PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CENTRAL WEST VIRGINIA ENERGY
COMPANY, INCORPORATED, a West
Virginia corporation; A.T. MASSEY
COAL COMPANY, INCORPORATED, a
Virginia corporation,
Plaintiffs-Appellants,
v.
MOUNTAIN STATE CARBON, LLC, a
Delaware Limited Liability No. 10-1486
Company; SNA CARBON, LLC;
SEVERSTAL WHEELING,
INCORPORATED, a Delaware
corporation; SEVERSTAL NORTH
AMERICA, INCORPORATED, a
Delaware corporation; OAO
SEVERSTAL, a Russian Joint Stock
Company,
Defendants-Appellees.
Appeal from the United States District Court
for the Southern District of West Virginia, at Beckley.
Thomas E. Johnston, District Judge.
(5:09-cv-00467)
Argued: January 26, 2011
Decided: April 13, 2011
Before DUNCAN, DAVIS, and WYNN, Circuit Judges.
2 CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON
Reversed by published opinion. Judge Wynn wrote the opin-
ion, in which Judge Duncan and Judge Davis concurred.
COUNSEL
ARGUED: Robert M. Stonestreet, DINSMORE & SHOHL,
LLP, Charleston, West Virginia, for Appellants. Gregory J.
Krock, BUCHANAN, INGERSOLL & ROONEY, PC, Pitts-
burgh, Pennsylvania, for Appellees. ON BRIEF: W. Henry
Jernigan, Jr., David E. Rich, DINSMORE & SHOHL, LLP,
Charleston, West Virginia, for Appellants. David B. Fawcett,
BUCHANAN, INGERSOLL & ROONEY, PC, Pittsburgh,
Pennsylvania, for Appellees.
OPINION
WYNN, Circuit Judge:
For federal diversity jurisdiction purposes, a corporation is
a citizen of the states in which it has been incorporated and
in which it has its principal place of business. In Hertz Corp.
v. Friend, 130 S. Ct. 1181, 1186 (2010), the Supreme Court
clarified that the phrase "‘principal place of business’ refers
to the place where the corporation’s high level officers direct,
control, and coordinate the corporation’s activities."
In this case, seven of Defendant Severstal Wheeling, Inc.’s
eight officers, including its chief executive officer, chief oper-
ating officer, and chief financial officer, set corporate policies
and oversee significant corporate decisions out of Dearborn,
Michigan. Accordingly, under Hertz, Dearborn, Michigan is
Severstal Wheeling’s principal place of business. We there-
fore conclude that the district court erred in holding otherwise
and reverse.
CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON 3
I.
Plaintiff Central West Virginia Energy Co. ("Central
Energy"), a West Virginia coal sales company, brought this
suit in federal district court in April 2009. Central Energy
filed an amended complaint, along with Plaintiff A.T. Massey
Coal Company ("Massey Coal"), a Virginia corporation, in
June 2009. Plaintiffs sued Mountain State Carbon, LLC
("Mountain State"), its member companies, one of which is
Severstal Wheeling, and its parent companies, all of which are
in the steel business. Plaintiffs alleged that Mountain State
wrongfully refused to accept coal deliveries in breach of a
coal supply agreement with Central Energy. According to the
complaint, Mountain State’s refusal of the coal was the result
of an illegal scheme on the part of Mountain State and its
affiliated companies to shift the costs of the 2008-2009 eco-
nomic downturn onto Central Energy and Massey Coal.
Mountain State and Severstal Wheeling filed a motion to
dismiss the complaint due to a lack of diversity, the basis of
federal jurisdiction in this case. Specifically, Mountain State
and Severstal Wheeling argued that Severstal Wheeling’s
principal place of business is in Wheeling, West Virginia.
And because both Central Energy and Severstal Wheeling are
West Virginia citizens, they contended, diversity jurisdiction
did not exist. Central Energy and Massey Coal opposed the
motion.
While the motion was pending, the United States Supreme
Court issued a decision clarifying how federal courts are to
determine principal place of business—Hertz, 130 S. Ct.
1811. On March 31, 2010, citing Hertz, the district court
granted Mountain State’s and Severstal Wheeling’s motion
and dismissed the complaint for lack of subject matter juris-
diction. In its memorandum opinion and order dismissing the
case, the district court focused on the fact that Severstal
Wheeling’s self-described day-to-day operations such as
"‘purchasing, sales, transportation, engineering, human
4 CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON
resources, and accounting/financial functions’ are all handled
in Wheeling" and noted Severstal Wheeling’s "visibility in
and involvement with the Wheeling community." Central
Energy and Massey Coal appealed.
II.
Central Energy and Massey Coal argue that the district
court erred in its application of Hertz when it determined that
Severstal Wheeling’s principal place of business was Whee-
ling, West Virginia, despite the fact that Severstal Wheeling’s
officers control the company’s policies and high-level deci-
sions from Dearborn, Michigan. We agree.
