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Glenda Johnson et al v. Smithkline Beecham Corporation et al

March 29, 2012


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


Plaintiffs Glenda Johnson (a Louisiana citizen) and Steven Lucier (a Pennsylvania citizen) brought this action in Philadelphia Common Pleas Court, alleging that thalidomide-a drug developed, produced, and distributed by Defendants-caused Plaintiffs to suffer severe birth defects. (Doc. No. 1, Ex. A.) Invoking diversity jurisdiction, Defendants removed to this Court. (Doc. No. 1.) See 28 U.S.C. §§ 1332(a)(1), 1441(a). Plaintiffs now ask me to remand, arguing that: 1) Defendants GlaxoSmithKline LLC, GlaxoSmithKline Holdings (Americas) Inc., SmithKline Beecham Corporation, and Avantor Performance Materials are Pennsylvania citizens, thus defeating complete diversity; and 2) SmithKline Beecham Corporation did not consent to removal. (Doc. No. 17.) See 28 U.S.C. § 1332(a)(1); Balazik v. County of Dauphin, 44 F.3d 209, 213 (3d Cir. 1995). For the reasons that follow, I will not remand. Because members of this Court have made contrary determinations as to the GlaxoSmithKline Defendants' citizenship and will continue to do so absent appellate guidance, I conclude that this important jurisdictional issue is "a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from [my] order may materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b).


For diversity jurisdiction to exist, no defendant in a civil action may be a citizen of the same state as any plaintiff. See 28 U.S.C. § 1332(a)(1); Grand Union Supermarkets of the V.I., Inc. v. H.E. Lockhart Mgmt., Inc., 316 F.3d 408, 410 (3d Cir. 2003) (citing Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990)). Because this matter began in state court, diversity must have existed both when the Complaint was filed and when the matter was removed. 14B Charles A. Wright, Arthur R. Miller, Edward H. Cooper & Joan E. Steinman, Federal Practice and Procedure § 3723 & n.15 (4th ed. 2009) (collecting cases).

The removing party must establish federal jurisdiction. Hertz Corp. v. Friend, 130 S. Ct. 1181, 1194 (2010).

In determining whether diversity exists, the court "may demand" that . . . "jurisdictional facts" be established by an evidentiary preponderance. . . . "When challenged on allegations of jurisdictional facts, the parties must support their allegations by competent proof."

Greenberg v. Macy's, No. 11-4132, 2011 WL 4336674, at *2 (E.D. Pa. Sept. 15, 2011) (quoting Hertz, 130 S. Ct. at 1194-95; Frederico v. Home Depot, 507 F.3d 188, 194 (3d Cir. 2007)).

The Third Circuit has held that as with "partnerships and other unincorporated associations," the citizenship of a limited liability company "is determined by the citizenship of its members." Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010). A corporation is a citizen of the state in which it is incorporated and the state where its principal place of business or "nerve center" is located. 28 U.S.C. § 1332(c)(1); Hertz, 130 S. Ct. at 1192. Accordingly, a business incorporated in one state with a nerve center in another state is a citizen of both states. See Davis v. Union Pac. Ry. Co., 224 F. App'x 190, 191 (3d Cir. 2007). A corporation may have only one nerve center, however. Hertz, 130 S. Ct. at 1193. It is "the place where a corporation's officers direct, control, and coordinate the corporation's activities." Id. at 1192. This is not necessarily where a business's bylaws or government filings suggest "nerve center activities" will take place. See id. at 1195 (SEC filing does not establish nerve center); Buethe v. Britt Airlines, Inc., 787 F.2d 1194, 1196 (7th Cir. 1986) (registered office provided in articles of incorporation does not establish nerve center); Guitar Holding Co. v. El Paso Natural Gas Co., No. 10-214, 2010 WL 3338550, at *5 (W.D. Tex. Aug. 18, 2010) (address provided in tax filings does not establish nerve center).

The Supreme Court has cautioned that if the record reveals attempts at manipulation-for example, that the alleged "nerve center" is nothing more than a mail drop box, a bare office with a computer, or the location of an annual executive retreat-the courts should instead take as the "nerve center" the place of actual direction, control, and coordination, in the absence of such manipulation.

Hertz, 130 S. Ct. at 1195. The Hertz Court recognized that "there may be no perfect test that satisfies all administrative and purposive criteria," and that "there will be hard cases" under the nerve center test. Id. at 1194; see also id. ("We understand that . . . seeming anomalies will arise. However, in view of the necessity of having a clearer rule, we must accept them.").


The Parties have agreed to proceed on the jurisdictional record made before Judge Savage in Brewer v. SmithKline Beacham Corp., 774 F. Supp. 2d 720 (E.D. Pa. 2011). (Doc. No. 17, Exs. 4-6; Doc. No. 34, Exs. 1-2, 5.) The Parties have supplemented this record with documents related to the Defendants' principal places of business, including Defendants' business records, information from their websites, and four affidavits. (Doc. No. 17, Exs. 1-3, 7-14; Doc. No. 34, Exs. 3-4, 6-9; Doc. No. 39, Exs. A-F.)


My ruling as to jurisdiction turns largely on the differences between a "holding company" and an "operating company." A holding company is typically described as a business that exists solely to own and manage its investments in other companies, and does not engage in its subsidiaries' operations. See, e.g., Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 454 (9th Cir. 2007); Corley v. Rosewood Care Ctr., Inc. of Peoria, 388 F.3d 990, 994 (7th Cir. 2004). An operating company, however, produces goods or provides services to customers. See, e.g., Boyer v. Crown Stock Distrib., Inc., 587 F.3d 787, 790, 791 (7th Cir. 2009); Boase v. Lee Rubber & Tire Corp., 437 F.2d 527, 528 n.1 (3d Cir. 1970).

A. Diversity Jurisdiction

Plaintiffs argue that I must remand because, like Mr. Lucier, GSK LLC and Holdings are Pennsylvania citizens. They base their argument principally on Brewer, in which Judge Savage ruled that both LLC and Holdings are Pennsylvania citizens. 774 F. Supp. 2d at 732. Because I respectfully disagree with Judge Savage's reasoning, I am compelled to reject Plaintiffs' contention and deny their Motion. Because, as I have noted, this jurisdictional issue has divided ...

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