Glenda Johnson v. SmithKline Beecham Corp

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
Nos. 12-2561/2562/2563/2564/2565
_____________
GLENDA JOHNSON;
STEVEN LUCIER,
Appellants in 12-2561
v.
SMITHKLINE BEECHAM CORPORATION, doing
business as GLAXOSMITHKLINE; GLAXOSMITHKLINE,
LLC; GLAXOSMITHKLINE HOLDINGS LLC; SANOFI-
AVENTIS, U.S., L.L.C.; AVANTOR PERFORMANCE
MATERIALS; GRUNENTHAL U.S.A.; GRUNENTHAL
GMBH
SmithKline Beecham Corporation;
GlaxoSmithKline, LLC; and
GlaxoSmithKline Holdings, LLC
Appellants in 12-2562
Avantor PerformanceMaterials,
Appellant in 12-2563
Sanofi-Aventis U.S.,LLC,
Appellant in 12-2564
Grunenthal U.S.A.,
Appellant in 12-2565
_______________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-11-cv-05782)
District Judge: Hon. Paul S. Diamond
_______________
Argued
March 5, 2013
Before: AMBRO, JORDAN, and VANASKIE, Circuit
Judges.
(Filed: June 7, 2013)
_______________
Steve W. Berman
Craig R. Spiegel [ARGUED]
Nick Styant-Browne
Hagens Berman Sobol Shapiro
1918 Eighth Avenue - #3300
Seattle, WA 98101
Mary A. Geppert
Jeffrey L. Kodroff
John A. Macoretta
Spector, Roseman, Kodroff & Willis
1818 Market Street - #2500
Philadelphia, PA 19103
2
Kay G. Reeves
6815 Lakeshore Drive
Dallas, TX 75214
Counsel for Appellants/Cross-Appellees
Lisa S. Blatt [ARGUED]
Sarah M. Harris
R. Stanton Jones
Arnold & Porter
555 Twelfth Street, NW
Washington, DC 20004
Michael T. Scott
Melissa A. Wojtylak
Reed Smith
1650 Market Street - #2500
Philadelphia, PA 19103
Counsel for Appellees/Cross-Appellants, SmithKline
Beecham Corp., GlaxoSmithKline, and
GlaxoSmithKline Holdings LLC
Anand Agneshwar
Bruce R. Kelly
Arnold & Porter
399 Park Avenue
New York, NY 10022
Kenneth A. Murphy
Drinker, Biddle & Reath
18th & Cherry Streets
One Logan Square - #2000
Philadelphia, PA 19103
3
Daniel S. Pariser
Arnold & Porter
555 Twelfth Street, NW
Washington, DC 20004
Counsel for Appellees, Sanofi-Aventis US Inc.,
and Avantor Performance Materials
Albert G. Bixler
Rachel C. Rosser
Eckert, Seamans, Cherin & Mellott
50 S. 16th Street – 22nd Fl.
Philadelphia, PA 19102
Sara J. Gourley
Eugene A. Schoon
Sidley Austin
One South Dearborn St.
Chicago, IL 60603
Counsel for Appellees/Cross-Appellants
Grunenthal USA and Grunenthal GmbH
_______________
OPINION OF THE COURT
_______________
JORDAN, Circuit Judge.
Plaintiffs Glenda Johnson and Steven Lucier appeal an
order of the United States District Court for the Eastern
District of Pennsylvania denying their motion to remand this
action to Pennsylvania state court. They contend that the
District Court lacks subject matter jurisdiction over their
claims because the parties do not have complete diversity of
4
citizenship. We conclude that the District Court‘s assessment
of citizenship was correct, and that none of the Defendants is
a citizen of the same state as either Plaintiff. Accordingly, we
will affirm.
I. Background1
Johnson, a Louisiana citizen, and Lucier, a
Pennsylvania citizen (collectively, ―Plaintiffs‖), suffer from
birth defects allegedly caused by their mothers‘ use of the
drug thalidomide during pregnancy in the 1960s.2
1
The parties agreed to proceed on the jurisdictional
record made in Brewer v. SmithKline Beecham Corp., 774 F.
Supp. 2d 720 (E.D. Pa. 2011), a similar case against many of
the same defendants, supplemented by additional documents
and affidavits.
2
Thalidomide was developed in the 1950s, and from
1957 to 1961 it was prescribed to treat a variety of conditions,
including morning sickness during pregnancy. Emma
Wilkinson, Thalidomide Survivors To Get £20M, BBC News,
Dec. 23, 2009, available at
http://news.bbc.co.uk/2/hi/8428838.stm (last visited on Feb.
11, 2013). It was taken off the market after being linked to
widespread, serious birth defects, including malformed
organs and shortened or nonexistent limbs. Id. In Europe,
more than 10,000 children were born with birth defects linked
to thalidomide before the drug was banned. Carl Zimmer,
Answers Begin to Emerge on How Thalidomide Caused
Defects, New York Times, Mar. 15, 2010, available at
http://www.nytimes.com/2010/03/16/science/16limb.html?ref
=science&pagewanted=all&_r=0 (last visited on Feb. 11,
2013). The drug was not FDA-approved during that period,
5
Defendants, described in more depth below, are drug
companies (and their successors-in-interest) that developed,
designed, manufactured, and distributed thalidomide.
According to Plaintiffs, ―newly-accessible evidence reveals‖
that Defendants were aware of the drug‘s risks even while
marketing it to pregnant women, and that for the last 60 years
they have been engaged in an elaborate cover-up to avoid
liability for those actions. (Appellants‘ Opening Br. at 8.)
Seeking redress for lifelong physical and emotional
suffering, Plaintiffs filed this personal injury action against
Defendants in the Philadelphia Court of Common Pleas on
August 26, 2011. Within thirty days, on September 14, 2011,
Defendants removed the case to federal court, asserting
diversity jurisdiction. Plaintiffs then filed a motion to
remand the action to state court, arguing that diversity
jurisdiction is lacking and removal was improper because
four of the Defendants – GlaxoSmithKline Holdings (―GSK
Holdings‖), GlaxoSmithKline LLC (―GSK LLC‖),
SmithKline Beecham Corporation (―SmithKline Beecham‖),
and Avantor Performance Materials (―Avantor‖) – are
Pennsylvania citizens, as is Plaintiff Steven Lucier.3 The
and therefore its alleged effects were less widespread in the
United States. Id.; see also Anita Bernstein, Formed by
Thalidomide: Mass Torts as a False Cure for Toxic Exposure,
97 Colum. L. Rev. 2153, 2154 (1997).
3
There are three other defendants – Grunenthal
U.S.A., Grunenthal GmbH, and Sanofi-Aventis U.S., Inc. –
whose citizenship is uncontested. Sanofi-Aventis and
Grunenthal U.S.A. are citizens of both Delaware and New
Jersey, and Grunenthal GmbH is a German citizen.
6
District Court disagreed and denied Plaintiffs‘ motion, but it
certified that order for interlocutory review.4 Johnson v.
SmithKline Beecham Corp., 853 F. Supp. 2d 487, 498 (E.D.
Pa. 2012). Plaintiffs then requested permission to appeal,
which we granted on May 22, 2012. On appeal, Plaintiffs
repeat their argument that the District Court lacks subject
matter jurisdiction because GSK LLC, GSK Holdings,
SmithKline Beecham, and Avantor are all citizens of
Pennsylvania.
GSK LLC is a large pharmaceutical company that is
responsible for operating the U.S. division of
GlaxoSmithKline plc, the British entity that is the ―global
head‖ of the GlaxoSmithKline group of companies.
(Appellees‘ Br. at 6.) It was formed on October 27, 2009,
when its predecessor – SmithKline Beecham – was converted
from a Pennsylvania corporation into a Delaware limited
liability company (―LLC‖). More specifically, SmithKline
Beecham underwent a two-step conversion, first becoming a
Delaware corporation by filing a ―certificate of conversion‖
with the Delaware Secretary of State, in accordance with
Delaware Code Title 8, Section 265, and then converting into
a Delaware LLC under Sections 18-201 and 18-214 of the
Delaware Limited Liability Company Act, Del. Code Ann. tit.
6, ch. 18. The LLC was formed under Delaware law because
it ―permits a corporation to convert to an LLC without any
break in the continuity of the legal entity.‖ (Id. at 10.)
4
As discussed in more depth below, we have
jurisdiction to review an interlocutory order when a district
court certifies in writing that its order involves ―a controlling
question of law as to which there is substantial ground for
difference of opinion.‖ 28 U.S.C. § 1292(b).
7
The purpose of that conversion was to obtain the tax
benefits of LLC status and thus facilitate the formation of a
joint entity with Pfizer, Inc. called ―ViiV Healthcare,‖ which
was created to ―develop critical treatments for HIV/AIDS at
not-for-profit pricing.‖ (Appellees‘ Br. at 9.) According to
Defendants, ―[i]f [SmithKline Beecham] had remained a
corporation, it would have incurred hundreds of millions of
dollars in unnecessary tax liability for transferring its existing
HIV/AIDS assets to the new entity – a ‗prohibitive‘ obstacle
that would have prevented the venture from being financially
viable.‖ (Id.) Following the conversion, SmithKline
Beecham dissolved under Pennsylvania law, which allows
dissolution ―[w]henever a domestic business corporation has
domesticated itself under the laws of another jurisdiction.‖
15 Pa. Cons. Stat. Ann. § 1980.
Despite that change in entity form and domicile,
SmithKline Beecham was, at least operationally, largely
unaffected by its conversion to GSK LLC. The company‘s
headquarters is still in Philadelphia, Pennsylvania, where it
occupies 650,000 square feet of office space and employs
1,800 people. Its management is substantively intact.
SmithKline Beecham‘s board of directors became GSK
LLC‘s ―board of managers,‖ and those managers operate
from the same offices they did before, with three located in
Philadelphia and a fourth in North Carolina. The ownership
structure of the business is also unchanged. SmithKline
Beecham‘s sole shareholder had been Defendant GSK
Holdings, a Delaware corporation founded in 1999 that holds
GlaxoSmithKline plc‘s investments in the United States.
Following the conversion, GSK Holdings became GSK
LLC‘s sole member. Although the default rule under
8
Delaware law provides that ―the management of a limited
liability company shall be vested in its members,‖ Del. Code
Ann. tit. 6, § 18-402, GSK LLC assigned that task to the
board of managers, making it a ―manager-managed,‖ rather
than a ―member-managed,‖ LLC.5 Therefore, both before
and after the conversion, GSK Holdings acted solely as the
owner, not as the operator, of the company.
Because it is a holding company, rather than an
operating company, GSK Holdings‘ own activities are quite
limited, consisting mostly of approving the financial
statements from its investments.6 It also decides whether to
pay dividends, make new investments, and approve proposed
restructurings. GSK Holdings‘ three-member board of
directors has the exclusive authority to control all of those
activities, which it does through resolutions it adopts at
quarterly and special board meetings. For most of the time
relevant to this lawsuit, that board consisted of Michael
5
That structure was established in accordance with
Delaware law by GSK LLC‘s limited liability company
agreement. See Del. Code Ann. tit. 6, § 18-402 (permitting
an LLC agreement to vest management authority in a
manager). That agreement provided that ―[t]he members of
the Board of Directors of SmithKline Beecham Corporation
shall continue as the initial manager of the company,
following the conversion, without the need for further
action.‖ (App. at 681.)
6
At all times relevant to this lawsuit, those
investments primarily included money market investments,
intra-group accounts, and the ownership interest in GSK
LLC.
