The opinion
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7 UNITED STATES DISTRICT COURT
8 EASTERN DISTRICT OF CALIFORNIA
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10 ROBERT SCOTT CHRISTENSEN, et al.
11 Plaintiffs, No. 2:21-cv-02258-TLN-KJN
v.
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13 LIBERTY UTILITIES, ORDER
14 Defendant.
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This matter is before the Court on Plaintiffs Robert Scott Christensen, Shad Lafonties,
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Michael Scott Avis, Dannie Anthony, Bret Paulson, Karen Paulson, Wayne Swindall, Clark
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Roberts, Scot Spangler, Reinhard Schmidt, Anne Reavey, Sheri Rosten, Greg Rondy, Craig
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Stanford, Rosemarie Sumner, Dennis Albrecht, Amanda Webb, Garner Wayne Meadows, John
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Borton, Jeffrey Hinds, Diane Anthony, Donna Roberts, David Spangler, Clint Nelson, Deborah
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Rupp, Brianna Morris, Daniel Wurzburger, Gisele Wurzburger, Lloyd Chichester, Michael
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Weaver, Heather Haviland, Philip Touchstone, Cathy Touchstone, Theresa Newman, Caroline
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Stewart, Thomas Stewart, Marilyn Portman, Ella Chichester, Andrew Holzhauer, Sheri Avis,
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Gerald Williams, Betty Williams, Karen Gulley, Ed Gulley, John McDougal, Kevin Julian,
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Colleen Julian, Leah Vengley, Sarah Garcia, Sage Garcia, Marianna Ames, and Terry Ames’s
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(collectively, “Plaintiffs”) Motion to Remand. (ECF No. 6.) Defendant Liberty Utilities
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1 (Calpeco Electric) LLC (“Defendant”)1 opposed the motion. (ECF No. 10.) Plaintiffs replied.
2 (ECF No. 12.) For the reasons set forth below, Plaintiffs’ Motion to Remand is GRANTED.
3 I. FACTUAL AND PROCEDURAL BACKGROUND
4 Defendant is a utility company providing electrical power and services to California
5 residents. (ECF No. 1-1 at 5.) On November 17, 2020, powerlines owned, operated, and
6 managed by Defendant ignited the Mountain View Fire in Mono County. (Id. at 2.) The fire
7 began when Defendant’s non-insulated electrical conductors connected, causing nearby
8 vegetation to ignite. (Id. at 4.) On September 16, 2021, Plaintiffs sued in Mono County Superior
9 Court, alleging Defendant negligently operated, repaired, and maintained its electrical equipment,
10 and had poor electrical and fire safety practices. (Id. at 1, 4.) On December 8, 2021, Defendant
11 removed the action to this Court based on diversity jurisdiction. (ECF No. 1.) On January 21,
12 2022, Plaintiffs filed the instant motion to remand. (ECF No. 6.)
13 II. STANDARD OF LAW
14 A civil action brought in state court, over which the district court has original jurisdiction,
15 may be removed by the defendant to federal court in the judicial district and division in which the
16 state court action is pending. 28 U.S.C. § 1441(a). The district court has jurisdiction over civil
17 actions between citizens of different states in which the alleged damages exceed $75,000. 28
18 U.S.C. § 1332(a)(1). Removal based on diversity requires that the citizenship of each plaintiff be
19 diverse from the citizenship of each defendant (i.e., complete diversity). Caterpillar Inc. v.
20 Lewis, 519 U.S. 61, 68 (1996). For purposes of diversity, a corporation is a citizen of any state in
21 which it is incorporated and any state in which it maintains its principal place of business. 28
22 U.S.C. § 1332(c)(1). An individual defendant’s citizenship is determined by the state in which
23 they are domiciled. Weight v. Active Network, Inc., 29 F. Supp. 3d 1289, 1292 (S.D. Cal. 2014).
