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Tosco Corp. v. Communities for a Better Env't

ELR Citation: 31 ELR 20354
Nos. No. 99-55400, 236 F.3d 495/(9th Cir., 01/02/2001)

The court holds that, applying the "place of operations" test, a district court lacks federal diversity jurisdiction under 28 U.S.C. §1332 to hear a manufacturer's slander, libel, malicious prosecution, and equitable relief claims against an environmental group arising from the group's Clean Air Act citizen suit. The manufacturer sued the group, incorporated in California, in federal court in California. The manufacturer is incorporated in Nevada and alleged that its principal place of business is Connecticut. The court first holds that under the place of operations test, the manufacturer's principal place of business is California. The substantial predominance of the manufacturer's business activity is in California. Although the manufacturer supports its argument that California does not contain a substantial predominance of its business activities by comparing the percentage of its business activity in California to the combined percentage of its business activity in the rest of the United States, it offers no evidence of its business activity in any specific state that can reasonably compare to the amount of its operations in California. Under the place of operations test, determining whether a corporation's business activity substantially predominates in a given state plainly requires a comparison of that corporation's business activity in the state at issue to its business activity in other individual states. Thus, "substantial predominance" does not require the majority of a corporation's total business to be located in one state, but instead, requires only that the amount of a corporation's business activity in one state be significantly larger than any other state in which the corporation conducts business. Based on the location of the manufacturer's employees, refineries, lubricant blending and packaging facilities, retail locations, convenience stores, sales and inventory, and executive and administrative offices, the manufacturer failed to show that no state contains a substantial predominance of its corporate operations. In addition, the manufacturer claimed California as its principal place of operations in previous litigation. The district court, therefore, lacks diversity jurisdiction to hear the case.

Counsel for Plaintiff
Gregory N. Pimstone
Latham & Watkins
633 W. 5th St., Ste. 4000, Los Angeles CA 90071
(213) 485-1234

Counsel for Defendants
Jonathan Weissglass
Altshuler, Berzon, Nussbaum, Berzon & Rubin
177 Post St., Ste. 300, San Francisco CA 94108
(415) 421-7151

Before Nelson, Brunetti, and Kozinski, JJ.