Stelly v. Tesla
- Jacquelyn Corley
- 3:25-cv-08933
- U.S. District Court · Northern District of California
- 3
In Bruce Stelly v. Tesla, Judge Corley ordered Tesla to explain why the case should not return to state court for lack of diversity jurisdiction.
Tesla, Inc. must respond to the court’s order to show cause. The case’s continued presence in federal court is at issue; the court had not yet decided whether to remand it to state court.
What happened
In Bruce Stelly v. Tesla, Inc. et al., Bruce Stelly filed a state-law case in state court against Tesla, Inc. and two individual defendants identified only by first names and unknown last names. Tesla removed the case to federal court, claiming the parties were citizens of different states.
Tesla argued that diversity jurisdiction existed because it said it was incorporated and headquartered in Texas and the individual defendants had not been served. The court explained that an unserved defendant’s citizenship still counts when deciding whether all opposing parties are citizens of different states. The opinion states that Stelly is a California citizen and that the individual defendants were alleged to live in Alameda County.
Judge Jacquelyn Scott Corley did not yet remand the case. Instead, the court ordered Tesla to show cause by November 10, 2025, why the case should not be returned to state court for lack of subject-matter jurisdiction, meaning the federal court’s power to hear the case.
The detailed version
- Stelly v. Tesla · No. 3:25-cv-08933
- Jacquelyn Corley
- Nov. 3, 2025
Background
Bruce Stelly, identified as a California citizen, filed a state-law action in state court against Tesla, Inc., “TY (LAST NAME UNKNOWN),” and “TONY (LAST NAME UNKNOWN).” Tesla removed the action to federal court based on diversity jurisdiction.
Jurisdictional issue
Federal diversity jurisdiction requires complete diversity of citizenship—meaning no plaintiff shares citizenship with any defendant—and an amount in controversy greater than $75,000. The defendant seeking removal bears the burden of showing that removal is proper. The federal court also has an independent duty to confirm that it has subject-matter jurisdiction, meaning legal authority to hear the case.
Tesla argued that complete diversity existed because it said it was incorporated and headquartered in Texas. Tesla also argued that the individual defendants’ citizenship should not defeat removal because they had not been served. Tesla relied on the rule that an action otherwise removable on diversity grounds generally cannot be removed when a properly joined and served defendant is a citizen of the state where the action was filed.
Court’s analysis
The court explained that this service-related rule is procedural and does not replace the separate requirement of complete diversity under 28 U.S.C. § 1332. The court stated that the Supreme Court and the Ninth Circuit have rejected the position that an unserved defendant’s citizenship is ignored when determining complete diversity. The opinion also stated that diversity is determined from the citizenship of the parties named in the case, not from whether they have been served.
Order
The court did not issue a final remand order. Instead, Judge Jacquelyn Scott Corley ordered Tesla to show cause on or before November 10, 2025, why the action should not be remanded to state court for lack of subject-matter jurisdiction. The court stated that it would advise Stelly if a response was required.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.