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B.S. Ex Rel. Soderberg v. Forest Laboratories, Inc.

United States District Court, W.D. Missouri, Central Division

April 28, 2015

B.S., a minor, by and through his mother and next friend, MICHELLE SODERBERG, and MICHELLE SODERBERG, individually, Plaintiffs,
v.
FOREST LABORATORIES, INC. and FOREST PHARMACEUTICALS, INC., Defendants.

ORDER

NANETTE K. LAUGHREY, District Judge.

Pending before the Court is Plaintiffs' motion to remand, Doc. 9. Plaintiffs' motion is denied.

I. Background

Plaintiffs Michelle Soderberg and her minor child filed this action in the Cole County Circuit Court on November 26, 2014. Plaintiffs allege that Defendants negligently manufactured, marketed, and sold Lexapro, a prescription anti-depressant, and that Soderberg's ingestion of Lexapro caused her child to be born with congenital abnormalities.

On January 7, 2015, Defendants Forest Laboratories and Forest Pharmaceuticals removed this action on the basis of diversity jurisdiction. Plaintiffs and Defendants agree that Forest Laboratories is incorporated in Delaware with its principal place of business in New Jersey, making it a citizen of both Delaware and New Jersey. They also agree that Forest Pharmaceuticals is incorporated in Delaware, making it a citizen of Delaware.

Parties dispute Forest Pharmaceuticals' principal place of business. Neither party contests that until at least July 2014, Forest Pharmaceuticals' principal place of business was located at its headquarters in Missouri. However, in July 2014, Actavis purchased Forest Pharmaceuticals. Actavis is headquartered in New Jersey. Defendants contend that after Actavis purchased Forest Pharmaceuticals, Forest Pharmaceuticals began the process of relocating its headquarters to New Jersey. Between July and November, Forest Pharmaceuticals entered into purchase and sales agreements to sell their Missouri property and appointed new officers who worked out of New Jersey. Defendants contend that these actions were sufficient to shift Forest Pharmaceuticals' principal place of business to New Jersey. Plaintiffs argue, however, that as of November 26, 2014 when the complaint was filed, Forest Pharmaceuticals was still being run out of its headquarters in Missouri. Plaintiffs are both citizens of Missouri. Therefore, if Forest Pharmaceuticals is a citizen of Missouri, there is no complete diversity under 28 U.S.C. ยง 1332(c)(1), and the Court lacks subject matter jurisdiction.

II. Discussion

Upon removing an action to federal court, the defendant bears the burden of proving by a preponderance of the evidence that the court has subject matter jurisdiction over the case. In re Prempro Products Liability Litigation, 591 F.3d 613, 620 (8th Cir. 2010); Hatridge v. Aetna Cas. & Sur. Co., 415 F.2d 809, 814 (8th Cir. 1969). "Removal statutes are strictly construed, and any doubts about the propriety of removal are resolved in favor of state court jurisdiction and remand." Baumgartner v. Ford Motor Credit Co., 2007 WL 2026135, at *1 (W.D. Mo. July 9, 2007).

In order to determine whether the Court has subject matter jurisdiction over this action, the Court must decide where Forest Pharmaceuticals' principal place of business was located on November 26, 2014 when Plaintiffs commenced this action in Cole County. Grupo Dataflux v. Atlas Global Group, L.P., et al., 541 U.S. 567, 570 (2004) (noting that a court's jurisdiction depends on the facts as they existed at the time the complaint was filed). In support of their contention that Forest Pharmaceuticals' principal place of business was in Missouri on November 26, 2014, Plaintiffs have submitted three exhibits: (1) Forest Pharmaceuticals' 2014 registration with the Missouri Secretary of State's office, listing its principal place of business in St. Louis; (2) a screen shot of the Secretary of State's website listing the company's principal office as St. Louis as of January 2015; and (3) an Answer filed on November 5, 2014 in a separate action in Cole County wherein Forest Pharmaceuticals admitted that its principal place of business was in Missouri.

