Pro-se Co-Plaintiffs:

1 Milton Charles Van Noland and Joy Garner

116 Murphy Street
2 Grass Valley, CA 95945
530-210-1001
3

8 UNITED STATES DISTRICT COURT FOR THE

9 EASTERN DISTRICT OF CALIFORNIA
10

11
MILTON CHARLES VAN NOLAND and )
12
JOY GARNER ) CASE NO. 2:09-cv-2035-MCE-DAD
)
13 ) PLAINTIFFS REPLY TO DEFENDANTS
Plaintiffs, ) RESPONSE & MEMORANDUM OF LAW
14 ) &VERIFIED STATEMENT OF FACTS
vs. )
15 ) RE: SHOW CAUSE MOTION FOR
ERIC S. PELLETIER and GRRR! LIMITED ) REMAND AND SANCTIONS
16 )
Defendants HEARING DATE: January 15th 2010
17 TIME: 10:00 am
18

19
TO THE HONORABLE MAGISTRATE JUDGE DROZD (OR JUDGE ENGLAND; See L.R.
20
Rule 302 (c) (21)) FOR THE EASTERN DISTRICT OF CALIFORNIA OF THE UNITED
21
STATES:
22
In answer to the Plaintiffs’ motion for remand, defendants present evidence that
23
Grrr! Limited is a corporation. The Plaintiffs file this memorandum to address diversity
24
jurisdiction for an alien corporation with its principal place of business in the state of California.
25

26
THE ALIEN CORPORATION
27
On January 27, 2009 in Caribbean Telecom., the Honorable Judge Harold Ackerman,
28
after “careful consideration of the statute’s language, history, and purpose,” found that an alien

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 1

 1 corporation with a principal place of business in the U.S. is a dual citizen for diversity
2 jurisdiction purposes. Caribbean Telecom. Ltd. v. Guyana Tel. & Tel. Co. Ltd., 594 F.Supp.2d
3 522 (D.N.J. 2009). In Caribbean Telecom, the Plaintiff contended that § 1332 (c)(1) did not
4 address corporations in foreign countries, because the capitalization of the word “State” meant
5 that Congress did not mean to include corporations formed overseas. The Court rejected the
6 Plaintiff’s “single citizenship” theory and held that, “if §1332 (c)(1) applies to alien corporations
7 at all, it applies to them in the same manner that it applies to domestic corporations.”
8

9 A most excellent law journal article on this specific subject, which also addresses some
10 similar issues and the distinctions made in Dresser Industries v. Underwriters at Lloyd’s of
11 London, 106 F.3d 494 (3d Cir. 1997), is attached to this filing as Exhibit A. In Danjaq, S.A. v.
12 Pathe Commc’ns Corp., 979 F.2d 772, 775 (9th Cir. 1992), (case is attached as Exhibit B) an
13 identical issue was raised. The Ninth Circuit concluded that;
“This appeal involves two arcane issues of subject matter jurisdiction that
14
are of first impression in this Circuit. Both issues relate to the
15 determination of a corporation's principal place of business for purposes of
diversity jurisdiction. The first is whether alien corporations are subject to
16 28 U.S.C. § 1332(c), which states that a corporation is a citizen both of its
place of incorporation and the location of its principal place of business.
17
We agree with the district court that an alien corporation, like a domestic
18 corporation, is a citizen of both.” (Emphasis added.)

19
In Jerguson v. Blue Dot Investment, Inc., 659 F.2d 31, 32-36 (5th Cir.1981) (attached
20
as Exhibit C) a similar conclusion was reached:
21
“We therefore hold that a foreign corporation is a citizen for diversity
22
jurisdiction purposes of a state where it has its principal place of
23 business.”

24

25
THE “NERVE CENTER” TEST

26
The Ninth Circuit Court of Appeals has repeatedly and consistently found that: “Where a

27
majority of a corporation's business activity takes place in one state, that state is the corporation's

28
principal place of business, even if the corporate headquarters are located in a different state.”