A.
This case was brought in federal court on the basis of diver-
sity jurisdiction. Under 28 U.S.C. § 1332, a federal district
court has original jurisdiction over all civil actions where the
amount in controversy exceeds $75,000, exclusive of interest
and costs, and is between citizens of different states. 28
U.S.C. § 1332(a)(1). With the exception of certain class
actions,1 Section 1332 requires complete diversity among par-
ties, meaning that the citizenship of every plaintiff must be
different from the citizenship of every defendant. Caterpillar,
Inc. v. Lewis, 519 U.S. 61, 68 (1996). For purposes of diver-
sity jurisdiction, the citizenship of a limited liability company
(such as Mountain State) is determined by the citizenship of
all of its members (such as Severstal Wheeling). Gen. Tech.
Applications, Inc. v. Exro Ltda, 388 F.3d 114, 121 (4th Cir.
2004). Further, a corporation (such as Severstal Wheeling)
"shall be deemed to be a citizen of any State by which it has
been incorporated and of the State where it has its principal
place of business . . . ." 28 U.S.C. § 1332(c)(1).
1
See 28 U.S.C. § 1332(d), part of the Class Action Fairness Act of 2005,
Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of Title 28,
United States Code).
CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON 5
B.
In the past, this Circuit has employed two tests to determine
a corporation’s principal place of business. Athena Auto., Inc.
v. DiGregorio, 166 F.3d 288, 290 (4th Cir. 1999). Under the
first test, the "nerve center test," the home office from which
the corporation’s officers direct, control, and coordinate the
corporation’s activities is its principal place of business. Id.
Under the second test, the "place of operations test," the place
where the bulk of corporate activity occurs is the principal
place of business. Id. Refusing to adopt either test to the
exclusion of the other, the Fourth Circuit had held that the
application of one test may be more appropriate than the other
depending on the facts of a particular case. Id.; see also, e.g.,
Peterson v. Cooley, 142 F.3d 181, 184 (4th Cir. 1998).
With its recent Hertz decision, however, the Supreme Court
made clear that, for purposes of diversity jurisdiction, a cor-
poration’s principal place of business is always its "nerve cen-
ter." Hertz, 130 S. Ct. at 1186. The plaintiffs in Hertz were
two California citizens who sued the Hertz car rental com-
pany in California state court on behalf of a putative class of
California citizens. Id. Hertz removed the case to federal court
on the basis of diversity, contending that its principal place of
business was New Jersey, where it maintained its headquar-
ters. Id. The district court looked at Hertz’s business activi-
ties, found that a plurality of the business activities took place
in California, and granted the plaintiffs’ motion to remand to
state court. The Ninth Circuit affirmed. Friend v. Hertz Corp.,
297 F. App’x 690 (9th Cir. 2008).
The Supreme Court rejected the lower courts’ business
activity reasoning. Instead, the Court focused on the location
of the corporation’s officers who direct, control, and coordi-
nate the company’s business and clarified that that location,
the corporation’s "nerve center," is, in all cases, the principal
place of business. Thus, the Court unanimously stated:
6 CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON
In an effort to find a single, more uniform inter-
pretation of the statutory phrase . . . [w]e conclude
that "principal place of business" is best read as
referring to the place where a corporation’s officers
direct, control, and coordinate the corporation’s
activities. It is the place that Courts of Appeals have
called the corporation’s "nerve center." And in prac-
tice it should normally be the place where the corpo-
ration maintains its headquarters—provided that the
headquarters is the actual center of direction, control,
and coordination, i.e., the "nerve center," and not
simply an office where the corporation holds its
board meetings (for example, attended by directors
and officers who have traveled there for the occa-
sion).
....
We . . . recognize that the use of a "nerve center"
test may in some cases produce results that seem to
cut against the basic rationale for 28 U.S.C. § 1332,
see supra, at 1188. For example, if the bulk of a
company’s business activities visible to the public
take place in New Jersey, while its top officers direct
those activities just across the river in New York, the
"principal place of business" is New York. One
could argue that members of the public in New Jer-
sey would be less likely to be prejudiced against the
corporation than persons in New York—yet the cor-
poration will still be entitled to remove a New Jersey
state case to federal court. And note too that the
same corporation would be unable to remove a New
York state case to federal court, despite the New
York public’s presumed prejudice against the corpo-
ration.
We understand that such seeming anomalies will
arise. However, in view of the necessity of having a
CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON 7
clearer rule, we must accept them. Accepting occa-
sionally counterintuitive results is the price the legal
system must pay to avoid overly complex jurisdic-
tional administration while producing the benefits
that accompany a more uniform legal system.
Hertz, 130 S. Ct. at 1192-94.
