Able Sales Co. v. Mead Johnson Puerto Rico, Inc., No. CIV 05-1111(PG).
| Citation | 420 F.Supp.2d 1 |
| Decision Date | 07 March 2006 |
| Docket Number | No. CIV 05-1111(PG). |
| Parties | ABLE SALES COMPANY, INC., Plaintiff, v. MEAD JOHNSON PUERTO RICO, INC., et al., Defendants. |
| Court | U.S. District Court — District of Puerto Rico |
Carlos A. Rodriguez-Vidal, Esq., San Juan, PR, for Plaintiff.
Edgardo L. Rivera-Rivera, Esq., Hato Rey, PR, Jorge A. Fernandez-Reboredo, Esq., San Juan, PR, for Defendants.
On January 31, 2005, defendants filed a Notice of Removal pursuant to 28 U.S.C. §§ 1332(a)(1), 1441(1) and 1446. (Docket No. 1.) On February 10, 2005 plaintiff's filed a Motion to Remand (Docket No. 2.) Plaintiff later moved to stay and sought leave to conduct limited discovery on the jurisdictional issues. (Docket No. 12.) On May 25, 2005, the Court granted in part and denied in part plaintiff's motion, denying the request to stay but granting the petition to conduct limited jurisdictional discovery. Plaintiff was granted sixty (60) days to conduct the discovery and the Court held the motion to remand in abeyance until the discovery was completed. Following several procedural events, the matter was referred to Magistrate Judge Camille Velez-Rive for a Report and Recommendation. (Docket No. 25.)
On February 17, 2006, Magistrate Judge Velez-Rive issued her Report and Recommendation finding that the Court lacked subject matter jurisdiction to entertain the case and recommending that the motion to remand be granted. (Docket No. 27.) The filing of the objections deadline was set for March 6, 2006.
On March 6, 2006, defendants filed a Motion for Order Accepting the Magistrate's Report and Recommendation stating that after carefully reviewing the Report and Recommendation and the case-law cited therein they accepted the recommendation to remand the case to the local courts for all further proceedings. (Docket No. 29.) Having defendants acquiesced to remand their improperly removed case, the Court hereby GRANTS plaintiffs Motion to Remand. (Docket No. 2.)
IT IS SO ORDERED.
REPORT AND RECOMMENDATION
On January 18, 2005, Able Sales Company, Inc. (hereinafter "Able Sales") filed a civil action against Bristol Myers Squibb Puerto Rico, Inc. (hereinafter "BMSPR"), Mead Johnson Puerto Rico and Mead Johnson Nutritionals before the Commonwealth of Puerto Rico Court of First Instance, San Juan Part, for preliminary and permanent injunction, violation of the Dealer's Act pursuant to Law 75, 10 L.P.R.A. § 278 et seq., and unjust enrichment. (Docket No. 1, Exhibit 1).
On January 31, 2005, BMSPR filed a Notice of Removal of the action filed by Able Sales pursuant to 28 U.S.C. § 1332(a)(1), 1441(a) and 1446. (Docket No. 1).
On February 10, 2005, Able Sales filed a Motion to Remand the case to state court for lack of federal subject matter jurisdiction claiming the absence of complete diversity of citizenship between Able Sales and BMSPR and lack of a federal question. (Docket No. 2).
On March 23, 2005, BMSPR filed an Opposition to Motion to Remand and Memorandum in support thereof claiming that complete diversity of citizenship exists between the parties in this case. In addition, BMSPR asserts the removal is proper pursuant to 28 U.S.C. § 1441(b) because Able Sales alleges a claim under federal law in light of the federal funds granted as part of the Women's, Infant and Children's Supplementary Nutritional Program (hereinafter "WIC"), under 42 U.S.C. § 1786 and 7 C.F.R. § 246. (Docket No. 11).
On May 25, 2005, the Court granted Able Sales' request to conduct limited jurisdictional discovery for a period of sixty (60) days and held in abeyance the Motion to Remand. (Docket No. 13).
On October 3, 2005, Able Sales filed its Reply to Opposition to Motion to Remand making reference to the facts ascertained through limited discovery in support of its request to remand for lack of subject matter jurisdiction in absence of diversity of citizenship between the parties. (Docket No. 22).
On January 25, 2006, the Motion to Remand and related pleadings were referred to this United States Magistrate Judge for report and recommendation. (Docket Nos. 25 and 26).
In this case there are two (2) conceivable basis for federal jurisdiction, namely, diversity of citizenship pursuant to 28 U.S.C. § 1332(a) and/or federal question under 28 U.S.C. § 1441(b). We thus discuss both possible grounds for federal jurisdiction.
"Diversity jurisdiction exists only when there is complete diversity, that is, when no plaintiff is a citizen of the same state as any defendant." Gabriel v. Preble, 396 F.3d 10, 13 (1st Cir.2005). For diversity purposes, a corporation is a citizen of both the state where it is incorporated and "the State where it has its principal place of business." Id. § 1332(c)(1). As used in the diversity statute, the term "state" includes Puerto Rico. Id. § 1332(e). Diaz-Rodríguez v. Pep Boys Corp., 410 F.3d 56, 58 (1st Cir.2005).
