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Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 18, 2016 Decided April 19, 2016

No. 15-7030

COSTCOMMAND, LLC,

APPELLANT

v.

WH ADMINISTRATORS, INC. AND BRENDAN M. TURNER,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:14-cv-00457)

Patrick A. Klingman argued the cause for appellant. With 

him on the briefs was Christopher Kip Schwartz. 

David A. Hill, pro hac vice, argued the cause for 

appellees. On the brief was Thomas A. Duckenfield III.

Before: TATEL, GRIFFITH, and KAVANAUGH, Circuit 

Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: This case calls on us to perform a 

single task: apply the “nerve center” test that the Supreme 

Court laid out in Hertz Corp. v. Friend, 559 U.S. 77 (2010), to 

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determine the location of a corporation’s “principal place of 

business,” and thus its citizenship for diversity jurisdiction 

purposes. For the following reasons, we agree with the district 

court’s application of this test and affirm its dismissal for lack 

of subject matter jurisdiction.

I.

Understanding this case’s decisive jurisdictional issue 

requires only a bird’s-eye view of the complicated underlying 

factual allegations. Ronald Vance and Brendan Turner 

founded CostCommand, LLC in 2012 with the goal of 

providing regulatory compliance services to government 

contractors. CostCommand hired PRS Software Solutions, a 

subsidiary of Video Equipment Rentals, two California 

companies we refer to collectively as the “California 

defendants,” to produce software to enable it to provide such

services. After struggling to secure customers and revenue,

CostCommand sought and obtained additional funding from 

the California defendants. Around this time, Turner resigned 

from CostCommand. Unbeknownst to Vance, however, 

Turner was also developing his own company, WH 

Administrators, Inc. (WHA).

CostCommand sued Turner, WHA, and the California 

defendants in the U.S. District Court for the District of 

Columbia alleging that they engaged in a series of wrongful 

acts that essentially destroyed CostCommand’s business. As 

described in greater detail below, the district court concluded 

that it lacked diversity jurisdiction and dismissed the case.

For diversity jurisdiction to exist, no plaintiff may share 

state citizenship with any defendant. Caterpillar Inc. v. Lewis, 

519 U.S. 61, 68 (1996). For example, a New York plaintiff 

would be unable to bring a diversity suit against three 

defendants if any one of them had New York citizenship. 

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Citizenship is measured as of the time the plaintiff files the 

complaint. Grupo Dataflux v. Atlas Global Group, L.P., 541 

U.S. 567, 570–71 (2004). An individual has citizenship in a 

state for diversity purposes if he is an American citizen and is 

domiciled in the state. Newman-Green, Inc. v. AlfonzoLarrain, 490 U.S. 826, 828 (1989). Unincorporated 

associations, including LLCs, have the citizenship of each of 

their members. See Americold Realty Trust v. Conagra Foods, 

Inc., 136 S. Ct. 1012, 1015 (2016). A corporation is a citizen 

of its place or places of incorporation, as well as its principal 

place of business. 28 U.S.C. § 1332(c)(1). Under Hertz, a 

corporation’s principal place of business is its “nerve center,” 

i.e., “the place where the corporation’s high level officers 

direct, control, and coordinate the corporation’s activities.”

559 U.S. at 80–81.

In this case, no dispute exists as to the citizenship of any 

party except WHA. When CostCommand filed its complaint, 

it was a citizen of Maryland because it was an LLC whose 

sole member, Vance, was a citizen of Maryland. The 

California defendants were citizens of California because they 

were California corporations with California principal places 

of business. Defendant Turner was a citizen of the District of 

Columbia. Finally, although all parties agree that WHA was a 

Texas corporation, and was therefore a Texas citizen, they 

disagree—and this is the central issue in this case—as to 

whether WHA’s principal place of business lay within Texas 

or Maryland. If the latter, then WHA shared Maryland 

citizenship with CostCommand, and no diversity jurisdiction 

exists.

This case’s procedural history is also relevant, though 

somewhat more complicated. The saga begins with 

CostCommand’s district court complaint, which alleged that 

“Defendant[] WH Administrators, Inc. . . . is a Texas 

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corporation . . . and maintains its principal place of business 

in Houston, Texas.” Compl. ¶ 7. Turner’s and WHA’s 

answers both admitted this allegation. In addition to the 

answers from Turner and WHA, the complaint generated a 

number of motions to dismiss, including one from the 

California defendants for lack of subject matter jurisdiction. 

These defendants argued that WHA maintained its principal 

place of business in Maryland because, among other things,

WHA’s website listed its Bethesda office as its “corporate 

headquarters.” CostCommand’s only response was that WHA

and Turner had admitted in their answers that WHA

maintained its principal place of business in Texas.

Noting this dispute, the district court ordered WHA to 

make a supplemental filing clarifying the location of its 

principal place of business and providing supporting 

evidence. In response, Turner and WHA apologized to the 

court for what they termed inadvertent mistakes in preparing 

their answers. They explained that WHA in fact maintained 

its principal place of business in Maryland, and they filed 

supporting affidavits from Turner and Bob Ring, a founder 

and officer of WHA who provided the company’s initial 

capital. Several days later, the district court issued an order 

concluding that the Bethesda office was WHA’s principal 

place of business and granting the motion to dismiss.