C.
In this case, the record shows that the place where Severstal
Wheeling’s "officers direct, control, and coordinate the corpo-
ration’s activities" is Dearborn, Michigan. Hertz, 130 S. Ct. at
1192. Seven of Severstal Wheeling’s eight corporate offi-
cers—including its chief executive officer, chief operating
officer, chief financial officer, and general counsel and secre-
tary—all maintain their offices in Dearborn, Michigan. Only
the eighth corporate officer, a vice president and general man-
ager, maintains his office in Wheeling, West Virginia. Fur-
ther, none of Severstal Wheeling’s five directors is located in
West Virginia, while two—the same men who also serve as
the company’s chief executive officer and chief financial offi-
cer—are in Dearborn, Michigan.
In its motion to dismiss, Severstal Wheeling conceded that
its officers in Dearborn, Michigan "are responsible for signifi-
cant oversight and strategic decision-making at Severstal
Wheeling, but the day-to-day operations are conducted in
Wheeling." Severstal Wheeling’s Vice President and General
Manager, Wilbur Winland, Jr., testified in his affidavit in sup-
port of the motion that the Dearborn, Michigan officers "are
responsible for certain significant corporate decision-making
at Severstal Wheeling, but not the day-to-day operations,
which are performed in Wheeling." And Severstal Wheeling
conceded in its briefing below that "Severstal Wheeling’s
officers and directors in Michigan are responsible for setting
policy and overseeing significant corporate decisions," though
they "do not conduct the corporation’s day-to-day opera-
8 CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON
tions." With these statements, Severstal Wheeling concedes
the very "direction and control" at the heart of the Supreme
Court’s "nerve center" discussion in Hertz.
Finally, in its corporate filings with the States of West Vir-
ginia, Ohio, and Michigan, Severstal Wheeling listed its Dear-
born, Michigan address as its principal place of business.2
While Severstal Wheeling notes that the Dearborn, Michigan
address was prefaced by "c/o" followed by "William Wed-
nieski, Severstal North America, Inc., 14661 Rotunda Drive,
Dearborn, MI 48120," that preface does not change the fact
that Severstal Wheeling told West Virginia, Ohio, and Michi-
gan that its principal place of business was nowhere other
than in Dearborn, Michigan. It is true that, under Hertz,
merely filing a government form listing a principal place of
business, without more, would be insufficient to establish a
corporation’s "nerve center." Hertz, 130 S. Ct. at 1195 ("[W]e
reject suggestions such as, for example, the one made by peti-
tioner that the mere filing of a form like the Securities and
Exchange Commission’s Form 10-K listing a corporation’s
‘principal executive offices’ would, without more, be suffi-
cient proof to establish a corporation’s ‘nerve center.’"). Here,
however, we are faced with much more than mere forms.
Severstal Wheeling did show that its "day-to-day opera-
tions," including purchasing materials, selling products, man-
aging environmental compliance, and administering human
resources matters such as payroll, are conducted in Wheeling.
Severstal Wheeling also demonstrated, for example, that it has
an employee credit union in Wheeling and is "active in the
West Virginia business community and belongs to the West
2
The district court noted other materials indicating otherwise—such as
a newspaper article reporting that "[t]he downtown Wheeling headquarters
will continue to be the home of SeverStal Wheeling, though some opera-
tions will be centralized in Dearborn . . . ." Such materials, however, do
not convert Wheeling, West Virginia into "the place where the corpora-
tion’s high level officers direct, control, and coordinate the corporation’s
activities." Hertz, 130 S. Ct. at 1186.
CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON 9
Virginia Chamber of Commerce." What Severstal Wheeling
fails to show, however, is how any of this is relevant to the
"nerve center" test under Hertz.
Indeed, Severstal Wheeling’s concession that its officers
direct the company’s high-level decisions from Dearborn,
Michigan, while its day-to-day operations and public interface
occur in West Virginia, underscores this case’s similarity to
the New Jersey/New York example that the Supreme Court
provided in Hertz. The Court stated "if the bulk of a compa-
ny’s business activities visible to the public take place in New
Jersey, while its top officers direct those activities just across
the river in New York, the ‘principal place of business’ is
New York." Hertz, 130 S. Ct. at 1194. Here, if we supplant
West Virginia for New Jersey and Michigan for New York,
the Hertz hypothetical is this case.
In an attempt to preserve their victory, Mountain State and
Severstal Wheeling argue that, under Hertz, a corporation’s
principal place of business is "where it directs its daily man-
agement activities." Yet neither the word "daily" nor the word
"management" appears anywhere in Hertz. This is not surpris-
ing, given that the Supreme Court eschewed tests such as this
Circuit’s prior "place of operations" test—under which the
locus of day-to-day activities would have been relevant—in
an effort to find a simpler approach. Id. at 1186, 1191-92.