The First Circuit has identified three (3) tests for determining a corporation's principal place of business:
One is the `nerve center' test which searches for the location from where the activities of the corporation are controlled and directed. The two other tests are the `center of corporate activity' test, i.e., where the corporation's day-to-day management takes place; and the `locus of the operations of the corporation' test, i.e., where the bulk of the corporation's actual physical operations are located.
Topp v. CompAir Inc., 814 F.2d 830, 834 (1st Cir.1987); see also de Walker v. Pueblo Inc., 569 F.2d 1169, 1171-72 (1st Cir.1978); Pep Boys Corp., 410 F.3d at 59.
In the recent case of Pep Boys, 410 F.3d at 59, the First Circuit clarified that the case law reveals that references to the center of corporate activity test have always been dicta. Id. at 60. Thus, the First Circuit ruled that Id. at 61.
It is well settled in the First Circuit that the nerve center test applies only to farflung corporations or corporations without physical operations. Id.; see Topp, 814 F.2d at 834. The principal place of business of a corporation that has the bulk of its physical operations in one state is to be determined under the locus of operations test, even if the corporation's executive offices are in another state. Id. at 60.
Once jurisdictional allegations are challenged, the party asserting diversity has the burden of establishing those allegations with competent proof. Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 675, 86 L.Ed. 951 (1942); Topp, 814 F.2d at 839; de Walker, 569 F.2d at 1172 n. 4; Media Duplication Services, Ltd. v. HDG Software, Inc., 928 F.2d 1228, 1235 (1st Cir.1991).
BMSPR has physical operations and is not a complex far flung operation. Therefore, following the directives of the First Circuit in Pep Boys, we now proceed to determine where is BMSPR's principal place of business using the "locus operations test."1 The First Circuit has described the locus of operations test as "search[ing] for the location of the corporation's actual physical operations." Taber Partners, I v. Merit Builders, Inc., 987 F.2d 57, 60, 61 (1st Cir.1993); Pep Boys Corp., 410 F.3d at 61.
After limited jurisdictional discovery in this case and after a careful and thorough analysis of the record, including motions, sworn statements, transcripts, and other documents submitted to this Court for its review, we find that complete diversity is lacking. Salzano-Pascuzzi v. Lucas Insertco Pharmaceutical Printing Co. of P.R., 135 F.Supp.2d 277, 278 (D.Puerto Rico 2001).
A review of the record reveals that the following facts are uncontested:
1. BMSPR is a Delaware corporation authorized to do business in Puerto Rico.
2. BMSPR is engaged in the distribution of pharmaceuticals, nutritional and consumer products to customers who are located within and without Puerto Rico.
3. BMSPR is a wholly owned subsidiary of Bristol Myers Company of New York.
4. BMSPR's physical operations are located in Catano and Bayamon, Puerto Rico.
5. BMSPR's warehouse is in Catano, Puerto Rico.
6. BMSPR's daily activities are managed in Puerto Rico.
7 Ms. Edda Guerrero, President and General Manager of BMSPR, is a resident of Guaynabo, Puerto Rico.
8. BMSPR's day-to-day management and operations decisions are made in Puerto Rico.
9. The sales and distribution of BMSPR takes place in Puerto Rico.
10. No sales or distribution of BMSPR takes place in Delaware.
11. BMSPR has approximately 200 employees in Puerto Rico.
12. Almost all if not all of the 200 employees of BMSPR reside in Puerto Rico.
13. BMSPR files its income tax returns in Puerto Rico.
14. BMSPR pays municipal taxes in Puerto Rico.
15. BMSPR files its volume of business tax returns ("patente") in Puerto Rico.
16. BMSPR pays workmen's compensation premiums for its employees in Puerto Rico.
17. BMSPR files returns and pays property taxes on its inventory in Puerto Rico.
18. BMSPR's tax records are kept on a separate and distinct basis from the parent company.
19. BMSPR's general ledger for audit purposes is kept by the office of Ramon Menendez (BMSPR's Assistant Treasurer) in Guaynabo, Puerto Rico.
20. BMSPR sells its products in Puerto Rico and the Caribbean.
21. BMSPR's payroll bank account is in the Banco Popular in Puerto Rico 22. BMSPR has a payroll officer in Puerto Rico.
23. Each of the three (3) business units of BMSPR (pharmaceuticals, nutritional and wound management and ophthalmic products) has a general manager residing in Puerto Rico.
24. The offices of the general managers of BMSPR are in Guaynabo, Puerto Rico.
25. BMSPR's assets are in...
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...lacking. This Court has held that "[n]ormally, removal is based on the face of a `well-pleaded complaint.'" Able Sales Co. v. Mead Johnson P.R. Inc., 420 F.Supp.2d 1, 10 (D.P.R.2006) (citations omitted). Said doctrine requires that the federal claim or rights arise from the complaint, "unai......