court good morning my name is dave canario i am here for thirty one twenty three s a m b this case presents a pretty straightforward issue for the court what do we do with a corporation that effectively does nothing and the hearst heard standard in determining what state it is a citizen of here we have a corporation that at the time the lawsuit was filed had only incorporated it had done effectively nothing else by that time did it have time to do anything else they had big corporate approximately one month before suit was filed your honor so there had been no time to do anything and as a practical matter this is a holding company so that what they would do even over the course as we found out later even over the course of a year is effectively incorporate all the board meeting and that's pretty much it they haven't done any of that yet though they had they had not held a board meeting yet your honor we knew where the board meeting was to be held because we knew what the principal place of business was record doesn't disclose this but i'm i think that's why i want to ask if it dies sure why missouri the fundamental reason your honor it was the to create diversity it was not your honor and i mean i think that was addressed in the california that's owned by two californians yet he gave two reasons your honor number one was the state planning purposes as you recall the the l l c that had been the member of thirty one twenty three prior to lincoln one taking over as a member had only had one member tony klann as the sole member in the one hundred percent who was an owner the subsequent corporation linked in one corporation was formed because there was a twenty five percent seventy five percent number one frankly i'm there and i both the corporate attorney for the claims and myself who was the litigation for the attorney call before the claims that's were my office is having a record oh yeah i did was that the reason that they chose missouri out of all the fifty states in the various territories was because you were there that was one reason it was for convenience is what he said in the convenience was i was there and corporate attorney was there the other reason is that the  louis they have holdings in st louis they have real estate in st louis they do business in st louis but none of that none of the corporate assets are in st louis in this case or what no they're well you know the only corporate asset that exists for a link and one which is the my recollection of that was and i take that back my recollection of there was a question in the record that was specifically asked did you form as more peroration in order to file a lawsuit and answer was no so did the judge make a finding and that the judge made no finding at all because that was a that would be a case of jurisdiction no jurisdictional have i can speak this earlier morning jurisdictional manipulation and the court made no finding that such jurisdictional manipulation partly because the court found that it didn't really matter because the court thought the principal place of business was in here i suppose but i would note two things i think number one both parties felt that there wasn't any reason to do that and it goes to the second reason which is we have all the facts i mean there are no facts that we can establish at this point that are beyond what we know and in effect the facts are on disputed i mean what happened here the formation of the corporation why it was formed what happened and what the corporation did in that time period sharp we have a corporation that's just been incorporated and hasn't done as you candidly say anything in the third circuit case we asked you off to address involves a corporation as a holding company but the third circuit looks at it and says well it had and then that's what we're all trying to figure out because there is no case that i have could find that addressed that issue and here is what i would propose is is that there are dirt two ways to look at this we can come at it from one way which is what do we do and what it will come in at a different way what we can't do what can we do well here is what we know is that we know that it identified its principal place of business in its papers and i know the supreme court said we can't use papers but i would note that the supreme court in finding that was talking about s c c filing that did not identify the principal place of business they did identify the principal executive offices here we have a filing that identifies the principal place of business of the corporation it's the missouri secretary of state filings and it says where that principal place of business is supra that would be a blanket rule would it not for a company that's done nothing else that as long as it identifies its principal place of business in that state whatever it were ever to identify that that's its principal place of business and i think what we can add to that your honor is what occurred here is what happened subsequently i was going to subsequent doesn't help you you have to have diversity on the day of the filing of the case i agree with that your honor but what we know is it was confirmed later now if  i said it's completely irrelevant you tell me the facts here all of it the facts i mean it would make no difference if later you opened a headquarters in columbus ohio either your principal place of business under data filing is so i have one of the questions just in this is one i'm not sure i know the answer to is it possible for a corporation not to have a principal place then a principal place a business that does not exist and we have the state of incorporation you want to save a little bit of time i do your honor thank you very much company has done nothing i think is disputed by the record because three one two three and lincoln one at a minimum had this link and one was incorporated and then acquired three one two three s  a holding company has to take at least some action to where did that acquisition take place well there's no evidence that took place in missouri and there's no evidence it took place in california