Source: https://law.justia.com/cases/federal/appellate-courts/F3/20/987/523302/
Timestamp: 2018-03-17 10:34:42
Document Index: 59453624

Matched Legal Cases: ['§ 1332', '§ 1359', '§ 1359', '§ 1332', '§ 1332', '§ 1332', '§ 1332', '§ 1367']

Nike, Inc., an Oregon Corporation, Plaintiff-appellant, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales,a Spanish Corporation; Carlos Rosalbertrand, Defendants-appellees.nike, Inc., an Oregon Corporation, Plaintiff-appellee, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales,a Spanish Corporation; Carlos Rosalbertrand, et al.,defendants-appellants.nike, Inc., an Oregon Corporation, Plaintiff-appellee, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales, a Spanishcorporation; Carlos Rosal Bertrand; Lorenzo Rosalbertrand; Mario Loscos, Defendants-appellants.nike, Inc., an Oregon Corporation, Plaintiff-appellee, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales, a Spanishcorporation; Carlos Rosal Bertrand; Lorenzo Rosalbertrand; Mario Loscos, Defendants-appellants, 20 F.3d 987 (9th Cir. 1994) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1994 › Nike, Inc., an Oregon Corporation, Plaintiff-appellant, v. Comercial Iberica De Exclusivas Deportiva...
Nike, Inc., an Oregon Corporation, Plaintiff-appellant, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales,a Spanish Corporation; Carlos Rosalbertrand, Defendants-appellees.nike, Inc., an Oregon Corporation, Plaintiff-appellee, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales,a Spanish Corporation; Carlos Rosalbertrand, et al.,defendants-appellants.nike, Inc., an Oregon Corporation, Plaintiff-appellee, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales, a Spanishcorporation; Carlos Rosal Bertrand; Lorenzo Rosalbertrand; Mario Loscos, Defendants-appellants.nike, Inc., an Oregon Corporation, Plaintiff-appellee, v. Comercial Iberica De Exclusivas Deportivas, S.a., a Spanishcorporation; S.a. Distribuciones Internacionales, a Spanishcorporation; Carlos Rosal Bertrand; Lorenzo Rosalbertrand; Mario Loscos, Defendants-appellants, 20 F.3d 987 (9th Cir. 1994)
US Court of Appeals for the Ninth Circuit - 20 F.3d 987 (9th Cir. 1994)
Argued and Submitted Aug. 31, 1993. Decided March 31, 1994
Nike brought these claims for breach of contract, fraud and tortious interference with prospective advantage against Cidesport, its parent corporation, and the individual corporate officers of these two corporations (collectively "defendants").2 Nike claims the district court had jurisdiction over this action pursuant to 28 U.S.C. § 1332(a) (2) because the action was between a "citizen [ ] of a State," Nike, an Oregon corporation with its principal place of business in Beaverton, Oregon, and "citizens or subjects of a foreign state," the defendants, none of whom are United States citizens. NIL, a Bermuda corporation, was not a party to the action, having assigned its claims to Nike just three days before Nike filed its complaint.
"The existence of subject matter jurisdiction is a question of law, and our review is de novo." Yokeno v. Mafnas, 973 F.2d 803, 806 (9th Cir. 1992). "We review the district court's findings of fact relevant to its determination of subject matter jurisdiction for clear error." Id.; see also Syms v. Castleton Indus., Inc., 470 F.2d 1078, 1085 (5th Cir. 1972) (applying clear error standard to trial court's finding that assignment was not collusive).
Defendants maintain that the claim assignment from NIL to Nike violates the proscriptions of the federal anti-collusion statute.5 28 U.S.C. § 1359. Under that statute, " [a] district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court." 28 U.S.C. § 1359.
We draw no distinction between corporations incorporated in a state of the United States and those incorporated in a foreign country when determining the corporation's citizenship for purposes of diversity jurisdiction. Danjaq, S.A. v. Pathe Communications Corp., 979 F.2d 772, 774 (9th Cir. 1992). In each instance, the corporation is deemed a citizen of its place of incorporation and the location of its principal place of business. 28 U.S.C. § 1332(c) (1). Our decision in Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707 (9th Cir. 1992), does not alter this result. In that case, we considered the effect of an individual's potential citizenship in the United States and Ireland and concluded that " [d]ual citizenship ... does not defeat jurisdiction." Mutuelles Unies, 957 F.2d at 711. The distinction between our treatment of individuals and corporations finds its source in the statute establishing diversity jurisdiction. While the statute creates a system of dual citizenship for corporations, see 28 U.S.C. § 1332(c) (1), it contains no indication that we should consider the dual citizenship of an individual for purposes of diversity jurisdiction. Accordingly, we do not. Mutuelles Unies, 957 F.2d at 711.
NIL, however, is a corporation and we cannot disregard either its site of incorporation, Bermuda, or its principal place of business, which Nike alleges is Oregon,6 when testing for complete diversity. In this instance, when we treat NIL as an alien citizen due to its Bermuda incorporation, the requirements of diversity jurisdiction are not met. Although the federal courts have jurisdiction over an action between "citizens of a State and citizens or subjects of a foreign state," 28 U.S.C. § 1332(a) (2), diversity jurisdiction does not encompass a foreign plaintiff suing foreign defendants, Cheng v. Boeing Co., 708 F.2d 1406, 1412 (9th Cir.), cert. denied, 464 U.S. 1017, 104 S. Ct. 549, 78 L. Ed. 2d 723 (1983), such as an action between NIL and these alien defendants. Nike's presence as a plaintiff does not salvage jurisdiction because diversity must be complete. See Faysound Ltd. v. United Coconut Chem., Inc., 878 F.2d 290, 294 (9th Cir. 1989) (presence of citizen defendant does not save jurisdiction as to alien defendant in action brought by alien plaintiff); cf. Transure, Inc. v. Marsh & McLennan, Inc., 766 F.2d 1297, 1298-99 (9th Cir. 1985) (pursuant to Sec. 1332(a) (3) presence of aliens on both sides does not defeat diversity when citizens of United States on both sides who satisfy diversity requirements); 28 U.S.C. § 1332(a) (3) (diversity jurisdiction extends to actions between "citizens of different States and in which citizens or subjects of a foreign state are additional parties").
