Monet v. Tesla, Inc.

Background

Derrick Monet sued Tesla, Inc. in the Superior Court for the County of Santa Clara on November 16, 2021. He sued individually and as the personal representative of the estate of Jenna Monet, who died after a December 29, 2019 crash involving a Tesla Model 3. Monet alleged nine causes of action, including strict product liability, negligence, and breach of warranty.

Tesla removed the case to federal court on February 2, 2022, relying on diversity jurisdiction. Diversity jurisdiction allows a federal court to hear certain civil cases involving citizens of different states when the amount in dispute exceeds $75,000. Monet is an Arizona citizen. When he filed the lawsuit, Tesla was a citizen of Delaware and California because it was incorporated in Delaware and had its principal place of business in California.

Tesla moved its principal place of business to Texas on December 1, 2021, becoming a citizen of Delaware and Texas. Monet served the complaint on Tesla’s registered agent in California on January 4, 2022, after the move. Monet then moved to remand, meaning he asked the federal court to return the case to state court for lack of subject-matter jurisdiction.

Issue

The issue was whether the federal removal statute’s “no local defendant” rule barred removal. That rule generally prevents removal based only on diversity jurisdiction when a properly joined and served defendant is a citizen of the state where the lawsuit was filed.

Court’s reasoning

The court found no dispute that complete diversity existed between Monet and Tesla and that the $75,000 jurisdictional threshold was satisfied. The court explained that the no-local-defendant rule applies when the notice of removal is filed. Under binding Ninth Circuit authority, the rule did not bar removal because Tesla was no longer a California citizen when it removed the case. The court also emphasized that the statute refers to a defendant who has been “properly joined and served”; Tesla was no longer a local defendant when Monet served the complaint.

The court rejected Monet’s reliance on a prior decision involving a change in a corporation’s headquarters because, unlike that case, complete diversity here existed both when the complaint was filed and when the case was removed. The court also distinguished the general “time of filing” rule. That rule requires complete diversity to exist when the complaint is filed, but the court said it is separate from the no-local-defendant rule, which turns on the circumstances when removal occurs.

Disposition

The court denied Monet’s Motion to Remand. The order did not decide the underlying product-liability, negligence, warranty, or other claims.