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 2

 1 This is true, even if some activities have occurred in other states. “The "nerve center" test should
2 be used only when no state contains a substantial predominance of the corporation's business
3 activities.” The 9th Circuit’s stance is clearly demonstrated in Industrial Tectonics, Inc. v. Aero
4 Alloy, 912 F.2d at 1094. (Attached as Exhibit D.) Here we conclusively show the predominate
5 place of operations for the defendant company Grrr! Limited is in the state of California and that
6 California is its “nerve center” of managerial activities. Now we look to the facts:
7

8 THE SOLE “BUSINESS” OF GRRR! LIMITED

9 The sole and exclusively stated purpose and function of the entity Grrr! Limited (or any
10 “Grrr!” entity to be formed) is the acquisition of the GameRunner product, prototypes,
11 technology, market research and related Intellectual Property and the marketing of this particular
12 product. (See: all contracts and/or proposed contracts between the Plaintiffs and the Defendant
13 Eric Pelletier which are a part of the record of this suit, and which, were all drafted by the
14 defendant.)
15 SOLE ASSETS
16 The defendants have claimed that the “sole asset” of Grrr! Limited, is the GameRunner
17 product, related technology and intellectual property, (defendant’s Memo of Law in Opposition
18 to Plaintiffs’ Motion for Remand and Sanctions, filed August 25th, 2009, pg. 5, lines 22-23)
19

20 LOCATION OF ALL GAMERUNNER RELATED ITEMS AND PROPERTY:

21 All GameRunner prototypes, hardware, software, inventories, and related technologies,
22 market research, websites, testing equipment, etc, are currently, and always have been, all
23 located exclusively in the State of California.
24

25 OPERATIONS
26 a. Corporate Activities: The only noticed company meeting of the Grrr! entity ever held,
27 was in Sacramento, California on December 8th- thru the 9th, 2008. At this meeting; (1) plans were
28 made to conduct the initial product launch in the State of California, (2) plans were made to

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 3

 1 further engineer the product in the State of California (3) the next meeting was scheduled and
2 planned to occur in San Francisco California on March 23rd, 2009. (See Exhibit E, which are the
3 minutes, drafted by the defendant, from the “Inaugural Corporate Meeting” of Grrr!)
4 b. Executive Activities: Marketing & Promotion: At the above meeting in Sacramento, it
5 was unanimously agreed that Joy Garner, a resident and citizen of the State of California, was the
6 “President” of the new Grrr! entity, and also the “face” of GameRunner, and that, she was to be
7 responsible for heading up marketing efforts for the product launch, (booking and preparing for
8 the GDC in SF, preparing a media-room for the website, conducting promotional events and
9 activities, etc). Ms. Garner has never stepped foot on the island of Guernsey, nor has there been
10 any plan for Joy Garner to work on the GameRunner product from any state besides California.
11 c. Executive Activities & Manufacturing Management: At this same meeting, it was
12 decided that Milton Charles Van Noland was the “Director of Manufacturing” and that, he would
13 henceforth carry out and execute any and all “managerial” functions related to any further
14 developments of the product, and also manage the manufacturing set-up of the product. Milton
15 Charles Van Noland has never once stepped foot on the island of Guernsey, and there were never
16 any plans for Mr. Van Noland to work from any state besides California.
17 d. Location of GameRunner Office Space and all GameRunner R&D Activities: All
18 GameRunner engineering, and R&D, (Research and Development) has been executed
19 exclusively in the state of California. The prototyping shop, where R&D on the GameRunner
20 product has been executed, and where no less than 6 Grrr!-related management meetings were
21 held, is located in Auburn, in the State of California.
22 e. Location of Product Testing: All GameRunner product viability, functionality, test-
23 bench studies, and other testing has been performed exclusively in the State of California.
24 f. Location of Market Research and Studies: All GameRunner market studies have been
25 performed exclusively in the state of California, (University of Fresno California, Nevada
26 County High School in California, Galleria Mall in Roseville, California, etc).
27

