DFND Security, Inc. v. CrowdStrike, Inc.
- Martinez-Olguin
- 3:22-cv-04542
- U.S. District Court · Northern District of California
- 6
In DFND Security v. CrowdStrike, Judge Martinez-Olguin dismissed DFND’s petition with prejudice because it failed to establish diversity jurisdiction.
DFND Security, Inc.’s petition to vacate the arbitration award was dismissed with prejudice. The ruling resolved the action against DFND and in favor of Respondents CrowdStrike, Inc. and James Sheridan.
What happened
DFND Security, Inc. v. CrowdStrike, Inc. involved DFND’s petition to cancel an arbitration award. CrowdStrike, Inc. and James Sheridan asked the court to dismiss the petition for lack of federal jurisdiction.
The parties agreed that DFND and Sheridan were citizens of different states and that more than $75,000 was at stake. They disagreed about whether CrowdStrike’s principal place of business was in California, which would make it a California citizen like DFND and defeat diversity jurisdiction. DFND also argued that the relevant location might be in Texas, Arizona, or Delaware.
Judge Araceli Martinez-Olguin concluded that CrowdStrike’s principal place of business was in Sunnyvale, California, and that DFND had not shown otherwise. The court granted the motion to dismiss and dismissed the action with prejudice, finding that further amendment would be futile.
The detailed version
- DFND Security, Inc. v. CrowdStrike, Inc. · No. 3:22-cv-04542
- Martinez-Olguin
- Mar. 13, 2025
Background
DFND Security, Inc. filed a petition seeking to vacate an arbitration award issued on August 2, 2022. CrowdStrike, Inc. and James Sheridan moved to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1). After an earlier hearing, the court permitted jurisdictional discovery and later ordered supplemental briefing.
Jurisdictional dispute
The court considered diversity jurisdiction, which requires more than $75,000 in dispute and citizenship by each plaintiff in a different state from each defendant. The parties agreed that DFND was a California citizen, Sheridan was a Missouri citizen, and the amount in controversy exceeded $75,000. The dispute was whether CrowdStrike was also a California citizen.
Under federal law, a corporation is a citizen of its state of incorporation and the state where its principal place of business is located. The principal place of business is the corporation’s “nerve center,” meaning the place from which its officers direct, control, and coordinate its activities.
The court found that most of CrowdStrike’s operational, administrative, and executive functions were directed from California. Five of its 13 chief officers worked from the Sunnyvale office, two of its four board members worked there, and the remaining officers worked remotely from homes in different states. The court concluded that Sunnyvale had the greatest concentration of executive presence and was the center of CrowdStrike’s overall direction, control, and coordination.
The court rejected DFND’s alternative arguments. It found that a designation of Austin, Texas, as the principal executive office of CrowdStrike Holdings, Inc., the parent company, did not establish Austin as the principal place of business of CrowdStrike, Inc. DFND did not allege or adequately argue that CrowdStrike, Inc. was the parent’s alter ego, and the court stated that overlapping management alone was insufficient. The court also rejected arguments that the principal place of business was in Arizona because CrowdStrike’s CEO lived there or in Delaware because CrowdStrike was incorporated there.
Ruling
Judge Araceli Martinez-Olguin held that DFND had not carried its burden of establishing subject matter jurisdiction. The court granted Respondents’ motion to dismiss, vacated the scheduled hearing, and dismissed the action with prejudice because it found that further amendment would be futile.
Read the full 6-page opinion on CourtListener, the free public archive maintained by the Free Law Project.