Van Der Steen v. Sygen Intern., Plc

• Decision Date: 20 November 2006
• Docket Number: No. C 06-4966 CRB.,C 06-4966 CRB.
• Citation: Van Der Steen v. Sygen Intern., Plc, 464 F.Supp.2d 931 (N.D. Cal. 2006)
• Court: U.S. District Court — Northern District of California
• Parties: Henricus VAN DER STEEN, Plaintiff, v. SYGEN INTERNATIONAL, PLC, et al., Defendants.

464 F.Supp.2d 931

Henricus VAN DER STEEN, Plaintiff, v. SYGEN INTERNATIONAL, PLC, et al., Defendants.

No. C 06-4966 CRB.

United States District Court, N.D. California.

November 20, 2006.

Peter B. Brekhus, Caroline C. Joachim, Elizabeth A. Brekhus, Law Offices of Peter B. Brekhus, Greenbrae, CA, for Plaintiff.

Carolyn Blecha Hall, Heather C. Beatty, Wendy M. Lazerson, Bingham McCutchen LLP, East Palo Alto, CA, Ann M. Maher, Whyte Hirschboeck & Dudek, Milwaukee, WI, for Defendants.

MEMORANDUM AND ORDER

BREYER, District Judge.

Henricus Van Der Steen ("Plaintiff") is a citizen of the Netherlands and a permanent resident alien domiciled in California. He filed suit in California state court against his former employer and related corporate entities. He asserts, among other claims, breach of contract. The case was removed to federal court on the basis of diversity jurisdiction. Now pending before the Court is Plaintiff's motion to remand.

Presently, the only defendants remaining in the suit are two alien corporations. The question presented by Plaintiff's motion is whether this Court has jurisdiction under the diversity statute, 28 U.S.C. § 1332, over a suit solely between aliens, when one of the alien parties is a lawful permanent resident. Plaintiff argues that, because the case now involves only an alien plaintiff and alien defendants, this Court lacks constitutional authority to hear it. For the reasons set forth below, the Court agrees.

BACKGROUND

Plaintiff came to the United States from the Netherlands in 1998 as part of his job with Sygen International, Ltd. ("Sygen"). In 2001, he became a legal permanent resident. Thus, at the time he filed this lawsuit, Plaintiff was a permanent resident alien domiciled in California.

Plaintiff worked primarily at Sygen's research lab in Berkeley, California, until 2003, when the company decided to move its research lab from California to Kentucky. Thereafter, Plaintiff continued to work for Sygen from his home in Marin County, California. Plaintiff alleges that in 2005 he was offered a new position with Sygen and entered into a new employment contract with the company. According to Plaintiff, Sygen agreed to establish a research chair at the University of Western Kentucky and to employ him in `that position as research liaison between Sygen and the University. Plaintiff further alleges that Sygen breached this contract when it subsequently repudiated its agreement to fund the position. Plaintiff filed suit on June 30, 2006, asserting claims for breach of employment contract, wrongful termination, various related statutory violations, and other tort claims. Plaintiff originally named four defendants in the suit: (1) Sygen, (2) Genus, PLC ("Genus"), (3) ABS Global, Inc. ("ABS"), and (4) PIC International Group, PLC ("PIC").

Two of these companies, Sygen and PIC, are actually the same entity. Sygen, which was previously called PIC International Group, changed its name in 2003 when it moved its headquarters to England. The company is incorporated and has its principal place of business in the United Kingdom. Currently, Sygen has only one employee, an internal auditor, working in California. As noted above, it also operates a research laboratory in the United States. Sygen is a wholly owned subsidiary of Genus.

Genus is also a United Kingdom company and has its principal place of business there. Genus has no employees and conducts no business in the United States, other than through its separately incorporated subsidiaries, Sygen and ABS.

ABS is a Delaware corporation whose headquarters are in Wisconsin. It is the only citizen party named in this lawsuit. Along with Sygen, ABS is a wholly owned subsidiary of Genus. The complaint reveals that Plaintiff named ABS as a defendant under the erroneous impression that Genus and ABS were the same company. Plaintiff never performed any work for AB S and made no specific allegations against that entity. In light of this misidentification, the Court has dismissed ABS, with Plaintiffs consent.

Thus, the only parties remaining in the case are Plaintiff (a permanent resident alien) and Defendants Sygen (a foreign corporation ¹) and Genus (a foreign corporation).

DISCUSSION

In 1988, Congress amended the diversity statute to include the following language: "For purposes of this section, ... and section 1441 [which governs removal], an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled." Judicial Improvements and Access to Justice Act, Pub.L. No. 100-702, § 203, 102 Stat. 4642, 4646 (1988) (codified at 28 U.S.C. § 1332(a)) ("the 1988 Amendment"). Thus, on its face, the 1988 Amendment classifies Plaintiff as a citizen of California for purposes of diversity jurisdiction, and thereby appears to confer federal jurisdiction over this case.