The next day, CostCommand filed a motion for 

reconsideration and requested jurisdictional discovery. After 

the parties fully briefed this motion, the district court allowed 

jurisdictional discovery limited to a deposition of Turner and 

requests for production of documents. Thereafter, the district 

court received three supplemental filings—one jointly from 

WHA and Turner, one jointly from the California defendants, 

and one from CostCommand.

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In its filing, CostCommand argued that various factors 

demonstrated that WHA maintained its principal place of 

business in Texas. These included WHA’s use of its Houston 

address on various corporate documents, regulatory filings, 

and contracts with customers and vendors; Bob Ring’s 

location in Houston; the fact that Andy Ring, Bob Ring’s son, 

managed accounts payable and receivable in Texas in 

conjunction with a Texas accountant; and the fact that WHA

paid its taxes from its Houston office and maintained its 

primary bank account in Houston.

By contrast, the defendants pointed to several factors that 

they believed demonstrated a Maryland principal place of 

business. Among these were that Turner, who worked out of 

the Bethesda office, had full operational control of WHA,

including spending company money without the other 

directors’ approval; that the other two directors needed 

Turner’s approval before spending company money; that 

Turner “manage[d] 100 percent of the operations, the product

development, the client issues,” Turner Dep. 53:21–54:1; and 

that when Turner disagreed with other directors, he did what 

he thought best.

After considering these submissions, the district court 

denied CostCommand’s motion for reconsideration. Although 

the district court first concluded that CostCommand had failed 

to demonstrate any exceptional circumstance justifying 

reconsideration, it also addressed the merits of the 

jurisdictional inquiry. In doing so, it reaffirmed its conclusion 

that WHA maintained its principal place of business in 

Maryland. CostCommand timely appealed both the dismissal 

and the denial of its motion for reconsideration. Although 

CostCommand has settled its claims with the California 

defendants, its appeal remains live as to Turner and WHA. In 

its briefing in this court, CostCommand argued that instead of 

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dismissing the case, the district court should have dropped 

WHA as a non-diverse party, see Appellant’s Br. 40–44, but it 

expressly abandoned that idea at oral argument, see Oral Arg. 

Rec. 4:49–56.

II.

We typically review a district court’s dismissal of a case 

for lack of jurisdiction de novo, Trumpeter Swan Society v. 

EPA, 774 F.3d 1037, 1040 (D.C. Cir. 2014), and its denial of 

a motion for reconsideration for abuse of discretion, Ark 

Initiative v. Tidwell, 749 F.3d 1071, 1075 (D.C. Cir. 2014). 

CostCommand argues that the district court should have given 

it more of an opportunity to litigate the jurisdictional issue 

before dismissing the case, and that the district court’s failure 

to do so harmed CostCommand given the disfavored status of 

motions for reconsideration. We need not consider this 

argument, however, because the district court’s 

determination—after allowing jurisdictional discovery—that 

WHA maintained its principal place of business in Maryland

was correct under any standard. We thus assume for the sake 

of argument that de novo review applies to the district court’s 

determination in its reconsideration denial that WHA

maintained its principal place of business in Maryland and 

treat as moot any argument that the district court entered its 

initial dismissal order without giving CostCommand an 

adequate opportunity to respond.

In Hertz, the Supreme Court gave clear guidance for 

determining the location of a corporation’s principal place of 

business. The Court described its approach as follows:

We 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 

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of Appeals have called the corporation’s “nerve 

center.” And in practice it should normally be the 

place where the corporation 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 occasion).

Hertz, 559 U.S. at 92–93. Acknowledging that difficult cases 

would still arise in situations where control was dispersed, the 

Court observed that the nerve-center test had the benefit of 

“point[ing] courts in a single direction, toward the center of 

overall direction, control, and coordination.” Id. at 96. This 

ensures that “[c]ourts do not have to try to weigh corporate 

functions, assets, or revenues different in kind, one from the 

other.” Id.

Applying this standard, we think it clear that WHA

maintained its principal place of business in Maryland. 

Overwhelming evidence establishes that when the complaint 

was filed (and indeed, throughout WHA’s existence)

Turner—from his office in Bethesda—exercised virtually 

complete control over the company. Turner testified to that 

effect in both his deposition, e.g., Turner Dep. 53:19–61:15, 

and affidavit, Turner Aff. ¶¶ 9–10, and Bob Ring testified that 

he left the operation of WHA “to the sound discretion of Mr. 

Turner,” Ring Aff. ¶ 8. From “[d]ay one,” only Turner had

authority to spend company funds without approval, Turner 

Dep. 24:16–25:8, and when Turner disagreed with the other 

directors, he nonetheless “operated the business as [he] saw 

fit,” Turner Aff. ¶ 10. Under Hertz, this is more than enough 

to establish a principal place of business, and thus citizenship 

for diversity purposes, in Maryland.