Mountain State and Severstal Wheeling also contend that
various district courts applying Hertz have focused on the
location of a corporation’s headquarters, and not just of its
officers, in determining the principal place of business. But
the cases Mountain State and Severstal Wheeling cite—none
of which has precedential weight—do not bolster their argu-
ment. In Ebert v. Desco Corp., No. 5:10CV46, 2010 WL
2365486 (N.D. W. Va. June 28, 2010), the district court, with
minimal recitation of facts or analysis, indicated that, among
other things, the corporation at issue’s operational and finan-
cial management was directed and controlled from the place
10 CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON
which the court decided was the principal place of business.
Nothing in that unpublished district court decision, however,
indicated that the corporation’s officers or directors worked
primarily elsewhere. Id.
In Compass Bank v. Villarreal, No. L-10-08, 2010 WL
1463483 (S.D. Tex. April 10, 2010), the district court deter-
mined that the plaintiff bank’s principal place of business was
where the plurality of its officers lived and worked, where
several of the other executives also maintained offices, and
where the vast majority of the bank’s management committee
meetings occurred. While the Compass Bank district court
also noted that the location was home to the bank’s adminis-
trative center and records, its focus on the bank’s high-level
executives hardly helps Mountain State’s and Severstal
Wheeling’s cause. And in Triple "S" Operating Co., LLC v.
Ezpawn Oklahoma, Inc., No. 10-CV-0328-CVE-FHM, 2010
WL 2690376 (N.D. Okla. June 30, 2010), despite the fact that
the defendant’s retail stores were in Oklahoma, the district
court determined that its principal place of business was in
Texas, where its officers worked and directed the business.
Triple "S", which Mountain State and Severstal Wheeling cite
for support, therefore cuts against their position.
Mountain State and Severstal Wheeling also suggest that
Central Energy and Massey Coal are attempting to impute the
citizenship of Severstal Wheeling’s parent company to Sever-
stal Wheeling. The district court, too, touched on this issue,
stating, without explanation, that "placing the principal place
of business of Severstal Wheeling in Michigan would ignore
the reality that Severstal Wheeling is separate and distinct
from its parent corporations, located in Michigan and Russia."
We fail to understand this reasoning. It is undisputed that
almost all of Severstal Wheeling’s own officers work out of
Dearborn, Michigan, as do some of its directors. That they
may do so from a building owned by Severstal Wheeling’s
parent company is irrelevant. And the fact that they may also
be engaged in affiliated companies’ business activities is also
CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON 11
of no import. Moreover, we refuse any invitation to examine,
for example, how much time Severstal Wheeling’s officers
devote to directing Severstal Wheeling’s versus affiliated
companies’ business. Doing so would subvert the Supreme
Court’s guiding principle in Hertz—establishing a simple
jurisdictional rule to avoid resource-intensive litigation. Hertz,
130 S. Ct. at 1193.
Finally, Mountain State and Severstal Wheeling contend
that the district court focused on the correct evidence and
properly concluded that direction and control actually ema-
nate from West Virginia. The district court noted, for exam-
ple, that employees in Wheeling, West Virginia "are engaged
in nearly all facets of the company’s operations" and that
"managing the company’s operations occur[s] in Wheeling."
These determinations are fully supported by the record, and
they may well have been salient, for example, under this Cir-
cuit’s prior "place of operations test," which turned on "the
place where the bulk of corporate activity takes place." Peter-
son, 142 F.3d at 184 (internal quotation marks omitted). But
they are not germane to the "nerve center" test as laid out in
Hertz. Moreover, focusing on such factors only resuscitates
the very complexity that the Supreme Court sought to extin-
guish with Hertz.
III.
In sum, the touchstone now for determining a corporation’s
principal place of business for diversity purposes is "the place
where the corporation’s high level officers direct, control, and
coordinate the corporation’s activities." Hertz, 130 S. Ct. at
1186.3 Here, that is Dearborn, Michigan, where nearly all of
3
We recognize that the proliferation of complex corporate structures
among business enterprises may compel further attention to the issue of
"principal place of business" under 28 U.S.C. § 1332. Cf. Brewer v. Smith-
Kline Beacham Corp., ___ F. Supp. 2d ___, 2011 WL 1103627 (E.D. Pa.
Mar. 24, 2011) (finding principal place of business for multinational hold-
ing company with sole membership in LLC was headquarters of LLC, and
not location of holding company’s high level officers). But in this case, it
is clear—Hertz controls, and Severstal Wheeling’s nerve center is in Dear-
born, Michigan.
12 CENTRAL W. VIRGINIA ENERGY v. MOUNTAIN STATE CARBON
the high-level officers work, make significant corporate deci-
sions, and set corporate policy. The district court erred in
holding otherwise, and we accordingly reverse.
REVERSED