MEMORANDUM
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,
I. LEGAL STANDARDS
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.,
The removing party must establish federal jurisdiction. Hertz Corp. v. Friend, — U.S. —,
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,
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,
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.
II. RECORD
The Parties have agreed to proceed on the jurisdictional record made before Judge Savage in Brewer v. SmithKline Beacham Corp.,
III. DISCUSSION
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.,
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.
GSK LLC
LLC is a pharmaceutical and consumer healthcare company with its principal place of business in Philadelphia. Once again, however, a limited liability company’s citizenship is determined solely by the citizenship of its members, not by the state in which it is legally organized or has its nerve center. See Zambelli,
Because GSK LLC’s sole member is Holdings, its citizenship is determined by that of Holdings. (Doc. No. 17, Ex. 4 at 18.) As I will explain, Holdings — and by extension, GSK LLC — are citizens of Delaware, not Pennsylvania.
GSK Holdings
Holdings is a citizen of its state of incorporation and the state where its nerve center is located. 28 U.S.C. § 1332(c)(1); Hertz,
As a holding company, Holdings does not operate GSK LLC. (Doc. No. 17, Ex. 4 at 59, 147-48, 150, 166.) Rather, it manages United States investments — in-
To carry out these extremely limited activities, Holdings has six officers (three of whom also serve as its Directors) and only one employee, who works in Wilmington and devotes about 20 hours a year to the Company’s affairs. (Id., Ex. 4 at 92, Ex. 5 at 35, 138.) Holdings’s office is a ten-by-ten-foot room in Wilmington that it subleases from Wilmington Trust. (Id., Ex. 5 at 19.) Dozens of holding companies have similar one-room offices in the same building. (Id., Ex. 5 at 22-23.) The room contains filing cabinets, a desk, Holdings’s books and records, a chair, and computer equipment. (Id., Ex. 5 at 19, 53.) The office is rarely used. (Ex. 5 at 19, 25, 53-54-) Although the office has a telephone, its calls are routed to an answering service in the same building. (Id., Ex. 5 at 50-52, 61-62.) The Directors rarely visit the office, and one testified that he did not recall ever having visited it. (Id., Ex. 4 at 40, Ex. 5 at 53-54.)
Holdings’s three Directors require no more than four 15- to 30-minute Board meetings a year to manage Holdings’s affairs. (Id., Ex. 4 at 42, 66, 166-67, Ex. 5 at 34, 130.) Although Holdings’s bylaws indicate that the meetings will take place in Philadelphia, they have, in fact, taken place in Wilmington exclusively since 2001. (Id., Ex. 4 at 66-67, 155-57, 164, 190, 203, 206-07; Doc. No. 34, Ex. 1 ¶ 15, Ex. 6.) The Board’s meeting room is in the same building as Holdings’s office. (Doc. No. 17, Ex. 4 at 40.) The meeting minutes and corporate seal are kept in Wilmington. (Id., Ex. 4 at 156, 206; Doc. No. 84, Ex. 6 ¶ 5.) The three Directors have their main offices in London, Philadelphia, and Wilmington. (Doc. No. 17, Ex. 4 at 63.) The Wilmington Director attends all Board meetings in person; the London and Philadelphia Directors attend most meetings in person. (Id., Ex. 4 at 76, 90, 92, 127, 161-62, Ex. 5 at 129, Ex. 6 at 23-24-) They will otherwise attend by telephone. (Id., Ex. 4 at 66, Ex. 6 at 23-24; Doc. No. 17-1 at 24-) The Board thus controls all Holdings’s actions through resolutions that are considered and passed in Wilmington. (Id., Ex. 4 at 157-58, Ex. 6 at 24.) These decisions may be made only by the Directors acting together at these meetings; no single Director has the authority to operate Holdings. (Id., Ex. 4 at 157-58, 183, Ex. 5 at 132-33, Ex. 6 at 24-25.)
Because all Holdings’s investment-related actions require Board decisions, officers and employees (most of them based outside Delaware) have no management discretion. Rather, they execute these decisions as directed by the Board. (Id., Ex. 4 at 86-87, 89, 183-84, 188, 193-94, Ex. 6 at 16, 25-28; Doc. No. 34, Ex. 1 ¶ 15.)
