Bearbones, Inc. v. Peerless Indemnity Insurance, 936 F.3d 12

Bearbones, Inc. and Amaral Enterprises LLC operated a commercial bakery in Massachusetts and sued their insurer, Peerless Indemnity Insurance Co., after a pipe rupture caused covered losses.
Complaint alleged diversity jurisdiction: plaintiffs citizens of MA and NY; Peerless alleged to be an Illinois corporation with principal place of business in Illinois.
Peerless answered admitting incorporation in Illinois but stating its principal place of business was in Massachusetts; it also filed a corporate disclosure consistent with MA.
Neither the parties nor the district court resolved this citizenship discrepancy; the magistrate judge (with consent) granted Peerless summary judgment and the plaintiffs appealed.
On appeal the First Circuit sua sponte questioned subject-matter jurisdiction because if Peerless’s principal place of business was Massachusetts, complete diversity would be lacking, and remanded for factfinding on Peerless’s principal place of business.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether federal diversity jurisdiction existed at filing	Plaintiffs relied on complaint allegations that Peerless was only an Illinois citizen	Peerless asserted in its answer and disclosures that its principal place of business was in Massachusetts, making it a citizen of both IL and MA	Court held jurisdiction unresolved; remanded for district court factfinding on Peerless's principal place of business
Proper test for a corporation's principal place of business	Plaintiffs did not contest the nerve-center test	Peerless implicitly relied on corporate filings and local contacts	Court confirmed use of the Hertz "nerve center" test to locate the single controlling place
Burden of proof on corporate citizenship	Plaintiffs argued they could supplement record with evidence of Peerless's IL operations	Peerless pointed to its own statements placing its nerve center in MA	Court reiterated that party invoking federal jurisdiction bears burden to prove diversity; plaintiffs given leave to develop facts on remand
Whether appellate court should dismiss for lack of jurisdiction sua sponte	Plaintiffs urged remand for discovery rather than dismissal	Defendant had not preserved jurisdictional objection earlier but had asserted MA principal place in filings	Court exercised discretion to remand to district court for factual findings rather than dismissing, retaining appellate jurisdiction pending report

Am. Fiber & Finishing, Inc. v. Tyco Healthcare Grp., LP, 362 F.3d 136 (1st Cir. 2004) (courts must police subject‑matter jurisdiction and may raise it sua sponte)
Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567 (2004) (citizenship assessed as of time of filing)
Hertz Corp. v. Friend, 559 U.S. 77 (2010) (announcing the "nerve center" test for a corporation's principal place of business)
Media Duplication Servs., Ltd. v. HDG Software, Inc., 928 F.2d 1228 (1st Cir. 1991) (party invoking diversity bears burden of proving corporate principal place of business)
Barrett v. Lombardi, 239 F.3d 23 (1st Cir. 2001) (complete diversity requirement explanation)