Brewer v. SmithKline Beacham Corp.
2011 WL 1103627
E.D. Pa.2011Background
- Eight related pharmaceutical actions removed from state court to EDPA involve GlaxoSmithKline and various plaintiffs.
- Plaintiffs contend lack of complete diversity; defendant argues citizenship via its sole member Holdings and Hertz nerve center test.
- SkB converted to Delaware LLC in 2009; Holdings remains sole member of LLC with Philadelphia as LLC’s operational center.
- Holdings delegates LLC’s management to LLC officers/directors located in Philadelphia; Holdings retains minimal Delaware involvement.
- LLC’s Philadelphia-based leadership conducts primary decision-making for LLC’s pharmaceutical/consumer healthcare business.
- Court applies Hertz nerve center framework to Holdings as sole member of a manager-managed LLC to determine principal place of business.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| What is Holdings' nerve center for LLC citizenship purposes? | Holdings' Delaware status makes LLC a Delaware citizen. | Nerve center is in Wilmington, Delaware or elsewhere with Holdings' operations. | Nerve center located in Philadelphia; Holdings’ primary direction/control center is LLC’s Philadelphia management. |
| Is LLC a citizen of Delaware or Pennsylvania for diversity purposes? | LLC is a Delaware citizen through its sole member Holdings. | Holdings' Philadelphia operations fix LLC’s nerve center outside Delaware. | LLC’s citizenship aligns with Holdings’ nerve center in Philadelphia; LLC is not a Delaware citizen for removal. |
| Does the presence of Holdings as sole member defeat remand under 28 U.S.C. § 1441(b)? | Complete diversity exists because Holdings is a Delaware entity with Delaware nerve center. | Holdings’ Delaware status is incidental; nerve center in Philadelphia defeats diversity. | Removal improper; motions to remand granted. |
| Do post-removal manipulations affect the nerve center determination? | Post-conversion actions are unrelated to actual direction of LLC. | Changes to by-laws and government contracts show Delaware focus. | Court disregards manipulative changes; real nerve center remains Philadelphia. |
Key Cases Cited
- Hertz Corp. v. Friend, 130 S. Ct. 1181 (2010) (nerve center test to locate corporate direction and control)
- Zambelli Fireworks Mfg. Co., Inc. v. Wood, 592 F.3d 412 (3d Cir. 2010) (LLC citizenship determined by members; treat as partnership for diversity)