Duncan & Sevin attorneys Chip Duncan and Tripp DuBose were recently successful in establishing federal subject matter jurisdiction in a class action removed from Louisiana state court. In Rowell, et al v. Shell Chemical, L.P., et al, No. 14-2392, 2015 WL 7306435 (E.D.La. Nov. 18, 2015) a class action suit was filed on behalf of residents of St. Rose, Louisiana who claimed to suffer personal injuries, diminution of property values and nuisance arising from noxious odors allegedly emitted from an asphalt production and storage facility located in the area. The plaintiffs filed their suit in state court in New Orleans, but the defendants removed the suit to the U.S. District Court for the Eastern District of Louisiana pursuant to the Class Action Fairness Act.
Once in federal court, the plaintiffs moved for remand, arguing that the local controversy exception to CAFA jurisdiction dictated the suit be sent back to state court. The application of the local controversy exception in Rowell turned on the location of the principal place of business for one of the defendants. The defendant in question maintained its headquarters in New Orleans, where the majority of its executive leadership and administrative personnel were located. However, between the time of the alleged odor emissions and the filing of the class action the defendant was purchased by a New York based financial services company. Executives from the defendant’s new parent company were appointed as the defendant’s CEO and CFO by the time suit was filed.
In its landmark case Hertz Corp. v. Friend, 559 U.S. 77 (2010), the U.S. Supreme Court established that a corporation’s principal place of business will be the location of its “nerve center,” where its “high level officers direct, control and coordinate the corporations activities.” In applying Hertz’s nerve center test to determine the defendant’s principal place of business, Judge Carl Barbier of the Eastern District looked to the location of the company’s two most senior officers in New York, rather than location of its headquarters and the majority of its management personnel in New Orleans. By looking to the location of the defendant’s highest ranking officers, Judge Barbier sided with a growing consensus of courts across the country who have focused on the location of a company’s most senior leadership, rather than the location of its day to day management in making the principal place of business determination using Hertz’s nerve center test. The Fifth Circuit subsequently denied a request by the plaintiffs to appeal Judge Barbier’s ruling. The full text of Judge Barbier’s opinion in Rowell is available here:
Author: Tripp DuBose