28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 4

 1 g. Location of All IP Related Activities: All Patent and Trademark filings and all other
2 GameRunner IP related activities (patent and trademark prosecutions, etc.) were initiated and
3 completed exclusively in the State of California.
4 h. Location of Authors and Engineers of GameRunner: The only IP authors and/or

5 engineers who have ever worked on the GameRunner product, ALL reside and work exclusively
6 in the State of California, and all activities related to the GameRunner product which were
7 carried out by them, were executed exclusively in the State of California.
8 i. Location of GameRunner Website Development and Maintenance: The GameRunner
9 websites (gamerunner.us and FPGamerunner.com) were designed, developed, and are
10 maintained, exclusively here in California.
11

12 THERE’S NOTHING HAPPENING IN GUERNSEY:

13 (Or: “What happens in Guernsey, stays in Guernsey”??)
14 As demonstrated below, there’s no “brain” or “nerve center” in Guernsey;
15 a. None of Grrr! Limited’s purported assets, prototypes, inventories, studies, tools of
16 trade, test equipment, samples, or any GameRunner product-related items, are, or ever were,
17 located, stored or advanced/developed in any way, in Guernsey, or in any place other that in the
18 State of California.
19 b. No Grrr! Limited board meetings have ever been noticed to be held, or were ever
20 physically held, in Guernsey. The only official board meetings noticed to the Plaintiffs, (which
21 would be required, since the defendant claims the Plaintiffs are on the board of Grrr! Limited)
22 were all held, and were scheduled to be held, in the state of California.
23 c. No Grrr! Limited employees reside or work in Guernsey.
24 d. No GameRunner-related product development has ever occurred in Guernsey, (or
25 outside of the state of California for that matter).
26 e. Grrr! Limited has made no plans for marketing the GameRunner product in Guernsey.
27 No market research for the GameRunner has ever occurred outside of the State of California.
28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 5

 1 f. No sales meetings or other “company meetings” have ever occurred in Guernsey, nor
2 were any sales meetings ever held outside of the state of California.
3 g. No GameRunner related IP (patent or trademark) related activities have occurred in
4 Guernsey, or have ever occurred outside of the State of California.
5 h. There is no physical office space located in Guernsey, (or any State besides California)
6 which has ever been specifically devoted to, or allocated for, Grrr! Limited or any of its
7 “activities”.
8 GUERNSEY IS A MAIL STOP
9 The truth is, Grrr! Limited retains only a minimal mail-stop type of service provider in
10 Guernsey. This service provider maintains their own offices for the purpose of servicing many
11 different Guernsey-Registry companies at once. This office is not maintained for the purpose of
12 actually conducting any real Grrr! Limited business activities, but is instead, for the purpose of
13 serving as an agent-of-service for numerous Guernsey Registry Companies.
14

15 A “CORPORATION”
16 As a corporation Grrr! Limited has citizenship in the State of California, as demonstrated
17 in pages 3 - 6 of this pleading and verified affidavit. No other single location can be shown as
18 having a predominance of the company’s activities, nor can any other location be shown as a
19 “nerve center”. Therefore, there is no diversity jurisdiction in this case. The Plaintiffs call the
20 Court’s attention to these 9th Circuit cases:
21

22 1. In Industrial Tectonics v. Aero Alloy, 912 F.2d 1090 (9th Cir. 1990) (case attached as
23 Exhibit D) the court stated:
“We hold that, where a majority of a corporation's business activity takes
24
place in one state, that state is the corporation's principal place of business,
25 even if the corporate headquarters are located in a different state. The
"nerve center" test should be used only when no state contains a
26 substantial predominance of the corporation's business activities.”
27

