Iowa, Chicago & Eastern Railroad Corp. v. Pay Load, No. C03-3017-MWB (N.D. Iowa 4/29/2003), C03-3017-MWB.
| Decision Date | 29 April 2003 |
| Docket Number | No. C03-3017-MWB.,C03-3017-MWB. |
| Parties | IOWA, CHICAGO & EASTERN RAILROAD CORPORATION, Plaintiffs, v. PAY LOAD, INC. d/b/a DENNY WESSELS TRANSPORT, INC. and DENNY WESSELS TRANSPORT; and COREY R. WESSELS, Defendants. |
| Court | U.S. District Court — Northern District of Iowa |
On February 25, 2003, plaintiff Iowa, Chicago & Eastern Railroad Corporation ("IC & E") filed its complaint in this lawsuit against defendants Pay Load, Inc. d/b/a Denny Wessels Transport, Inc. and Denny Wessels Transport ("Pay Load"), and Corey R. Wessels. In the complaint, IC & E asserts an Iowa state common law claim for negligence against Pay Load and Wessels for damages that resulted from a collision at a railroad crossing between a train operated by IC & E and a semi-truck owned by Pay Load and being operated by Wessels. IC & E has also filed a claim for punitive damages and seeks a declaratory judgment regarding the parties obligations vis-a-vis a locomotive lease. Defendants filed their Motion To Dismiss on March 18, 2003, contending that complete diversity does not exist between the adverse parties in this case because defendants are citizens of Iowa, and IC & E's principal place of business is in Iowa, making IC & E a citizen of Iowa under 28 U.S.C. § 1332(c)(1).1 IC & E filed a timely resistance to defendants' Motion to Dismiss in which it asserts that its principal place of business is in South Dakota, thereby making this court's assertion of diversity jurisdiction proper.
While the court initially set telephonic oral arguments on defendants' Motion to Dismiss, upon review of the parties' submissions and the record, the court concludes that oral argument would not be beneficial here. The court turns first to the factual background of this case. The court then turns to the legal analysis of defendants' Motion To Dismiss.
The parties have supplied affidavits and exhibits in support of their respective positions with regard to the motion to dismiss from which, in addition to the complaint and the answer, the court has extracted the following facts.
Defendant Pay Load, Inc. d/b/a Denny Wessels Transport, Inc. and Danny Wessels Transport, is an Iowa Corporation with its principal place of business in Buffalo Center, Iowa. Defendant Corey R. Wessels is an individual living in Winnebago County, Iowa. IC & E owns and operates a railroad line as a common carrier in interstate commerce. IC & E is a Delaware Corporation. IC & E is wholly owned by Cedar American Rail Holdings, Inc. ("CARH"), a Delaware Corporation which in turn is wholly owned by Dakota, Minnesota & Eastern Railroad Corporation ("DMERC"), a privately held Delaware Corporation with its principal place of business located in Sioux Falls, South Dakota.
IC & E's headquarters are located at 140 North Phillips Avenue, Sioux Falls, South Dakota.2 Both CARH and DMERC also have their headquarters at the same address. On January 31, 2003, the Surface Transportation Board ("STB") approved of DMERC's joint control of CARH and IC & E. At the time that this lawsuit was commenced, the following executives worked out of IC & E's Sioux Falls, South Dakota, office: Kevin V. Schieffer, President and Chief Executive Officer; Robert B. Brownell, Executive Vice President of Operations; Kurt V. Feaster, Senior Vice President and Chief Financial Officer; Lynn A. Anderson, Vice President of Marketing; Steven O. Scharnweber, Vice President of Engineering and Chief Engineer; Richard D. Awe, Chief Transportation Officer; and Daniel L. Goodwin, Chief Mechanical Officer.
The Financial Department for IC & E is located in Sioux Falls, South Dakota. IC & E's Financial Department is comprised of the Information Technology Department, Revenue and Accounting Departments and the Human Resources Department. The employees who work in the Financial Department report to Kurt V. Feaster, Senior Vice President and Chief Financial Officer. The vast majority of Financial Department employees are located in Sioux Falls, South Dakota. The business records pertaining to the day-to-day financial operations of IC & E are prepared by and filed in IC & E's headquarters in Sioux Falls, South Dakota.
