Barrantes Cabalceta v. Standard Fruit Co.

Decision Date21 July 1987
Docket NumberNo. 87-0457-Civ.,87-0457-Civ.
PartiesPerfecto BARRANTES CABALCETA, et al., Plaintiffs, v. STANDARD FRUIT COMPANY, et al., Defendants.
CourtU.S. District Court — Southern District of Florida

Charles S. Siegel, Baron & Budd, Dallas, Tex., Louis S. Robles, Miami, Fla., for plaintiffs.

James E. Wilber, Bond, Shoeneck & King, Boca Raton, Fla., for Standard Fruit Co., Standard Fruit & Steamship Co. Castle and Cook.

Kimbrell, Hamann, Jennings, Womack, Carlson & Kniskern, P.A., Miami, Fla., Edward T. O'Donnell, Mershon, Sawyer, Johnston, Dunwoody & Cole, Miami, Fla., Gennaro A. Filice, III, Hardin, Cook, Loper, Engel & Bergez, Oakland, Cal., Charles J. Kalil, of counsel, Midland, Mich., for Dow Chemical Co.

Sheryll Martens Dunaj, Fowler, White, Burnett, Hurley, Banick & Strickroot, P.A., Miami, Fla., R. Burton Ballanfant, Houston, Tex., for Shell Oil Co.

ORDER ON MOTION TO REMAND, MOTION TO DISMISS, AND RELATED MOTIONS

ATKINS, District Judge.

This cause is before the court on plaintiffs' Motion to Remand, and defendants' Motions to Dismiss for Forum Non Conveniens, Lack of Service of Process, Lack of Jurisdiction Over the Person, for Fraudulent Joinder, and More Definite Statement. The court has considered the pleadings submitted in this matter, the relevant law, and has heard oral argument. It is thereupon

ORDERED AND ADJUDGED as follows:

1. Plaintiffs' Motion to Remand is DENIED.

The court finds that removal was proper pursuant to 28 U.S.C., section 1441(b), on the ground that none of the parties is a citizen of Florida and that diversity of citizenship is present.

I. Principal Place of Business of Standard Fruit Company and Standard Fruit and Steamship Company

The court's main inquiry in this case concerns whether the principal place of business of any of the defendants is Florida. If so, removal would have been improper pursuant to the "no local citizen" limitation of the removal statute, 28 U.S.C., section 1441(b), which provides:

(b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

A corporation is deemed to be a citizen of both the state of incorporation and the state of its principal of business for diversity purposes. 28 U.S.C., section 1332(c). To determine the principal place of business of a corporate party, the court must apply the "total activity" test. Vareka Investments, N.V. v. American Investment Properties, Inc., 724 F.2d 907 (11th Cir.1984). The test actually incorporates two tests: the nerve center test, which focuses on the locus of managerial and policymaking functions in the corporation, and the place of activities test, which focuses on the locus of production or sales activities. Id. at 910.

The two tests are applied in different factual situations. The nerve center test is applied to determine the principal place of a corporation whose activities are scattered among several different states. See Scot Typewriter Co. v. Underwood Corp., 170 F.Supp. 862 (S.D.N.Y.1959). The place of activities test is applied to determine the principal place of business of a corporation whose activities are basically bifurcated between two different states. Homestead Log Co. v. Square D Co., 555 F.Supp. 1056 (D.Idaho 1983). Thus, the principal place of business of a corporation with significant administrative authority and activity in one state and lesser executive offices but principal operations in another state has been held to be the latter state, Kelly v. U.S. Steel Corp., 284 F.2d 850 (3d Cir. 1960), and the principal place of business of a corporation with its corporate headquarters in one state and its single activity in another will generally be in the state of its operations, Lurie Co. v. Loew's San Francisco Hotel Corp., 315 F.Supp. 405 (N.D.Cal.1970). As applied, therefore, the two tests have been found to be not only reconcilable, see Toms v. Country Quality Meats, Inc., 610 F.2d 313, 315 n. 6 (5th Cir.1980), but complementary, J.A. Olson Co. v. City of Winona, 818 F.2d 401, 410 (5th Cir.1987).

