Derrica v. Tura, Inc.

Background

Jamie Derrica filed an employment case against Tura, Inc. in New York state court. She alleged that Tura failed to pay her salesperson’s compensation in violation of the New York Labor Law and an employment contract. Tura removed the case to the U.S. District Court for the Southern District of New York, asserting diversity jurisdiction—federal jurisdiction based on the parties being citizens of different states and the required amount being in dispute. Derrica moved to remand, meaning she asked the federal court to return the case to state court.

Parties’ Positions and Procedural History

Tura did not dispute that Derrica was a citizen of New York, but it argued that Tura was a citizen of Pennsylvania rather than New York. Derrica pointed to Tura’s New York City executives, office activities, promotional materials describing the company as based in Manhattan, and business events held in New York. She also pointed to Tura’s statement in a 2012 federal case that it was a citizen of New York.

The court held a conference and requested additional information about Tura’s New York and Pennsylvania operations and its executive decision-making. Tura submitted declarations addressing those issues. The court explained that the relevant facts were those existing when this case was filed in 2021, so Tura’s 2012 statement and Derrica’s observations from her employment ending in 2018 were not controlling.

Legal Standard

For a corporation, citizenship is based on its state of incorporation and its principal place of business. Under the “nerve center” test, the principal place of business is generally where the corporation’s officers direct, control, and coordinate its activities. On a motion to remand, the party seeking to keep the case in federal court bears the burden of showing complete diversity.

Court’s Analysis

The court found that Tura’s President and Chief Executive Officer, Scott Sennett, supervised six executives or top-level managers working in several states. Sennett generally worked from a home office in Connecticut and sometimes traveled to New York, while Michael Pasnello, Tura’s Vice President of Operations, Chief Financial Officer, Corporate Secretary, and Treasurer, worked exclusively from Muncy, Pennsylvania.

From Muncy, Pasnello directly supervised Tura’s operations, finance, and administrative departments, along with the managers of those departments. The court found that Muncy exercised greater decision-making authority than New York. The New York office housed Tura’s design and marketing team, but those employees did not directly supervise employees in Muncy. The court concluded that the “lion’s share” of Tura’s corporate decision-making and direction occurred in Muncy.

The court also found that Tura’s marketing materials, corporate-records location, tax headquarters, employee distribution, and New York meetings and events did not establish Tura’s principal place of business. Those facts did not outweigh the evidence about where Tura’s high-level corporate activities were directed and coordinated.

Ruling

Judge Vernon S. Broderick found that Tura had met its burden of showing complete diversity of citizenship. He denied Derrica’s motion to remand. He also lifted the stay previously imposed in the case and ordered Derrica to file her answer to Tura’s counterclaim by May 25, 2022.