28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 6

 2. In Tosco Corp. v. Communities for a Better Env’t., 236 F.3d 495 (9th Cir. 2001) (case
1

2 attached as Exhibit F) the court stated:

3 “Tosco Corporation ("Tosco") claims that the district court has diversity
jurisdiction over this action under 28 U.S.C. 1332 because, under the
4
"nerve center " test, its principal place of business is Connecticut. But we
5 apply the "place of operations" test when a corporation conducts a
substantial predominance of its business activities within a state.”
6

7
3. In Melinda Friend v. Hertz Corporation 9th, (2008) No. 08-16963, (unpublished, but
8
allowed as precedent under 9th, Cir. R. 36-3, and attached to this pleading as Exhibit G) the court
9

10
succinctly summarized the intent and conclusions of the above two cases, once again affirming

11 its stance on this same issue. The panel included Fernandez, Callahan and Ikuta. There was no
12
dissent. NOTE: This case has been appealed to the US Supreme Court, argued on Nov. 10th,
13
2009 and is awaiting a decision. The issues raised and the implications for corporate diversity
14
jurisdiction are covered in a brief attached as Exhibit H. Hertz is a Delaware corporation with its
15

16 company headquarters in New Jersey. Hertz argued for a “never center” test (rather than

17 “predominance” of activity) to support a finding that its citizenship belongs in New Jersey. The
18
state of incorporation was not at issue in the appeal, nor in any of the decisions leading up to it.
19

20
SANCTIONS
21

22 After almost six months of repeated insistence that Grrr! Limited is an LLC, defense

23 counsel now takes the position that Grrr! Limited is actually a corporation, but he has failed to
24
inquire into, (let alone cite) the relevant jurisdictional laws, (or facts) which might support
25
diversity jurisdiction with his new story. (Could this be because there aren’t any facts or law to
26

27
support it?) Defense counsel had an obligation to learn and cite the relevant applicable laws,

28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 7

 before filing each new/changed statement of fact. Instead, defense counsel asks the court assume
1

2 his new and self-contradicting facts support jurisdiction, when they do not.

3
When the Plaintiffs confronted defense counsel with the fact that he had outright lied to
4
the court about the presence of a federal question in the suit, counsel did recant under safe harbor
5
of Rule 11, but only because the lie was so blatant, so obvious, that he knew there was simply no
6
wiggle-room there. Now defense counsel has the gall to accuse the Plaintiffs of dancing around
7
with the law, when defense counsel has been engaged in a whimsical and mercurial, tango-tap-
8
dance with the actual facts. The Plaintiffs are simply trying to get to the factual truths, (no easy
9
task) so that they know which laws apply, each time they get a new story from defense. The
10
Plaintiffs’ only goal is to see to it that whichever court hears this case, it is the one with the
11
correct jurisdiction to do so. Without this, any judgment would be worthless, and much more
12
time would be lost.
13

14 Defense counsel has made no “colorable arguments” in his recently changed story.
15
Jurisdiction cannot be assumed merely because defense counsel has come up with a new story
16
which contradicts his prior statements of fact. Defense counsel was not blind to the obvious
17

18
applicable 9th Circuit cases here, or to the facts. He simply chose to ignore them, hoping that both

19 the “Pro Se” Plaintiffs and this court, would be ignorant of them.
20

21
DEFENSE COUNSEL’S INTENTIONAL DECEPTION UPON THE COURT
22
In defense counsel’s arguments, (Filed Dec, 31st, 2009, footnote 1 on page 2) counsel
23

24 attempts to intentionally deceive the court into believing that the Plaintiffs have some intention

25 of dismissing Grrr! Limited from the lawsuit, when nothing could be further from the truth. The
26
Plaintiffs’ use of the word “odd” could not possibly have been interpreted by defense counsel to
27
mean that the Plaintiffs have any intention of dismissing such an indispensable defendant/party
28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 8

 as Grrr! Limited, since it is Grrr! Limited who has falsely claimed ownership over the Plaintiffs’
1

