The Court of Appeals for the Third Circuit held that to determine the citizenship of an LLC the court must look to the citizenship of the limited liability company’s members. In Johnson v. SmithklineBecham Corporation, 2013 WL 2456043, plaintiffs, Pennsylvania residents filed suit in the state court. Defendants removed the matter to the federal court asserting diversity jurisdiction. Plaintiffs then filed a motion to remand the action arguing that diversity jurisdiction was lacking and removal was improper because all of the defendants were Pennsylvania residents. The district court denied the motion and the court of appeals accepted jurisdiction.
The principal argument on lack of diversity was centered around defendants Glaxosmithkline Holdings (“GSK Holdings”) and Glaxosmithkline LLC (“GSK LLC”). GSK LLC had its headquarters in Philadelphia, Pennsylvania and employed 1,800 people. GSK Holdings was the owner of GSK LLC and its board meetings were held in Wilmington, Delaware at the Wilmington Trust headquarters. GSK Holdings also subleased a 10 X 10 foot office in the Wilmington Trust building. The citizenship of GSK LLC is defined by that of its sole member, GSK Holdings. The court pointed out that GSK holdings was a citizen of the state of its incorporation and of the state where it has its principal place of business. It was undisputed that GSK Holdings is incorporated in Delaware so it clearly was a Delaware corporation the issue was where was GSK Holdings principal place of business.
The Court of Appeals reviewed the evidence upon which the District Court based its decision, i.e. the three-person board of GSK Holdings controlled all of its limited ownership related activities and that it did so through resolutions which were considered and passed in Wilmington, Delaware. The Court of Appeals concluded, as did the District Court that the actual center of direction, control, and coordination was in Delaware. The court affirmed the decision of the district court that removal was proper.