9
Corrigan, a senior officer of GSK LLC based in Philadelphia,
Julian Heslop, the chief financial officer of GlaxoSmithKline
plc based in London, and Donald McLamb, a Wilmington-
based employee of Wilmington Trust Services (―Wilmington
Trust‖), a company that provides ―corporate services to
Delaware holding companies‖ (App. at 756).7 In his capacity
as an employee of Wilmington Trust, McLamb also serves as
a director or officer of 50 to 75 other companies.
Since 2001, GSK Holdings‘ board meetings have been
held in Wilmington, Delaware at the Wilmington Trust
headquarters.8 They typically last 15 to 30 minutes, and,
7
Those three directors were in office when discovery
was conducted in Brewer. See 774 F. Supp. 2d at 726. Julian
Heslop retired on March 31, 2011, and therefore was not a
member of the board of directors at the time this case was
removed. Plaintiffs argue that we must therefore disregard
his role in the corporation, but they have presented no
evidence that GSK Holdings‘ corporate structure has changed
in the wake of Heslop‘s retirement. Moreover, they agreed to
proceed on the record developed in Brewer, see supra note 1,
and they themselves rely extensively on Heslop‘s deposition
testimony. Therefore, we assume that although Heslop
himself may no longer be carrying out the functions of GSK
Holdings‘ London-based director, his testimony is still
indicative of the corporation‘s structure and activities.
8
From 1999 until 2001, the company‘s board meetings
took place in Philadelphia, and that city was therefore listed
in GSK Holdings‘ bylaws as the location of its headquarters
and board meetings. Although that location changed in 2001,
the company failed to update those bylaws until recently,
when this litigation brought the mistake to their attention.
10
although McLamb always attends them in person, directors
Corrigan and Heslop often participate telephonically from
other offices. The parties disagree about the extent of the
actual decision-making that occurs at the meetings. Plaintiffs
argue that GSK Holdings conducted its substantive work in
Philadelphia and London, and that the board meetings served
merely to ―ratify decisions made somewhere other than
Delaware.‖ (Appellants‘ Opening Br. at 32.) Defendants, on
the other hand, insist that GSK Holdings‘ directors ―reached
decisions about GSK Holdings‘[] investments only at board
meetings and based on their own independent judgment‖
(Appellees‘ Br. at 21), and that the board had exclusive
―direction, control, and coordination‖ of GSK Holdings‘
activities (id. at 40).
Apart from those meetings, GSK Holdings‘ presence
in Wilmington is minimal. It subleases a small, ten-by-ten
foot office from Wilmington Trust, but that office is rarely
visited, and it serves primarily to house GSK Holdings‘ books
and records. GSK Holdings‘ other Wilmington activities
consist mostly of administrative and secretarial functions,
such as paying monthly bills for the office. Those functions
are usually conducted by Elizabeth Bothner, GSK Holdings‘
sole employee, who devotes about 20 hours per year to the
company. GSK Holdings has one Delaware bank account
that, as of November 2010, had less than $25 in it.
Although GSK Holdings‘ board has the sole authority
to manage the company‘s activities, it receives various
support services from individuals in both Philadelphia and
London. Officers Jan Lyons and Sarah-Jane Chilver-Stainer,9
9
GSK Holdings has six corporate officers. In addition
11
who are based in Philadelphia and London, respectively,
provide tax assistance and facilitate GSK Holdings‘
investment transactions, as does Philadelphia-based GSK
LLC employee Audrey Klijian. Complex tax issues are
sometimes addressed by Helen Jones, a London-based GSK
employee. George Brown, another GSK employee based in
London, maintains GSK Holdings‘ financial records, and
overall strategic guidance comes from the London office.
The GSK Holdings board has also authorized a number of
people in both Philadelphia and London to sign documents on
GSK Holdings‘ behalf and enter into certain routine
transactions for the company. Finally, directors Corrigan and
Heslop generally prepare for board meetings at their
respective offices, and staff at the Philadelphia office compile
and circulate the materials that the board reviews during those
meetings.
Beyond those limited functions, GSK Holdings has no
operations. It produces no products, conducts no research,
and has no sales. Rather, as is typical for a holding company,
its role is confined to owning its interest in its subsidiary –
GSK LLC. See Black‘s Law Dictionary 298 (8th ed. 2004)
(defining a holding company as a ―company formed to
control other companies, [usually] confining its role to
owning stock and supervising management‖); 19 William
Meade Fletcher et al., Fletcher Cyclopedia of the Law of
Corporations, glossary at 13 (perm. ed., rev. vol. 2006)
(defining a holding company as ―a corporation whose
principal business is the holding of stocks of other
to Lyons and Chilver-Stainer, Holdings‘ three directors serve
as officers, as does Elizabeth Bothner, the company‘s
Wilmington-based part-time employee.
12
corporations‖). That subsidiary, on the other hand, has
widespread and complex operations, as it develops, produces,
and sells pharmaceutical products nationwide. Such a
corporate structure, in which an operating company is wholly
owned by a holding company, has many features that are
appealing to large business enterprises. For example, the
holding company structure gives each subsidiary the
autonomy to manage its business without regard to other
business units, it allows the enterprise to prevent liabilities
incurred by one investment from jeopardizing other
investments, and it facilitates borrowing transactions and
restructurings. See Robert Charles Clark, The Regulation of
Financial Holding Companies, 92 Harv. L. Rev. 789, 816-
825 (1979) (describing the benefits of holding company
formation). Director Heslop testified that, for those reasons,
including a holding company within an enterprise‘s corporate
structure ―is a very, very common thing.‖ (App. at 705.)
The last defendant – Avantor Performance Materials –
is a New Jersey corporation that is not part of the
GlaxoSmithKline group of companies. Until 2011, it had its
principal place of business in New Jersey. In February 2011,
Avantor announced that it was relocating its headquarters to
Center Valley, Pennsylvania. The corporation officially
moved its rank-and-file employees to its new headquarters on
September 19, 2011, five days after Defendants removed this
action. The parties disagree on precisely when Avantor‘s
high-level officers began directing activities from
Pennsylvania. Plaintiffs note that Avantor‘s website, a
corporate directory, and many technical documents and
federal filings listed its address in Center Valley starting
before this action was removed. They also observe that
Avantor‘s CEO gave an interview from the new headquarters
13
two days before the official move date. Defendants argue that
those actions were all part of the preparation for the move,
which multiple affidavits, an internal company memo, and a
news story demonstrate occurred on September 19.
The District Court reviewed all of the foregoing
evidence and concluded none of the Defendants was a
Pennsylvania citizen at the time of removal. It thus held that
diversity jurisdiction is present. Johnson, 853 F. Supp. 2d at
489, 498. Specifically, the Court found that GSK Holdings
has its principal place of business in Wilmington, Delaware,
where its board of directors manages its investments. Id. at
495. It is therefore a Delaware citizen, as is GSK LLC,
which, as a limited liability company, assumes the citizenship
of its owner. Id. at 491. As for the remaining Defendants, the
Court held that Avantor was still a New Jersey citizen when
the case was removed, id. at 495, and that SmithKline
Beecham‘s citizenship is irrelevant because, as a dissolved
corporation whose assets and liabilities have been assumed by
another entity, it is a nominal party with no interest in the
litigation, id. at 496-97. Accordingly, the Court concluded it
had jurisdiction over the case, and denied Plaintiffs‘ motion
to remand. Id. at 498. This timely appeal followed.
II. Jurisdiction and Standard of Review
The District Court determined that it had jurisdiction
pursuant to 28 U.S.C. § 1332. In denying remand, it certified
for interlocutory review the jurisdictional question of whether
two of the Defendants – GSK Holdings and GSK LLC
(collectively, the ―GSK Defendants‖) – are Pennsylvania
citizens, in order to resolve the uncertainty created by
―contrary determinations as to the GlaxoSmithKline
14
Defendants‘ citizenship‖ that have emerged recently. Id. at
490. To date, six judges from the Eastern District of
Pennsylvania have ruled on the issue of the GSK Defendants‘
citizenship. Four of them concluded that GSK Holdings and
GSK LLC are Pennsylvania citizens, and thus granted
motions for remand due to lack of diversity. See Brewer v.
SmithKline Beecham Corp., 774 F. Supp. 2d 720 (E.D. Pa.
2011) (Savage, J.); Yeatts v. SmithKline Beecham Corp., No.
11-6711, 2012 WL 5488907 (E.D. Pa. Mar. 29, 2012)
(Slomsky, J.); Murray v. SmithKline Beecham Corp., No. 11-
3510, 2012 WL 5488905 (E.D. Pa. Mar. 29, 2012) (Jones, J.);
Monroe v. SmithKline Beecham Corp., No. 10-2140, 2010
WL 2606682 (E.D. Pa. June 25, 2010) (Joyner, J.). Two
others, including the District Judge in this case, reached the
opposite conclusion. See Johnson, 853 F. Supp. 2d at 489
(Diamond, J.); White v. SmithKline Beecham Corp., No. 10-
2141, 2010 WL 3119926 (E.D. Pa. Aug. 6, 2010)
(McLaughlin, J.). Due to that disagreement, and to the
likelihood that it will continue absent our decision, the
District Court certified the issue of the GSK Defendants‘
citizenship as ―a controlling question of law as to which there
is substantial ground for difference of opinion.‖ Johnson, 853
F. Supp. 2d at 490 (quoting 28 U.S.C. § 1292(b)) (internal
quotation marks omitted).
We therefore have jurisdiction to review the Court‘s
order pursuant to 28 U.S.C. § 1292(b),10 which we accepted
by granting Plaintiffs‘ request for permission to appeal.
Although the District Court noted only the issue of the GSK
10
Our references to the District Court are, unless
otherwise noted, to the Court acting through the Honorable
Paul S. Diamond in this case.
15
Defendants‘ citizenship as requiring interlocutory review, we
have jurisdiction to ―address any issue fairly included within
the certified order.‖ Yamaha Motor Corp., U.S.A. v. Calhoun,
516 U.S. 199, 205 (1996). The certified order from which
this appeal originated denied all Plaintiffs‘ bases for remand,
including the alleged Pennsylvania citizenship of SmithKline
Beecham and Avantor. We therefore have jurisdiction to
review the District Court‘s citizenship determination for each
of the challenged Defendants, not just for GSK Holdings and
GSK LLC. See id. (noting that ―it is the order that is
appealable, and not the controlling question identified by the
district court‖ (internal quotation marks omitted) (emphasis in
original)); cf. Morris v. Hoffa, 361 F.3d 177, 196 (3d Cir.
2004) (―Although the scope of review on an interlocutory
appeal is generally constrained to the questions certified for
review by the district court, we may consider any grounds
justifying reversal.‖ (internal quotation marks omitted)
(emphasis in original)).
We exercise plenary review over issues of jurisdiction.
Grand Union Supermarkets of the V.I., Inc. v. H.E. Lockhart
Mgmt., Inc. 316 F.3d 408, 410 (3d Cir. 2003). Under that
standard, we review determinations of law de novo, but a
court‘s factual findings regarding domicile or citizenship are
reviewed for clear error. McCann v. Newman Irrevocable
Trust, 458 F.3d 281, 286 (3d Cir. 2006). When reviewing for
clear error, an appellate court ―must accept the trial court‘s
findings‖ unless it is ―left with the definite and firm
conviction that a mistake has been committed.‖ Inwood
Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 855 (1982)
(internal quotation marks omitted); see also Frett-Smith v.
