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Federal District Court Applies Supreme Court's 'Nerve Center' Test
Last year, the U.S. Supreme Court resolved a conflict among the federal circuits by establishing a uniform interpretation of the phrase “principal place of business” for determining corporate citizenship under 28 U.S.C. ' 1332(a), the federal diversity jurisdiction statute (the “Diversity Statute”). In Hertz Corp. v. Friend (130 S.Ct. 1181 (Feb. 23, 2010)), the Supreme Court ruled that corporate citizenship should be determined on the basis of the specific location of a corporation's “center of direction, control, and coordination” ' usually, but not always, the state in which its principal headquarters is located. This methodology is aptly labeled the “nerve center” test. To avoid potential “attempts at manipulation,” the Hertz Court explained that a nominal principal office consisting of “nothing more than a mail drop box, a bare office with a computer, or the location of an annual executive retreat” will not suffice to establish a corporation's nerve center.
Recently, in Brewer et al. v. SmithKline Beacham Corporation d/b/a GlaxoSmithKline (Civ. Action No. 10-4443 et seq. (E.D. Pa., March 24, 2011)), the United States District Court for the Eastern District of Pennsylvania applied Hertz in deciding the citizenship, for purposes of the Diversity Statute, of an operating entity organized as a limited liability company (“LLC”) within a corporate holding company structure. In a fact-specific ruling, the district court found that “for purposes of determining the citizenship of a limited liability company whose sole member is a holding company that does not direct or control the operations of the limited liability company, we look to the 'nerve center' of the limited liability company to which the holding company has delegated the operational decision-making.”
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
The DOJ's New Parameters for Evaluating Corporate Compliance Programs
The parameters set forth in the DOJ's memorandum have implications not only for the government's evaluation of compliance programs in the context of criminal charging decisions, but also for how defense counsel structure their conference-room advocacy seeking declinations or lesser sanctions in both criminal and civil investigations.
Use of Deferred Prosecution Agreements In White Collar Investigations
This article discusses the practical and policy reasons for the use of DPAs and NPAs in white-collar criminal investigations, and considers the NDAA's new reporting provision and its relationship with other efforts to enhance transparency in DOJ decision-making.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.