The court finds the place of activities test to be the appropriate one for determining the principal place of business of Standard Fruit Company ("Standard Fruit"). Its operations occur in Ecuador, Honduras, and Costa Rica, and its executive and administrative functions occur in California and Florida. For purposes of determining diversity of citizenship, all aliens, whatever their nationality, are deemed to be citizens of the same jurisdiction. K & H Business Consultants, Ltd. v. Cheltonian, Ltd., 567 F.Supp. 420 (D.N.J.1983). In the court's view, this rule is equally applicable to determining a corporation's principal place of business. This determination underlies that of corporate citizenship for purposes of diversity jurisdiction, and, in cases not presenting a federal question, removal jurisdiction. Thus, the fact that all of Standard Fruit's operations occur in alien jurisdictions is the controlling characteristic, and, for purposes of the place of activities test, the court concludes that Standard Fruit's operations occur in one jurisdiction. Although certain of its executive and administrative functions occur in two states in the United States, this fact does not support a conclusion that Standard Fruit's activities, including operations and management, are scattered throughout several jurisdictions within the meaning of the nerve center test. Rather, its activities are distinctly, though not equally, divided among three different jurisdictions, with with its operations occurring solely in one of them.

Application of the place of activities test leads the court to the conclusion that Standard Fruit's principal place of business is Latin America, not Florida, and that therefore its presence in the litigation does not contravene that no local citizen limitation in the removal statute. Standard Fruit is in the business of growing and exporting bananas in Costa Rica, Honduras, and Ecuador. All of its employees are in those three countries. Affidavit of Patrick Nielson at 16. Its day to day operational and management decisions are made at these places of operation. Id. at 35, 48-49. None of its operational activities take place in the United States.

The court need not reach the issue of whether Standard Fruit is actually a citizen of any of the Latin American countries in which its operations are centered, nor must it address the possibility of corporate dual citizenship. See Willems v. Barclays Bank, D.C.O., 263 F.Supp. 774 (S.D.N.Y. 1966). The removal issue as it pertains to Standard Fruit can be resolved on the basis of the court's finding that Standard Fruit's principal place of business is not Florida. Accord Steinbock-Sinclair v. Amoco Int'l. Oil Co., 401 F.Supp. 19 (N.D.Ill.1975).

The court further finds that Standard Fruit & Steamship Company's ("Standard Steamship") principal place of business is California by applying the nerve center test. The nerve center test is most appropriate in regard to Standard Steamship because its activities are scattered over six states. Its executive, administrative, and managerial activities take place in California, Mississippi, and Florida, and its operations occur in Delaware, New York, California, Mississippi, and Texas. On the record presented, Standard Steamship is neither an alien nor a Florida citizen such that removal would have been improper due to its presence in this litigation.

Standard Steamship has no employees in Florida, nor does it own assets or make sales in Florida. Its ties to Florida appear to be through the Dole Fresh Fruit Company. (It is not disputed that Dole's principal place of business is Florida.) Two of Standard Steamship's vice-presidents reside in Boca Raton and are also officers of Dole Fresh Fruit Company. It apparently has a logistics department in Boca Raton, which plaintiffs assert is responsible for the coordination of banana shipments. However, the record is lacking in any details as to what the logistics department actually does, and plaintiffs' conclusion is contradicted by evidence that the shipments are supervised from the terminals in Mississippi and four other states. In addition, this department is not staffed by employees of Standard Steamship, but rather its administration is procured from Dole employees.

Standard Steamship's operations and employees are located outside of Florida. It receives fruit from Latin America at five terminals, located in Delaware, New York, California, Mississippi, and Texas. The terminal operations are overseen by a Standard Steamship employee at the Mississippi terminal.

Standard Steamship's directors reside in California. The Board of Directors meets there. Its president and two vice-presidents live there. Its corporate headquarters are in Los Angeles, where corporate books and records are prepared and maintained, tax returns are generated and filed, and corporate policy is determined. Affidavit of Patrick Nielson at par. 13.

On this record, the court finds that the locus of managerial and policymaking functions of Standard Steamship, that is, its nerve center, would be California. Its president, many of its officers, and directors reside there, one of its terminals is there, and, although its operations and managerial activities are scattered among five other states, its executive and policymaking activities appear to be centered at its corporate headquarters in California. Its activities in Florida, as in the other three states involved, are minimal compared to its activities in California. Thus, Standard Steamship is neither an alien nor a Florida citizen such that removal would...

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