Vanterpool, 511 F.3d 396, 399 (3d Cir. 2008) (applying that
standard to the factual findings which underpin a court‘s
16
determination of diversity jurisdiction). Put another way,
―[i]f the district court‘s account of the evidence is plausible in
light of the record viewed in its entirety, the court of appeals
may not reverse it even though convinced that had it been
sitting as the trier of fact, it would have weighed the evidence
differently.‖ Anderson v. City of Bessemer City, 470 U.S.
564, 573-74 (1985).
Plaintiffs argue that it would be unfair to apply the
clearly erroneous standard to the factual findings in this case
because of the contrary outcomes reached by different district
judges on this jurisdictional issue. But varying outcomes do
not change that we are called upon to review only the
particular order on appeal, nor do they put us in a better
position to make our own factual findings. See Inwood Labs.,
456 U.S. at 855 (recognizing the ―unique opportunity
afforded the trial court judge to evaluate the credibility of
witnesses and to weigh the evidence‖). Rule 52(a) of the
Federal Rules of Civil Procedure makes clear that ―[f]indings
of fact … must not be set aside unless clearly erroneous, and
the reviewing court must give due regard to the trial court‘s
opportunity to judge the witnesses‘ credibility.‖ Fed. R. Civ.
P. 52(a)(6). The Supreme Court has held that that standard
applies ―even when the district court‘s findings do not rest on
credibility determinations, but are based instead on physical
or documentary evidence or inferences from other facts.‖
Anderson, 470 U.S. at 574. We are therefore not at liberty to
substitute our own jurisdictional facts for those credited by
the District Court, unless that Court‘s findings are clearly
erroneous. We reiterate, however, that our overall review is
plenary, and thus we do not defer to the District Court‘s
application of the law to those facts.
17
III. Discussion
A civil action brought in state court may be removed
by the defendant to federal district court if the federal court
would have had original jurisdiction over the claim. 28
U.S.C. § 1441(a). ―Diversity of citizenship subject matter
jurisdiction falls within the original jurisdiction of the district
court,‖ pursuant to § 1332(a) of Title 28 of the United States
Code, and thus ―a state court case that implicates diversity
jurisdiction‖ may generally be removed, Brown v. Francis, 75
F.3d 860, 865 (3d Cir. 1996), provided that the defendant is
not a citizen of the state in which the action is brought, 28
U.S.C. § 1441(b)(2). See also 28 U.S.C. § 1332(a) (granting
jurisdiction in cases between citizens of different states in
which the amount in controversy exceeds $75,000).
Jurisdiction under § 1332(a) requires ―complete diversity,‖
meaning that ―no plaintiff can be a citizen of the same state as
any of the defendants.‖ Grand Union Supermarkets, 316
F.3d at 410. Diversity of citizenship must have existed at the
time the complaint was filed, id., and at the time of removal,
Abels v. State Farm Fire & Cas. Co., 770 F.2d 26, 29 (3d Cir.
1985), and the burden is on the removing party to establish
federal jurisdiction, id. ―Because lack of jurisdiction would
make any decree in the case void and the continuation of the
litigation in federal court futile, the removal statute should be
strictly construed and all doubts resolved in favor of remand.‖
Brown, 75 F.3d at 864-65 (quoting Abels, 770 F.2d at 29)
(internal quotation marks omitted).
Plaintiffs argue that removal of their case was
improper because the federal courts lack subject matter
jurisdiction over it. They contend that each of the four
Defendants involved in this appeal is a Pennsylvania citizen,
18
and thus that diversity jurisdiction is lacking because Plaintiff
Steven Lucier is also a citizen of that state.11 Specifically,
they maintain that GSK Holdings‘ principal place of business
is in Philadelphia, and, because a limited liability company‘s
citizenship is determined by the citizenship of its members,
both GSK Holdings and GSK LLC are therefore
Pennsylvania citizens. Plaintiffs further argue that although
SmithKline Beecham dissolved, Pennsylvania law preserves
its citizenship for purposes of diversity jurisdiction. As for
Avantor, it became a Pennsylvania citizen when it moved its
headquarters to Center Valley, Pennsylvania, which Plaintiffs
claim may have happened before the case was removed.12
We address each of those arguments in turn and conclude, as
the District Court did, that none of the Defendants was a
Pennsylvania citizen at the time of removal.
11
For the same reason, they also contend that removal
of the case violated the rule barring removal when any
―defendant is a citizen of the forum state.‖ Lincoln Property
Co. v. Roche, 546 U.S. 81, 84 (2005); see 28 U.S.C.
§ 1441(b)(2). Plaintiffs do not dispute that the amount in
controversy exceeds $75,000, as required by 28 U.S.C.
§ 1332(a).
12
Plaintiffs do not specify when Avantor moved its
headquarters to Pennsylvania. Rather, they contend that
―Avantor has not met its burden of proving that its principal
place of business was in New Jersey, not Pennsylvania, when
Defendants removed this action on September 14, 2011.‖
(Appellants‘ Opening Br. at 47.)
19
A. Citizenship of the GSK Defendants
Section 1332(a) grants federal courts jurisdiction over
civil actions between ―citizens of different [s]tates,‖ 28
U.S.C. § 1332(a)(1), and it is well established that a
corporation is considered a ―citizen‖ for purposes of that
provision, Carden v. Arkoma Assocs., 494 U.S. 185, 189
(1990). Since 1844, the Supreme Court has recognized that a
corporation is ―capable of being treated as a citizen … as
much as a natural person.‖ Louisville, Cincinnati &
Charleston R.R. Co. v. Letson, 43 U.S. 497, 558 (1844). It
has taken considerably longer, however, for Congress and the
Court to decide how a corporation‘s citizenship should be
determined. In 1958, after years of studying the matter,
Congress amended § 1332 to provide that a corporation is a
citizen of both its state of incorporation and the state ―where
it has its principal place of business.‖ 28 U.S.C. § 1332(c)(1);
see also Hertz Corp. v. Friend, 559 U.S. 77, 130 S. Ct. 1181,
1189-90 (2010) (describing the legislative history of that
enactment). But applying the phrase ―‗principal place of
business‘ … proved more difficult … than its originators
likely expected,‖ Hertz, 130 S. Ct. at 1190, and that difficulty
resulted in ―divergent and increasingly complex
interpretations‖ by the courts of appeals, id. at 1192. In 2010,
the Supreme Court stepped in to resolve the confusion,
holding in Hertz that ―the phrase ‗principal place of business‘
refers to the place where the corporation‘s high level officers
direct, control, and coordinate the corporation‘s activities,‖
which is often ―metaphorically called its ‗nerve center.‘‖ Id.
at 1186.
In endorsing the ―nerve center‖ test, the Court
―place[d] primary weight upon the need for judicial
20
administration of a jurisdictional statute to remain as simple
as possible,‖ id., and it rejected other approaches involving
complex multifactor tests designed to pinpoint a corporation‘s
―center of gravity,‖ id. at 1191. Instead, it adopted the
comparatively simpler method of identifying the single place
that is the corporation‘s ―brain‖ – its ―actual center of
direction, control, and coordination‖ – which is usually its
headquarters. Id. at 1192-93; see also id. at 1193 (―A
corporation‘s ‗nerve center,‘ usually its main headquarters, is
a single place.‖). Hertz also warned courts to guard against
jurisdictional manipulation by ensuring that a corporation‘s
headquarters is actually its center of direction, ―not simply an
office where the corporation holds its board meetings,‖ id. at
1192, or ―a bare office with a computer,‖ id. at 1195. If there
is evidence of such manipulation, Hertz explained that courts
should look past that manipulation, and ―take as the ‗nerve
center‘ the place of actual direction, control, and
coordination, in the absence of such manipulation.‖ Id.
Hertz said nothing, however, about how to determine
the citizenship of an unincorporated entity. Such entities do
not have the same legal status as a corporation, and the
Supreme Court has made clear that, ―[w]hile the rule
regarding the treatment of corporations as ‗citizens‘ has
become firmly established,‖ that treatment cannot be
extended to other entities. Carden, 494 U.S. at 189; see also
id. (―That rule must not be extended.‖ (internal quotation
marks omitted)). In Carden v. Arkoma, the Court held that,
because unincorporated entities are not considered ―citizens‖
in their own right, ―diversity jurisdiction in a suit by or
against [an unincorporated] entity depends on the citizenship
of … each of its members.‖ Id. at 195-96 (citations and
internal quotation marks omitted). In other words, because
21
such an entity is not recognized as a legal person, courts
should look to the citizenship of the people or corporations
who comprise it to determine if diversity jurisdiction exists.
The principal place of business of an unincorporated entity is
therefore irrelevant to determining its citizenship.
That rule holds true despite the substantive similarities
between corporations and other entities. Id. at 196. The
Court in Carden acknowledged that unincorporated entities
can be ―functionally similar‖ to corporations, and that
―[c]onsiderations of basic fairness and substance over form‖
may ―require that [they] receive similar treatment.‖ Id. (first
alteration in original) (internal quotation marks omitted). Yet
it nonetheless enforced the rigid jurisdictional distinction
between corporations and other entities. See id.; see also
Hoagland ex rel. Midwest Transit, Inc. v. Sandberg, Phoenix
& Von Gontard, P.C., 385 F.3d 737, 739-40 (7th Cir. 2004)
(holding that a nonbusiness corporation, even though it may
differ from business corporations in more respects than
unincorporated entities do, is nonetheless treated as a citizen
for diversity jurisdiction purposes). Such adherence to
mechanical rules may seem at first glance to be unfair, but it
comports with the Court‘s unwavering insistence that
jurisdictional rules ―remain as simple as possible.‖ Hertz,
130 S. Ct. at 1186; see also Carden, 494 U.S. at 196 (―The
resolutions we have reached above can validly be
characterized as technical, precedent-bound, and
unresponsive to policy considerations raised by the changing
realities of business organization. But, … that has been the
character of our jurisprudence in this field … .‖). As the
United States Court of Appeals for the Seventh Circuit has
explained:
22
Functional approaches to legal questions are
often, perhaps generally, preferable to
mechanical rules; but the preference is reversed
when it comes to jurisdiction. When it is
uncertain whether a case is within the
jurisdiction of a particular court system, not
only are the cost and complexity of litigation
increased by the necessity of conducting an
inquiry that will dispel the uncertainty but the
parties will often find themselves having to start
their litigation over from the beginning, perhaps
after it has gone all the way through to
judgment.
Hoagland, 385 F.3d at 739-40. For that reason, although the
rise of new business structures may make the rigid divide
between corporations and other entities appear outdated, the
Supreme Court has explicitly left to Congress the task of
―accommodating our diversity jurisdiction to the changing
realities of commercial organization,‖ if it sees fit to do so.
Carden, 494 U.S. at 197.
In recognition of those principles, this and every other
Circuit Court to face the question have held that the
citizenship of a limited liability company ―is determined by
the citizenship of each of its members.‖ Zambelli Fireworks
Mfg. Co. v. Wood, 592 F.3d 412, 418 (3d Cir. 2010); see also
id. at 420 (collecting cases from our sister circuits). In
Zambelli, we noted that limited liability companies ―resemble
corporations in many respects,‖ but we recognized that the
Supreme Court has ―flatly rejected arguments in favor of
extending the rule of corporate citizenship to analogously
formed business entities.‖ Id. at 419 (citing Carden, 494 U.S.
