Langer Juice Company, Inc v. Zucarmex USA

• Court: District Court, C.D. California
• Decided: July 1, 2021
• Docket: 2:21-cv-02462
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10

11 LANGER JUICE COMPANY, INC., Case No. 2:21-CV-02462-AB-PVC

12 Plaintiffs,

13 ORDER DENYING MOTION TO v. REMAND 14

15 ZUCARMEX USA, INC.,

16 Defendants. 17 Before the Court is Plaintiff Langer Juice Company, Inc.’s (“Plaintiff”) Motion 18 to Remand. (Dkt. No. 10, “Motion” or “Mot.”). Defendant Zucrum Foods, LLC, 19 doing business as Zucarmex USA, (“Defendant”), opposed (Dkt. No. 13, “Opp’n”), 20 and Plaintiff replied (Dkt. No. 15, “Reply”). The Court took the matters raised with 21 respect to the Motion under submission without oral argument pursuant to Local Rule 22 7.15. For the following reasons, the Court DENIES the Motion. 23 24 I. BACKGROUND 25 A. Factual Background 26 Plaintiff alleged in their Complaint (Dkt. No. 1-1 Exh. A, “Complaint” or 27 “Compl.”), that in August 2020, they purchased liquid sugar from the Defendant to 28 add to the juice their company makes, however the batch of juice was contaminated 1 by the sugar, resulting in an improper smell that forced Plaintiff to recall all juice 2 made with said sugar, as it was rendered unsaleable and not consumable. (Compl. ¶ 3 3.) Plaintiff had the juice tested by a certified lab, allegedly revealing that the liquid 4 sugar from the Defendant had acidophilic thermophilic bacteria and guaiacol, which 5 were responsible for making the juice undrinkable. (Compl. ¶ 5.) 6 B. Procedural Background 7 Plaintiff filed their complaint against the Defendant on February 2, 2021 (Dkt. 8 No. 1) in the Los Angeles County Superior Court, alleging four causes of action, 9 including: strict liability under 21 U.S.C. § 342(a) of the Federal Food Drug and 10 Cosmetic Act (“FDCA”) and California’s Sherman Food, Drug and Cosmetic Laws, 11 California Health and Safety Code § 109875 et sec.; breach of implied warranty; 12 negligence; and breach of contract. (See generally Compl.) 13 Defendant was served with the Complaint on February 19, 2021 (Dkt. No. 1 14 Notice of Removal (“NOR”), ¶ 5.) and removed the case to this Court on March 19, 15 2021, citing both federal question and diversity jurisdiction. (See generally NOR.) 16 Plaintiff filed the instant Motion on April 13, 2021. (See generally Mot.) 17 II. LEGAL STANDARD 18 Civil actions may be removed from state court if the federal court has original 19 jurisdiction. See Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 33 (2002) (“Under 20 the plain terms of § 1441(a), in order properly to remove an action pursuant to that 21 provision, … original subject-matter jurisdiction must lie in the federal courts.” 22 (cleaned up)). Thus, removal of a state action may be based on either diversity or 23 federal question jurisdiction. City of Chi. v. Int’l Coll. of Surgeons, 522 U.S. 156, 163 24 (1997); Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Determination of 25 federal question jurisdiction “is governed by the well-pleaded complaint rule, which 26 provides that federal jurisdiction exists only when a federal question is presented on 27 the face of plaintiffs properly pleaded complaint.” Cal. v. United States, 215 F.3d 28 1005, 1014 (9th Cir. 2000). The defendant seeking removal of an action from state 1 court bears the burden of establishing grounds for federal jurisdiction, by a 2 preponderance of the evidence. Geographic Expeditions, Inc. v. Estate of Lhotka, 599 3 F.3d 1102, 1106–07 (9th Cir. 2010). 4 “The burden of establishing jurisdiction falls on the party invoking the removal 5 statute, which is strictly construed against removal.” Sullivan v. First Affiliated Sec., 6 Inc., 813 F.2d 1368, 1371 (9th Cir. 1987) (internal citations omitted). Courts resolve 7 all ambiguities “in favor of remand to state court.” Hunter v. Philip Morris USA, 582 8 F.3d 1039, 1042 (9th Cir. 2009) (citing Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 9 Cir. 1992)). A removed case must be remanded “[i]f at any time before final 10 judgment it appears that the district court lacks subject matter jurisdiction.” 28 U.S.C. 11 § 1447(c). 