The Emergency Injunction and the Vanishing Venue
A manufacturer (incorporated in Delaware, principal place of business in Ohio) ships a defective valve to a hospital in Pennsylvania. The valve fails, flooding the hospital's basement and destroying $180,000 of stored records. The hospital sues in Pennsylvania state court. The manufacturer removes to federal court on diversity grounds, then moves to transfer venue to Ohio under 28 U.S.C. § 1404(a), arguing that its witnesses and records are there. The hospital responds that removal itself was improper because the manufacturer's registered agent for service is in Pennsylvania, making it a citizen there for venue purposes. Meanwhile, the hospital files a motion to remand and, separately, a motion for a preliminary injunction ordering the manufacturer to preserve the failed valve and its testing data, which the manufacturer says it routinely discards after 90 days. The valve is now 75 days old.
1. Should the court grant the motion to remand? Analyze both the citizenship argument and the removal timing.
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The motion to remand should be denied. First, the hospital's citizenship argument fails. For a corporation, citizenship under 28 U.S.C. § 1332(c)(1) is the state of incorporation and the state of the principal place of business - here Delaware and Ohio. Having a registered agent in Pennsylvania does not make the manufacturer a Pennsylvania citizen; a registered agent is relevant to service of process and personal jurisdiction, not diversity citizenship. Because the hospital is a Pennsylvania citizen and the manufacturer is a Delaware/Ohio citizen, complete diversity exists. Second, removal was timely: the manufacturer removed within 30 days of service of the initial pleading, satisfying 28 U.S.C. § 1446(b). The hospital cannot defeat removal by pointing to the agent. The one-year limit in § 1446(c) applies only to removal based on diversity perfected after the initial pleading, which is not the situation here. Thus remand is improper and the case stays in federal court in Pennsylvania.
2. How should the court rule on the preliminary injunction to preserve the valve and testing data? Apply the governing standard.
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The court should likely grant a narrow preservation injunction. A preliminary injunction requires the movant to show (1) likelihood of success on the merits, (2) irreparable harm absent relief, (3) the balance of equities favors the movant, and (4) the public interest is served. The hospital has a strong likelihood of success on a products-liability theory given the valve's failure and documented damage. Irreparable harm is compelling: the valve and testing data are the core physical evidence, and destruction in 15 days would permanently deprive the hospital of the ability to prove the defect. The balance of equities favors preservation because the manufacturer suffers little burden in retaining evidence it already possesses, while the hospital would lose its case. The public interest favors preserving evidence and preventing spoliation. The court should order preservation of the valve and all testing data, and may additionally warn of sanctions for destruction under its inherent authority and Rule 37(e).
3. If the manufacturer destroys the valve after the injunction issues, what procedural consequences follow, and does the transfer motion change the analysis?
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Destruction after an injunction would constitute civil contempt and spoliation. Under Rule 37(e), if electronically stored information is lost because a party failed to take reasonable steps to preserve it and it cannot be restored, the court may order curative measures or, on a finding of intent to deprive, impose adverse-inference instructions, dismissal, or default judgment. Here the destruction is intentional and violates a court order, so the court could impose an adverse inference that the valve was defective and consider terminating sanctions. The pending § 1404(a) transfer motion does not insulate the manufacturer: the issuing court retains authority to enforce its injunction and sanction contempt until transfer is effected, and the transferee court inherits the case with the preservation order intact. Transfer is discretionary and considers convenience and the interest of justice; it does not erase the manufacturer's obligation to comply with the injunction.