23at 189). Therefore, we opted to treat limited liability
companies as we do partnerships and other ―unincorporated
associations,‖ and held that courts must look to the
citizenship of a limited liability company‘s members to
determine if there is diversity jurisdiction. Id. at 420.
Both sides in the dispute before us now agree that,
under Zambelli, GSK LLC‘s citizenship is defined by that of
its sole member: GSK Holdings. As a corporation, GSK
Holdings is a citizen of its state of incorporation and of the
state where it has its principal place of business, 28 U.S.C. §
1332(c)(1), which Hertz defined as its ―nerve center.‖ 130 S.
Ct. at 1186. It is undisputed that GSK Holdings is
incorporated in Delaware, so it is clearly a Delaware citizen.
Therefore, in order for GSK Holdings – and, by extension,
GSK LLC – to also be Pennsylvania citizens, as Plaintiffs
claim, GSK Holdings‘ ―actual center of direction, control, and
coordination,‖ i.e., its nerve center, id. at 1192, must be
located in Pennsylvania.
Plaintiffs provide two explanations for why they
believe GSK Holdings‘ nerve center is in Pennsylvania, both
of which were endorsed in a trilogy of opinions from the
Eastern District of Pennsylvania. See Patton ex rel. Daniels-
Patton v. SmithKline Beecham Corp., 2011 WL 6210724, at
*5 (E.D. Pa. Dec. 14, 2011); Maldonado ex rel. Maldonado v.
SmithKline Beecham Corp., 841 F. Supp. 2d 890, 897 (E.D.
Pa. 2011); Brewer, 774 F. Supp. 2d at 729-30, 732.13 First,
13
Those opinions were authored by the Honorable
Timothy J. Savage. Brewer, as Judge Savage‘s first statement
on the matter, provides the core of his analysis. See 774 F.
Supp. 2d at 729-32. Maldonado supplemented and clarified
24
they argue that we should consider GSK LLC‘s activities in
the determination of GSK Holdings‘ citizenship, because, as
Plaintiffs put it, GSK Holdings had the authority to manage
GSK LLC, but ―delegated‖ that power to GSK LLC‘s
managers. (Appellants‘ Opening Br. at 25.) Under that
―delegation theory,‖ GSK Holdings‘ nerve center is in
Philadelphia, because that is where GSK LLC‘s managers are
based. Second, they maintain that, even if we do not consider
GSK LLC‘s management, ―Holdings‘ own holding-company
activities‖ are directed from Philadelphia, and thus that is its
principal place of business. (Id. at 27.) We are unpersuaded
by either of those arguments.
1. The Delegation Theory
Plaintiffs‘ novel delegation theory makes GSK LLC‘s
management the focus in assessing GSK Holdings‘ nerve
center. Noting that the default rule under Delaware law is
that ―the management of a limited liability company shall be
vested in its members,‖ Del. Code Ann. tit. 6, § 18-402,
Plaintiffs conclude, as the court did in Brewer, that ―[GSK]
Holdings had the exclusive right and power to control, direct,
run, manage, and operate [GSK] LLC.‖ 774 F. Supp. 2d at
729. According to Plaintiffs, GSK Holdings opted not to
retain that power, instead ―delegat[ing] that duty to
Philadelphia-based managers.‖ (Appellants‘ Opening Br. at
26 (citing Brewer, 774 F. Supp. 2d at 729 (explaining that
GSK Holdings had delegated ―the operational decision-
making authority and power of [GSK] LLC to [GSK] LLC‘s
aspects of the Brewer holding. See 841 F. Supp. 2d at 894-
97. Patton repeats Maldonado‘s analysis. 2011 WL
6210724, at *5.
25
officers and directors‖)).) Looking at that delegation, the
court in Brewer concluded that ―[t]he ‗managers‘ of [GSK]
LLC are still part of [GSK] Holdings because they are
managing [GSK] LLC on behalf of [GSK] Holdings.‖
Brewer, 774 F. Supp. 2d at 729 (emphasis in original). Based
on that premise, Plaintiffs argue that GSK LLC‘s
Philadelphia-based management decisions should be
considered ―‗corporate activities‘ for which GSK Holdings
was responsible.‖ (Appellants‘ Opening Br. at 26.) Those
corporate activities far outweigh GSK Holdings‘ other limited
holding-company functions, and thus, say Plaintiffs, its
principal place of business is in Philadelphia. As Brewer put
it, because ―[GSK] Holdings has effectively transplanted the
vast majority of its ‗brain‘ or ‗nerve center‘ to its managers in
Philadelphia,‖ it must be considered a Pennsylvania citizen.
774 F. Supp. 2d at 730.
At the outset, it is important to note that the record
does not support that description of GSK Holdings‘
relationship to GSK LLC. To say that GSK Holdings
―transplanted … its ‗brain‘ or ‗nerve center‘‖ to GSK LLC‘s
managers implies that at some point GSK Holdings‘ activities
included directing and controlling GSK LLC. But GSK
Holdings has never occupied such a role. It has always
functioned solely as the owner of GSK LLC, just as it did
when it was the sole shareholder of GSK LLC‘s predecessor,
SmithKline Beecham. The only decision by GSK Holdings
that arguably has affected GSK LLC‘s management was the
decision to structure that company as a manager-managed
LLC – in other words, GSK Holdings‘ decision not to manage
GSK LLC. It is hard to see how that decision, which resulted
in GSK Holdings continuing to operate as it had before
SmithKline Beecham‘s conversion to GSK LLC, could
26
involve the kind of transplant that Plaintiffs and Brewer
describe.14
But even if we were to accept Brewer‘s
characterization, adopting the delegation theory would require
that we turn our holding in Zambelli upside down. Zambelli
and the Supreme Court opinions on which it is based, e.g.,
Carden, 494 U.S. at 189; United Steelworkers of Am. v. R.H.
Bouligny, Inc., 382 U.S. 145, 146-47 (1965), instruct courts
that the citizenship of an unincorporated association like a
limited liability company is determined by looking to the
citizenship of its members. 592 F.3d at 420. We are not
supposed to focus on GSK LLC‘s activities; rather, precedent
dictates that we turn our attention to the citizenship of GSK
LLC‘s sole member, GSK Holdings. While they
acknowledge that precedent, Plaintiffs ask us to define GSK
Holdings‘ citizenship by contemplating its status as a member
of GSK LLC. Put more simply, to determine the citizenship
of a limited liability company using Plaintiffs‘ approach, we
must look to its member, but then, if that member is a holding
14
Notably, Plaintiffs identify no cases, other than
Brewer and its progeny, that characterize the relationship
between a manager-managed LLC and its sole member in
such a manner. Moreover, Brewer has been rejected in at
least two district court cases, and Plaintiffs identify no other
districts that endorse its approach. See Jennings v. HCR
ManorCare Inc., -- F. Supp. 2d -- , No. 12-1397, 2012 WL
5360911, at *3 (D.S.C. Oct. 3, 2012) (―The Court declines to
adopt the reasoning of Brewer.‖); Dalton v. Georgia-Pacific
L.L.C., No. 12-415, 2012 WL 2072766, at *5 (D.S.C. May 4,
2012) (same).
27
company, we must immediately look back to the limited
liability company, reversing the Zambelli analysis entirely.15
GSK Holdings‘ allegedly ―unique‖ relationship with
GSK LLC does not justify applying that inverted approach.
See Brewer, 774 F. Supp. 2d at 729 (describing ―the unique
circumstance where the holding company is the sole member
of a manager-managed limited liability company‖).
According to Brewer, ―[w]here the sole member of a limited
liability company is a holding company … we are presented
with an anomaly in applying the ‗nerve center‘ test,‖ and we
should consider the LLC‘s activities despite Zambelli‘s
instruction to the contrary.16 774 F. Supp. 2d at 728-29. But
15
That analysis would also not be limited to the facts
of this case, as Brewer appears to indicate. 774 F. Supp. 2d at
728-29; see also Maldonado, 841 F. Supp. 2d at 897 (―The
Brewer holding is narrower than GSK makes it out to be. It
does not apply to all limited liability companies. Nor does it
apply to all manager-managed limited liability companies.‖).
According to Brewer, the delegation theory applies only in
situations ―[w]here the sole member of a limited liability
company is a holding company that holds one constituent
company and several intra-group accounts.‖ Id. But whether
an LLC‘s members are holding companies, operating
companies, or individuals, they must establish the
management structure for the LLC, either by ―delegating‖
that management authority or assuming it (or some
combination thereof). Brewer bases its holding on just that –
the member‘s decision to delegate management authority –
and there is nothing in that reasoning that limits its
application to holding companies.
16
Maldonado stepped back from that characterization
28
the situation presented here is hardly anomalous. Holding
companies are ubiquitous, especially in large business
enterprises, and courts have been determining their nerve
centers for decades.17 See, e.g., Taber Partners, I v. Merit
Builders, Inc., 987 F.2d 57, 63 (1st Cir. 1993) (determining
the nerve center of two holding companies that were partners
in a limited partnership). The fact that the holding company
at issue here holds an LLC rather than a corporation does not,
in itself, complicate the nerve center analysis.
The argument that we must look to GSK LLC‘s
activities to identify GSK Holdings‘ nerve center also ignores
the well-established rule that a parent corporation maintains
separate citizenship from a subsidiary unless it has exerted
somewhat, explaining that ―holding companies and single
member limited liability companies are not unusual and are,
indeed, common.‖ 841 F. Supp. 2d at 894. It explained that
the point of Brewer was that ―where the sole member of a
limited liability company is a holding company,‖ the rules in
Zambelli and Hertz ―intersect,‖ which raises the ―novel‖
question of how the holding company‘s citizenship should be
defined. Id. Therefore, while Maldonado may agree that
GSK LLC‘s structure is common, it still bases its holding on
the supposedly unique questions raised by that structure.
17
Although Hertz is a recent decision, many circuits
applied the ―nerve center‖ test before its formal adoption by
the Supreme Court. In fact, the First Circuit long ago
identified the ―nerve center‖ test as the ―most appropriate in
the case of a holding company,‖ Lugo-Vina v. Pueblo Int’l,
Inc., 574 F.2d 41, 43 n.2 (1st Cir. 1978), because such
companies do not have physical operations, Diaz-Rodriguez
v. Pep Boys Corp, 410 F.3d 56, 60 (1st Cir. 2005).
29
such an overwhelming level of control over the subsidiary
that the two companies do not retain separate corporate
identities. Quaker State Dyeing & Finishing Co. v. ITT
Terryphone Corp., 461 F.2d 1140, 1142 (3d Cir. 1972); see
also Taber Partners, 987 F.2d at 62-63 (emphasizing that, ―in
determining a corporation‘s principal place of business, [the]
inquiry must focus solely on the business activities of the
corporation whose principal place of business is at issue‖).