Holdings’s Wilmington “footprint” is certainly modest. I must measure that footprint, however, against the modest scope of Holdings’s activities. See 457 Madison Ave. Corp. v. Amedeo Hotels Ltd. P’ship, No. 04-3030,
Plaintiffs invoke the Hertz Court’s admonition that a corporation’s nerve center is not simply where board meetings take place. See
In noting that the nerve center of a sprawling operating company and the site of its board meetings may be different, the Hertz Court was not referring to these myriad holding entities, whose limited, ownership-related activities are necessarily “directed], controlled], and coordinated]” by their boards. Hertz,
Plaintiffs contend that Holdings’s emphasis on its boardroom activities is simply an “attempt[] at [jurisdictional] manipulation” — that the Wilmington boardroom is tantamount to “a mail drop box, a bare office with a computer, or the location of an annual executive retreat.” Hertz, 130
Plaintiffs also argue that under Delaware law, Holdings “delegated” its operational responsibilities to GSK LLC. Accordingly, they contend that because this owner-subsidiary structure is highly unusual, I must conclude that Holdings’s nerve center is located where LLC’s officers carry out those operations. The law suggests just the opposite. See Danjaq, S.A. v. Pathe Commc’ns Corp.,
I agree that Delaware law gave Holdings, as owner of LLC, the authority to operate LLC, had it chosen to do so. See 6 Del. C. § 18-402. Plaintiffs’ suggestion notwithstanding, the statutory conferral of such authority is hardly unusual. See, e.g., Cal. Corp.Code § 17151; 805 Ill. Comp. Stat. 180/15-1; N.J. Stat. Ann. § 42:2B-27; N.Y. Ltd. Liab. Co. Law § 408; 15 Pa. Cons.Stat. § 8941. Moreover, Plaintiffs have identified no provision of Delaware law that required Holdings to manage LLC. On the contrary, they concede that “Holdings as the sole member was not obligated to retain management control.” (Doc. No. 17-1 at SI.) Further, apart from Brewer, Plaintiffs cite no decision (and I have found none) that adopts this delegation argument. Cf. J.A. Olson Co. v. City of Winona,
In these circumstances, Holdings’s decision to conduct only ownership activities and “delegate” operational authority is typical of all holding companies and determines neither Holdings’s nor LLC’s citizenship. See Carden,
The result Plaintiffs urge would effectively construe all holding companies out of existence and contravene Hertz. By Plaintiffs’ logic, a Delaware corporation that holds fifteen limited liability companies operating in fifteen different states might well have fifteen nerve centers. The Supreme Court has condemned precisely such an “anomalous result,” noting that the lower court’s “novel citizenship rule” meant that Wachovia Bank “would be a citizen of 16 States.” Wachovia Bank v. Schmidt,
Moreover, there is no indication that the Hertz Court intended to create a “holding company exception” to its admonition that a corporation has only one nerve center. See Hertz,
In sum, a corporation’s principal place of business — including that of a holding company — is the state in which the corporation’s activities are “directed, controlled, and coordinated.” Hertz,
Avantor
Plaintiffs argue that at the time of removal, Defendant Avantor (the successor corporation to a thalidomide manufacturer) had its “nerve center” in Center Valley, Pennsylvania. Avantor has submitted two affidavits from its general counsel, internal Company memoranda, and a newspaper report, all of which establish that Avantor’s headquarters moved from New Jersey to Pennsylvania on September 19, 2011 — five days after Defendants removed the case. None of the evidence Plaintiffs have submitted contradicts this. (Doc. No. 17-1 at 38-43; Doc. No. 39 at 26-30.) Accordingly, at all relevant times, Avantor was a citizen of New Jersey, not Pennsylvania.
B. SmithKline Beecham’s Failure to “Consent” to Removal
All properly joined defendants must consent to removal. See Balazik,
Plaintiffs argue that because SmithKline Beecham did not'consent, the “rule of unanimity” requires remand. (Id. at 10-13.) I disagree.
Formerly a Pennsylvania corporation, SmithKline Beecham was converted on October 27, 2009 to GSK LLC, a limited liability company organized under Delaware law. (Doc. No. 17, Ex. 4 at 19-22; Doc. No. 34, Ex. 1 ¶¶ 3-10.) This was done to avoid certain tax liabilities. (Doc. No. 17, Ex. 4 at 18-21, 139.) Brewer,
Plaintiffs do not dispute that SmithKline Beecham is now GSK LLC. (Doc. No. 39 at 6-8.) LLC is thus the real party in interest that consented to removal; no entity named SmithKline Beecham now exists that has “a real interest in the litigation.” Bumberger,
Plaintiffs also contend that SmithKline Beecham continues to exist independently of GSK LLC by operation of 15 Pa. Cons. Stat. § 1979, which provides that: 1) an “action or proceeding may be prosecuted against and defended by a dissolved corporation in its corporate name”; and 2) remedies against a dissolved corporation expire two years after the date of dissolution. 15 Pa. Cons.Stat. § 1979(a)(2), (e). Plaintiffs thus argue that SmithKline Beecham continued to exist as a Pennsylvania citizen until two years after its conversion to GSK LLC — over a month after Defendants removed to this Court.