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Resisting this simple conclusion, CostCommand raises 

two primary arguments. First, that it was entitled to rely on 

the admissions in Turner’s and WHA’s answers that WHA

maintained its principal place of business in Texas. And 

second, that the factors relied on by circuit and district courts 

that used the nerve-center test prior to Hertz establish a Texas 

principal place of business in this case.

The first argument requires little discussion. Although 

CostCommand admits that parties cannot create jurisdiction 

by stipulation, it insists that they can stipulate to facts that 

provide a basis for jurisdiction. Even assuming for the sake of 

argument that this is true, and even assuming that the location 

of a party’s principal place of business is such a factual 

question, but see 13F Charles Alan Wright, Arthur R. Miller

& Edward H. Cooper, Federal Practice & Procedure § 3625

(3d ed. 2009) (“Although the determination of a corporation’s 

principal place of business involves a fact specific inquiry, the 

weight to be given these factual elements is a question of 

law . . . .”), CostCommand’s argument suffers from a fatal 

flaw: the California defendants neither stipulated nor admitted 

that WHA maintained its principal place of business in Texas. 

Instead, they challenged this claim in their first responsive 

filing.

CostCommand’s second argument fares no better. 

According to CostCommand, by adopting the nerve-center 

test and citing previous circuit and district court cases 

applying it, the Supreme Court implicitly adopted the factors

these earlier cases had used to locate a corporation’s principal 

place of business, such as where the corporation keeps its 

bank account and pays taxes from. As CostCommand points 

out, since Hertz, the Fourth Circuit has twice looked to such 

objective factors in determining a corporation’s principal 

place of business. Hoschar v. Appalachian Power Co., 739 

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F.3d 163, 172 (4th Cir. 2014); Central West Virginia Energy 

Co. v. Mountain State Carbon, LLC, 636 F.3d 101, 105 (4th 

Cir. 2011).

At a sufficiently high level of generality, the idea that the 

pre-Hertz factors still apply makes sense. Especially in close 

cases, which Hertz itself acknowledged would continue to 

arise, many such factors will remain relevant to Hertz’s 

central question: where is the corporation’s nerve center? The 

Fourth Circuit’s reference to, for example, the location of a 

corporation’s officers and directors, see Hoschar, 739 F.3d at 

172, is thus unsurprising. But as the Fourth Circuit has also 

noted, Hertz made clear that “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.’” Central West Virginia Energy, 636 F.3d at 107 

(quoting Hertz, 559 U.S. at 80). The factors courts had 

previously relied on retain relevance only to the degree they 

speak to this “touchstone” inquiry.

Unfortunately for CostCommand, here they do so 

minimally if at all. CostCommand summarizes the factors that 

it claims support a Houston, Texas, principal place of 

business as follows: “Houston is where WHA told State 

authorities, customers, vendors and its landlord it could be 

found, it was where in-person, strategic meetings were 

conducted, it was where tax filings were made, where its 

corporate records are kept, where its primary counsel, 

accountants and bank account are located, and the place 

specified as its headquarters in its corporate charter.” 

Appellant’s Br. 39–40. Except for the alleged “in-person, 

strategic meetings,” the factors composing this list have little 

to do with “where the corporation’s high level officers direct, 

control, and coordinate the corporation’s activities.” Hertz, 

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559 U.S. at 80. Although some corporate activities occurred 

in Texas, Turner oversaw and controlled them from 

Maryland.

CostCommand’s strongest argument takes the form of 

attacking the conclusion that Turner had absolute control over 

WHA. CostCommand offers two main pieces of evidence in 

support of this position. First, it contends that Bob Ring, from 

his office in Texas, funded the company and maintained 

control through his son Andy, who handled the company’s 

finances, also from Texas. CostCommand calls particular 

attention to Turner’s deposition testimony describing this

arrangement as a “safety net.” See Turner Dep. 25:9–26:9.

The problem with this argument is that, as noted above,

record evidence makes clear that Turner made decisions

regarding the company, even when he and Bob Ring 

disagreed. As Ring put it: “Unlike other entities I own, I do 

not operate WHA. I leave that to the sound discretion of Mr. 

Turner.” Ring Aff. ¶ 8. Turner confirmed that “[e]ven where 

there may have been a disagreement on business issues . . . I 

operated the business as I saw fit.” Turner Aff. ¶ 10. 

CostCommand’s suggestion that Andy Ring served as a check 

for his father on Turner’s control of the company thus falls 

flat.

Second, CostCommand points to the fact that Bob Ring 

never traveled to Maryland to meet with Turner, but that 

Turner met with Ring in Houston on multiple occasions. In 

context, however, the record makes clear that most of the time 

Turner talked to Ring, he did so by phone. To be sure, they

did occasionally meet in Houston. But those meetings seem to 

have been incidental to trips Turner was making to Houston to 

meet with clients. Turner Dep. 27:8–10. Moreover, as noted 

above, Turner retained practically complete authority, and his 

conversations with Ring were more in the nature of Turner 

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seeking advice than of collective decision making about the 

company’s direction. Turner Aff. ¶ 10.

III.

For the foregoing reasons, we affirm the district court’s 

dismissal for lack of subject matter jurisdiction.

So ordered.

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