Plaintiffs do not allege that GSK Holdings and GSK LLC
disregarded corporate formalities, nor do they claim that GSK
Holdings controls its subsidiary‘s operations. In fact, they
argue the opposite, suggesting that we consider GSK LLC‘s
nerve center in assessing GSK Holdings‘ citizenship because
GSK Holdings has exerted no managerial control over GSK
LLC, which is just the opposite of what is typically required
to consider a parent‘s and subsidiary‘s citizenships jointly.18
18
Plaintiffs attempt to support their approach by citing
our decision in Mennen Co. v. Atlantic Mutual Insurance Co.,
147 F.3d 287 (3d Cir. 1998). In that case, which was decided
before Hertz, we held that a corporation‘s principal place of
business was the location in which its ―day-to-day activities‖
were carried out. Mennen, 147 F.3d at 293. That location
happened to also be the center of operations of a different
company, which, pursuant to a management services contract,
was conducting ―the practical work‖ of the company whose
citizenship was at issue. Id. Based on that precedent,
Plaintiffs argue that ―a court should consider services
performed by one company on another company‘s behalf to
determine the latter‘s principal place of business.‖ (Reply Br.
at 1-2.) But, in addition to being of questionable utility
because it applied what is now an outdated test for
determining a corporation‘s principle place of business,
30
Plaintiffs imply that that counterintuitive approach is
required by Hertz. They note that Hertz instructs courts to
identify a company‘s ―actual center of direction, control, and
coordination,‖ 130 S. Ct. at 1192, and, because GSK
Holdings exercises no control over GSK LLC‘s operations,
they suggest that treating GSK Holdings‘ headquarters
location as determinative of GSK LLC‘s citizenship would, in
the words of Maldonado, ―exalt form over substance.‖
Maldonado, 841 F. Supp. 2d at 897. In support of that ―form
over substance‖ argument, Plaintiffs note the seamless change
in corporate form from SmithKline Beecham, which was
indisputably a Pennsylvania citizen, to GSK LLC, which
Defendants now claim is a Delaware citizen. No people,
offices, or operations moved from one state to the other
during that transition, and so a change in citizenship seems to
Plaintiffs to be in conflict with Hertz‘s concentration on a
company‘s ―actual center of direction, control, and
coordination.‖ 130 S. Ct. at 1192.
The argument is not without logical appeal, but it
suffers from two significant problems. First, it is GSK
Holdings‘ nerve center – not GSK LLC‘s – that is at issue
here. As described above, Hertz‘s ―nerve center‖ test is a
means of identifying a corporation‘s principal place of
Mennen is readily distinguishable from this case. Here, GSK
LLC did not enter into a contract to perform GSK Holdings‘
corporate activities; rather, it manages its own affairs as it is
required to do by its LLC agreement. Plaintiffs provide no
explanation for how a contractual agreement to perform
services on a company‘s behalf is in any way analogous to the
establishment of the management structure of an LLC, and
their citation to Mennen is unpersuasive.
31
business. A limited liability company‘s citizenship is not
defined by its principal place of business, and thus the
location of its nerve center is not at issue for purposes for
establishing diversity jurisdiction. Hertz therefore does not
require that we identify the actual center of direction and
control for GSK LLC – it requires only that we determine
GSK Holdings‘ center of control.
More fundamentally, as troubling as those like
Plaintiffs may find it, form matters for purposes of
establishing jurisdiction, and the distinction between a
corporation and an unincorporated entity has tremendous
jurisdictional significance. The Supreme Court has
emphasized that, although a corporation has citizenship,
unincorporated entities do not, regardless of their substantive
similarities to corporations. Carden, 494 U.S. at 195.
Plaintiffs may denounce that rule as elevating form over
substance, but it is entirely consistent with the Supreme
Court‘s approach to jurisdictional questions. See id. at 196(explaining that adherence to rigid rules ―has been the
character of our jurisprudence in this field‖); see also Hertz,
130 S. Ct. at 1186 (insisting that jurisdictional rules ―remain
as simple as possible‖). Therefore, the formal conversion of
SmithKline Beecham to GSK LLC changes the jurisdictional
calculus, despite the substantive continuity of business
operations. Whereas SmithKline Beecham – a corporation –
was a citizen of the state in which it had its principal place of
business, GSK LLC‘s citizenship is defined solely by the
citizenship of its sole member, GSK Holdings. Plaintiffs‘
delegation theory is an adroit attempt to shift the focus back
onto GSK LLC‘s nerve center, but that is contrary to the
approach required by the Supreme Court in Carden and by us
in Zambelli. There is nothing in Hertz to change that fact, as
32
Hertz deals solely with the definition of a corporation‘s
―principal place of business.‖
We thus reject Plaintiffs‘ delegation theory, and
instead proceed, as the District Court in this case did, to
determine GSK Holdings‘ citizenship by considering its own
activities, not those of GSK LLC.
2. GSK Holdings’ Corporate Activities
Plaintiffs argue that, even looking solely at the
activities of GSK Holdings, it must be recognized as a citizen
of Pennsylvania. As each court to examine GSK Holdings has
agreed, its activities are very limited in scope. Because it is a
holding company, not an operating company, GSK Holdings
has no sales or production, only one part-time employee, and
little infrastructure. Instead, its activities consist primarily of
owning its interest in GSK LLC, holding intra-company
accounts, issuing and receiving dividends, and paying taxes.
As the District Court put it, ―all holding companies do is
‗hold,‘‖ Johnson, 853 F. Supp. 2d at 493, and GSK Holdings
is typical in that regard.
Hinging its decision largely on that fact, the District
Court concluded that GSK Holdings‘ principal place of
business is in Wilmington, Delaware. Id. at 493. Although it
acknowledged that the company‘s ―Wilmington ‗footprint‘ is
certainly modest,‖ the Court ―measure[d] that footprint …
against the modest scope of Holdings‘[] activities.‖ Id. at
492. Finding that GSK Holdings‘ three-person board controls
all of its limited, ownership-related activities, and that it does
so ―through resolutions that are considered and passed in
Wilmington,‖ id., the Court concluded that its actual center of
33
direction, control, and coordination is in Delaware. Id. at
492-96; see also Hertz, 130 S. Ct. at 1192 (holding that a
corporation‘s principal place of business is ―the place where a
corporation‘s officers direct, control, and coordinate the
corporation‘s activities‖). Accordingly, the Court held that
GSK Holdings is not a Pennsylvania citizen. Johnson, 853 F.
Supp. 2d at 493; see also id. at 495 (―Holdings‘[] nerve center
is where its ownership decisions are made: Wilmington.‖).
Plaintiffs argue that that conclusion contradicts Hertz,
which specifically states that an office used solely for board
meetings ―attended by directors … who have traveled there
for the occasion‖ should not be considered a company‘s
actual center of direction and control. 130 S. Ct. at 1192; see
also id. at 1195 (warning that an ―alleged ‗nerve center‘ [that]
is nothing more than a mail drop box, a bare office with a
computer, or the location of an annual executive retreat‖
might be an attempt at jurisdictional manipulation). GSK
Holdings‘ ten-by-ten foot office in Wilmington closely fits
that description, and Plaintiffs contend that the evidence
demonstrates that no substantive decision-making could have
occurred there. As Brewer put it, ―the undisputed fact that the
quarterly board meetings of [GSK] Holdings last no more
than 15 or 20 minutes belies any argument that any
operational or strategic decisions affecting the business
activities are made during [those] brief meetings.‖ 774 F.
Supp. 2d. at 731. Plaintiffs also dismiss the role of GSK
Holdings‘ Wilmington-based director, Donald McLamb,
noting that he ―performs only administrative functions‖
(Appellants‘ Opening Br. at 33), spends only about four hours
per year conducting GSK Holdings‘ business, and serves as a
director for numerous other companies. Citing all of those
facts, Plaintiffs argue that no real decisions could have been
34
made during the board meetings and that the board‘s
decisions must have been made elsewhere and simply ratified
in Wilmington. Therefore, Plaintiffs say, Wilmington cannot
be GSK Holdings‘ principal place of business under Hertz, as
it is not GSK Holdings‘ actual center of direction and control.
Again Plaintiffs‘ reasoning has force but there are
flaws that substantially weaken it. First, as the District Court
rightly noted, the kind of board meetings denigrated in Hertz
were being considered in the context of a case involving ―a
sprawling operating company,‖ with ―extensive activities
carried out by 11,230 employees at facilities in 44 states.‖
Johnson, 853 F. Supp. 2d at 493. For a holding company
such as GSK Holdings, relatively short, quarterly board
meetings may well be all that is required to direct and control
the company‘s limited work. As former director Julian
Heslop explained, the board generally conducts three tasks at
each meeting: (1) it approves or corrects the minutes from the
previous meeting, (2) it reviews the company‘s financial
statements with George Brown, a London-based accountant
who provides financial services to GSK Holdings, and (3) it
addresses ―any other business required to come before the
meeting,‖ such as authorizing agents to sign documents,
making changes to the officers, paying a dividend, or,
occasionally, restructuring the company‘s holdings. (App. at
709.) Generally, such business is straightforward and takes
little time, yet it constitutes GSK Holdings‘ primary activity:
managing its assets. The location of board meetings is
therefore a more significant jurisdictional fact here than it was
in Hertz, and the meetings‘ brevity does not necessarily
reflect an absence of substantive decision-making.19
19
The significance of that fact is further demonstrated
35
Second, the District Court‘s factual finding that GSK
Holdings‘ board controls its investment activities through
consensus-based resolutions at its meetings in Wilmington is
not clearly erroneous. See McCann, 458 F.3d at 286
by the numerous post-Hertz cases that have determined the
principal place of business of a holding company by looking
to the location in which its officers or directors meet to make
high-level management decisions. See Lewis v. Lycoming,
No. 11-6475, 2012 WL 2422451, at *5 (E.D. Pa. June 27,
2012) (concluding that a holding company‘s nerve center is
the place where its officers made major business decisions,
not the location of its ―public persona‖); Freedom Envtl.
Servs., Inc. v. Borish, No. 12-665, 2012 WL 2505723, at *1
(M.D. Fla. June 20, 2012) (considering the location of a
holding company‘s board meetings in assessing its
citizenship); Sebastian Holdings, Inc. v. Kugler, No. 08-1131,
2012 WL 1190837, at *3 (D. Conn. Mar. 30, 2012)
(determining a holding company‘s citizenship based on the
location in which its owner and director made management
decisions); Balachander v. AET Inc., No. 10-4805, 2011 WL
4500048, at *1 (S.D. Tex. Sept. 27, 2011) (relying on the
location in which the company‘s chief officers make
management decisions); Ortiz v. Chesapeake Operating, Inc.,
No. 11-0055, 2011 WL 3584832, at *2 (W.D. La. Aug 12,
2011) (looking to where the holding company‘s directors
make overall policy decisions, not to where its subsidiaries
manage their day-to-day activities); cf. Astra Oil Trading N.V.
v. Petrobras Am. Inc., No. 09-1274, 2010 WL 3069793, at *3
(S.D. Tex. Aug. 4, 2010) (declining to use the location of the
board of directors, but only because the company‘s sole
officer had ―significant independent authority as CEO … to
direct, control, and coordinate [the company‘s] activities‖).
36
(applying clear error review to factual findings regarding
citizenship and domicile). Each of GSK Holdings‘ three
directors testified that only the board can authorize GSK
Holdings to take a new action relating to its investments, and
that the board does so by adopting resolutions at quarterly or
special board meetings. None of GSK Holdings‘ individual
directors or officers can take ―new, unauthorized actions‖ on
GSK Holdings‘ behalf, nor can GlaxoSmithKline plc, its
ultimate parent in London, do so. (App. at 707-08.) The
directors further explained that although individuals in
Philadelphia and London provide various services to the
board and sometimes sign documents, receive money, or pay
taxes for GSK Holdings, the scope of their actions is
―constrained by what the Board of Directors authorizes.‖
(App. at 714.) Those individuals cannot make fundamental
decisions – that power lies solely with the board.
