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Urata v. Canare Electric Co. Ltd.

United States District Court, Third Circuit

May 10, 2013

KAZUO URATA, Plaintiff,


MICHAEL A. HAMMER, Magistrate Judge.


This matter comes before the Court on Plaintiff's motion to remand. Mot., ECF No. 19.[1] The Honorable Jose L. Linares, United States District Judge, referred the motion to the undersigned for Report and Recommendation. Pursuant to Federal Rule of Civil Procedure 78, the Court did not hold oral argument. For the reasons that follow, the Undersigned respectfully recommends that the Court grant Plaintiff's motion to remand.


Kazuo Urata brings this action against Canare Electric Co. Ltd. ("CCE"), which is a Japanese corporation, and Canare Corporation of America ("CCA"), which is CCE's wholly owned American subsidiary and a New Jersey corporation. Plaintiff asserts claims for: (1) age discrimination in violation of the New Jersey Law Against Discrimination ("NJLAD"), N.J.S. 10:5-12 (Count One); (2) breach of a covenant of good faith and fair dealing (Count Two); and (3) breach of contract (Count Three). Amended Compl. (attached as Exh. A to Notice of Removal, ECF No. 1).

According to the Amended Complaint, Plaintiff served as President of CCA from July 1, 2007 to March 8, 2012. Amended Compl., Count 1, ¶ 1.[2] Plaintiff claims that beginning in November 2011, senior management of CCE requested that Plaintiff retire from his position as President. Id . ¶ 2. Plaintiff further alleges that senior management of CCE requested that he retire because he was about to turn sixty years old. Id . Count 1, ¶¶ 2-3. Plaintiff claims that when he refused to retire, CCA fired him due to his age, thereby violating the NJLAD's age-discrimination provision. Id . Count 1, ¶ 4.

In Count Two of the Amended Complaint, Plaintiff claims that his termination constituted a breach of the covenant of good faith and fair dealing, because "[t]here were no terms in the contract relating to a mandatory retirement date or a term of years after which the contract would be invalid." Id . Count 2, ¶¶1-2. Thus, Plaintiff claims that Defendants breached their duty to perform under the employment contract in good faith. Id . Count 2, ¶¶4-5. In Count Three, Plaintiff alleges that Defendants committed breach of contract by failing to honor their commitment to give Plaintiff twenty percent of his salary as additional compensation for participating in CCA's move from California to New Jersey. Id . Count 3, ¶¶1-3. All of the claims are based on state law.

Defendants claim their employment agreement with Plaintiff and Japanese law allowed them to fire Urata if he refused to resign. Def. Opp., ECF No. 21, at 6-7. Defendants claim that Plaintiff's employment contract with CCE incorporated CCE's employment handbook, which in turn provided that Plaintiff agreed that his retirement date "would be the end of the month in which his sixtieth birthday occurred." Certification of Kimberley A. Capadona, April 1, 2013 ("Capadona Certif."), Exh. C, ECF No. 22-3. Further, Defendants assert that Plaintiff's employment contract mandated acceptance of CCE's policies, and that Plaintiff signed an oath to CCE agreeing to follow CCE's employment practices. Def. Opp. at 6 & Capadona Certif. Exh. D, ECF No. 22-4. CCE argues that the Treaty of Friendship, Commerce and Navigation Between the United States and Japan, 4 U.S.T. 2063 (April 2, 1953) ("FCN Treaty") permits this practice.

Defendants further assert that CCE assigned Plaintiff in September 2005 to serve as President and Chief Executive Officer of CCA in California. Capadona Certif. Exh. E, ECF No. 22-5. On or about December 26, 2008, Canare Corporation of America, a California Corporation, merged with Canare Corporation of America, a New Jersey corporation. Capadona Certif., Exh. G, ECF No. 22-7. The resulting corporation was Canare Corporation, a New Jersey Corporation. Id. at page 2, ¶ 1. Canare Corporation of America, a California corporation, ceased to exist. Id . ¶¶ 1-3. The agreement named Plaintiff as the President of CCA in New Jersey. Id . ¶ 7. Plaintiff also signed the merger agreement on behalf of both CCA-California and CCA-New Jersey, and was listed as both President and Treasurer of CCA-New Jersey. Id .; see also id. at page 4.