either that's correct yes or no there's we're still stuck with a company that doesn't appear to have done anything in any state that we can identify right well i think then the issue is the burden of it's plaintiff's burden to show that the principal place of business was missouri and if we have  activity that took place no evidence that it took place in missouri in fact we have counterevidence let me give you a hypothetical and flip it around so let's say i want to form a holding company because i've got substantial tyson in the story i formed the holding company in missouri intending to have board meetings every quarter but before that happens i get sued let's the place of incorporation will put the placement corporation would be missouri the principal place of business if nothing happened it begs the question of why you would  citizenship the citizenship in that instance i believe would be missouri but here we have a different situation because the holding company actually did do something acquired the the operating company and  nothing except old board meeting the only place that had done any business was in missouri so that we would then find it to be his or he wouldn't is now with the third circuit case tells us you've got a holding company that holds board meetings in its state in a state th and that's where the principal place of business absent some other evidence of doing business right i mean the third circuit says essentially that when you are trying to find the nerve center of a holding company in certain instances it can be determined by the board of directors meeting if that's where the decisions are actually made  is it possible i asked your colleague this is it possible not to have a nerve center at this early stage of gestation you know i looked into that your honor i tried to find a case that says what happens if you incorporate the company and then it doesn't do anything and i didn't find any case that addressed that issue i think it's because a corporation that hadn't done anything would not be involved in a lawsuit well but we have one here well but we don't have a corporation that hasn't done anything we have a corporation that acquired three one two three s and b we also i would add  we have the deposition of anthony claiming and he is talking about the operations of lincoln one and that there were real estate company they managed three one two three s and b the in order to the district court found this made a factual finding on whether or lincoln one had done anything and found that to be totally impossible impossible or completely and the reason i think the district court found that was because the plaintiff is asking the court to believe that there's this flurry of activity in september of twenty fourteen that it in that link in one incorporates in missouri it's given a business purpose to manage and direct three one two three s m b it acquires this company the business purpose particularly includes  that finding should we send it back for that finding to be made i don't think that's necessary because the district court's findings are that the the corporation has an established that its principal place of business is missouri to your argument is in effect that the principal place of business of this holding companies to file lawsuits and and its business was conducted in california because that's where it's lawsuit that is that is i think that's a fair statement i think that the coefficient case the  hasn't been to missouri since the date it was incorporated and till the telephonic appearance a year later so i don't know exactly where the decision was made i can't i can't tell you on this record where that was made i can tell you that it only officer she's the president and secretary there anthony thing is not an officer of the company will do to agree that there were substantial issues that were directed and controlled from missouri not at the time this case was filed no i there's no evidence at all that anything could happen in missouri by the time this case was filed except for the filing of the articles incorporation by the turning back to judge her which is hypothetical if the if the holding company was incorporate and they waited a month held a board meeting and then sued thank you say that i understand your answer to be that the citizenship with that would be misery if the if the calling company had already held the board meeting and the board meeting thing cooperated they held a board meeting and then a week after they held the board meeting they filed the lawsuit if that were the decision isn't it i believe so if that's where the decision was made and that's assuming that the court follows the third circuit argument that that the board meetings can control that i think that's in conflict with hertz so let's combine that with the hypothetical that i gave you earlier holding company incorporated in missouri but before we had a chance to hold the board meeting eve of the board meeting we get sued the holding company get sued so your under your argument one company would have the benefit of citizenship in missouri but the other company when i think in order to establish a principal place of business in missouri something has to be done in missouri if there is an intention i mean the intention to do something is essentially what plaintiff is arguing here he says well we intended to have this board meeting and we had it a year later and so that should somehow establishes gudger which printed out that's not the that's not the law you have to have taken some activity in order to set you to conduct some business somewhere to have a principal place of business i'm interested in your suggestion that the third circuit case conflicts with hurts i don't read it that way i read the third circuit cases say we're looking for the nerve center and with a corporation like this we look to see what it does and where it does it and if it only has boy if the only purpose of the companies to hold stuff and have board meetings if they hold them in the state of incorporation that's good enough for us but it it i think the third