STERNER v. MCP HOLDINGS CORP.

CourtDistrict Court, E.D. Pennsylvania
DecidedJuly 3, 2025
Docket2:24-cv-02917
StatusUnknown

This text of STERNER v. MCP HOLDINGS CORP. (STERNER v. MCP HOLDINGS 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
STERNER v. MCP HOLDINGS CORP., (E.D. Pa. 2025).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

ROBERT H. STERNER, JR. : CIVIL ACTION : v. : NO. 24-2917 : MCP HOLDINGS CORPORATION :

MEMORANDUM KEARNEY, J. July 3, 2025 We today address our subject matter jurisdiction when a former employee from the Middle District of Pennsylvania sues a Delaware holding company which allegedly breached a contract regarding his stock options after claiming the employee breached post-employment obligations to the holding company’s subsidiary. The Delaware holding company has no business activities other than owning subsidiaries. The holding company moves to dismiss arguing, among other issues, we lack subject matter jurisdiction because its Chief Financial Officer manages the holding company’s rather limited day-to-day activities from Centre County, Pennsylvania in the Middle District of Pennsylvania (and thus no diversity jurisdiction). The holding company also argues the proper venue for this case is in the Middle District of Pennsylvania. The former employee disagrees. We ordered expedited jurisdictional discovery with leave to supplement the motion to dismiss arguments. Expedited discovery confirmed all the holding company’s decisions are made by a Texas citizen. The adduced facts confirm diversity of citizenship (Pennsylvania employee versus a holding company which is not a Pennsylvania citizen) but no basis for venue here. We enjoy subject matter jurisdiction because the parties are diverse but transfer this case to the United States District Court for the Middle District of Pennsylvania where the employee lives and formerly worked. I. Facts relating to subject matter jurisdiction and venue. Hanover, Pennsylvania resident Robert H. Sterner worked for Mission Critical Partners, Inc., owned by Delaware corporation MCP Holdings Corporation.1 MCP Holdings issued Mr. Sterner 102,089 stock options under an Incentive Stock Option Agreement in July 2018 as part of his employment compensation and subject to employment restrictions.2 The Incentive Stock

Option Agreement does not contain a venue provision but the Stock Restriction Agreement attached to the Incentive Agreement requires the parties to bring lawsuits related to the Restriction Agreement “in the federal or state courts in the districts which include the principal executive offices of the Company[.]”3 Mr. Sterner resigned from his job at Mission Critical in May 2023 to work for non-party Michael Baker International in an unpleaded and presently unknown (to us) location.4 Mission Critical then learned of certain alleged conduct by Mr. Sterner which it believed breached his post-employment obligations. One of Mission Critical’s lawyers, Philadelphia attorney Kevin Passerini, emailed a letter to Mr. Sterner at his residence in Hanover, Pennsylvania on August 24, 2023 on behalf of Mission Critical and MCP Holdings.5 Attorney Passerini advised

Mr. Sterner MCP Holdings had terminated all of Mr. Sterner’s fully vested stock options because Mr. Sterner had breached his post-employment non-competition obligations.6 Attorney Passerini allegedly also sent the letter to Mr. Sterner’s new employer, Michael Baker International, at an unknown address.7 Mr. Sterner responded by suing MCP Holdings for defamation and tortious interference based on the letter sent to his new employer and breach of contract based on the canceled stock options8 He also demanded his stock options as wages under Pennsylvania’s Wage Payment and Collection Law.9 Mr. Sterner sued in this District, although he lives in the Middle District of Pennsylvania, on the basis MCP Holdings is subject to our personal jurisdiction and Attorney Passerini wrote and sent the allegedly defamatory letter from his Philadelphia law office.10 Mr. Sterner alleges we retain diversity jurisdiction because he is domiciled in Pennsylvania and MCP Holdings is a Delaware corporation with its principal place of business in Delaware.11 MCP Holdings disagrees. It moved to dismiss for lack of diversity jurisdiction and

improper venue.12 MCP Holdings argued its principal place of business is in Port Matilda in Centre County, Pennsylvania, which destroys diversity jurisdiction because Mr. Sterner is a citizen of Pennsylvania.13 MCP Holdings further argued the venue provision in the Stock Restriction Agreement requires Mr. Sterner to bring his breach of contract claim in Centre County state court; the fact Attorney Passerini sent the allegedly defamatory letter from Philadelphia on behalf of his Middle District clients does not create venue here.14 MCP Holdings referenced an earlier-filed Declaration from its Chief Financial Officer Patrick Duffy swearing both his residence and MCP Holdings’s principal place of business are in Centre County.15 Chief Financial Officer Duffy swore he is principally responsible for MCP Holdings’s finances, valuations, tax filings, financial statement audits, and administration of the stock incentive plan.16 He swore he handles all of the

paperwork for the stock options (including those awarded to Mr. Sterner) along with the accompanying restrictive covenant agreement.17 He also swore MCP Holdings’s directors live in several states outside of Pennsylvania although its annual board meetings occur in Centre County, Pennsylvania every July.18 We ordered expedited jurisdictional and venue discovery and learned, as of July 3, 2024 (the day Mr. Sterner filed suit), MCP Holdings: • has held two board meetings in Centre County, Pennsylvania but has held other board meetings in other states and/or remotely;

• does not own or lease real estate anywhere; • has no employees, revenues, expenses, or payroll tax returns; • has five directors and three officers who reside in six different states, and the only Pennsylvania resident, Mr. Duffy, is not a director;

• is structured such that the entire organization (MCP Holdings and its subsidiaries) “reports” to Chief Executive Officer Darrin Reilly, who resides in Texas;

• is not registered in Pennsylvania and never filed a Pennsylvania tax return;

• the stock option plan at the center of this case is administered by the Board of Directors, none of whom reside Pennsylvania; and,

• has self-reported its principal place of business as Port Matilda, Pennsylvania on at least one tax filing in its state of incorporation, Delaware.19

II. Analysis We deny MCP Holdings’s Motion to dismiss based on a lack of diversity jurisdiction and improper venue. Mr. Sterner has established MCP Holdings’s principal place of business in not Pennsylvania, which allows us to exercise our subject matter jurisdiction. And the parties’ jurisdictional discovery establishes the entire organization reports to Chief Executive Officer Reilly in Texas. While we agree with MCP Holdings as to our lack of proper venue, we decline to dismiss on this basis and instead transfer this case to a proper venue in the Middle District of Pennsylvania. A. We enjoy diversity subject matter jurisdiction. MCP Holdings argues we do not have subject matter jurisdiction because the parties are not diverse: Mr. Sterner is a Pennsylvania citizen and MCP Holdings is a citizen of its state of incorporation (Delaware) and the state of its principal place of business (Pennsylvania).20 MCP Holdings claims its nerve center is in Pennsylvania because Chief Financial Officer Duffy manages MCP Holdings’s financial operations, tax filings, and the administration of its Stock Incentive Plan (including the paperwork and distribution of stock option awards forming the basis of Mr. Sterner’s claims) from his hometown in Centre County.21 Mr. Sterner counters MCP Holdings has no physical location, and its directors and officers are located throughout the country.22 He argues under recent authority from our Chief Judge MCP Holdings’s principal place of business is not in Pennsylvania; it is probably in Texas, where the

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STERNER v. MCP HOLDINGS CORP., Counsel Stack Legal Research, https://law.counselstack.com/opinion/sterner-v-mcp-holdings-corp-paed-2025.