Maldonado ex rel. Maldonado v. SmithKline Beecham Corp.

841 F. Supp. 2d 890, 2011 WL 7069430, 2011 U.S. Dist. LEXIS 142578
CourtDistrict Court, E.D. Pennsylvania
DecidedDecember 12, 2011
DocketCivil Action Nos. 11-2812, 11-2813, 11-2814, 11-2815, 11-2816, 11-2817, 11-2818, 11-2819, 11-2820, 11-2821, 11-2822, 11-2824, 11-2825, 11-2826, 11-2827, 11-2828, 11-2829, 11-2830, 11-2831, 11-2832, 11-4078, 11-4080, 11-4081, 11-4082, 11-4457, 11-4458, 11-4459
StatusPublished
Cited by8 cases

This text of 841 F. Supp. 2d 890 (Maldonado ex rel. Maldonado v. SmithKline Beecham Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Maldonado ex rel. Maldonado v. SmithKline Beecham Corp., 841 F. Supp. 2d 890, 2011 WL 7069430, 2011 U.S. Dist. LEXIS 142578 (E.D. Pa. 2011).

Opinion

MEMORANDUM OPINION

SAVAGE, District Judge.

As it did in earlier pharmaceutical product liability cases involving the drug Paxil that it had removed from the state court, the defendant GlaxoSmithKline, LLC ("LLC") opposes the plaintiffs’ motions to remand these cases. It challenges the determination in Brewer v. SmithKline Beacham Corp., 774 F.Supp.2d 720 (E.D.Pa. Mar.24, 2011) that, for jurisdictional purposes, LLC is a Pennsylvania citizen and cannot remove a case from a Pennsylvania state court on the basis of federal diversity jurisdiction under 28 U.S.C. § 1332. LLC argues that we misapplied the "nerve center" test announced in Hertz Corp. v. Friend, — U.S. —, 130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010), and the citizenship test established in Zambelli Fireworks Manufacturing Co. v. Wood, 592 F.3d 412 (3d Cir.2010), when we held that in the case of a limited liability company whose sole member is a non-operating holding company, which delegated its operational decision-making to the limited liability company, the "nerve center" is that of the limited liability company rather than the non-operating holding company.

LLC does not and cannot contest the facts recited in Brewer.1 It challenges the inferences and conclusions drawn from those facts, and disagrees with the application of the law to those facts. In short, LLC argues that the Brewer decision was wrong.

LLC miscomprehends the reasoning in Brewer and misapplies the facts to the law. After thoroughly reviewing the current [893]*893record, including the supplemental materials submitted in the recent cases, and reconsidering the Brewer opinion, we conclude that Brewer was correctly decided. Therefore, we shall remand these actions.

LLC contends that the record now is more developed since Brewer was decided. LLC argues that newly presented evidence shows that there was no delegation of LLC’s sole member’s authority, there was no jurisdictional manipulation, and the corporate structure was not unusual. Despite the supplements, the essential facts remain the same.

Nothing LLC has presented since Brewer changes the framework of the jurisdictional analysis focusing on operational decision-making. The essential facts have not changed. They are the same now as they were then. LLC is a limited liability company that operates GlaxoSmithKline pic’s pharmaceutical and health care business in the United States. Its sole member is GlaxoSmithKline Holdings (Americas) Inc. (“Holdings”), a non-operating holding company incorporated in Delaware. Holdings does not direct, manage or control any of LLC’s operations. LLC’s officers and directors do what they did for LLC’s predecessor corporation, SmithKlineBeeeham Corporation (“SKB”)—making operating decisions in the Philadelphia headquarters.

LLC’s supplemental submissions do not change the result. Although Victor Vogel’s 2 testimony and the amended government contracts tend to show that Holdings was erroneously listed as the contracting party with a Philadelphia address, it does not dispel the reasonable inference that Holdings and LLC had perceived the Philadelphia headquarters as the principal place of business. The timing of the changes to the contract documents is not coincidental. Only after it became apparent that its decision-making out of the Philadelphia headquarters posed jurisdictional problems in the multitude of Paxil cases did LLC make any effort to correct its contracts and to amend its by-laws to change the office from Philadelphia to Wilmington. As we observed in Brewer, these efforts were belatedly made to defeat jurisdiction in Pennsylvania.

We repeat and emphasize that the formation of LLC was not done with the intent to manipulate jurisdiction. Rather, the post-litigation conduct was. Nevertheless, whether LLC’s and Holdings’s later conduct constitutes jurisdictional manipulation is not controlling. Whether it was manipulation or not does not affect the ultimate conclusion.

LLC has presented no new facts regarding Holdings’s delegating the operational decision-making to LLC’s directors and officers who made those decisions in Philadelphia. Indeed, there is nothing in the supplemental record that contradicts, and there has been no retraction of, Heslop’s testimony that LLC is “simply a continuation of what used to be SKB,”3 which made and continues to make its business decisions in its Philadelphia office.

Clarification of Brewer

Isolating language outside its context, LLC makes much of our characterization of the corporate relationship between LLC and Holdings as “unique” and the circumstances presented for application' of the Hertz nerve center test as an “anomaly.” Perhaps we were unclear and we could have stated it differently to convey our intended meaning.

[894]*894We agree with LLC and its expert, Jonathan Macey, that holding companies and single member limited liability companies are not unusual and are, indeed, common. LLC is not unlike any other holding company. Despite LLC’s implication, Brewer did not say otherwise.

What Brewer means is that the corporate structure and the relationship between the limited liability company and its sole member were not what the Hertz and Zambelli courts confronted. The Hertz “nerve center” test and the limited liability company citizenship test, which has not been adopted by the Supreme Court, did not intersect in either case. In Brewer, they did. Thus, when we referred to the “melding” of the two tests in these “unique circumstances,” we were acknowledging that the issue was a novel one, requiring application of the two tests to circumstances never before encountered.

In Brewer, we could have used clearer language in describing the interplay between the Hertz “nerve center” test and the Zambelli limited liability company citizenship test. Rather than stating that the tests meld, we should have more precisely explained that they intersect where the sole member of a limited liability company is a holding company that has a single constituent operating company.

The Delegation of Management Issue

Under the Delaware Limited Liability Company Act (“LLC Act”), a limited liability company may be managed either by its members or by a non-member manager. Who manages the company is designated in the operating agreement. If the agreement is silent, the members manage it. Unless the operating agreement provides otherwise, “the management of a limited liability company shall be vested in its members.”4 Del.Code Ann. tit. 6, §§ 18-402. The members can designate a nonmember person to manage the company. If the operating agreement provides that the company shall be managed by a nonmember, then the “management of the limited liability company, to the extent so provided, shall be vested in the manager” chosen by the members.5 Id. Thus, the members forming the company designate who will manage the company—either the members or non-members.

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Cite This Page — Counsel Stack

Bluebook (online)
841 F. Supp. 2d 890, 2011 WL 7069430, 2011 U.S. Dist. LEXIS 142578, Counsel Stack Legal Research, https://law.counselstack.com/opinion/maldonado-ex-rel-maldonado-v-smithkline-beecham-corp-paed-2011.