The problem in this case is that a literal application of the 1988 Amendment leads to an arguably unconstitutional result. Article III provides in part that the federal judicial power "shall extend to [suits] ... between a State, or the Citizens thereof, and foreign States, Citizens or Subjects." U.S. CONST. art. III, § 2. The Supreme Court has long held that this conferral of so-called "alienage jurisdiction" does not extend to cases involving only aliens. Montalet v. Murray, 8 U.S. (4 Cranch) 46, 47, 2 L.Ed. 545 (1807) ("[T]he courts of the United States have no jurisdiction of cases between aliens."); see also Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 825, 89 S.Ct. 1487, 23 L.Ed.2d 9 (1969) (stating that a district court would have no jurisdiction over a suit between foreign entities); Hodgson v. Bowerbank, 9 U.S. (5 Cranch) 303, 303, 3 L.Ed. 108 (1809) (same).

Thus, the issue presented here is whether the Court has jurisdiction to hear claims brought by an alien permanent resident against two foreign corporations. On the one hand, Defendants argue that the plain language of the diversity statute makes this a suit between a California citizen and two foreign corporations, over which this Court may properly exercise alienage jurisdiction. On the other hand, Plaintiff argues that such an application of the 1988 Amendment would exceed the constitutional limits on alienage jurisdiction set forth in Article III by purporting to create federal jurisdiction over a suit solely between aliens.

The Court notes that it is not the first to confront the apparent conflict between § 1332(a) and the constitutional limits on alienage jurisdiction.² Other courts have concluded, with near uniformity, that a literal application of § 1332(a) would be unconstitutional in cases such as this one. As the D.C. Circuit Court of Appeals explains:

[A] literal reading of the 1988 amendment to § 1332(a) would produce an odd and potentially unconstitutional result. It would ... create federal diversity jurisdiction over a lawsuit brought by one alien against another alien, without a citizen of a state on either side of the litigation. The judicial power of the United States does not extend to such an action under the Diversity Clause of Article III.

Saadeh, 107 F.3d at 58 (citing Hodgson, 9 U.S. at 303, 5 Cranch 303). Accord Engstrom, 959 F.Supp. at 551 (noting that the 1988 Amendment "seems to lend itself to an entirely unintended and almost surely unconstitutional interpretation"); Chavez-Organista, 208 F.Supp.2d at 176-77 ("[T]he plain language of the 1988 Amendment could not govern inasmuch as it expands diversity jurisdiction to cases where a permanent resident alien residing in state A sues only a permanent resident alien residing in state B or a nonresident alien, thus exceeding the limits of Article III."); Tay, 1995 WL 55330, **1-2, 1995 U.S. Dist. LEXIS 22196, at *4 (noting that there would be no federal jurisdiction over a suit between a permanent resident alien and a nonresident alien); Lee, 111 F.Supp.2d at 141 (finding no federal jurisdiction over an action between plaintiffs permanent resident aliens and defendants alien corporations). Scholars have likewise concluded that "any interpretation of the [ 1988 Amendment] that would provide diversity jurisdiction for a case solely involving aliens would be unconstitutional." 15 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE § 102.78[2] (3d ed.2006); see also John B. Oakley, Recent Statutory Changes in the Law of Federal Jurisdiction and Venue: The Judicial Improvements Act of 1988 and 1990, 24 U.C. DAVIS L. REV. 735, 745 (1991) ("By facially authorizing such suits between aliens the 1988 Act conflicts with the rule ... that article III does not permit federal alienage jurisdiction over a suit in which aliens are the only opposing parties."); Kevin R. Johnson, Why Alienage Jurisdiction? Historical Foundations and Modern Justifications for Federal Jurisdiction Over Disputes Involving Noncitizens, 21 YALE J. INT'L L. 1, 25 (1996) ("[T]he amendment potentially allows an alien, who has been admitted for permanent residence into the United States and is domiciled in a state, to sue another alien in federal court, an unconstitutional result."). Indeed, this court is aware of no authority to support the proposition that the exercise of federal jurisdiction would be constitutional on the facts of this case.

"Where an otherwise acceptable construction of a statute would raise serious constitutional problems, [a court should] construe the statute to avoid such problems unless such a construction is plainly contrary to the intent of Congress." Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Constr. Trades Council, 485 U.S. 568, 575, 108 S.Ct. 1392, 99 L.Ed.2d 645, (1988). While it is true that courts do not ordinarily resort to legislative history where statutory language is plain on its face, Garcia v. United States, 469 U.S. 70, 76, 105 S.Ct. 479, 83 L.Ed.2d 472 (1984), it is an axiomatic principle of statutory interpretation that courts should not construe statutes...