2 property, which is the entire subject matter of this suit. It was nothing short of fraud for defense

3 counsel to make such a representation to the Court concerning the Plaintiffs’ intentions. The only
4
thing the Plaintiffs found to be “odd” was how defense counsel’s prior repeated assertions of
5
Grrr! Limited’s LLC status, put the Plaintiffs on both sides of the suit.
6

7
RULE 11

8 One purpose of Rule 11 of the Federal Rules of Civil Procedure is to prevent an attorney
9 from haling a party into federal court without having performed, at the very least, a reasonable
10
inquiry into the jurisdictional underpinning of the lawsuit. Rule 11 mandates sanctions where it
11
is clear that: (1) a reasonable inquiry into the basis for a pleading has not been made; (2) under
12

13 existing precedents there is no chance of success; and (3) no reasonable argument has been

14 advanced to extend, modify or reverse the law as it stands. Cf. Norris v. Grosvenor Marketing
15
Ltd., 803 F.2d 1281, 1288 (2d Cir.1986).
16

17
The Rule "explicitly and unambiguously imposes an affirmative duty on each attorney to
18

19 conduct a reasonable inquiry into the viability of a pleading before it is signed." Eastway

20 Construction Corp. v. City of New York, 762 F.2d 243, 253 (2d Cir.1985). This requirement
21
assures that lawyers are prepared to demonstrate that they have done the necessary investigation
22
prior to appearing in court.
23

24
Attorney James Arguelles’ arguments and constantly shifting “facts” are not even worthy

25 of being referred to as crafty "post hoc sleight of hand" calculations to make plausible very
26 tenuous jurisdictional claims. See Schwarzer, Rule 11 Revisited, 101 Harv.L.Rev. 1013, 1022
27
(1988). Defense counsel most recently submits new facts which contradict his prior statements,
28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 9

 (seemingly to support the idea that he might’ve had at least a “colorable argument” for diversity
1

2 jurisdiction) when even the newly submitted and contradictory facts still do not support diversity

3 jurisdiction.
4
Given defense counsel’s most recent and current assertion that Grrr! Limited is really a
5
corporation, (and he now claims to have known this all along) defense counsel could have, and
6

7
should have, conducted at least a cursory legal investigation into how an alien corporation,

8 whose predominant business operations are conducted in a state other than its state of
9 incorporation, affects its citizenship for purposes of diversity jurisdiction.
10
Defense counsel doesn’t bother himself with such details. However, Defense counsel did
11
find the time over the holidays, to seek out, locate and harass the defendant’s business associates,
12
slandering the Plaintiffs to them.
13

14
ADDITIONAL RELEIF IS REQUIRED AT THIS TIME
15
When the Plaintiffs confronted defense counsel as to why he was contacting their
16
associates at all, defense counsel nervously stated that he “did not know where” to “serve” the
17
Plaintiffs with “legal documents” and that this was why he had sought out and contacted the
18
Plaintiffs’ business associates. (This however, did not begin to explain the slanderous and untrue
19
remarks defense counsel made to them about the Plaintiffs.) There is no question that defense
20
counsel knows perfectly well where to find the Plaintiffs, and how to arrange to serve them with
21
documents. The Plaintiffs have never once attempted to deny they’ve received any legal
22
documents in this case. Defense counsel however, has refused to allow his secretary to accept
23
any legal paper from the Plaintiffs at the firm’s front desk during normal business hours. It is
24
also well documented that Defense counsel’s client engaged in service-ducking for months when
25
this suit began.
26