According to Defendants, on March 7, 2012, a CCE official met with Plaintiff and presented him with a notification of appointment that terminated his transfer to CCA, effective April 26, 2012, and reassigned him to CCE's administrative department in Japan. Id . Exh. H, ECF No. 22-8 (March 7, 2012, letter from CCE President and Representative Director Masao Owase to Plaintiff stating "[y]our assignment, the temporary transfer to CCA, will end on April 26, 2012 and you will return to Canare Electric Co. Ltd. on this date. Your new position is in the Administrative Department."). When Plaintiff refused the assignment in Japan, Defendant Canare Electric Co. terminated Plaintiff's employment. Def. Opp. at 7.

On May 2, 2012, Plaintiff filed this action in the Superior Court of New Jersey, Passaic County. Mot. to Remand, ECF No. 19-1, at 3. After some issues regarding the proper names of the parties, and two corresponding amendments of the complaint, Defendants were served with process on August 15, 2012. Id .; Notice of Removal, ECF No. 1, ¶ 2.

On September 12, 2012, Defendants filed their notice of removal. Defendants asserted that this Court possesses subject matter jurisdiction because this case raises a federal question pursuant to 28 U.S.C. § 1331. Specifically, Defendants argue that adjudication of Plaintiff's claims will require "substantial" interpretation of the FCN Treaty to determine whether Defendants' right to employ "executive personnel... of their choice" extends to recalling that employee. Id . ¶¶ 5-6; Def. Opp., ECF No. 21, at 11-12. On November 28, 2012, Plaintiff moved to remand the action back to the Superior Court of New Jersey. First Mot. to Remand, ECF No. 7. On February 27, 2013, the Court administratively terminated the motion and instructed the parties to address the recent holding of the Supreme Court in Gunn v. Minton, ___ U.S. ___ , 133 S.Ct. 1059 (2013). Order, ECF No. 18. On March 13, 2013, Plaintiff submitted the current motion to remand. Second Mot. to Remand, ECF No. 19. On April 1, 2013, Defendants filed their opposition. Def. Opp., ECF No. 21. On April 8, 2013, Plaintiff filed his reply. Reply, ECF No. 23.


As an initial matter, the Court notes that a decision to remand is dispositive. In re U.S. Healthcare , 159 F.3d 142, 146 (3d Cir. 1998) ("[A]n order of remand is no less dispositive than a dismissal order of a federal action for lack of subject matter jurisdiction where a parallel proceeding is pending in the state court.") Accordingly, the Court respectfully submits the following Report and Recommendation to United States District Judge Jose L. Linares.

A. Plaintiff's Motion to Remand

Removal of a civil case to federal court is governed by 28 U.S.C. § 1441. A defendant may remove an action brought originally in state court only if the plaintiff could have filed the complaint within the original jurisdiction of the federal court. 28 U.S.C. § 1441(b); see also 28 U.S.C. § 1441(a) ("Except as otherwise provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant... to the district court of the United States..."). A federal court lacking subject matter jurisdiction over a case must remand the matter back to state court. 28 U.S.C. § 1447(c); see Farina v. Nokia, Inc. , 625 F.3d 97, 114 (3d Cir. 2010) (noting that federal courts can neither proceed without subject matter jurisdiction, nor can a party waive a lack of jurisdiction). The party asserting federal jurisdiction by way of removal bears the burden of establishing that subject matter jurisdiction exists at all stages in which the case is properly before the federal court. Samuel-Bassett v. KIA Motors Am., Inc. , 357 F.3d 392, 396 (3d Cir. 2004).

Section 1441 is to be construed strictly. All doubts must be resolved in favor of remand. Id . (stating that courts construe § 1441 strictly to honor "the Congressional intent to restrict federal diversity jurisdiction"); Batoff v. State Farm Ins. Co. , 977 F.2d 848, 851 (3d Cir. 1992) ("[R]emoval statutes are to be strictly construed against removal and all doubts should be resolved in favor of remand.") (internal quotations and citations omitted); Abels v. State Farm Fire & Casualty Co. , 770 F.2d 26, 29 (3d Cir. 1985) ("Because lack of [federal] jurisdiction would make any decree in the case void and the continuation of ...

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