Employees located in Sioux Falls, South Dakota, are responsible for preparing the requisite financial and operating reports of IC & E for the Federal Railroad Administration, Railroad Retirement Board, Surface Transportation Board and other governmental agencies.
Twenty-three IC & E employees located at IC & E's headquarters in Sioux Falls, South Dakota, manage the day-to-day movements of trains and railcars for IC & E. Eight additional IC & E employees in Sioux Falls, South Dakota, handle the scheduling and contacts with train crews throughout the IC & E and DMERC systems. IC & E's consumer service representatives and operations supervisors are the employees responsible for the routine contact with IC & E's customers and the general public. These employees answer customer telephone inquiries regarding shipment orders and the status of shipments. All of these activities are controlled from Sioux Falls, South Dakota.
IC & E has employees scattered through the states in which it operates, including Iowa. IC & E has a satellite office in Bettendorf, Iowa, which employs sixteen individuals. Six executives in IC & E's marketing department, including General Manager John Brooks, are located the Bettendorf facility. However, since STB's approval of joint control of IC & E and DMERC, the marketing operations for IC & E are being consolidated in Sioux Falls, South Dakota. No engineers or conductors report to IC & E's Bettendorf satellite office.
For the court to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), the complaint must be successfully challenged on its face or on the factual truthfulness of its averments. Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). The court in Titus distinguished between the two kinds of challenges:
In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction. Eaton v. Dorchester Dev., Inc., 692 F.2d 727, 731-32 (11th Cir. 1982). . . .
If the [defendant] wants to make a factual attack on the jurisdictional allegations of the complaint, the court may receive competent evidence such as affidavits, deposition testimony, and the like in order to determine the factual dispute. Land v. Dollar, 330 U.S. 731, 735 n. 4 (1947) [footnote omitted]. The proper course is for the defendant to request an evidentiary hearing on the issue. Osborn [v. United States], 918 F.2d [724,] 730 (citing Crawford v. United States, 796 F.2d 924, 928 (7th Cir. 1986)).
In Osborn v. United States, 918 F.2d 724 (8th Cir. 1990), the Eighth Circuit Court of Appeals provided an exhaustive discussion of the procedures and requirements for determination of a 12(b)(1) motion to dismiss.
The district court was correct in recognizing the critical differences between Rule 12(b)(1), which governs challenges to subject matter jurisdiction, and Rule 56, which governs summary judgment. Rule 12 requires that Rule 56 standards be applied to motions to dismiss for failure to state a claim under Rule 12(b)(6) when the court considers matters outside the pleadings. [Citations omitted.] Rule 12 does not prescribe, however, summary judgment treatment for challenges under 12(b)(1) to subject matter jurisdiction where a factual record is developed. Nonetheless, some courts have held that Rule 56 governs a 12(b)(1) motion when the court looks beyond the complaint. We agree, however, with the majority of circuits that have held to the contrary. . . . [Citations omitted.]
The reason for treating a 12(b)(1) motion differently than a 12(b)(6) motion, which is governed by Rule 56 when matters outside the pleadings are considered, "is rooted in the unique nature of the jurisdictional question." Williamson [v. Tucker ], 645 F.2d [404,] 413 [(5th Cir.), cert. denied, 454 U.S. 897 (1981)]. It is "elementary," the Fourth [sic] Circuit stated, that a district court has "broader power to decide its own right to hear the case than it has when the merits of the case are reached." Id. Jurisdictional issues, whether they involve questions of law or of fact, are for the court to decide. Id. Moreover, because jurisdiction is a threshold question, judicial economy demands that the issue be decided at the outset rather than deferring it until trial, as would occur with denial of a summary judgment motion.
The court in Osborn found the distinction between facial and factual attacks on the complaint under 12(b)(1) to be critical. Id. (). The court stated that
[i]n the first instance, the court restricts itself to the face of the pleadings, and the non-moving party receives the same protections as it would defending against a motion brought under Rule 12(b)(6). The general rule is that a complaint should not be dismissed "`unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" In a factual attack, the court considers matters outside the pleadings, and the non-moving party does not have the benefit of 12(b)(6) safeguards.
Id. at 729 n. 6 (citations omitted); see Mattes v. ABC Plastics, Inc., 323 F.3d 695, 698 (8th Cir. 2003) (...
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