Facts
- Bernice Knee, a citizen of Pennsylvania, sued Chemical Leaman Tank Lines, Inc. (Chemical Leaman) in the U.S. District Court for the Eastern District of Pennsylvania for personal injuries allegedly caused by Chemical Leaman’s negligence.
- Knee invoked diversity jurisdiction under 28 U.S.C. § 1332, alleging Chemical Leaman was a Delaware corporation.
- Chemical Leaman initially did not challenge diversity.
- After the Pennsylvania statute of limitations on Knee’s negligence claim had expired, Chemical Leaman asserted that its headquarters was in Pennsylvania and moved to dismiss for lack of subject-matter jurisdiction.
- Chemical Leaman supported its motion with an uncontradicted affidavit from its president stating that the executive office and executive officers were located in Pennsylvania and that major corporate functions (including billing and payroll) were conducted there.
- The affidavit also stated that supervision of sales, general supervision of terminals, and central dispatching were run from Pennsylvania, even though Chemical Leaman operated terminals in multiple states and in Canada.
- Knee argued that dismissal would be unfair because Chemical Leaman revealed its Pennsylvania citizenship only after limitations ran, allegedly to prevent her from refiling in state court.
Issues
- Whether Chemical Leaman’s “principal place of business” under 28 U.S.C. § 1332(c) was Pennsylvania, making it a Pennsylvania citizen and destroying diversity with a Pennsylvania plaintiff.
- If diversity was lacking, whether the court could keep the case on equitable or estoppel-type grounds because the defendant raised the jurisdictional defect after the statute of limitations expired.
Decision
- The court found Chemical Leaman’s principal place of business was Pennsylvania based on the uncontradicted affidavit describing where day-to-day corporate management and centralized operations occurred.
- Because Chemical Leaman was a citizen of Pennsylvania (principal place of business) and Delaware (state of incorporation), and Knee was a citizen of Pennsylvania, complete diversity was absent.
- The court held it lacked subject-matter jurisdiction and granted Chemical Leaman’s motion to dismiss.
- The court rejected Knee’s fairness argument; the timing or conduct of the parties could not supply subject-matter jurisdiction that Congress had not granted.
Legal Principles
- Under 28 U.S.C. § 1332(c), a corporation is deemed a citizen of both (1) its state of incorporation and (2) the state where it has its principal place of business.
- In the Third Circuit, guided by Kelly v. United States Steel Corp., a corporation’s principal place of business is determined by the location of its headquarters for day-to-day direction and management (often described as a headquarters/management-control approach).
- Evidence that executive officers and core corporate functions (billing, payroll, sales supervision, terminal supervision, centralized dispatching) are concentrated in one state supports finding that state to be the corporation’s principal place of business, even when operations are spread across many jurisdictions.
- Subject-matter jurisdiction is not waivable and cannot be created by consent, delay, concealment, or estoppel; when diversity is absent, dismissal is required even if dismissal may leave the plaintiff without a forum due to an expired limitations period.
Conclusion
The court dismissed Knee’s negligence action because Chemical Leaman, though incorporated in Delaware, had its principal place of business in Pennsylvania and was therefore also a Pennsylvania citizen under § 1332(c), eliminating complete diversity with a Pennsylvania plaintiff; equitable objections based on the defendant’s late jurisdictional challenge could not confer federal subject-matter jurisdiction.