Tosco Corp. v. Communities for a Better Environment, 99-55400

Decision Date02 January 2001
Docket NumberNo. 99-55400,99-55400
Citation236 F.3d 495
Parties(9th Cir. 2001) TOSCO CORPORATION, a Nevada corporation, Plaintiff-Appellant, v. COMMUNITIES FOR A BETTER ENVIRONMENT, a California non-profit corporation; DOES 1 through 50, Defendants-Appellees
CourtU.S. Court of Appeals — Ninth Circuit

Gregory N. Pimstone, Los Angeles, California, for the plaintiff-appellant.

Jonathan Weissglass, Altshuler, Berzon, Nussbaum, Berzon & Rubin, San Francisco, California, for the defendants-appellees.

Appeal from the United States District Court for the Central District of California Dickran M. Tevrizian, District Judge, Presiding. D.C. No.CV-98-05877-DT

Before: Dorothy W. Nelson, Melvin Brunetti and Alex Kozinski, Circuit Judges.

PER CURIAM.

Tosco Corporation ("Tosco") claims that the district court has diversity jurisdiction over this action under 28 U.S.C. 1332 because, under the "nerve center " test, its principal place of business is Connecticut. But we apply the "place of operations" test when a corporation conducts a substantial predominance of its business activities within a state. See Industrial Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1094 (9th Cir. 1990); see also Montrose Chem. Corp. v. American Motorists Insur. Co., 117 F.3d 1128,1135 (9th Cir. 1997) (district court abused its discretion in sanctioning law firm because a state arguably contained a substantial predominance of the corporation's business activity and firm's assertion of principal place of business was not completely baseless). The district court found that a substantial predominance of Tosco's business activities are conducted in California and, therefore, that California is Tosco's principal place of business. We affirm the district court's judgment dismissing Tosco's complaint for lack of subject matter jurisdiction, and adopt the district court's opinion, Tosco Corp. v. Communities for a Better Env't, 41 F. Supp. 2d 1061 (C.D. Cal. 1999), as our own. See Appendix infra.

AFFIRMED.

APPENDIX

TEVRIZIAN, District Judge.

I. Background
A. Factual Summary

This action is brought by Plaintiff Tosco Corporation ("Plaintiff"), a Nevada Corporation, against Defendant Communities for a Better Environment ("Defendant"), a California non-profit Corporation, for (1) slander, (2) libel, (3) malicious prosecution, and (4) equitable relief. Plaintiff asserts that this Court has subject matter jurisdiction because there is complete diversity between the parties and the amount in controversy exceeds $75,000.

Plaintiff's claims arise from two previous lawsuits initiated by Defendant against Plaintiff for alleged violations of federal and state environmental laws. First, Plaintiff alleges that Defendant's statements and conduct during a July 1997 lawsuit constitute libel, slander, and malicious prosecution. On July 23, 1997, Defendant filed a lawsuit in this Court against Plaintiff and several other oil companies for violating the Clean Air Act. See Declaration of R. Drury in Support of Defendant's Motion to Dismiss, Exhibit B (Defendant's July 23, 1997 Clean Air Act Complaint against Tosco). Defendant's Complaint alleged that Plaintiff was excessively polluting the air during oil tanker loading at its Wilmington, California Marine Terminal Facility ("Marine Terminal Facility") in violation of South Coast Air Quality Management District ("SCAQMD") Rule 1142, which requires reduced air emissions. See id. Specifically, Defendant's Complaint asserted that Plaintiff was improperly attempting to avoid compliance with the Rule 1142 emissions standard by offsetting its emissions at the Marine Terminal Facility with "pollution credits" obtained by scrapping old cars under SCAQMD Rule 1610. See id.

Defendant held highly-publicized media events in conjunction with the initiation of the July 23, 1997 action. See Plaintiff's First Amended Complaint, General Allegations, pp. 514. Plaintiff contends that, at these events, Defendant issued public oral and written statements that accused Plaintiff of "environmental injustices" and "environmental racism" by scrapping cars, which formerly emitted pollution over more dispersed and affluent areas, and using the resulting "pollution credits" to offset higher-than-permitted emissions at and around its Marine Terminal Facility, which is surrounded by low income and minority communities. See id.

Plaintiff contends that Defendant's public statements were completely false because Plaintiff "did not apply any such emission reduction credits towards compliance with SCAQMD Rule 1142 for the Marine Terminal Facility. " Id. at p. 14. Therefore, Plaintiff alleges Defendant's statements constitute libel and slander. See id. at First Cause of Action, p. 2, Second Cause of Action, p. 2. Additionally, Plaintiff claims that Defendant's action constitutes malicious prosecution because the "[l]awsuit was initiated with malice" by Defendant, who knew the charges were false or had no reason to believe they were true. See id. at Third Cause of Action, pp. 5-7.

