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Webb v. Farmers of North America, Inc.

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

July 13, 2017

JAMES WEBB, Plaintiff,


          FERNANDO J. GAITAN, JR. United States District Judge.

         Currently pending before the Court is defendants' Farmers of North America, Inc. (“FNA”) and James Mann's (“Mann”), Motion to Dismiss for Lack of Subject Matter jurisdiction (Doc. No. 33). Also before the court is plaintiff's motion to file a surreply in opposition to defendants' motion to dismiss (Doc. No. 39). As an initial matter, the Court finds a surreply to be unnecessary and DENIES plaintiff's motion for leave to file same (Doc. No. 39).

         I. BACKGROUND

         On February 1, 2016, plaintiff filed the present suit in the United States District Court for the Western District of Missouri. After some time, on July 27, 2016 Plaintiff executed service in accordance with The Hague Service Convention upon Defendant FNA in Saskatoon, Saskatchewan. The defendant FNA is the spinoff of a Canadian company by the similar name, Farmers of North America, hereinafter “FNA Canada”; the like businesses' plan is to provide a subscription-based membership organization, “like a COSTCO or SAM'S CLUB, that used a membership structure to enhance buying power and pricing of commonly used and desired farming products and needs.” (Doc. No. 25 at 4). The plaintiff alleges in his First Amended Complaint (“FAC”) (Doc. No. 25), that defendants FNA and Mann, the CEO of FNA, (1) breached the employment contract; (2) made fraudulent misrepresentations in the employment negotiations; and (3) intentionally interfered with the rights of the plaintiff.

         Plaintiff claims in the FAC this Court has diversity jurisdiction over this case, as plaintiff is a Missouri citizen, and FNA is incorporated in Delaware.[1] Defendants subsequently filed their motion to dismiss for lack of subject matter jurisdiction (Doc. No. 33), which also argues that in the event the court finds subject matter jurisdiction exists, the court should compel the parties to arbitrate as per the employment agreement between the parties. Defendant also seeks the dismissal of Count III - intentional interference - as a matter of law.


         A. Diversity Jurisdiction.

         1. Standard

         Motions to dismiss for lack of subject matter jurisdiction are governed by Rule 12(b)(1). Additionally, 28 U.S.C. § 1332(a)(1) states that the district courts shall have original jurisdiction in civil actions between citizens of different States when the amount in controversy exceeds $75, 000. “Complete diversity of citizenship exists where no defendant holds citizenship in the same state where any plaintiff holds citizenship.” One Point Solutions, LLC v. Borchert, 486 F.3d 342, 436 (8th Cir. 2007)(citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396 (1978)).

         The plaintiff shall have the “burden to establish the factual bases for the subject matter jurisdiction plaintiff invokes.” Wilkerson v. Mo. Dep't of Mental Health, 279 F.Supp.2d 1079, 1080 (E.D. Mo. 2003) (citing Osborn v. United States, 918 F.2d 724, 730 (8th Cir. 1990). Corporations have dual citizenship for diversity purposes, both the state of its incorporation and the location of its “principal place of business.” 28 U.S.C. § 1332(c)(1). In Hertz Corp. v. Friend, 130 S.Ct. 1181 (2010), the Supreme Court adopted the “nerve center” test to clarify the principal place of business, that is “where a corporation's officers direct, control and coordinate the corporation's activities.” Hertz, 130 S.Ct. at 1192.

         It is also well established that “[w]here there is no change of party, a jurisdiction depending on the condition of the party is governed by that condition, as it was at the commencement of the suit.” Connoly v. Taylor, 27 U.S. 556, 565 (1829); see also Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 571 (2004); Centrue Bank v. Golf Disc. of St. Louis, Inc., No. 4:10CV16 TIA, 2010 WL 4178942, at *2 n.1 (E.D.Mo. 2010) (“For purposes of diversity jurisdiction, the Court analyzes citizenship as of the date that the Complaint was filed.” (Internal citations omitted)).

         2. Analysis

         In their motions, the parties dispute the location of FNA's nerve center. “In a facial challenge to jurisdiction, all of the factual allegations concerning jurisdiction are presumed to be true and the motion is successful if the plaintiff fails to allege an element necessary for subject matter jurisdiction.” Titus v. Sullivan, 4 F.3d 590, 593 (8th Cir. 1993). Here, defendants challenge that FNA's principal place of business, although being incorporated in Delaware, is located in the same state as the plaintiff's citizenship, in Missouri. To advance their theory, defendants allege that plaintiff Webb, the former COO of FNA, used his home address as FNA's ‘principal place of business' when registering to do business in Missouri (Doc. No. 33-1, at 3). Defendants argue that plaintiff ran the company from Missouri, exemplified by plaintiff's registering of a post office box, writing the initial marketing and business plans and performing the initial hiring decisions, all from Missouri (Doc No. 36, at 3-4, citing Aff. of James Webb (Doc. No. 35-1)).

         In response, the plaintiff argues that FNA, much like its spinoff-model FNA Canada, is controlled by citizens of Canada, in Canada. “It was there that life was given to any idea or project, approval was given to any action, but most important, funding was provided ...

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