12 III. DISCUSSION 13 Plaintiff has moved to remand this action to state court, based on the claims that 14 there is neither diversity nor federal question jurisdiction. (See generally Mot.) First, 15 Plaintiff argues that there is no diversity jurisdiction because the Defendant has its 16 principal place of business in California and thus Defendant is not diverse from 17 Plaintiff. (Id. at 2.) Second, Plaintiff argues there is no federal question jurisdiction 18 because the federal claim under the FDCA in their Complaint does not expressly 19 preempt the state law cause of action they alleged in accordance. (Id.) 20 In response, Defendant first argues that its principal place of business is in 21 Arizona, not California. (NOR at 4; Opp’n at 11.) Defendant also purports that the 22 inclusion of the FDCA claim necessarily implicates federal question jurisdiction, as it 23 is a federal statute. (NOR at 3; Opp’n at 6.) In addition, the Defendant did not assert 24 preemption as an affirmative defense, and states that Plaintiff’s preemption arguments 25 are misplaced. (Opp’n at 7–9.) This Court agrees with the Defendant finds that 26 removal was appropriate. 27 A. Diversity Jurisdiction 28 Neither party disputes that the amount in controversy for this case exceeds 1 $75,000. (NOR at 3–4; See 28 U.S.C. § 1332.) Defendant noted that the amount in 2 controversy likely exceeds that threshold three times over. (NOR at 3–4.) Thus, the 3 only remaining issue with respect to diversity jurisdiction is whether there is complete 4 diversity between the parties. 5 Corporations can have two states of citizenship—where they are incorporated 6 and where their principal place of business, or “nerve center,” is located. Hertz Corp. 7 v. Friend, 559 U.S. 77, 92 (2010). The “nerve center” is “the place where a 8 corporation’s officers direct, control, and coordinate the corporation’s activities.” 9 (Id.) In practice, this is usually the corporate headquarters, where high-level meetings 10 take place. In addition, where one of these two states is the same for either party, 11 there is not complete diversity, and thus no grounds for removal based on diversity 12 jurisdiction. (Id. at 87.) 13 The Plaintiff is incorporated in and has their principal place of business in the 14 County of Los Angeles in California; these facts are not disputed by either party. 15 (Dkt. 1-1, Declaration of Renee De Golier (“De Golier Dec.”) Exh. E.) Defendant is 16 incorporated in Arizona as a Limited Liability Company. (Id.) Where the parties 17 disagree is the home of Defendant’s nerve center, or principal place of business. 18 Defendant asserts that its principal place of business located at 825 North Grand 19 Avenue, Suite 200, Nogales, Arizona 85621. (NOR at 4) (citing De Golier Dec. ¶ 4– 20 5, Exhs. C, E.) Further, Defendant states that “[a]ll operational and management 21 decisions for [Defendant] are made in the State of Arizona where the sole Members of 22 the LLC are domiciled.” (NOR at 4) (citing De Golier Dec., Exh. E.) Plaintiff argues 23 that the North Grand address cannot be considered a legitimate address for their high 24 level operations as it is merely an address for Defendant’s statutory agent’s law 25 offices. (Mot. at 2.) Instead, Plaintiff contends that Defendant’s “nerve center” or 26 principal place of business is its San Diego refinery/manufacturing plant, with address 27 7122 Enrico Fermi Place, San Diego, CA 92154. (Mot. at 10) (“This location is 28 Defendant’s only manufacturing plant in the U.S. and therefore, the location where 1 Defendant prepares, supervises, stores, manufactures, and distributes its product to 2 clients, including to Langer.”). 3 While it does appear that Defendant conducts general business activities in 4 California, such activities are not dispositive—high level activities are the threshold. 5 See Hertz, 559 U.S. at 94. Defendant provides undisputed affidavits from its high- 6 level members which state that the San Diego facility is a “constituent” part that lacks 7 independence from the Arizona office and operates pursuant to the decisions made at 8 the Arizona office. (Opp’n at 12) (citing Declaration of Jorge De La Vega Canelos 9 (“Canelos Dec.” at ¶¶ 1–3, 5–10.) Given these detailed affidavits and attached 10 exhibits, the Court finds that Defendant meets its burden of showing that its 11 operational activities emanate from Arizona. See, e.g., City of Vista v. Gen. 12 Reinsurance Corp., 295 F. Supp. 3d 1119, 1124 (S.D. Cal. 2018); DeLeon v. Wells 13 Fargo Bank, N.A., 729 F. Supp. 2d 1119, 1123 (N.D. Cal. 2010); Langston v. T- 14 Mobile US, Inc., No. LACV1801972JAKASX, 2018 WL 2382464, 3 (C.D. Cal. May 15 24, 2018); Portillo v. Chipotle Mexican Grill, Inc., No. EDCV1701497ABJCX, 2018 16 WL 637386, 2–3 (C.D. Cal. Jan. 31, 2018). 