27
AND A LITTLE MORE DECEPTION FOR GOOD MEASURE
28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 10

 1 In answer to the suit, the defendant has also asserted that the Plaintiffs are 70% owners of
2 Grrr! Limited, which if true, would mean that the Plaintiffs would’ve received some
3 documentation to this fact. Until this suit was removed, the Plaintiffs had no evidence of their
4 ownership within Grrr! Limited. Now it appears that Mr. Pelletier put a trust in possession and
5 control over the Plaintiffs’ purported property and vote, since the Plaintiffs have never signed an
6 agreement that a trust could do this for them. It is also important to note that in the “Articles of
7 Incorporation” provided by the defendants in support of their most recent positioning, there are
8 no accompanying formal board resolutions which are signed by any of any of the purported
9 founders which authorize, either the formation of the company, or its chosen “articles” and rules.
10 In fact, such items are most conspicuously missing.
11

12 HARASSMENT WHICH KNOWS NO BOUNDS

13 This removal and every defense argument and filing since, has been for no purpose other
14 than to harass and delay the Plaintiffs in having their suit heard. The defendant’s most recent
15 filing, (wherein the obvious issue of the actual citizenship of Grrr! Limited as a “corporation” is
16 most conspicuously missing/avoided) is just one more example of this seemingly endless
17 harassment, as now, it even extends to defense counsel James Arguelles personally contacting
18 the Plaintiff’s business associates and making slanderous remarks about the Plaintiffs to them.
19

20 DOUBTS?
Removal jurisdiction is to be strictly construed, with all doubts as to its propriety to be
21

22 resolved in favor of remand. Steel Valley Auth. v. Union Switch and Signal Div., 809 F.2d 1006,

23 1010 (3d Cir. 1987). Here there is no doubt that the indispensable defendant company Grrr!
24
Limited has its principle place of business in the State of California. Beyond simply the
25
“predominant” activities of Grrr! Limited, (which are clearly established) California is also the
26

27
“nerve center” location, which encompasses$$ the actual meetings here, the base of operations

28 for the “President” and “Director of Marketing” and the Director of Manufacturing, etc. Whether

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 11

 the Court were to choose a singular citizenship theory for Grrr! Limited, (on the “nerve center”
1

2 test) or dual citizenship, Guernsey is not the citizenship of Grrr! Limited for the purpose of

3 diversity jurisdiction, California is.

4

7
IMMEDIATE RELIEF IS NEEDED
8
THE PLAINTIFFS PRAY, this court order that defense counsel is PROHIBITED from
9
contacting the Plaintiff’s personal business associates for any purpose and that; he is
10
PROHBITED from slandering the Plaintiffs to any party. Defense counsel is counsel for the
11
defense, not his personal servant in attempting to ruin the Plaintiff’s business interests. Defense
12
counsel has never had a problem locating the Plaintiffs directly, and any argument he may offer
13
that he has had trouble here, is pure fraud. Defense counsel has no legitimate purpose in
14
contacting the Plaintiffs’ business associates, let alone making slanderous and untrue remarks to
15
them about the Plaintiffs. This behavior must stop.
16

17
WHEREFORE, Plaintiffs pray this court remand this case to the court from which it was
18
removed and sanction defendants and defense counsel in an amount reasonably calculated by the
19
court to deter such behavior in the future.
20

21
Respectfully submitted,
22

23
DATE:_____________ __________________ ___________________________
24 Joy Garner Milton Charles Van Noland
7164 Marblethorpe Drive 116 Murphy Street
25 Roseville, CA 95747 Grass Valley, CA 94945
26
916-872-4753 530-210-1001

27

28 VERIFICATION / AFFIDAVIT

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 12

 1
The Plaintiffs in the above entitled action do hereby swear, under penalty of perjury, under the
2 laws of the State of California that all of the above statements are true and correct, and where
stated on information and belief, they believe them to be true. This verification is made in the
3 State of California in Placer County on ____________, 2010.
4

5 ______________________________ ______________________________________
Joy Garner Milton Charles Van Noland
6

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

SURREPLY RE: MOTION FOR REMAND & SANCTIONS - 13