The opinion of the court was delivered by: Judge Wayne D. Brazil, United States Magistrate Judge.
ORDER DENYING MOTION TO REMAND AND CASE MANAGEMENT ORDER
II. Policy Underlying Diversity Statute
The primary purpose of the diversity statute is to avoid prejudice against
"outsiders."*fn2 Corporations who have minimal contact with the public
in a particular state are not likely to be recognized as "locals." The
Congress that provided for diversity jurisdiction was concerned that a
local jury sifting in state court might exhibit bias in favor of a
"local" party who was suing an out-of-state party. Because federal courts
draw from a wider jury pool, removal to federal court, so the theory
goes, provides a more neutral forum. In contrast, parties who have a
great deal of contact with the public in a particular state are not
likely to be considered outsiders and, therefore, are not likely to be
victims of discrimination by "local" jurors sifting in state court.
III. Discussion A.The Applicable Law
In the Ninth Circuit the court must apply one of two tests in order to
identify Ikon's "principal place of business." If any state contains a
"substantial predominance" of icon' s corporate business activities, the
court applies the "place of operations" test. Industrial Tectonics, Inc.
v. Aero Alloy ["ITI'], 912 F.2d 1090 (9th Cir. 1990). The state that
substantially predominates, if any, is icon' s principal place of
business. In applying the substantial predominance test, the courts are
to compare, one at a time, the state in issue to each other individual
state in which the company is present. "[D]etermining whether a
corporation's business activity substantially predominates in a given
state plainly requires a comparison of that corporation's business
activity in the state at issue to its business activity in other
individual states. [citations omitted.] Thus, "substantial predominance'
does not require the majority of a corporation's total business activity
to be located in one state, but instead, requires only that the amount of
[the] corporation's business activity in one state be significantly
larger than any other state in which the corporation conducts business."
Tosco, 236 F.3d at 500. The alternative test for identifying a
corporation's principal place of business is to be used only if applying
the "place of operations" test as clarified in Tosco,the party seeking to
invoke federal jurisdiction proves that "no state contains a substantial
predominance of the corporation's business activities." Tosco , 236 F.3d
at 500 quoting ITI, 912 F.2d at 1094. That alternative test is known as
the "nerve center" test. Under it, the state in which the corporation's
core executive and administrative functions are carried out is its
"principal place of business."
Plaintiff contends that California contains a substantial predominance
of Ikon's corporate business activity. Accordingly, plaintiff moves the
court to deem California Ikon's principal place of business and to remand
the case to the state court.
Ikon asserts that it maintains a relatively small presence in every
state and that n state substantially predominates. In that setting, icon
argues, the court must apply the nerve center test. According to Ikon,
Pennsylvania constitutes its nerve center. Thus according to Ikon, the
court has diversity jurisdiction. The law places the burden of persuasion
on these issues on the party seeking to invoke the court's diversity
jurisdiction. ITI, 912 F.2d at 1092. Ikon must prove, under the Tosco
test, that no state contains a substantial predominance of its business
activity. B. Comparison of Ikon's Presence in Various States
We utilize the analysis in Tosco as an aide to determining whether
application of the place of operations test, as we applied it in Ghaderi,
would be consistent with Congress' intentions as reflected in the
diversity jurisdiction statute and with Ninth Circuit case law. See,
Ghaderi v. United Airlines, Inc., 136 F. Supp.2d 1041 (N.D.Cal. 2001).
In order to determine whether any state contains a "substantial
predominance" of Ikon's corporate activity we consider several factors,
among those "the location of Ikon's] employees, tangible property,
production activities, sources of income, and where sales take place."
Tosco, 236 F.3d at 500 citing ITI, 912 F.2d at 1094.
The parties submitted evidence on a variety of factors relating to
Ikon's business activities in California and in other states. We
summarize that ...