The evidence also supports the District Court‘s finding
that the board actually makes its decisions during its
meetings, rather than simply ratifying decisions made
elsewhere, as Plaintiffs claim. Although it is uncontested that
―strategic direction and guidance … emanate[] from London‖
(App. at 710), as they likely do for all of the companies in the
GSK group, GSK Holdings‘ directors insist that the board‘s
decisions are not preordained. On the contrary, director
Heslop explained that ―[w]e sit down as a Board at our
meetings … and go through the papers and make the
decisions required of those meetings.‖ (App. at 709.) Each
director, including Wilmington-based director Donald
McLamb, testified that he exercises his independent judgment
in making those decisions and is not controlled by the other
directors, officers, or corporate entities. In fact, McLamb
explained that, as a Certified Public Accountant (―CPA‖) with
37
significant experience working under Delaware corporate
law, he occupies an important role on the board, providing
―assurance that [the] company will operate within the laws
and proper corporate governance of Delaware,‖ ―looking out
for the best interest of the shareholders‖ as an independent
director, and ensuring that the board‘s decisions ―are
reasonable in nature and make good business sense.‖ (App.
at 785.) Such evidence, credited by the District Court, is
enough to support the finding that the board engages in
substantive decision-making during its meetings in
Wilmington. See Anderson, 470 U.S. at 573-74 (holding that
a court of appeals may not reverse a district court‘s factual
finding if that court‘s ―account of the evidence is plausible in
light of the record viewed in its entirety‖).20
20
Our concurring colleague disagrees, and says that
―[t]he record does not support‖ the District Court‘s finding.
(Concurring Op. at 6.) Rather, in his view, there is ―no
doubt‖ that any direction, control, or coordination exercised
by GSK Holdings‘ board must have ―been in line with the
wishes of Heslop.‖ (Id.) While our colleague is free to
harbor his doubts, we are bound to a standard of review that
does not permit us ―to conduct a de novo review of the
evidence.‖ Newark Branch, N.A.A.C.P. v. City of Bayonne,
134 F.3d 113, 120 (3d Cir. 1998) (internal quotation marks
omitted). Under Rule 52 of the Federal Rules of Civil
Procedure, ―[f]indings of fact, whether based on oral or other
evidence, must not be set aside unless clearly erroneous.‖
Fed. R. Civ. P. 52(a)(6). The District Court considered the
evidence, including statements by the board members, all of
whom said they exercised independent judgment at board
meetings and that the resolutions they adopted were not
preordained. The District Court thus had a reasonable basis
38
Finally, despite Plaintiffs‘ insistence to the contrary,
Hertz actually reinforces the District Court‘s conclusion that,
in light of those factual findings, GSK Holdings‘ nerve center
is in Wilmington. Even while cautioning courts to identify a
corporation‘s actual center of direction and control, Hertz
―place[d] primary weight upon the need for judicial
administration of a jurisdictional statute to remain as simple
as possible.‖ 130 S. Ct. at 1186. The Supreme Court
recognized that adopting the ―nerve center‖ test would not
resolve every ambiguity, and that ―there will be hard cases.‖
Id. at 1194. In fact, the Court specifically observed that, ―in
this era of telecommuting, some corporations may divide their
command and coordinating functions among officers who
work at several different locations, perhaps communicating
over the Internet.‖ Id. Rather than requiring courts facing
such situations to weigh those different functions, Hertz
reminded us that the ―nerve center‖ test ―points courts in a
single direction, towards the center of overall direction,
control, and coordination.‖ Id.
on which to draw a factual conclusion about who was making
decisions for GSK Holdings and where they were doing it.
We are not at liberty to substitute our own reading of the facts
when, as here, there is evidence directly supporting the
District Court‘s finding. See McCann, 458 F.3d at 268(―[O]ur sole function is to review the record to determine
whether the findings of the District Court were clearly
erroneous, i.e., whether we are left with a definite and firm
conviction that a mistake has been committed.‖ (internal
quotation marks omitted)).
39
Here, it is clear that people in both Philadelphia and
London contribute to GSK Holdings‘ operations. From
London, George Brown prepares the financial documents
reviewed during board meetings, Helen Jones oversees
complex tax matters, Sarah-Jane Chilver-Stainer facilitates
certain investments, and Julian Heslop‘s staff provide overall
strategic guidance. From Philadelphia, Jan Lyons prepares
GSK Holdings‘ tax return and provides tax advice, Audrey
Klijian facilitates other investments and payments, and
Michael Corrigan prepares for board meetings and carries out
actions on GSK Holdings‘ behalf. Faced with this situation,
we ―do not have to try to weigh‖ those various corporate
functions to determine GSK Holdings‘ principal place of
business, but rather should look ―towards the center of overall
direction, control, and coordination.‖ Id. All of the functions
described above are intended to inform or facilitate the
decisions of GSK Holdings‘ board of directors, which has the
sole authority to adopt binding resolutions affecting the
corporation‘s investments. Thus, the ―single direction‖ in
which the nerve center test points is toward the location of
those decisions. As the District Court ably concluded from
the evidence, that location is in Wilmington, Delaware.21
21
In so concluding, we are not, as our concurring
colleague implies, carving out a holding-company exception
to Hertz. Rather, we are faithfully applying Hertz‘s
instruction to identify ―the actual center of direction, control,
and coordination‖ of a corporation. 130 S. Ct. at 1192. To do
so, we first have to acknowledge the nature of the
corporation‘s activities, as it is difficult to locate a
corporation‘s brain without first identifying its body. In this
case, GSK Holdings‘ sole function is to hold assets.
Therefore, the question under Hertz is where that activity is
40
controlled and directed. When, as here, the evidence suggests
that the board of directors actually controlled that activity, we
do not think that Hertz requires us to ignore that fact and look
instead to the location of certain corporate officers.
Moreover, even if we were to look to GSK Holdings‘ officers
(three of whom are also the members of the board of
directors), the conclusion regarding the company‘s nerve
center is not as clear as our colleague suggests. GSK
Holdings has two officers in London, two in Philadelphia, and
two in Wilmington, and each performs different functions. If
we were to weigh those functions, we might agree that some
of the most important work is performed in London, but that
involves the type of balancing that Hertz eschews, and, in any
event, it is not necessary when the facts, as found by the
District Court, suggest that this particular corporation did not
vest the relevant decision-making in its officers.
Our conclusion on this record does not mean that the
location of board meetings will always determine a holding
company‘s citizenship. If a holding company‘s officers, not
its directors, actually control the company‘s core activities, or
if the company‘s board makes decisions in one location and
simply ratifies them in another, the holding company is
unlikely to be a citizen of a state simply because that is where
it holds its board meetings. Here, however, the record
supports the conclusion that, although an array of support
services were provided from different locations, the board
controlled the company‘s core activities through decision-
making at board meetings located in Delaware. In such an
instance, Hertz encourages rather than discourages our
looking to the location of the board meetings as the center of
direction and control.
41
3. Jurisdictional Manipulation
Having concluded that GSK Holdings‘ nerve center is
in Delaware, we now turn briefly to Plaintiffs‘ contention that
that outcome is impermissible under Hertz because it would
condone jurisdictional manipulation. Hertz cautioned that, ―if
the record reveals attempts at [jurisdictional] manipulation
…[,] the courts should instead take as the ‗nerve center‘ the
place of actual direction, control, and coordination, in the
absence of such manipulation.‖ Id. at 1195. Plaintiffs argue
that there is evidence of jurisdictional manipulation here and
that we should not encourage that manipulation by
concluding that GSK Holdings is a Delaware citizen.
Specifically, they note that GSK Holdings altered its bylaws
and sought to amend government documents associating it
with a Philadelphia address. They allege that GSK Holdings
made those post-discovery alterations to ―bolster [its]
contention … that [its] principal place of business is in
Wilmington‖ (Appellants‘ Opening Br. at 46 (quoting
Brewer, 774 F. Supp. 2d at 731)), and thus facilitate its
removal of ―hundreds of personal injury cases‖ that
previously were in Pennsylvania state court (id. at 45).
Brewer agreed, commenting that the post-discovery alteration
―smacks of jurisdictional manipulation.‖22 774 F. Supp. 2d at
730.
22
Brewer was careful to explain that it did not consider
the transition from SmithKline Beecham to GSK LLC to
itself be an attempt at jurisdictional manipulation, noting that
―[GSK] LLC was formed to accomplish a legitimate business
purpose and not to manipulate jurisdiction for litigation
purposes.‖ 774 F. Supp. 2d at 730. Plaintiffs conceded that
point at oral argument, but they suggest that GSK Holdings
42
The record, however, squarely contradicts that
contention. Although Defendants concede that, until recently,
GSK Holdings‘ bylaws indicated that its headquarters and
board meetings were in Philadelphia, as did a number of
summaries of government contracts produced by government
agencies, Defendants also presented uncontested evidence
that those documents were inaccurate, and thus they could not
have affected GSK Holdings‘ principal place of business. See
Hertz, 130 S. Ct. at 115 (rejecting the notion that ―the mere
filing of a form … listing a corporation‘s ‗principal executive
offices‘ would, without more, be sufficient proof to establish
a corporation‘s ‗nerve center‘‖); Mennen Co. v. Atlantic Mut.
Ins. Co., 147 F.3d 287, 293-94 (3d Cir. 1998) (rejecting
representations of a company‘s principal place of business
that ―run contrary to the empirical facts with which the
jurisdictional inquiry is concerned‖). Adjusting those
documents to reflect the reality of GSK Holdings‘ operations
therefore did not affect jurisdiction, much less ―manipulate‖ it
improperly. Furthermore, although Plaintiffs express concern
that GSK Holdings could easily manipulate jurisdiction by
changing the location of its board meetings, they do not allege
that that actually occurred here. Had GSK Holdings moved
its board meetings in anticipation of litigation, the analysis of
this issue could very well be different, but GSK Holdings‘
board has been meeting in Wilmington since 2001. There is
simply no evidence of jurisdictional manipulation, and the
District Court properly concluded that GSK Holdings‘
may have located its meetings in Delaware to gain a
jurisdictional benefit. They presented no evidence of such an
intent, however, and that suggestion is belied by the fact that
GSK Holdings began holding its board meetings in Delaware
long before GSK LLC was formed.
43
principal place of business has consistently been in Delaware.
The conclusion thus remains that, as GSK Holdings is GSK
LLC‘s sole member, neither of the GSK Defendants is a
Pennsylvania citizen.23
B. Citizenship of the Remaining Defendants
Plaintiffs‘ fall-back argument is that SmithKline
Beecham and Avantor Performance Materials are
Pennsylvania citizens, which, if true, would defeat diversity
23
Our concurring colleague worries about
manipulation in future cases, expressing concern that our
approach ―will encourage parties to shift the location or
formal authority of their corporate boards in order to create
citizenship where those board meetings are held.‖
(Concurring Op. at 8.) We repeat, however, that evidence of
manipulation – which is entirely lacking here – may well alter
the calculus. If there is such evidence, Hertz authorizes
courts to disregard the attempts at manipulation, so the
expressed concern is inordinate. Of much greater concern
would be a rule in keeping with our colleague‘s focus on the
location of strategic decision-making, as it would risk
disregarding the distinctions among the various corporate
entities that often comprise large business enterprises. Julian
Heslop‘s team in London likely made strategic decisions that
guided the activities of all of the corporations in the GSK
group. Under our colleague‘s approach, London could
therefore be considered the ―brain‖ of each and every GSK-
related corporation, thus defining all of their citizenships.
Such an outcome would disregard our rule that parent and
subsidiary corporations retain separate corporate identities.
