Court Opinion

ID: 4281477
Source: CourtListenerOpinion
Date Created: 2018-06-05 20:00:28.577816+00
Date Added: 2024-06-11T14:34:46.241516
License: Public Domain

FILED
                           NOT FOR PUBLICATION
                                                                             JUN 05 2018
                    UNITED STATES COURT OF APPEALS                       MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

STARR INDEMNITY & LIABILITY                      No.   16-17291
COMPANY, as Subrogee of Med-Trans, a
corporation and MED-TRANS                        D.C. No. 4:14-cv-02100-BGM
CORPORATION,

              Plaintiffs-Appellees,              MEMORANDUM*

 v.

ROLLS-ROYCE CORPORATION and
ROLLS-ROYCE NORTH AMERICA
INCORPORATED,

              Defendants-Appellants.

                   Appeal from the United States District Court
                            for the District of Arizona
                 Bruce G. Macdonald, Magistrate Judge, Presiding

                        Argued and Submitted May 16, 2018
                             San Francisco, California

Before: WALLACE, N.R. SMITH, and FRIEDLAND, Circuit Judges.

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      In this choice of law case, Rolls-Royce appeals from the district court’s

determination that, under Arizona choice of law rules, Arizona (rather than Texas)

law applies. We reverse in this interlocutory appeal.

      Arizona follows the choice of law principles identified in the Restatement

(Second) of Conflict of Laws. Bates v. Superior Court, 749 P.2d 1367, 1369 (Ariz.

1988). The Restatement identifies several factors to determine which forum has a

more significant relationship with the parties. See Restatement (Second) of

Conflict of Laws § 145 (Am. Law Inst. 1971). One of these factors is the parties’

principal place of business. Id. § 145(2)(c). In this case, the parties agree that Med-

Trans Corporation’s (Med-Trans) principal place of business is the dispositive

factor in the choice of law analysis.

      In the district court, the parties briefed the principal place of business issue

under the “nerve center” test set forth in Hertz Corp. v. Friend, 559 U.S. 77, 80-81

(2010), and the district court applied this standard in its choice of law analysis. On

appeal, Appellees now argue that Hertz is not a binding case under Arizona law, so

the court should apply a more “flexible” standard than the nerve center test.

Although it is true that Hertz is not binding with respect to Arizona’s choice of law

analysis, the Supreme Court’s rationale for adopting the nerve center test is

persuasive. Id. at 92-95 (identifying rationales for the nerve center test including

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simplicity and predictability). Moreover, Appellees conceded at oral argument that

they have not offered any alternative test for determining principal place of

business. Accordingly, we find no error in the district court’s decision to use the

nerve center test.

      “We review de novo a district court’s choice of law determination” but

“[w]e review factual findings underlying a choice of law determination” for clear

error. Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1187 (9th Cir. 2001).

Here the facts are undisputed, but we conclude that the district court erred in its

application of the nerve center test to the undisputed facts in this case. Hertz holds

that a corporation’s principal place of business is generally its headquarters, where

the top officers are located—the “center of overall direction, control, and

coordination.” Hertz, 559 U.S. at 92-93, 95-96 (emphasis added). Here, that

location is Lewisville, Texas.

      The district court acknowledged that Med-Trans’ headquarters and top

corporate officers were located in Texas. Nonetheless, the court determined that the

Tucson, Arizona office was the corporate “nerve center,” because this office

conducted essential FAA regulatory work essential to Med-Trans’ business. This

decision was fundamentally inconsistent with the standard in Hertz. Although the

work of the Tucson office is essential to the most visible aspect of Med-Trans’

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corporate activities—conducting medical flights, Hertz makes clear that this is not

a reason to supplant the corporate headquarters as the principal place of business.

See id. at 95-96. Lewisville, Texas, is the clear “center of overall direction, control,

and coordination” of Med-Trans’ business—even accepting that Tucson plays an

essential role in Med-Trans’ sprawling operations. Id. at 96 (emphasis added).

Thus, Texas law applies to the parties’ dispute.

      REVERSED.

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