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1 The Notice of Removal states that Defendant Liberty Utilities (Calpeco Electric) LLC was
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erroneously named as Liberty Utilities by Plaintiff. (ECF No. 1 at 2.) Plaintiff does not contest
27 this in the instant motion and indeed treats Defendant Liberty Utilities (Calpeco Electric) LLC as
the singular named Defendant in this action. (See ECF Nos. 6, 12.) Accordingly, the Clerk of the
28 Court is directed to update the docket to reflect the correct name.
1 “[I]n a case that has been removed from state court to federal court under 28 U.S.C. §
2 1441 on the basis of diversity jurisdiction, the proponent of federal jurisdiction — typically the
3 defendant in the substantive dispute — has the burden to prove, by a preponderance of the
4 evidence, that removal is proper.” Geographic Expeditions, Inc. v. Estate of Lhotka ex rel.
5 Lhotka, 599 F.3d 1102, 1106–07 (9th Cir. 2010). “The preponderance of the evidence standard
6 applies because removal jurisdiction ousts state-court jurisdiction and ‘must be rejected if there is
7 any doubt as to the right of removal in the first instance.’” Id. (citation omitted). “This gives rise
8 to a ‘strong presumption against removal jurisdiction [which] means that the defendant always
9 has the burden of establishing that removal is proper.’” Id. (citation omitted).
10 III. ANALYSIS
11 Plaintiffs argue this Court lacks subject matter jurisdiction over Defendant because its sole
12 member, LUCo, a holding company of public utilities, “has admitted in numerous filings with the
13 California Secretary of State, as well as other documents, that its corporate offices are located in
14 California, not Arizona, and that its Chief Executive Officer and Director Gregory Sorensen is
15 located in California.” (ECF No. 6 at 5, 8.) Plaintiffs contend that because they are citizens of
16 California, this defeats diversity jurisdiction.2 (Id. at 4.) In opposition, Defendant does not
17 contest that its citizenship is based upon that of LUCo, but rather that LUCo’s principal place of
18 business is actually in Arizona, which provides this Court with diversity jurisdiction. (ECF No.
19 10 at 8.) Specifically, Defendant argues: (1) 3123 SMB LLC v. Horn, 880 F.3d 461 (9th Cir.
20 2018), treats a holding company like LUCo differently when determining its citizenship; (2)
21 Defendant has consistently represented in Delaware filings that its principal place of business is
22 in Arizona and the California filings are immaterial; and (3) the residency of a former officer and
23 the residencies of LUCo’s officers and directors generally do not control. (Id. at 9–17.) The
24 Court will address each of Defendant’s arguments in turn.
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28 2 Plaintiffs’ California citizenship is not contested.
1 A. Determination of Citizenship for Holding Companies
2 Defendant argues that pursuant to Horn, holding companies like LUCo are treated
3 differently when determining their citizenship. (ECF No. 10 at 9.) Defendant contends that
4 under Horn’s holding, LUCo’s principal place of business is Arizona. (Id. at 11–13.) In reply,
5 Plaintiffs argue LUCo’s only board meeting had no attendees from Arizona and the Declaration
6 from Todd Wiley relied on by Defendant offers only legal conclusions. (ECF No. 12 at 5–6.)
7 A corporation is a citizen of both the state of its incorporation and the state that includes
8 its principal place of business. 28 U.S.C. § 1332(c). However, a limited liability company “is a
9 citizen of every state of which its owners/members are citizens.” Johnson v. Columbia Properties
10 Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). A corporation’s principal place of business is
11 the place where “officers direct, control, and coordinate the corporation’s activities.” Hertz Corp.
12 v. Friend, 559 U.S. 77, 92–93 (2010). Normally this is the state home to the corporation’s
13 headquarters, so long as the headquarters is “the actual center of direction, control, and
14 coordination, i.e., the ‘nerve center,’ and not simply an office where the corporation holds its
15 board meetings.” Id. at 93. However, the Ninth Circuit recently held that because holding
16 companies exercise such little control, the “nerve center” should be considered the state where it
17 holds board meetings. See Horn, 880 F.3d at 468.
