Matsuno v. Hoffman-La Roche Inc.

Background

Michael Matsuno filed a California-law complaint in California state court against Hoffman-La Roche, Inc., F. Hoffman-La Roche Ltd., Roche Laboratories Inc., Genentech Inc., and Genentech USA, Inc. He alleged that Lariam, a drug manufactured and marketed by defendants for malaria prevention, caused severe psychiatric and neurological outcomes. The defendants removed the case to federal court under the diversity-jurisdiction statute, 28 U.S.C. § 1441. Matsuno moved to remand, meaning he asked the federal court to return the case to state court.

Jurisdictional dispute

Diversity jurisdiction generally requires complete diversity: every plaintiff must be a citizen of a different state from every defendant, and the amount in controversy must exceed $75,000. The parties did not dispute that the amount-in-controversy requirement was met or that Matsuno was a California citizen.

For a corporation, citizenship includes the state of incorporation and the state containing its principal place of business. The main dispute concerned the principal place of business of Hoffman-La Roche Inc. and Roche Laboratories Inc. Matsuno presented evidence that their business headquarters, or “nerve center”—the place where corporate officers direct, control, and coordinate the company’s activities—was in South San Francisco, California. The defendants argued that the entities were headquartered in Little Falls, New Jersey.

The court found that the defendants had not carried their burden of showing that these companies’ principal places of business was outside California. The court considered Matsuno’s evidence of Roche’s relocation of its U.S. commercial headquarters to South San Francisco, including press materials, internal reports, and filings with the Securities and Exchange Commission. It found the declaration offered by Hoffman-La Roche Inc.’s assistant secretary too conclusory to establish that the nerve center was in New Jersey. The court also noted that board meetings, corporate records, and meeting materials in New Jersey did not by themselves establish the principal place of business there.

Ruling

The court concluded that two defendants were California citizens, so complete diversity was lacking and the federal court lacked subject-matter jurisdiction. It did not reach the defendants’ other arguments, including whether the Genentech defendants had been joined improperly. The court also rejected the argument that the defendants’ citizenship could be disregarded because they removed the case before being served; it stated that diversity is determined from the citizenship of the named parties, not from service.

The court held that the case had been removed improvidently and without jurisdiction and remanded it to the San Mateo County Superior Court under 28 U.S.C. § 1447(c). It declined to tax costs and fees against the defendants.