See Quaker State, 461 F.2d at 1142.
44
jurisdiction even though the GSK Defendants are citizens of
Delaware. See 28 U.S.C. § 1332(a)(1) (requiring complete
diversity). They contend that, although SmithKline Beecham
converted to GSK LLC and dissolved as a Pennsylvania
entity, Pennsylvania law preserves its citizenship for diversity
jurisdiction purposes. As for Avantor, Plaintiffs concede that
the corporation officially moved its operations from New
Jersey to Pennsylvania five days after Defendants removed
this action, but they suggest that Avantor‘s leadership may
have already been operating from Pennsylvania at the time of
removal. The District Court disagreed on both counts,
finding that Avantor‘s headquarters moved at the same time
as the rest of its operations, Johnson, 853 F. Supp. 2d at 496,
and concluding that SmithKline Beecham‘s preserved
citizenship is irrelevant because it is a nominal party that
lacks a ―real interest in the litigation,‖ id. (internal quotation
marks omitted).24 We see no reason to disturb those rulings.
1. SmithKline Beecham
―[T]he ‗citizens‘ upon whose diversity a plaintiff
grounds jurisdiction must be real and substantial parties to the
24
The District Court did not specifically address
SmithKline Beecham‘s citizenship in its discussion of
diversity jurisdiction, but Plaintiffs raised SmithKline‘s
citizenship as a basis for remand, and the Court analyzed
whether the company retained an interest in the litigation
before denying Plaintiffs‘ request. Johnson, 853 F. Supp. 2d
at 489, 496-97. Therefore, we understand that it declined to
treat SmithKline as a Pennsylvania citizen due to its
conclusion that the company was not a ―real party in interest‖
to the controversy. Id. at 497.
45
controversy.‖ Navarro Savings Ass’n v. Lee, 446 U.S. 458,
460 (1980). ―Thus, a federal court must disregard nominal or
formal parties,‖ id. at 461, and can base its jurisdiction only
upon the citizenship of parties with ―a real interest in the
litigation,‖ Bumberger v. Ins. Co. of N. Am., 952 F.2d 764,
767 (3d Cir. 1991).
Plaintiffs are correct that, generally speaking,
Pennsylvania law preserves for a limited time a dissolved
corporation‘s interest in litigation against it. The
Pennsylvania code provides that, ―[e]very business
corporation that is dissolved … shall, nevertheless, continue
to exist for the purpose of … prosecuting and defending
actions or proceedings by or against it … .‖ 15 Pa. Cons.
Stat. Ann. § 1978. It also ensures that the dissolution of a
corporation does ―not eliminate nor impair any remedy
available to or against‖ it for a period of two years. Id.
§ 1979. We have held that when such a state statute renders a
dissolved corporation ―sufficiently alive to sue,‖ the
corporation also retains its citizenship for purposes of
diversity jurisdiction. Stentor Elec. Mfg. Co. v. Klaxon Co.,
115 F.2d 268, 271 (3d Cir. 1940), rev’d on other grounds,
313 U.S. 487 (1941); see also Ripalda v. Am. Operations
Corp., 977 F.2d 1464, 1468 (D.C. Cir. 1992) (―[A] state
statute extending the life of a dissolved corporation for the
purpose of being sued also preserves the corporation as a
citizen of the state of incorporation for the purpose of
determining diversity of citizenship.‖). Accordingly,
SmithKline Beecham‘s dissolution as a Pennsylvania
corporation did not, standing alone, destroy its Pennsylvania
citizenship or the import of that citizenship.25
25
SmithKline dissolved on October 27, 2009, not quite
46
But SmithKline Beecham did not simply dissolve – it
―domesticated itself under the laws of another jurisdiction,‖
15 Pa. Cons. Stat. Ann. § 1980, becoming a Delaware
corporation and then converting to a Delaware limited
liability company. See Del. Code Ann. tit. 8, § 265(regarding conversion of a foreign entity into a Delaware
corporation); id. tit. 6, § 18-214 (regarding conversion of a
Delaware corporation into a Delaware LLC). That company
– GSK LLC – has stepped into SmithKline Beecham‘s shoes,
and, under Delaware law, all of SmithKline Beecham‘s
―debts, liabilities and duties‖ now lie with GSK LLC. Id. tit.
6, § 18-214(f); id. tit. 8, § 265(f).26 SmithKline Beecham thus
two years before Plaintiffs filed their complaint. See 15 Pa.
Cons. Stat. Ann. § 1979 (preserving remedies against a
dissolved company for two years).
26
Those two provisions govern, respectively, the
transition from a foreign corporation to a Delaware
corporation, and from a Delaware corporation to a Delaware
LLC. Title 8, § 265(f) provides that:
When an other entity has been converted to a
corporation of this State pursuant to this
section, the corporation of this State shall, for
all purposes of the laws of the State of
Delaware, be deemed to be the same entity as
the converting other entity. … [A]ll rights of
creditors and all liens upon any property of such
other entity shall be preserved unimpaired, and
all debts, liabilities and duties of the other entity
that has converted shall remain attached to the
corporation of this State to which such other
entity has converted, and may be enforced
47
has no actual interest in the outcome of the litigation, making
it a ―nominal party.‖ See Bumberger, 952 F.2d at 767
(explaining that a ―nominal party‖ is one that lacks ―a real
interest in the litigation‖); see also Strotek Corp. v. Air
Transp. Ass’n of Am., 300 F.3d 1129, 1133 (9th Cir. 2002)
(holding that a dissolved entity whose liabilities had been
transferred to a different entity is not a real party in interest).
Therefore, although SmithKline Beecham may technically
still be a Pennsylvania citizen, we must disregard its
citizenship for purposes of establishing diversity
jurisdiction.27
against it to the same extent as if said debts,
liabilities and duties had originally been
incurred or contracted by it in its capacity as a
corporation of this State.
Del. Code Ann. tit. 8, § 265(f). The language of Title 6, § 18-
214(f) is very similar, providing, inter alia, that:
[A]ll debts, liabilities and duties of the other
entity that has converted shall remain attached
to the domestic limited liability company to
which such other entity has converted, and may
be enforced against it to the same extent as if
said debts, liabilities and duties had originally
been incurred or contracted by it in its capacity
as a domestic limited liability company.
Del. Code Ann. tit. 6, § 18-214(f).
27
For the same reason, SmithKline‘s apparent failure
to consent to removal also does not provide a basis for
remand. Although removal generally requires ―unanimity
among the defendants,‖ that requirement does not extend to
nominal parties. Balazik v. Cnty. of Dauphin, 44 F.3d 209,
48
2. Avantor Performance Materials
Avantor‘s citizenship also does not provide a basis for
remand. Plaintiffs argue that Defendants, who bear the
burden of proof, have ―not presented any evidence that
[Avantor‘s] officers directed, controlled, and coordinated its
activities in New Jersey, rather than Pennsylvania, as of the
date of removal.‖ (Appellants‘ Opening Br. at 48.) Although
Plaintiffs concede that the corporation officially moved its
operations from New Jersey to Pennsylvania after Defendants
removed this action, they suggest that Avantor‘s leadership
may have begun operating from Pennsylvania before
removal. The District Court saw things differently, finding
that Avantor‘s headquarters moved from New Jersey to
Pennsylvania at the same time as its rank-and-file employees
– ―five days after Defendants removed the case.‖ Johnson,
853 F. Supp. 2d at 495. Based on that finding, the Court
concluded that, ―at all relevant times, Avantor was a citizen
of New Jersey, not Pennsylvania.‖ Id.
The date when Avantor‘s officers began controlling
the company from Pennsylvania is purely a question of fact,
and we therefore review the District Court‘s determination for
clear error. McCann, 458 F.3d at 286. The Court based its
finding on two affidavits from Avantor‘s general counsel, an
internal company memorandum, and a newspaper report, each
of which indicates that the entire company moved into its new
213 (3d Cir. 1995); see also 28 U.S.C. § 1446(b)(2)(A)
(requiring that ―all defendants who have been properly joined
and served must join in or consent to the removal of the
action‖).
49
Pennsylvania headquarters on September 19, 2011, after the
case was removed. In response, Plaintiffs point to evidence
that a number of corporate documents listed Avantor‘s
Pennsylvania address prior to removal, and the fact that its
CEO gave an interview from the new headquarters two days
before the move (which, notably, is still after the date of
removal). As the District Court explained, however, none of
that evidence contradicts Avantor‘s account of the actual
move, Johnson, 853 F. Supp. 2d at 495, and we cannot say
that the Court‘s finding was clearly erroneous. Given its view
of the facts, the District Court was correct to conclude that
Avantor‘s nerve center was in New Jersey at all times
relevant to this litigation, as its New Jersey headquarters was
its actual center of direction and control at the time the
complaint was filed and at the time of removal.
IV. Conclusion
The District Court rightly held that GSK LLC and
GSK Holdings are both citizens of Delaware, that SmithKline
Beecham is a nominal party, and that Avantor was a citizen of
New Jersey at the time this case was removed. As none of
those Defendants was, at the time of removal, a citizen of a
state where Plaintiffs are citizens, the parties satisfy the
diversity of citizenship requirement of 28 U.S.C. § 1332. The
District Court thus had original jurisdiction over the matter,
making removal proper, 28 U.S.C. § 1441(a), and we must
affirm the order denying Plaintiffs‘ motion for remand.
50
Glenda Johnson, et al. v. SmithKline Beecham Corp., et al.,
Nos. 12-2561/2/3/4/5
AMBRO, Circuit Judge, concurring in part and concurring in
the judgment
I agree with my colleagues that the District Court
properly denied Plaintiffs‘ motion to remand this case to state
court. Defendants have met their burden of demonstrating
that complete diversity exists between the opposing parties.
Plaintiffs are citizens of Louisiana and Pennsylvania. Their
arguments that Defendants—including GlaxoSmithKline
Holdings (―GSK Holdings‖ or ―Holdings‖) and
GlaxoSmithKline LLC (―GSK LLC‖)—are also citizens of
Pennsylvania I find wanting for the reasons set out in Judge
Jordan‘s comprehensive and well-crafted opinion. As that
opinion notes, the citizenship of GSK LLC depends on the
citizenship of its sole member,28 GSK Holdings, which is
28
It is undisputed that GSK LLC is headquartered in
Pennsylvania, where it operates its pharmaceutical business,
and would not be diverse from Plaintiffs if it were deemed a
citizen of its principal place of business. Thus our case is
made more complicated by the doctrinal rule that
unincorporated entities are treated like partnerships, instead
of corporations, for diversity purposes. Carden v. Akroma
51
Assocs., 494 U.S. 185 (1990); Zambelli Fireworks Mfg. Co. v.
Wood, 592 F.3d 412 (3d Cir. 2010). This test has been
widely criticized. See, e.g., Christine M. Kailus, Note,
Diversity Jurisdiction and Unincorporated Businesses:
Collapsing the Doctrinal Wall, 2007 U. Ill. L. Rev. 1543;
Debra R. Cohen, Limited Liability Company Citizenship:
Reconsidering an Illogical and Inconsistent Choice, 90 Marq.
L. Rev. 269 (2006); Robert J. Tribeck, Cracking the
Doctrinal Wall of Chapman v. Barney: A New Diversity Test
for Limited Partnerships and Limited Liability Companies, 5
Widener J. Pub. L. 89 (1995). Although this is not the case to
revisit our holding in Zambelli (the issue was not even briefed
and, in any event, Zambelli follows the lead of the Supreme
Court in Carden), further understanding in this area may
make the issue more pressing, especially if LLCs continue to
complicate jurisdictional determinations. Perhaps Congress is
52
deemed for purposes of diversity jurisdiction a citizen ―of the
State or foreign state where it has its principal place of
business.‖ 28 U.S.C. § 1332(c)(1).