18 Another court in this district recently decided a nearly identical case and considered Horn.
19 In Travelers Commercial Insurance Co., the plaintiffs sued the defendant for damages caused by
20 the Mountain View Fire and sought remand to state court once the defendant removed. See
21 Travelers Com. Ins. Co. v. Liberty Utilities (CalPeco Elec.) LLC, No. 2:21-CV-01485-MCE-AC,
22 2022 WL 992935, at *1 (E.D. Cal. Apr. 1, 2022). The court noted the Ninth Circuit held in Horn
23 that “a recently-formed holding company’s principal place of business is the place where it has
24 board meetings, regardless of whether such meetings have already occurred, unless evidence
25 shows that the corporation is directed from elsewhere.” Id. at *3 (citing Horn, 880 F.3d at 465,
26 468 (emphasis added)). But the court found Horn inapplicable, reasoning LUCo’s incorporation
27 over a decade ago did not make it “recently formed.” Id. Additionally, the court noted LUCo did
28 not have routine board meetings and so its activity was not directed from meetings. See id.
1 (“[T]he location of board meetings is proper ‘unless evidence shows the corporation is directed
2 from elsewhere.’”) (citing Horn, 880 F.3d at 468).’
3 Here, Defendant raises the same argument: a single 2017 board meeting in Missouri
4 establishes its principal place of business lies in Arizona. (ECF No. 10 at 12 (citing ECF No. 10-
5 8 at 2).) LUCo was incorporated on December 9, 2010. (ECF No. 10-2 at 2.) Accordingly, as
6 LUCo is over a decade old, Horn does not apply. See Travelers, 2022 WL 992935 at *3. Thus,
7 the Court must look to other evidence besides the location of LUCo’s board meetings in
8 determining its principal place of business, or its “nerve center,” which is the “actual center of
9 direction, control, and coordination.” See Hertz, 559 U.S. at 93.
10 B. Filings
11 Plaintiffs cite certain filings with the California Secretary of State from 2017 through
12 2020, such as Statements of Information, where LUCo lists its principal executive office as a
13 California address. (ECF No. 6 at 5–6 (citing ECF No. 6-2 at 2, 7–8).) Defendant argues the
14 forms referenced by Plaintiffs are insufficient to establish its principal place of business as
15 California. (ECF No. 10 at 14–15 (citing Mesa v. Am. Gen. Life Ins. Co., No. 1:19-CV-01393-
16 DAD-EPG, 2020 WL 374354, at *5 (E.D. Cal. Jan. 23, 2020)).) In Mesa, the court found an 18-
17 year-old registration document to be insufficient proof of the principal place of business. See
18 Mesa, 2020 WL 374354 at *5. However, while the age of the document was important in Mesa,
19 here the evidence is less than five years old. Additionally, the court in Mesa relied on a passage
20 from Hertz denigrating the “mere filing of a form” as insufficient evidence. See id. at *4 (citing
21 Hertz, 559 U.S. at 97); see also L’Garde, Inc. v. Raytheon Space & Airborne Sys., 805 F. Supp.
22 2d 932, 940 (C.D. Cal. 2011) (“[R]eliance on a single piece of evidence, such as a Secretary of
23 State printout, is insufficient for a party to prove the location of its headquarters under the nerve
24 center test.”).
25 Defendant contends LUCo’s W9s and tax filings from Delaware establish its principal
26 place of business as Arizona. (ECF No. 10 at 15.) These list an Arizona address as LUCo’s
27 principal place of business and main address, respectively, up through 2020. (ECF Nos. 10-3, 10-
28 4.) Defendant also points to a Certificate of Surrender filed with the California Secretary of State
1 on March 30, 2021, which lists an Arizona mailing address for its principal executive office.