Defendants submitted a declaration of William Meury, the Vice President of Forest Pharmaceuticals, describing the relocation of the company from Missouri to New Jersey, as well as a document showing that new officers were appointed to the Board of Directors of Forest Pharmaceuticals on October 13, 2014. Defendants also filed a copy of a pending motion to amend Forest Pharmaceuticals' Answer in the above referenced Cole County action. Following two oral arguments before the Court, Defendants filed a supplemental declaration of Mr. Meury stating that since October 13, 2014, Forest Pharmaceuticals' officers have directed, controlled, and coordinated its activities from New Jersey and have made no decisions from Missouri.[1] [Doc. 30-1]. Defendants also state that prior to November 4, 2014, core business functions and medical information and communication personnel were informed that their functions would be performed at locations outside of Missouri. The last day the person in charge of medical information and communication in St. Louis reported to work in St. Louis was October 17, 2014. Defendants state that since October 13, 2014, Forest Pharmaceuticals has directed the field sales force from New Jersey. Finally, Defendants note that two Purchase and Sales Agreements for Forest Pharmaceuticals' St. Louis properties, executed in October 2014, directed that all communications regarding the sales be mailed to Forest Pharmaceuticals in New Jersey. Defendants state that the decisions to sell these two properties were made in New Jersey prior to November 4, 2014.

In 2010, the Supreme Court decided Hertz Corporation v. Friend, which clarified the test to be applied in determining where a company's principal place of business is located. 559 U.S. 77 (2010). The Supreme Court concluded that "principal place of business' is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that the Courts of Appeals have called the corporation's nerve center.' And in practice it should normally 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 (for example, attended by directors and officers who have traveled there for the occasion)." Id. at 92-93. This "nerve center" rule acts to prevent a corporation from being able to change its principal place of business on a whim in response to anticipated litigation. Unlike a company's place of incorporation, which can be changed on a whim, a company must uproot its entire center of direction in order to change its principal place of business.

According to Mr. Meury's declaration, Forest Pharmaceuticals began the process of moving its principal place of business from Missouri to New Jersey after Actavis acquired Forest Pharmaceuticals on July 1, 2014. [Doc. 15-1, p. 2]. On October 13, 2014, the Board of Forest Pharmaceuticals appointed new officers. Id. at 3-5. The vast majority of these officers were located in Parsippany, New Jersey at the time of the appointment, and all are located there today. Id. at 3. Mr. Meury states that Forest Pharmaceuticals' officers have been directing and controlling the company from New Jersey since October 13, 2014. [Doc. 30-1, p. 1-2]. Some of the actions taken by the Board from New Jersey since October include the decision to transition core business functions from St. Louis to locations elsewhere, the decision to transfer the drug safety department from St. Louis to locations outside of Missouri, direction of field sales force activities, and decisions to enter into purchase and sales agreements to sell two properties in St. Louis. Id. at 1-4.

Plaintiffs have made almost no arguments regarding the factual assertions in Mr. Meury's declaration regarding the election of the officers, location of the officers, or sale of the St. Louis properties. They do not argue that the company did not appoint new officers in October 2014, that those officers were not located almost exclusively in New Jersey, or that the company had not entered into sales agreements to get rid of its property in St. Louis as of October. They also do not contest the information contained in Mr. Meury's supplemental declaration, which expanded on the content of the Board's decisions and the extent of control exercised by Forest Pharmaceuticals' officers from New Jersey beginning in October 2014. What arguments Plaintiffs do make are entirely speculative. For example, they argue sans evidence that the officers from New Jersey may have traveled to Missouri to hold meetings in the Missouri office space.[2]

In lieu of contesting Defendants' factual assertions, Plaintiffs argue that Defendants have failed to meet their burden of proof to show that Forest Pharmaceuticals' principal place of business was in New Jersey in November 2014. As discussed above, Defendants' primary evidence to prove the location of its principal place of business is Mr. Meury's declarations and accompanying documents. Though this evidence is somewhat minimal, declarations such as these, when uncontested, have often been held to be sufficient to establish a company's principal place of business. See Hertz, 559 U.S. at 81-82, 97 (stating that the petitioner's "unchallenged declaration" suggested that a company's headquarters were located in New Jersey when the declaration stated that the leadership of the company was located at corporate headquarters in New Jersey, "that its core executive and administrative functions... are carried out' there and to a lesser extent' in Oklahoma City, Oklahoma; and that its major administrative operations... are found' at those two locations"); see Doe v. Prudential Ins. Co. of America, 2010 WL 2326065, at *2 (E.D. Mo. June 8, 2010) (holding that a sparse affidavit was sufficient to establish the company's principal place of business when plaintiff produced no evidence that another state was the ...


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