Conroy v. Ridge Tool Company

Background

Bradley R. Conroy sued Ridge Tool Company, Cal Steam, Inc., and Ferguson Enterprises, Inc. in the Superior Court of California for negligence and strict product liability. Ridge removed the case to the U.S. District Court for the Northern District of California, asserting diversity jurisdiction. Conroy moved to remand, meaning he asked the federal court to return the case to state court.

The complaint did not state the amount in controversy, but Ridge asserted that it exceeded $75,000, excluding interest and costs. Conroy did not dispute that amount. The parties disputed whether complete diversity existed because Conroy alleged that Cal Steam was a corporation existing and doing business in California.

Complete Diversity

For diversity jurisdiction, the parties must be citizens of different states, and the amount in controversy must exceed $75,000, excluding interest and costs. A corporation is generally a citizen of its state of incorporation and the state where it has its principal place of business.

The court found that Ridge provided documents showing that California corporations using the Cal Steam name merged into WIA of California, a Virginia corporation, around December 31, 2006. WIA of California later changed its name to Cal-Steam, Inc. Records showed that Cal-Steam, Inc., a Virginia corporation, became inactive because it merged into Ferguson around December 31, 2015. Ferguson was also incorporated in Virginia and had its executive offices there.

The court concluded that Conroy had not disputed this evidence or alleged that Cal Steam’s principal place of business was California. It held that Ridge had shown by a preponderance of the evidence that complete diversity existed.

Timing and Unanimity of Removal

Conroy argued that removal was untimely because Cal Steam and Ferguson did not initially join Ridge’s removal notice within 30 days after service. The court explained that the 30-day removal period begins when the initial pleading affirmatively reveals the facts necessary for federal jurisdiction. Because the complaint did not clearly reveal the parties’ citizenship, the court found that the removal clock had not started when the complaint was filed.

The court also explained that, although all properly served defendants ordinarily must join a removal, a defect can be cured by obtaining their joinder before judgment. Cal Steam and Ferguson filed notices joining the removal on September 18, 2020. The court concluded that the joinder was timely under the authority cited by Conroy and, alternatively, that any defect was cured under later authority allowing such defects to be corrected before judgment.

Explanation for the Other Defendants’ Initial Absence

Conroy argued that Ridge’s removal notice did not sufficiently explain why Cal Steam and Ferguson had not joined. The court found that Ridge mentioned both defendants but did not fully explain their absence in the initial notice. Ridge later explained that it lacked information about Cal Steam’s representation, had evidence that Cal Steam might be inactive or merged, and did not know that Cal Steam had merged into Ferguson. Ridge also explained that the state court docket did not show proof that Ferguson had been served when Ridge removed the case.

The court treated Ridge’s opposition papers as an amendment to the removal notice. It held that, even if Ridge’s explanation was insufficient or Ridge had not exercised reasonable diligence, the resulting defect was cured when Cal Steam and Ferguson joined the removal.

Disposition

The court DENIED Conroy’s motion to remand. It also set a case-management conference for December 14, 2020, at 2:00 p.m. Pacific time, to be held through Zoom, and terminated Docket Number 13. Judge Yvonne Gonzalez Rogers signed the order.