Plaintiffs ignore that SmithKline Beecham domesticated itself as a Delaware corporation pursuant to 15 Pa. Cons.Stat. § 1980, and then converted to a Delaware limited liability company. Though such domestication is termed a “dissolution” under Pennsylvania law, it is not a dissolution “in the ordinary sense.” See 15 Pa. Cons. Stat. § 1980 cmt. “The existence of the corporation is not affected because the same entity continues to exist in the new jurisdiction of incorporation.” Id.; see Brewer,
Plaintiffs are thus correct in stating that any cause of action against SmithKline Beecham survived its “dissolution,” because the cause of action now exists against GSK LLC. See 6 Del. C. § 18-214(f); 8 Del. C. § 265(f)- They err, however, in suggesting that SmithKline Beecham still exists as an entity separate from LLC.
Plaintiffs also argue that because service was twice accepted on SmithKline Beecham’s behalf, this somehow establishes that its existence continued after 2009. Once again, I disagree. Plaintiffs “served” the instant Complaint upon SmithKline Beecham at GSK LLC’s Philadelphia headquarters. (Doc. No. 17, Exs. 8A, 8B at 8, 10, 12.) It thus appears that LLC— the real party in interest — accepted service for SmithKline Beecham. This does not establish that SmithKline Beecham then existed, nor that its consent was required for removal. See Balazik,
IV. INTERLOCUTORY CERTIFICATION
Two Judges of this Court have already reached contrary conclusions as to whether Holdings and LLC are Pennsylvania citizens. Compare Brewer,
GSK LLC and Holdings are also defendants in thalidomide cases removed from state court and pending before Judge Jones and Judge Slomsky of this Court. Murray v. SmithKline Beecham Corp., No. 11-3510 (E.D.Pa. filed May 31, 2011); Yeatts v. SmithKline Beecham Corp., No. 11-6711 (E.D.Pa. filed Oct. 27, 2011). The plaintiffs in those cases have moved to remand, making the same jurisdictional arguments Plaintiffs make here. Although I have ruled that this Court has subject matter jurisdiction, Judges Jones and Slomsky have ruled that it does not. Without guidance from the Third Circuit, Judges of this Court will undoubtedly continue to disagree in the numerous cases involving the GSK Defendants and similarly situated parties. See, e.g., Maldonado,
Statutory restraints on appellate jurisdiction compound these difficulties. See-28 U.S.C. §§ 1291, 1292(a), 1447(d). A refusal to remand is appealable, but an order remanding generally is not. See 28 U.S.C. § 1447(d), 1453(c); In re U.S. Healthcare,
Such hurdles to appellate review may prevent this Court from obtaining much-needed guidance in resolving the jurisdictional question respecting the GSK Defendants’ citizenship. Accordingly, Judge Jones, Judge Slomsky, and I have agreed to issue our rulings on the same day, and to certify this jurisdictional question for interlocutory appeal. See 28 U.S.C. § 1292(b). The Parties have agreed jointly to appeal our Orders. Accordingly, I conclude that the jurisdictional issue respecting the GSK Defendants’ citizenship “involves 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.” Id.
V. CONCLUSION
I am well aware that the law requires me to resolve all doubts in favor of remand. Brown v. Francis,
An appropriate Order follows.
ORDER
AND NOW, this 29th day of March, 2012, for the reasons set out in my Memorandum Opinion, it is hereby ORDERED as follows:
1. Plaintiffs’ Motion to Remand (Doc. No. 17) is DENIED;
2. For diversity jurisdiction purposes, Defendants GlaxoSmithKline Holdings (Americas) Inc. and GlaxoSmithKline LLC are citizens of Delaware alone; and
3. The above-captioned matter shall be STAYED pending appellate review of this Order.
The Clerk of the Court of Appeals should note that this matter addresses the same jurisdictional issues addressed in Murray v. SmithKline Beecham Corp., No. 11-3510 (E.D.Pa. Mar. 29, 2012) (order granting motion to remand), and Yeatts v. SmithKline Beecham Corp., No. 11-6711 (E.D.Pa. Mar. 29, 2012) (order granting motion to remand).
IT IS SO ORDERED.