2 (ECF No. 10-13 at 2.) Defendant claims the California listings were clerical errors, citing a
3 declaration by LUCo Vice President Todd Wiley. (ECF No. 10-1 at 9.) However, the Court finds
4 that the declaration contains “conclusory allegations” that fail to demonstrate the Arizona office
5 directed and controlled LUCo’s activities, similar to the declaration that was filed in Travelers.
6 See Travelers, 2022 WL 992935, at *4 (“The [c]ourt remains skeptical especially since the
7 California address was listed in four separate Statements . . .”). For example, Wiley avers in only
8 a conclusory manner that the Statements of Information mistakenly identified Defendant’s
9 addresses as LUCo’s “Principal Executive Office,” but they were “incorrect filings in California .
10 . . made by a clerical employee in Canada and were incorrectly prepared.” (ECF No. 10-1 at 9–
11 10.) Wiley avers instead that the Arizona office is LUCo’s headquarters and “is a full corporate
12 office,” and matters are assigned there “as appropriate for resolution.” (Id. at 8, 10–11.)
13 Aside from the “conclusory allegations” in Wiley’s declaration, Defendant’s only
14 evidence of activities in Arizona lies in forms. (ECF Nos. 10-3, 10-4.) These include the recently
15 filed Certificate of Surrender with the California Secretary of State and tax filings in Delaware
16 listing an Arizona address as LUCo’s headquarters. (ECF No. 10 at 15.) Such evidence does
17 little to demonstrate from where LUCo actually directs and controls its activities. Considered
18 together, the filings highlighted by both parties at best reveal inconsistencies and raise questions
19 as to where LUCo’s principal place of business really is — far from proving the answer to be
20 Arizona. See Travelers, 2022 WL 992935, at *4.
21 C. Residency of Former Officers
22 Finally, Defendant argues the California residency of LUCo’s former President, Gregory
23 Sorensen, is irrelevant and the residencies of LUCo’s officers and directors do not control. (ECF
24 No. 10 at 16.) Plaintiffs do not address this argument in their reply. (See ECF No. 12.)
25 Indeed, the Ninth Circuit noted in Horn that “the connection between the state where a
26 holding company conducts its business, on the one hand, and the states where its officers and
27 directors reside, on the other, is tenuous.” 880 F.3d at 469. The court further emphasized a test
28 based on the location of a holding company’s officers would be “difficult to administer.” Id. at
1 | 470. Therefore, whether or not Sorensen is a resident of California or Arizona does nothing to
2 | further Defendant’s goal of establishing LUCo’s principal place of business as Arizona. While
3 | Sorensen’s shift to California residency in 2018 does little to prove California citizenship for
4 | LUCo, it does nothing to show Arizona is the principal place of business. See Travelers, 2022
5 | WL 992935, at *4 (finding the fact that Sorensen was listed as President but also at Downey,
6 | California and Tahoe Vista, California addresses in the 2017 and 2018 Franchise Tax Reports,
7 | respectively, while listing the California address in four separate Statements of Information filed
8 | with the California Secretary of State from 2017 through 2020 raised questions about LUCo’s
9 | actual principal place of business).
10 Ultimately, the Court finds Defendant failed to meet its burden of showing citizenship
11 | outside of California. See id. at *5; see also Ethridge v. Harbor House Rest., 861 F.2d 1389,
12 | 1393 (9th Cir. 1988) (“The party invoking the removal statute bears the burden of establishing
13 | federal jurisdiction.”).
14 IV. CONCLUSION
15 For the foregoing reasons, the Court hereby GRANTS Plaintiffs’ Motion to Remand.
16 | (ECF No. 6.) Accordingly, the Court REMANDS this case back to the Superior Court of
17 | California, County of Mono. The Clerk of Court is directed to close the case.
18 IT IS SO ORDERED
19 | DATED: August 8, 2022
20 () f
21 “ Mp Voxkay
22 Troy L. Nuhlep ]
73 United States District Judge
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