NOVAK v. BEST BUY COMPANY

NORA M. MANELLA, District Judge

Joelle Novak ("Plaintiff") filed this action in the California Superior Court for the County of Los Angeles ("Superior Court") against Best Buy Company, Inc. ("Defendant") alleging employment discrimination on the basis of gender and family status in violation of California Government Code 12940 et seq. Defendant removed this matter pursuant to 28 U.S.C. § 1441 (b) on the basis of diversity. Plaintiff moves to remand the case for lack of complete diversity.

Defendant is incorporated in Minnesota and operates retail stores throughout the United States. Plaintiff, a resident of California, was employed by Defendant. Plaintiff contends that after she became pregnant, Defendant intentionally created excessive work schedules for her, harassed her about her ability to perform her duties, and advised her not to return to work after giving birth because she should stay home to raise her child. Complaint ¶ 9. Plaintiff further alleges that upon returning to work from maternity leave, she faced a "campaign of harassment and discrimination" designed to force her to quit. Complaint ¶ 10. Plaintiff eventually submitted her resignation, but alleges that Defendant's conduct amounted to a constructive discharge. Complaint ¶ 18.

Defendant removed this action to federal court on the basis of diversity, asserting that it maintains its principal place of business in Minnesota. Plaintiff seeks to remand this action to state court on the grounds that Defendant is a citizen of California, defeating diversity jurisdiction.

A federal court has subject matter jurisdiction based on diversity when there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332 (a). The party asserting jurisdiction has the burden of proving all jurisdictional facts. See Industrial Tectonics. Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). For purposes of diversity jurisdiction, a corporation is a citizen of any state where it is incorporated and maintains its principal place of business. 28 U.S.C. § 1332 (c). When a majority of a corporation's business activity takes place in one state, that state is the corporation's principal place of business, even if the corporate headquarters are located in a different state. Industrial Tectonics, 912 F.2d at 1094. If no single state contains "a substantial predominance of the corporation's business activities," the corporation's principal place of business is the state in which its executive and administrative functions are performed. Id.

In order to determine a corporate defendant's principal place of business, courts compare the corporation's business activity in the state at issue with that in other individual states. Tosco Corp. v. Communities for a Better Env't, 236 F.3d 495, 500 (9th Cir. 2001). "`Substantial predominance' does not require the majority of a corporation's total business activity to be located in one state, but instead, requires only that the amount of [the] corporation's business activity in one state be significantly larger than any other state in which the corporation conducts business." Id. Courts consider the location of employees, tangible property, and production activity, as well as the locations in which income is earned, purchases are made, and sales take place. See Industrial Tectonics, 912 F.2d at 1094.

Defendant's business activity in California is not significantly greater than its activities in the other states in which it does business. Although Defendant operates 412 retail outlets throughout the United States, only 45 of them, or approximately 11 % of the total, are located in California. By comparison, Defendant maintains 42 stores (10% of total) in Texas, 32 stores (8% of total) in Illinois, and 29 stores (7% of total) in Florida. Defendant's Opposition: Keskey Declaration ¶ 2. Defendant employs approximately 60,557 people nationwide, of which 6,796, or approximately 11% of the total, reside in California. However, 5,361 (9% of total) employees reside in Texas; 4808 (8% of total) employees reside in Illinois; 4,456 (7.4% of total) employees reside in Minnesota; and 4,084 (6.8% of total) employees reside in Florida. Id. ¶ 3. Although California accounted for $1.8 billion of Defendant's sales, or 11.8% of its total sales, Defendant earned $1.5 billion (9.8% of total) from sales in Texas, $1.2 billion (7.8% of total) from sales in Illinois, and $1.1 billion (7.2% of total) in sales from Florida. Id. ¶ 4.

It is clear that no single state contains a "substantial predominance" of Defendant's business activities. Although approximately 11% of Defendant's retail outlets, employees, and sales are located in California, Defendant also maintains a substantial presence in Texas, Illinois, and Florida. Plaintiff cites no facts that contradict these findings. As Defendant's business activities are not predominantly concentrated in a single state, the court must look to the state in which Defendant performs its executive and administrative functions. All of Defendant's corporate offices and most of its officers are located in Minnesota. Id. ¶ 5. Defendant also conducts its executive and upper-level administrative functions in Minnesota. Id. Thus, the court concludes Defendant maintains its principal place of business in Minnesota.

The court finds that Minnesota represents Defendant's state of incorporation and principal place of business. As Plaintiff was a resident of California, complete diversity exists in this case. Accordingly, Plaintiffs' motion to remand this case to Superior Court is DENIED.

Counsel are notified that the Court will issue a ruling on plaintiff's motion to remand without oral argument. The motion is taken off the 8/13/01 calendar. The matter stands submitted.