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Judge Sides with Defendant McNeil Holding It is a Citizen of New Jersey, Not Pennsylvania

U.S. District Judge Mary A. McLaughlin of the Eastern District of Pennsylvania rules that McNeil Pharmaceuticals is a corporate citizen of New Jersey, not Pennsylvania.

McNeil, a wholly owned subsidiary of Johnson & Johnson, is the maker of allegedly defective Tylenol that killed a 2-year old boy from Washington.  A major question in all pharmaceutical cases is what state is a drug company deemed a citizen.

U.S. District Judge Mary A. McLaughlin looked beyond the “nerve center” test to determine McNeil’s corporate citizenship.  McLaughlin said, “The threshold question in determining McNeil-PPC’s principal place of business is whether the ‘nerve center’ test permits this court to consider activities of executives outside a party’s corporate structure.”  Plaintiffs argued that most of McNeil’s titled executives including the president, vice president, chief financial officer and secretary were based on Fort Washington, PA and therefore the company should be deemed a citizen of Pennsylvania.

The Court sided with the Defendants who asserted that “these official titles and powers do not reflect the reality of corporate control at McNeil-PPC.”  Applying a test established by the U.S. Supreme Court in Hertz v. Friend (2010), Judge McLaughlin looked beyond the McNeil’s corporate form and the activities of individuals controlling the corporation, finding that McNeil is a citizen of NJ.  McLaughlin found that McNeil’s nerve center is in Skillman, NJ, where the executives for Johnson & Johnson’s family of companies, a group that oversees McNeil, are located.

The plaintiffs will likely ask the judge to certify it for an appeal.

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