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Evernu Technology, LLC v. Rohm and Haas Co.

August 26, 2010

EVERNU TECHNOLOGY, LLC PLAINTIFF,
v.
ROHM AND HAAS COMPANY, DEFENDANT.



The opinion of the court was delivered by: Diamond, J.

MEMORANDUM

Defendant Rohm and Haas has challenged diversity jurisdiction in this dispute with Plaintiff EverNu Technology. At issue is the citizenship of Defendant, a subsidiary of the Dow Chemical Company. Because I agree that Rohm and Haas's principal place of business is in Philadelphia, I will dismiss for lack of subject matter jurisdiction.

I. BACKGROUND

EverNu Technology is a Pennsylvania limited liability company founded by Dr. Manhua Lin, formerly a scientist at Rohm and Haas. (Doc. No. 1.) After Dr. Lin left Defendant's employ in 1999, the company alleged that she had absconded with hundreds of its confidential files and disclosed trade secrets in breach of her termination agreement. (Doc. No. 5 at 4.) After conducting a ten day hearing, the Montgomery County Common Pleas Court granted Rohm and Haas's request for a preliminary injunction. (Id.) In 2008, the Court determined that Dr. Lin had failed to comply with its orders, and permanently enjoined her "from using, disclosing or divulging directly or indirectly any information that Rohm and Haas Company considers confidential or a trade secret." See Rohm and Haas Co. v. Lin, 992 A.2d 132, 141 (Pa. Super. Ct. 2010) (citing the lower court's opinion). The Pennsylvania Superior Court affirmed, vacating on overbreadth grounds only that part of the permanent injunction restraining unidentified third parties. Id. at 148, 151. The Court denied Dr. Lin's petition for reargument. Rohm and Haas Co. v. Lin, 2010 Pa. Super. LEXIS 1604 (Pa. Super. Ct. May 7, 2010).

On June 2, 2010, EverNu filed the instant Complaint, invoking diversity jurisdiction and alleging abuse of process by Rohm and Haas in the state court litigation. See 28 U.S.C. § 1332; Doc. No. 1. On June 28, 2010, Defendant moved to dismiss, arguing that there is no diversity because Rohm and Haas is a Pennsylvania company with its principal place of business in Philadelphia. (Doc. No. 5.) In opposing the Motion, EverNu alleges that Rohm and Haas's principal place of business is Midland, Michigan, the location of its sole shareholder and corporate parent, the Dow Chemical Company. (Doc. No. 8.)

On July 8, 2010, I Ordered the Parties to conduct expedited discovery on the jurisdictional issue and denied Defendant's Motion without prejudice, noting that it could renew the Motion at the conclusion of expedited discovery. (Doc. Nos. 9,10.) The Parties subsequently submitted additional memoranda on jurisdiction. (Doc. Nos. 15, 17.) Included in Defendant's renewed submissions were four affidavits setting out in detail Rohm and Haas's operational autonomy and the location of its executive management. (Doc. No. 15, Ex. 1-4.) In its supplemental filing, Plaintiff focused entirely on the "Authorization Policy," by which Dow reviews and controls Defendant's activities. (Doc. No. 17 at 1-2.)

On August 13, 2010, I conducted an evidentiary hearing. Plaintiff did not challenge any of Defendant's factual representations. Rather, Plaintiff emphasized portions of the deposition testimony of Defendant's corporate designee, and called as on cross-examination Dennis O. Wilson -- Defendant's Assistant General Counsel, whose testimony I credit.

II. LEGAL STANDARDS

A. Jurisdiction

In deciding a motion to dismiss for lack of subject matter jurisdiction, I must accept Plaintiff's factual allegations as true and ensure that the Complaint contains necessary jurisdictional elements. Fed. R. Civ. P. 12(b)(1); Turicentro, S.A. v. Am. Airlines, Inc., 303 F.3d 293, 300 n. 4 (3d Cir. 2002). In conducting this review, I am not obligated to make inferences in Plaintiff's favor. Halstead v. Motorcycle Safety Found., Inc., 71 F. Supp. 2d 464, 468 (E.D. Pa. 1999). Rather, Plaintiff must establish jurisdiction. Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005); see also Hertz Corp. v. Friend, 130 S.Ct. 1181, 1194 (2010) ("The burden of persuasion for establishing diversity jurisdiction, of course, remains on the party asserting it.")

B. Corporate Citizenship

The Third Circuit has held that "[a] corporation is deemed a citizen 'of any State by which it has been incorporated and of the State where it has its principal place of business.'" Grand Union Supermarkets of the V.I. v. H.E. Lockhart Mgmt., 316 F.3d 408, 410 (3d Cir. 2003) (citing 28 U.S.C. § 1332(c) (2001)). The Supreme Court has recently held that for diversity purposes, a corporation's principal place of business is the location of its "nerve center," or "corporate brain" -- "the center of overall direction, control, and coordination." Hertz, 130 S.Ct. at 1194. Usually, a corporation's nerve center will be where it maintains its headquarters, "provided that the headquarters is the actual center of direction, control, and coordination," or the location that the public considers to be "the corporation's main place of business." Id. at 1192-93. The Court cautioned, however, that "if the bulk of a company's business activities visible to the public take place in New Jersey, while its top officers direct those activities just across the river in New York, the 'principal place of business' is New York." Id. at 1043-44.

A subsidiary's principal place of business is not automatically determined by the location of its parent. Quaker State Dyeing & Finishing Co. v. ITT Terryphone Corp., 461 F.2d 1140, 1142 (3d Cir. 1972) ("[A] subsidiary corporation which is incorporated as a separate entity from its parent corporation is considered to have its own principal place of business.") (internal citations omitted); see also Topp v. CompAir, Inc., 814 F.2d 830, 835 (1st Cir. 1987) ("[T]he nerve center test does not grant free license to ignore the separate corporate identity of the corporation whose citizenship is being sought.")

In the months since Hertz, courts that have sought to determine a subsidiary's principal place of business have focused on the location of day-to-day control and coordination of the company's business operations. For instance, the Southern District of West Virginia rejected the contention that a parent ...


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