principal place of business. Tosco v. Communities for a

Better Environment, 236 F.3d 495, 500 (9th Cir. 2001). Using the “place of operations” test,

a corporation’s principal place of business is located in the state where the substantial

predominance of its business activity takes place. Id. Courts look to factors including the

location of employees, tangible property, production activities, sources of income, and where

Case 3:08-cv-01516-BTM-POR Document 18 Filed 12/22/08 Page 1 of 3
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2 08cv1516 BTM (POR)

sales take place to determine whether a corporation’s substantial predominance of business

activity is in any given state. Id. In the Ninth Circuit, courts only use the “nerve center” test

when no state contains a substantial predominance of the corporation’s business. Id. The

“nerve center” test places a corporation’s principal place of business where the majority of

its executive and administrative functions are performed. Id.

Using the “place of operations test, the Court finds it unclear where the substantial

predominance of Pacific’s business activity is located. Since Pacific has no employees and

no tangible property, the Court looks to the location of its sources of income, place of sales,

and executive and administrative offices. New York accounts for the largest monetary

amount of Pacific’s direct written premiums, followed by Massachusetts. Pacific’s greatest

per capita revenue is located in Massachusetts, followed by New York. Pacific’s executive

and administrative functions are located in New Jersey. Thus, the Court finds that no state

contains a substantial predominance of Pacific’s business activity. The Court employs the

“nerve center” test and holds that New Jersey, the location of its corporate headquarters,

qualifies as Pacific’s principal place of business. 

Using either the “place of operations” test or the “nerve center” test, Defendants make

clear that Federal’s principal place of business is not California. The largest number of

Federal employees are located in New York. Federal also draws the most direct written

premiums and per capita revenue from New York. But, the majority of Federal’s tangible

property is in New Jersey, as are its executive and administrative functions. Thus, it is

unclear whether the substantial predominance of Federal’s business is located in New York

or New Jersey. Using the “nerve center” test, Federal’s principal place of business is in New

Jersey. Regardless of the test used, Federal has adequately shown that California is not

Federal’s principal place of business. 

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3 08cv1516 BTM (POR)

For the reasons stated above, the Court is satisfied that Defendants Federal and

Pacific have demonstrated diversity of citizenship. The Court therefore declines to remand

this case to the Superior Court.

IT IS SO ORDERED.

DATED: December 22, 2008

Honorable Barry Ted Moskowitz

United States District Judge

Case 3:08-cv-01516-BTM-POR Document 18 Filed 12/22/08 Page 3 of 3