Bagdon v. Bridgestone/Firestone, Inc.

Bridgestone/Firestone, Inc. (Firestone) (defendant) acquired 300 auto centers from J.C. Penney Company, and it operated some of them in competition with its already existing auto centers—some of which were separately incorporated. One of Firestone’s auto centers acquired from J.C. Penney, Ford City East, was in the same shopping center as one of the separately incorporated, already existing auto centers, Ford City West. Bagdon (plaintiff) managed Ford City West and owned 49 percent of its stock: Firestone owned the remaining 51 percent. Bagdon, a citizen of Illinois, sued Firestone, an Ohio corporation with its principal place of business in Ohio, in federal district court in Illinois and invoked diversity subject-matter jurisdiction. Bagdon alleged that if Firestone had sold Ford City East to a third party as opposed to operating it as an auto center, then Ford City West would have picked up customers and increased its profits and Bagdon’s 49 percent share of those profits as well as Bagdon’s bonus from Firestone. Firestone moved to dismiss and alleged that Ford City West was an indispensable defendant party because Bagdon’s loss derived from injury to it. Because Ford City West was incorporated in Delaware and had its principal place of business in Illinois—the same state as Bagdon—Ford City West’s presence in the suit would destroy complete diversity. Because Bagdon’s complaint alleged additional counts that did not depend on injury to Ford City West and because the lost-profit claim included an element that was personal to Bagdon regarding Bagdon’s bonus, the district court concluded that the case could proceed without Ford City West. Firestone appealed.