circuit tries very hard to find the nerve center of the holding company well your honor i would suggest this the supreme court in herds and in card in has expressed a clear preference for simple mechanical rules for the way to determine a company's principal place of business in herds it specifically said we conclude that the person places business is best read as a place where the corporation's high level officers control direct and coordinate the company's activities as and in that case and in the  case i'm not sure why we need to argue about it that's precisely what they found that the high level officers of the holding company held board meetings in delaware people occasionally traveled there their books were kept there i think the third circuit case faithfully applies i'm not sure it helps either of you here but i don't see it as contrary to hertz but the way i read it they were looking to the board of directors meetings which also is a holding company do well a holding company typically just holds assets but this particular company which plaintiff is claiming is a holding company had a purpose of directing and managing another company regarding its real estate all the lawsuits there's this lawsuit was the other one filed before this one or after this after so that's irrelevant isn't it in terms of doing business yeah i would agree so we'd have to find at the business that the business that you think the corporation gaijin in california was filing this lawsuit well no the business that i think the corporation engaged in was acquiring three one two three s and b and that was and stablish ing itself as the entity that directs and manages that company and that is something that indisputably happened before this case was filed  and it didn't happen in missouri the held company these are both flicie so they're really well lincoln one is and is a corporate corporation with one's corporation but with one shareholder right to shareholders the clicks the  the holding company right there three three three one twenty three a plaintiff supposedly manages this property and the property other than this property now is just this one property so that the plaintiff in this case business is to manage this piece of is and lincoln one is is two lincoln one is directing it this is a strange fiction that we have because it is we look at it see if we look at the shareholder even though the l c may be doing business on its own we don't look at the ad it its business week at the shareholders business exactly that's that's so interesting situation where you have the l l c wholly owned by a corporation there's you know it makes a huge difference that it's an l l c and not a corporation so if this were a corporation and this would be an easy case would if this were a corporation where we would look at where if three one two three s m b were a corporation we would look at where we did it business yet it does its business in california it will counsel wouldn't it make sense to send it back to the district just clarify i don't think that there's anything to clarify why i would say this the district judges findings are reviewed under the clear air standard the district judge specifically found that the suggestion that lincoln one hadn't done anything was completely impossible the so that the inquiry in my opinion is whether on the record as a whole that is a instance of clear error and if the if the district court rejects the idea that lincoln one is you know one and define non active not yet initiated company then there is nothing further to do because then it's plain its burden to establish that it was missouri and plaintiff didn't do that there's nothing that happened in missouri we've taken you over your argument time i appreciate i thank you if i could just have one brief follow up that was brought up and just to clarify something lincoln one is not the one who makes the decisions as to where and when and when and how a lawsuit is filed thirty one twenty three s and b is the plaintiff they are the ones who made those decisions it's clear those took place in california in the last ratified by five because their own i see we look to the citizenship of their cell shareholder we only look at the citizenship of lincoln one that's the only thing that matters is that is that a universal rule in a case like this it's sort of a strange thing because the principal place of you know what where's the plaintiff is that i will see it's doing business like crazy in california through i got arguing company and we now change its citizenship to the citizenship of the state in which the person and whether they have a right to have citizenship that's already been decided for us they do it does it's pretty clearly that everything lincoln one did was done in missouri and that's what we're left with but the only thing they did was incorporate the only thing they did at the time a civil lawsuit w incorporated well council made the argument that one did more than just simply incorporate it it actually undertook activities to manage the building in santa monica we are not in the record before us and i'd like to address that your honor because it is important to player up with the record was is that there was a point in the deposition and it was pointed out in my brief there was a point in the deposition where mr kling became confused between whether he was being asked about thirty one twenty three or lincoln one and that was clarified later in the record i point out where in my brief and in fact it was defendant's counsel who said oh you were talking about lincoln one here you were talking about thirty one twenty three when you meant to be talking about when one or vice that happens to me all the time but there was some confusion on the record about what he was talking about it was clarified later it was made clear the only thing one thing one did was board meetings ratified with thirty one twenty three did later which last counsel correct in saying that the individual shareholder never none none of the none of the people at that interest were in missouri at any relevant time to this case