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Mario Deluca v. Allstate New Jersey Insurance Company

August 24, 2011

MARIO DELUCA,
PLAINTIFF,
v.
ALLSTATE NEW JERSEY INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Hon. William J. Martini

OPINION

WILLIAM J. MARTINI, U.S.D.J.:

This matter comes before the Court on the application for an Order to Show Cause filed by Plaintiff Mario DeLuca, which seeks remand of this case pursuant to 28 U.S.C. § 1447(c). The Court issued the Order to Show Cause on July 27, 2011, and a show cause hearing was held on August 16, 2011. For the reasons stated below, Plaintiff's request for remand is GRANTED and this case is REMANDED to the Superior Court of New Jersey.

I. FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Mario DeLuca commenced this action against Defendant Allstate New Jersey Insurance Company ("Allstate NJ") in the Superior Court of New Jersey on July 5, 2011. Plaintiff alleges that Allstate NJ has violated the New Jersey Franchise Practices Act ("NJFPA") and the implied covenant of good faith and fair dealing by attempting to terminate Plaintiff's Exclusive Agency Agreement without good cause. (Compl. ¶ 1.) Plaintiff has been an agent for Allstate NJ for 42 years, and has been acting as an independent contractor pursuant to the Exclusive Agency Agreement since 1999. (Compl. ¶ 5.) On June 29, 2011, Allstate NJ sent Plaintiff a letter, notifying him that his Exclusive Agent Agreement was being terminated as of September 30, 2011. (Compl. ¶ 20.) In response, Plaintiff filed the instant Complaint in state court, and further moved for a preliminary injunction preventing Defendant from terminating Plaintiff while the case is pending. (Compl. ¶ 1.)

On July 19, 2011, Defendant removed the case to this court based on diversity jurisdiction, stating that Plaintiff is a citizen of New Jersey while Allstate NJ is an Illinois corporation with its principal place of business in Illinois. (Docket Entry No. 1.) In response, Plaintiff asserted, via his application for an Order to Show Cause, that there is no diversity of citizenship here as Allstate NJ has its principal place of business in New Jersey, not Illinois. (Docket Entry Nos. 9-11.) This Court then ordered Defendant to show cause why this case should not be remanded to the Superior Court of New Jersey. (Docket Entry No. 16.)

It is undisputed that Allstate NJ has an office in Bridgewater, New Jersey, that Allstate NJ is a wholly-owned subsidiary of Allstate Insurance Company, Inc. ("AIC"), and that AIC has its headquarters in Northbrook, Illinois. Allstate's website lists the "home office" of Allstate NJ as Bridgewater, New Jersey. (Garner Decl., Docket Entry No. 11, Ex. 1.) Allstate NJ's President and Chief Executive Officer, William Ballinger ("Ballinger"), who also serves as a member of the Board of Directors and of the Executive Committee, works out of the Bridgewater, New Jersey office. (Ballinger Decl. ¶¶ 1, 7.)

Ballinger's declaration states that other than himself, the other current members of the Board of Directors (the "Board") and the other current Officers of Allstate NJ "regularly report to work" at Allstate NJ's "executive headquarters" in Northbrook, Illinois. (Ballinger Decl. ¶¶ 4-5.) Furthermore, Ballinger states that all Board and Board committee meetings take place at the Northbrook, Illinois headquarters, and that "[a]ll executive and corporate strategy decisions" as well as "formal control over and approval of all significant decisions regarding ANJ's business activities" are made at the Northbrook, Illinois headquarters. (Ballinger Decl. ¶¶ 8-10.) However, Plaintiff DeLuca states that all of his dealings as an Allstate NJ agent have been with or through the Bridgewater, New Jersey office, and that he has never "had any meaningful contact" with the directors and officers listed in Ballinger's Declaration. (DeLuca Decl. ¶¶ 5-6.)

II. LEGAL STANDARDS

A. Standard for Remand

A state court action may be removed to federal district court only if the action could otherwise have been commenced in federal court. 28 U.S.C. § 1441(a). Where the case could not have been commenced in federal court because subject matter jurisdiction is lacking, a party may seek to remand a civil action back to state court. 28 U.S.C. § 1447(c). The burden is on the party opposing remand to show that removal was proper. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990), cert denied, 498 U.S. 1085, 111 S. Ct. 959, 112 L. Ed. 2d 1046 (1991). The Third Circuit has held that "the party asserting federal jurisdiction in a removal case bears the burden of showing, at all stages of the litigation, that the case is properly before the federal court." Frederico v. Home Depot, 507 F.3d 188, 193 (3d Cir. 2007). Moreover, removal statutes are to be strictly construed, and all doubts must be resolved in favor of remand. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 61 S. Ct. 868, 85 L. Ed. 1214 (1941).

B. Determining Corporate Citizenship

Pursuant to 28 U.S.C. §1332, federal courts have jurisdiction over actions between citizens of different states where the amount in controversy exceeds $75,000. In determining the citizenship of a corporation for diversity jurisdiction purposes, "a corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1). Up until recently, the Third Circuit applied a "center of corporate activities" test to determine a corporations "principal place of business," which looked to the corporation's day-to-day activities. Kelly v. United States Steel Corp., 284 F.2d 850, 854 (3d Cir. 1960). However, the Supreme Court recently resolved the conflicting interpretations of "principal place of business" among the Circuits by holding that the "nerve center" test governs.

Hertz Corp. v. Friend, 559 U.S. , 130 S.Ct. 1181, 175 L. Ed. 2d 1029 (2010). As such, Hertz overruled the Third Circuit's "center of corporate activities" test and required all courts to apply the "nerve center" test, which directs courts to look to "the place where the corporation's high level officers direct, control, and coordinate the corporation's activities." Id. at 1192. The Supreme Court goes on to state that usually, a corporation's nerve center will be "the place where the corporation maintains its headquarters -- provided that the headquarters is the actual center of direction, control and coordination, i.e. the 'nerve center,' and not simply an office where the corporation holds its board meetings..." Id. The Supreme Court cautioned, however, that "if the bulk of a company's ...


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