On August 8, 1997, two weeks after the initiation of the Clean Air Act lawsuit against Plaintiff, Defendant voluntarily dismissed its action before ever serving Plaintiff with its Complaint. See Declaration of R. Drury in Support of Defendant's Motion to Dismiss, Exhibit C (Notice of Voluntary Dismissal, dated August 8, 1997). On January 23, 1998, Defendant added Plaintiff to a separate Clean Air Act SCAQMD Rule 1142 action pending in this Court against the Unocal Corporation (CV 97-5414 DT (BQRx)), who was the prior owner of the Marine Terminal Facility. See Declaration of R. Drury, Exhibit D (Plaintiff's (CBE) First Amended Complaint, dated 23 January, 1998). The lawsuit alleged that both Plaintiff and Unocal, as the present and past owners of the Marine Terminal Facility, violated Rule 1142, but Defendant deleted its allegations that Plaintiff was scrapping cars to avoid compliance with Rule 1142. See id. Defendant later voluntary dismissed Plaintiff from the Rule 1142 lawsuit altogether.1

Plaintiff asserts additional claims of libel and slander against Defendant as a result of statements that Defendant made during a second lawsuit initiated against Plaintiff in state court. On August 6, 1998, Defendant filed suit in San Francisco County Superior Court against Plaintiff and several other oil companies for illegally polluting California's drinking water with the gasoline additive methyl butyl tertiary ether (MTBE). See Defendant's Motion to Dismiss, p. 4; Declaration of R. Drury in Support of Defendant's Motion to Dismiss, Exhibit K.

Plaintiff alleges that, in oral and written statements made to the press in conjunction with this lawsuit, Defendant "falsely and maliciously, with broad, vague allegations, accused [Plaintiff] of knowingly sacrificing the health of the citizens of this State through the addition of MTBE to gasoline, and then engaging in a scam to cover it up." Plaintiff's First Amended Complaint, General Allegations, p. 33. Plaintiff contends that one example of Defendant's false accusations is Defendant's executive director's statement to a variety of media outlets, including the San Francisco Examiner, that "[o]il companies have been running the same kind of scam the tobacco companies did for years, only it was MTBE instead of nicotine." Id. at p. 34. Plaintiff believes the reasonable implication of Defendant's statements is that Plaintiff is intentionally harming the public by engaging in a "scam" to cover up its use of MTBE as a gasoline additive and to cover up the adverse health effects of MTBE. See id.

Plaintiff contends that Defendant's public statements are defamatory because Plaintiff was not engaged in a scam to cover up its use and the dangers of MTBE. See id. at pp. 3637. On the contrary, Plaintiff claims that refineries are forced to use oxygenates, the principal one being MTBE, to meet the stringent emission standards of the Clean Air Act. Moreover, Plaintiff asserts that, "contrary to other California refineries, [Plaintiff] publicly and visibly advocated and supported the reduced use or elimination of MTBE in gasoline" and is actively studying alternatives to MTBE due to MTBE's potential threat to drinking water. See id. at p. 26. Plaintiff argues that Defendant knew of Plaintiff's leadership in the elimination of MTBE as a gasoline additive and, nonetheless, made the aforementioned false and misleading statements to the public. See id. at p. 33.

B. Procedural Summary

On July 21, 1998, Plaintiff filed its Complaint with this Court alleging (1) libel, (2) slander, and (3) malicious prosecution. On October 23, 1998, Plaintiff filed its First Amended Complaint alleging the same claims and requesting equitable relief.

On December 28, 1998, Defendant filed its Motion to Dismiss Pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6), which is currently before this Court.

II. Discussion
A. Standard

Federal Rule of Civil Procedure 12(b)(1) allows litigants to seek the dismissal of an action from federal court for lack of subject matter jurisdiction. A federal court has subject matter jurisdiction over an action that either arises under federal law, or when there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000. See 28 U.S.C. 1331, 1332(a) (West 1998). When subject matter jurisdiction is challenged under Federal Rule of Procedure 12(b)(1), the plaintiff has the burden of proving jurisdiction in order to survive the motion. See Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989). "A plaintiff suing in a federal court must show in his pleading, affirmatively and distinctly, the existence of whatever is essential to federal jurisdiction, and, if he does not do so, the court, on having the defect called to its attention or on discovering the same, must dismiss the case, unless the defect be corrected by amen...

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