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Koreen v. Tahoe Joe's


November 5, 2009


The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge


This is an action for employment discrimination under the provisions of California's Fair Employment and Housing Act, California Government Code § 12900, et seq. Defendants Tahoe Joe's Inc. and Buffets, Inc. ("Defendants") removed Plaintiff's lawsuit, originally commenced in the Superior Court for the County of Solano, to this Court, citing diversity jurisdiction under 28 U.S.C. § 1332. Plaintiff now moves for remand back to state court on grounds that Defendants' principal place of business is California, and not Minnesota, and that consequently the requisite diversity is not present.

Defendants, as the removing parties, bear the burden of establishing federal jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Plaintiff correctly points out in her moving papers that for purposes of establishing a corporation's principal place of business, inquiry must be made as to which state contains the substantial predominance of corporate operations. Tosco Corp. v. Communities for a Better Environment, 236 F.3d 495, 500. While Defendants appear to contend that under the "nerve center" test for establishing a corporation's principal place of business, Minnesota qualifies since the majority of Defendants' executive and administrative functions are allegedly performed there, the law is clear that the "nerve center" test should be used only when no state contains a substantial predominance of a corporation's business activities. Industrial Tectonics , Inc. v. Aero Alloy, 912 F.2d 1090, 104 (9th Cir. 1990). Consequently, a quantitative and comparative analysis of Defendants' business activities must be made for purposes of establishing its principal place of business for diversity purposes. Ganezer v. DirectBuy, Inc., 2009 WL 363908 (N.D. Cal. Feb. 11, 2009). Defendants have failed to make this analysis, stating only that it has some 180 employees working in Minnesota, while conceding that all of Tahoe Joe's restaurants, along with a support center, are located in California. The situation is further muddled by documents attached by Defendants to the Graber Declaration which suggest that Defendants' Minnesota headquarter may also serve as management for other affiliated restaurant chains, including Home Town Buffet and Ryan's Restaurant.

Given Defendants' failure to provide the requisite comparitive analysis, the Court would be justified in granting Plaintiff's Motion for Remand. See Ganezer v. DirectBuy, Inc., 2009 WL 363909 at * 4 (granting motion to remand since defendant's failure to provide comparative data resulted in failure to prove diversity jurisdiction). Nonetheless, the Court will permit additional briefing to address these factors before reaching any final decision as to the merit of Plaintiff's Motion. Defendants are directed to provide comparative data regarding its total annual revenue, the relevant percentage of its revenue generated from California locations, and how the revenue from its California locations compares with revenues generated by its outlets located in other states. Defendants are further directed to provide data concerning its number of employees located in California, as compared to other states, including Minnesota. Defendants should clarify whether the 180 employees it identifies as being employed in Minnesota work solely for Defendants as opposed to other restaurant and/or business entities affiliated with Defendants.

In order to accommodate this further briefing, the hearing on Plaintiff's Motion to Remand (Docket No. 7) is continued to Thursday, November 19, 2009 at 10:30 a.m. Defendants are directed to provide their supplemental briefing not later than Thursday, November 12, 2009; Plaintiff may file a response to that briefing not later than Monday, November 16, 2009. Briefing is not to exceed ten (10) pages in length.



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