Moreover, if Nike had filed this suit as the sole plaintiff, it could not have relied on the district court's supplemental jurisdiction to add NIL and NIL's claims. Prior to the assignment, NIL was an indispensable party, see Harrell & Sumner Contracting v. Peabody Peterson, 546 F.2d 1227, 1229 (5th Cir. 1977) (joint obligees are indispensable parties to action for enforcement of that obligation), whose presence, as we have just demonstrated, would have defeated diversity.7 Supplemental jurisdiction cannot be used to create jurisdiction over an action that does not satisfy the requirements of the diversity statute. See 28 U.S.C. § 1367(b) (where original jurisdiction founded on diversity supplemental jurisdiction does not extend to claims "by persons proposed to be joined as plaintiffs under Rule 19 ... when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332"). Absent NIL's assignment to Nike, the federal courts lacked jurisdiction over this action.
We may now proceed to determine whether the assignment was "collusive." In this circuit, we have concluded that " [c]ertain kinds of diversity-creating assignments warrant particularly close scrutiny." Yokeno v. Mafnas, 973 F.2d 803, 809 (9th Cir. 1992). We have treated assignments "by corporations to their officers or directors ' [as] presumptively ineffective to create diversity jurisdiction,' " id. at 809-10; see also Dweck v. Japan CBM Corp., 877 F.2d 790, 792 (9th Cir. 1989), and have generally stated that the same presumption applies to " [a]ssignments between parent companies and subsidiaries." Yokeno, 973 F.2d at 809-10 (citations omitted). In this action, for the first time, we apply these general statements to an assignment by a subsidiary to its parent corporation. Whichever direction the transfer occurs, "the close relationship between parent and subsidiary necessarily presents opportunities for the collusive manufacture of" commercial reasons for the assignment.8 Prudential Oil Corp. v. Phillips Petroleum Co., 546 F.2d 469, 476 (2d Cir. 1976) (quoting Green & White Constr. Co. v. Cormat Constr. Co., 361 F. Supp. 125, 128 (N.D. Ill. 1973)). Moreover, "when a wholly-owned subsidiary assigns a claim to its parent, just as in the reverse situation, the same set of stockholders running both corporate forms can transfer title to that claim freely between them. In each case the transferor, whether it is the parent or the subsidiary, realistically retains a substantial pecuniary interest in the outcome of the litigation which it assigns to the other." Id. at 475-76. We agree with the district court that this assignment triggers a presumption of collusion.
When testing this assignment, although the district court applied the presumption, it did not have the benefit of our decision in Yokeno v. Mafnas, 973 F.2d 803 (9th Cir. 1992), which further explicates the implications of the presumption. There we stated that evidence of a jurisdictional motive for the assignment will heighten the presumption of collusion. Yokeno, 973 F.2d at 811. Simply showing a colorable or plausible business reason for the assignment will no longer suffice. Id. "The business reason must be sufficiently compelling that the assignment would have been made absent the purpose of gaining a federal forum." Id.
Because we conclude the district court did not have diversity jurisdiction, our jurisdiction is "not of the merits but merely for the purpose of correcting the error of the lower court in entertaining the suit." United States v. Corrick, 298 U.S. 435, 440, 56 S. Ct. 829, 831, 80 L. Ed. 1263 (1936). Accordingly, we have no jurisdiction to interpret the agreements or their provision for attorney's fees.
Relying on Rule 3(c) of the Federal Rules of Appellate Procedure, Nike contests our jurisdiction to entertain the issues concerning the district court's entry of a preliminary injunction and its orders holding defendants in contempt and striking their answer. Nike has not expressly questioned our jurisdiction to evaluate for collusion the assignment from NIL to Nike. See Fed. R. App. P. 3(c) (requiring notice of appeal to designate order from which party appeals). We attribute this silence to the nature of the latter issue. See Kantor v. Commissioner, 998 F.2d 1514, 1521 (9th Cir. 1993) (considering on appeal merits of jurisdictional argument even though not raised below); Albrecht v. Lund, 845 F.2d 193, 194, as amended by, 856 F.2d 111 (9th Cir. 1988) (jurisdictional issue may be raised for first time on appeal)
Nike's reliance on North Am. Watch v. Princess Ermine Jewels, 786 F.2d 1447 (9th Cir. 1986), is misplaced. In that case "there was simply no assignment." North Am. Watch, 786 F.2d at 1450
The district court denied defendants' motion to dismiss for lack of jurisdiction. To defeat a motion to dismiss for lack of jurisdiction Nike was required to make a prima facie showing of facts to support the district court's exercise of jurisdiction. See Societe de Conditionnement en Aluminum v. Hunter Eng'g Co., 655 F.2d 938, 942 (9th Cir. 1981). This action, however, proceeded to a default judgment and a limited hearing on the merits and on damages. The issue of jurisdiction was not revisited. We do not need to resolve Nike's burden of proof under the peculiar facts of these proceedings because we conclude that it failed to make its prima facie showing and the district court therefore erred in denying defendants' motion to dismiss