Talece Inc. v. Zhang
- Beth Freeman
- 5:20-cv-03579
- U.S. District Court · Northern District of California
- 6
Talece v. Zhang: Judge Freeman denied remand and fees, holding diversity jurisdiction existed because Zhang was a Chinese citizen on an H-1B visa.
Talece Inc. and Zheng Zhang; the case remained in federal court, and both sides’ attorney-fee requests were denied.
What happened
Talece Inc. sued Zheng Zhang in state court, and Zhang moved the case to federal court based on the parties’ alleged citizenship. Talece asked the federal court to send the case back, arguing that Zhang was becoming a permanent resident domiciled in California.
The court found that Zhang was a Chinese citizen in the United States on a temporary H-1B visa, not a lawful permanent resident. It also found that the amount involved exceeded $75,000, so the requirements for diversity jurisdiction were met. The court said Talece’s claim about Zhang’s possible future permanent-resident status was speculative and did not defeat jurisdiction.
The court vacated the hearing, denied Talece’s motion to remand, denied Talece’s request for attorney’s fees, and denied Zhang’s request for attorney’s fees. Judge Beth Labson Freeman also said the court did not need to address Zhang’s arguments about federal-question jurisdiction.
The detailed version
- Talece Inc. v. Zhang · No. 5:20-cv-03579
- Beth Freeman
- Sept. 8, 2020
Background
Talece Inc. sued Zheng Zhang in Santa Clara County Superior Court for breach of fiduciary duty, unjust enrichment, conversion, and accounting. The complaint accused Zhang, Talece’s former chief executive officer, of embezzling corporate funds and taking the corporation’s software and codes. Zhang removed the case to federal court based on diversity jurisdiction.
Talece moved to remand, meaning it asked the federal court to return the case to state court. Talece argued that diversity jurisdiction was absent because Zhang was in the process of obtaining lawful permanent-resident status and was domiciled in California. Talece is a California corporation. Zhang opposed the motion and submitted a declaration stating that he had held temporary-worker H-1B visa status since October 2019, had never applied for permanent residence, and did not intend to do so.
Court’s Analysis
Federal diversity jurisdiction requires complete diversity of citizenship and an amount in controversy exceeding $75,000. Under 28 U.S.C. § 1332(a)(2), a foreign citizen who has been lawfully admitted for permanent residence and is domiciled in the same state as the opposing party does not satisfy the diversity requirement. A person who has not obtained permanent-resident status, however, is not treated as a lawful permanent resident for this purpose. Foreign citizens living in the United States on temporary, nonimmigrant visas can satisfy the diversity requirement.
The court found that Zhang was not a lawful permanent resident and was instead a foreign citizen in the United States on an H-1B visa. It also noted that citizenship is evaluated when the action is filed. Thus, even if Zhang had later applied for permanent residence, that would not defeat diversity jurisdiction because he had H-1B status when the lawsuit was filed. The court further found that the amount-in-controversy requirement was satisfied because Talece alleged more than $75,000 in damages.
Attorney’s Fees
Talece requested costs and attorney’s fees under 28 U.S.C. § 1447(c), arguing that Zhang’s removal was improper. The court explained that fees may be awarded when the removing party lacked an objectively reasonable basis for removal. Because Zhang had an objectively reasonable basis for removing the case, the court denied Talece’s request for fees.
The court also denied Zhang’s request for attorney’s fees. It stated that losing a motion does not by itself justify a fee award and that the motion to remand was not frivolous.
Order
The court found that the requirements for diversity jurisdiction were satisfied. It vacated the October 15, 2020 hearing on the motion to remand, denied Talece’s motion to remand, denied Talece’s request for attorney’s fees, and denied Zhang’s request for attorney’s fees. Because diversity jurisdiction existed, the court did not reach Zhang’s separate assertions concerning federal-question jurisdiction.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.