I write separately because I cannot agree with the
conclusion in Part III.A.2 of the majority opinion that GSK
Holdings‘ principal place of business is Wilmington,
Delaware, where its board of directors holds very brief
quarterly meetings. The parties disputed whether Holdings‘
principal place of business was Delaware or Pennsylvania,
and the record is limited by their adherence to this dichotomy.
But I believe that the facts and law point to a third option, that
GSK Holdings‘ principal place of business is the United
Kingdom, where the company‘s strategic direction is
determined. Although our difference of opinion does not
affect the outcome of this case, I believe that my colleagues‘
conclusion is in tension with Hertz Corp. v. Friend, 559 U.S.
77, 130 S. Ct. 1181 (2010), and, unless Hertz is changed or
clarified by the Supreme Court, sets an incorrect precedent
that will affect corporate citizenship rulings in future cases.
I.
most likely to effect change, as it did under the Class Action
Fairness Act of 2005, 28 U.S.C. § 1332(d)(10) (―[f]or the
purpose of this section . . . an unincorporated association shall
be deemed to be a citizen of the State where it has its
principal place of business‖).
53
In Hertz, the Supreme Court defined a corporation‘s
principal place of business under 28 U.S.C. § 1332(c)(1) as
―the place where a corporation‘s officers direct, control, and
coordinate the corporation‘s activities,‖ called its ―nerve
center.‖ 130 S. Ct. at 1192 (emphasis added). That nerve
center is ―not simply an office where the corporation holds its
board meetings (for example, attended by directors and
officers who have traveled there for the occasion).‖ Id.While acknowledging this limitation, my colleagues conclude
that the location of the board of directors‘ meetings takes on
increased jurisdictional significance when the entity involved
is a holding company such as GSK Holdings. Majority Op. at
34–35. Their analysis has the effect of treating holding
corporations differently than operating corporations.
Without clarification from the Supreme Court, I am
skeptical that a corporation‘s status as a holding company
changes the Hertz analysis. True, holding companies are
different from operating companies because they hold and
invest assets rather than manufacture, service, or sell. But
whether a corporation holds or operates tells us little about its
―actual center of direction, control, and coordination,‖
metaphorically called its ―brain‖ or ―nerve center.‖ Hertz,
130 S. Ct. at 1192–93. The terms ―hold‖ and ―operate‖ refer
to what a corporation does with the assets it owns, but not
necessarily who controls its actions and how extensive those
actions may be. As the Court of Appeals for the First Circuit
acknowledged in Taber Partners, many holding companies
are more than lifeless corporate structures. They may be
quite active in investing or managing their assets. Taber
Partners, I v. Merit Builders, Inc., 987 F.2d 57, 63–64 n.9
(1st Cir. 1993) (explaining that the holding companies in that
case ―operate out of New York,‖ which is the location of
their office, employees, bank accounts, working capital
accounts, corporate books and records, and board meetings).
Because holding companies have their own corporate
54
operations (though not as extensive as a typical operating
company), I don‘t see the need to distinguish holding
companies from the operating company addressed in Hertz.
My colleagues cite no case where a court has relied
solely on the location of the board of directors‘ meeting to
determine a holding company‘s principal place of business,
nor has my research revealed one. Indeed, in all of the cases I
have found—including all of the cases cited by my
colleagues, see Majority Op. at 35 n.19—district courts have
determined the actual place of control of holding companies
by considering the location, responsibility, and functions of
corporate officers, just as Hertz requires. See, e.g., Lewis v.
Lycoming, No. 11-6475, 2012 WL 2422451, at *5–6 (E.D.
Pa. June 27, 2012) (determining nerve center based on place
of review of monthly financial reports and strategic plans,
candidate interviews, and personnel decisions); Sebastian
Holdings, Inc. v. Kugler, No. 08-1131, 2012 WL 1190837, at
*3 (D. Conn. Mar. 30, 2012) (determining nerve center based
on officer‘s travel schedule, office locations, and meetings
with strategic advisors).
As district courts seem to have had no trouble applying
the Hertz test to holding companies, I am unpersuaded by the
majority‘s argument that board of directors‘ meetings should
be considered for the sake of administrative simplicity. If
simplicity is the goal of a rule, no doubt it is quite simple to
rule that a holding company, which holds and invests assets
entrusted to it, is a citizen where its directors decree formally
what those investments will be. But for now the test is what
the brain tells the body to do, and here I do not think that
brain is in Delaware.
55
II.
In determining a corporation‘s brain or nerve center,
Hertz has us look to where the corporation‘s officers make
leadership decisions about the company. 130 S. Ct. at 1193.
In our case, I believe that is the United Kingdom, where GSK
Holdings‘ ―strategic direction and guidance . . . emanates
from.‖ 29 App. at 710. Julian Heslop, GSK Holdings‘ then-
highest ranking officer and stationed in the United
Kingdom,30 testified that his staff there produces the ―strategy
and strategic formulation‖ for the company and ―anything
that impinges upon Holdings . . . that relates to strategic
formulation.‖ Id. at 710, 715. Similarly, ―investment
decisions for GSK Holdings,‖ a principal activity of a holding
company, are made under the direction of its officer Sara-
Jane Chilver-Stainer, who is also based in the U.K. Id. at
684.
29
Like my colleagues, I am concerned solely with
GSK Holdings‘ principal place of business and not the nerve
center of its parent or subsidiary companies. We have no
reason to disregard Holdings‘ separate corporate identity.
Quaker State Dying & Finishing Co. v. ITT Terryphone
Corp., 461 F.2d 1140 (3d Cir. 1972).
30
Heslop retired prior to this case‘s removal, but the
56
In contrast, relatively little is done in Delaware at GSK
Holdings‘ perfunctory quarterly board meetings, which last
from 15 to 30 minutes. Id. at 686. Two of the directors,
Heslop and Michael Corrigan, often participate by phone
from their offices outside of Delaware. Id. at 695, 823.
When he did attend in person, Heslop spent only enough time
in Wilmington to attend Holdings‘ short Board meeting. Id.
at 969. Often only the third director, Donald McLamb, a
Wilmington Trust Services employee who is a director for
dozens of other companies and spends less than ten hours per
year on GSK Holdings, is present in Delaware. Id. at 756–57;
761–62. Board meetings consist primarily of three tasks: (1)
approving or correcting minutes from the previous meeting;
(2) reviewing the company‘s financial statements; and (3)
addressing other necessary business, such as authorizing
agents to act on GSK Holdings‘ behalf, approving dividend
payments, or occasionally restructuring the company‘s
holdings. Id. at 709–10. Only the last task could be
considered a form of direction, control, or coordination, and
no doubt it has been in line with the wishes of Heslop (and
now his successor), whose team in the U.K. determines the
strategy for the company.
I do not agree with my colleagues that the record
supports their conclusion that the Board actually serves as the
―brain‖ of GSK Holdings. The District Court—whose ―ruling
parties proceeded on a record produced before his retirement,
and there is no evidence that GSK Holdings‘ corporate
structure or activities changed after his departure. See
Majority Op. at 10 n.7.
57
as to jurisdiction turn[ed] largely on the differences between a
‗holding company‘ and an ‗operating company‘‖—found that
―Holdings‘[] three Directors require no more than four 15- to
30- minute Board meetings a year to manage Holdings‘[]
affairs‖ and ―the Board . . . controls all Holdings‘[] actions . .
. in Wilmington.‖ Johnson v. SmithKline Beecham Corp.,
853 F. Supp. 2d 487, 491–92 (E.D. Pa. 2012). My colleagues
uphold this finding, explaining that ―relatively short, quarterly
board meetings may well be all that is required to direct and
control the company‘s limited work.‖ Majority Op. at 35.
The record does not support that conclusion. The District
Court relied on Heslop‘s testimony that the ―Board makes
those‖ decisions ―that actually control the activities of GSK
Holdings‖ as well as the testimony of all three directors that
Holdings cannot take ―new, unauthorized‖ actions without
Board approval. App. at 707–08, 786, 823. As Heslop
rightly explains, this is ―very much traditional corporate
governance,‖ id. at 708, and could, it seems to me, be said of
every corporation. A board of directors usually has the
authority to make decisions that govern the corporation, but
that authority is not the same as actual control; if it were, the
nerve center test would always point to the location of the
board of directors‘ meetings, contrary to what Hertz requires.
Moreover, these general statements of authority do not
square with the scope of the activities of GSK Holdings. It
―holds financial assets and liabilities‖ that include GSK LLC
(a multi-billion dollar company and the GlaxoSmithKline
family group‘s primary pharmaceutical business in the United
States). Id. at 593, 672. It has held ―more than $10 billion of
intra-[GSK] group debt,‖ serves as the ―lead American
company‖ for U.S. tax purposes, and ―has litigated over its
rights and obligations.‖ Id. at 593, 688–89. There is no
evidence that any actual analysis presaging GSK Holdings‘
major actions on these issues—such as the conversion of
SmithKline Beecham to GSK LLC or Holdings‘ tax,
58
investing, and litigation strategies—occurred, or could occur,
during short board meetings held in Delaware. Id. at 709–10.
Instead, the evidence shows that the actual oversight and
control of these strategic decisions occur in the United
Kingdom, and only later are made formal by Board vote.
Thus I cannot agree with my colleagues that 15- to 30-
minute meetings in Delaware—where two of the directors in
effect drive by or attend by phone while the other director
services myriad other holding companies in Delaware and
tends to GSK Holdings for, at most, a few hours each year—
establish that Holdings‘ nerve center is in the state where
those meetings are held. This is especially so when Heslop
himself tells us that strategic decisions governing Holdings
are made in the United Kingdom.
I worry that my colleagues‘ approach will encourage
parties to shift the location or formal authority of their
corporate boards in order to create citizenship where those
board meetings are held. My colleagues rightly state that
courts have a responsibility to look past efforts at
jurisdictional manipulation, but I think we likewise have a
responsibility to avoid incentivizing manipulation that would
require that inquiry. A holding company should be treated
like any other company under the Hertz test, looking for the
―center of overall direction, control, and coordination‖ of the
corporation, and ―not simply an office where the corporation
holds its board meetings.‖ Hertz, 130 S. Ct. at 1192, 1194.
In light of this clear language, I believe the location of
board of directors‘ meetings should only be deemed the nerve
center of a corporation when evidence is absent that its actual
guidance, supervision, and management—by its officers—
occurs elsewhere. That absence is not the case here. Officers
of GSK Holdings in the United Kingdom make the calls later
59
formalized by its board of directors in Delaware. Under
Hertz, its brain is thus located in the U.K.
* * * * *
My colleagues have done a masterful job in addressing
the parties‘ arguments that GSK Holdings‘ principal place of
business is either in Pennsylvania or Delaware. But the
United Kingdom is also in play, and here critically so. My
colleagues‘ rationalization of sparse facts is, in effect, that
holding companies are different than operating companies for
the purpose of the nerve center test. For them, this holds true
until the Supreme Court tells us otherwise; for me the nerve
center test applies uniformly to all companies until the
Supreme Court tells us otherwise. For these reasons, I
respectfully concur in the majority‘s judgment and in its
opinion except for Part III.A.2.
60