17 Accordingly, because Plaintiff is a citizen of California and Defendant is a 18 citizen of Arizona, the Court finds that Defendant has met its burden of establishing 19 complete diversity and thus appropriateness of removal. 20 B. Federal Question Jurisdiction 21 Alternatively, the Court also finds that it has federal question jurisdiction over 22 this matter. The question before the Court is whether inclusion of a federal claim, one 23 which could be interpreted as stemming from a state law claim, in the original 24 complaint, is sufficient grounds for removal. The Court finds that it is. 25 In their Complaint, Plaintiff alleged a federal claim under the FDCA in addition 26 to their claim under California’s Sherman Food, Drug and Cosmetic Laws, California 27 Health and Safety Code § 109875 et sec. (See Compl.) Defendant cites the inclusion 28 of the FDCA claim as one of its grounds for removal. (NOR at 3.) Plaintiff states 1 that mere inclusion of a federal claim does not necessarily implicate a federal 2 question, and asks the Court to ignore the federal claim, but has not amended their 3 original Complaint to drop such claim. (Mot. at 12.) 4 Plaintiff points out that, according to Duncan v. Stuetzle, they are “the ‘master’ 5 of [their] own case, and if the plaintiff can maintain its claims on both state and 6 federal grounds, the plaintiff may ignore the federal question, assert only state claims, 7 and defeat removal.” Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996). (Mot. at 8 12.) However, Duncan does not stand for the proposition that a plaintiff may ignore a 9 federal claim that is expressly asserted in the complaint. Indeed, the plaintiff in 10 Duncan did not assert any federal causes of action in their original complaint, as 11 Plaintiff in this case has done. (Id.) While a plaintiff may ignore federal claims if 12 they choose and keep them out of a complaint, the Plaintiff has not done so in this 13 case. (Opp’n, at 6.) As noted, remand usually requires that a plaintiff amend their 14 complaint to take out any federal causes of action. See Duncan, 76 F.3d at 1485. 15 Accordingly, the Court need not undergo any lengthy analysis to determine 16 whether Plaintiff’s Complaint “arises under” federal law. Gunn v. Minton, 568 U.S. 17 251 (2013). The “arising under” analysis is to determine whether a federal court has 18 jurisdiction over a purely state law claim but such an analysis is not applicable to the 19 instant case. Defendant is not asking the Court to exercise federal jurisdiction over a 20 state law claim—Plaintiff expressly included a federal cause of action in their 21 Complaint. Thus, the Court need not analyze whether any state law claim “arises 22 under” federal law. 23 Plaintiff also argues that the Court should ignore the federal claim because there 24 is not express preemption of state law claims by the FDCA, because the state law’s 25 requirements are not different than the federal requirements, and the two have very 26 similar language. (Reply at 5; Mot. at 14.) However, Defendant is not arguing that 27 the FDCA preempts Plaintiff’s state law claims. (Opp’n at 7.) Again, Plaintiff 28 expressly included the FDCA claim in their Complaint. The Court agrees with 1 | Defendant that preemption principles articulated in Grable & Sons Metal Prod., Inc. v. 2 | Darue Eng'g & Mfg., 545 U.S. 308, 314 (2005) are more ostensibly intended to 3 || embrace protection of the federal court’s original jurisdiction, as opposed to providing 4 | methods by which to avoid federal jurisdiction by utilizing state law claims. 5 | Preemption provides removing parties with an option of seeking removal on the basis 6 | that a state law claim is preempted by a by an implicated federal question not already 7 | asserted in the Complaint. See id. Again, Defendant did not remove on the mere 8 || basis that a federal issue was implicated. Defendant removed on the basis that a 9 | federal claim was expressly invoked. Accordingly, the Court agrees with Defendant 10 | that Plaintiff's preemption arguments are misplaced. 11 As Plaintiff is actively alleging a federal cause of action, placed expressly in 12 | their Complaint, this necessarily implicates federal question jurisdiction. Thus, the 13 | Court also has federal question jurisdiction over this matter. 14 | IV. CONCLUSION 15 For the foregoing reasons, the Court DENIES Plaintiff's Motion. The matter 16 | will remain in federal court. 17 18 19 | Dated: July 1, 2021 61-— nh 1 HONORABLE ANDRE BIROTTE JR. UNITED STATES DISTRICT COURT JUDGE

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