Koot v. Bwdac, Inc. (2024)

Our plain-English summary of Koot v. Bwdac, Inc. (U.S. District Court, District of Nevada, March 18, 2024).

Clemens Koot, a Nevada citizen, sued a number of companies in Nevada state court, alleging they caused or contributed to his mesothelioma. The opinion does not describe his work or how he was exposed to asbestos. Defendant Caterpillar removed the case to federal court on the basis of diversity of citizenship. Koot asked for the case to be sent back, arguing that complete diversity was missing because defendant Meritor, Inc. is incorporated in Nevada. Caterpillar answered that the Nevada Meritor is only a name holder and shell for an identically named parent incorporated in Indiana with its principal place of business in Michigan, so the parent's citizenship should control. The court disagreed. Federal law makes a corporation a citizen of every state where it is incorporated as well as where it has its principal place of business, and Caterpillar cited no case allowing the state of incorporation to be ignored. Because Koot chose to sue the Nevada entity, both he and a defendant were Nevada citizens. The court remanded the case to state court.

We wrote this summary from the court's opinion with the help of AI. It is not the court's wording, and it is not legal advice. The full opinion is below.

The decision

• Court: U.S. District Court, District of Nevada
• Decided: March 18, 2024
• Docket: Case No. 2:24-cv-00190-APG-EJY
• Stage: Jurisdiction, venue or removal
• State: Nevada

Outcome. The court granted plaintiff Koot's motion to remand to Nevada state court for lack of complete diversity, rejecting defendant Caterpillar's argument that Nevada-incorporated Meritor should be treated as a citizen of its parent's states.

What the court held. Under 28 U.S.C. § 1332(c)(1) a corporation is a citizen of its state of incorporation as well as its principal place of business, so a Nevada-incorporated defendant defeats diversity with a Nevada plaintiff even if it is only a name holder for its parent.

Issues decided: Venue, Removal and Transfer.

The people and their exposure

• Clemens A. Koot: mesothelioma

The defendants

• Caterpillar
• Meritor, Inc.
• BWDAC, Inc.

The court's opinion

The text below is Google Scholar's copy of the court's opinion, a public record. Numbers in brackets, such as [*921], mark where each page of the printed reporter begins.

CLEMENS A. KOOT, Plaintiff,

v.

BWDAC, INC., etal., Defendants.

Case No. 2:24-cv-00190-APG-EJY.

March 18, 2024.

United States District Court, D. Nevada.

Order Granting Motion to Remand

[ECF No. 20]

ANDREW P. GORDON, District Judge.

Plaintiff Clemens Koot filed this lawsuit in Nevada state court against a number of entities, alleging that they caused or contributed to his contracting mesothelioma. Defendant Caterpillar removed the case to this court based on diversity jurisdiction. Koot now moves to remand, alleging that complete diversity is lacking because he is a Nevada citizen and defendant Meritor, Inc. is incorporated in Nevada. ECF No. 20. Caterpillar responds that, while Meritor is incorporated in Nevada, it is only a name holder for its identically named parent company, which is incorporated in Indiana and has its principal place of business in Michigan. ECF No. 31 at 3-4. Caterpillar argues that, because the Nevada entity is "simply a shell and a holding company," its citizenship must be determined by its parent. Id. at 7.

Caterpillar relies upon cases that address where the principal place of business should be for a holding company. Id. at 5-6 (citing to Johnson v. SmithKline Beecham Corp., 724 F.3d 337 (3rd Cir. 2013) and 3123 SMB LLC v. Horn, 880 F.3d 461 (9th Cir. 2018)). But 28 U.S.C. § 1332(c)(1) states that "a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business. . . ." Caterpillar ignores the first possible location of citizenship: the "state by which it has been incorporated." Meritor is incorporated in Nevada, so it is a citizen of Nevada. Caterpillar offers no cases saying I can ignore the state of incorporation and focus only on the principal place of business. Even if, as Caterpillar contends, Meritor exists only as a name holder for its parent, that does not negate the express language of § 1331(c)(1).

Koot is the master of his complaint and he has chosen to sue Meritor, the Nevada entity. See ECF 1-4 at 6; 49 at 2 ("Plaintiff Clemens Koot, a Nevada citizen, filed a lawsuit and served the company that is incorporated in Nevada."). If that Nevada company is ultimately found not liable to Koot because it did nothing to him, then Koot will have chosen the wrong defendant. But that is his choice and an issue for a different day. At present, both Koot and one of the defendants he sued (Meritor) are Nevada citizens, so complete diversity is lacking. I therefore must remand this case to state court for lack of jurisdiction.

I THEREFORE ORDER that Koot's motion to remand (ECF No. 20) is granted. This case is remanded to the state court from which it was removed. The clerk of the court is directed to close this file.

Sources

• The opinion on Google Scholar
• The opinion on CourtListener
• Nevada asbestos laws
• Nevada asbestos exposure sites