The United States Supreme Court has held that 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. In Hertz Corp. vs. Friend. Case No. 08-1107, S.Ct., 2010 WL 605601 (U.S.), 10 Cal. Daily Op. Serv. 2181 the respondents filed a class action lawsuit in a California state court. Hertz removed the matter to the United States District Court and the respondents moved to remand on the basis that Hertz was a California citizen, like themselves, and therefore diversity jurisdiction was lacking. The District Court agreed and remanded. In doing so, the court applied the Ninth Circuit precedent which instructs courts to identify a corporation’s “principal place of business” by first determining the amount of a corporation’s business activities state by state. The court rejected Hertz’s contention that its principal place of business was in New Jersey where its corporate offices were and the majority of its executive and administrative functions were performed. In reversing the Court of Appeals, the Supreme Court said:
The federal diversity jurisdiction statute provides that “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and its principal place of business.” 28 R.S.C. ?1332(c)(1) (emphasis added). We seek here to resolve different interpretations that the Circuits have given this phrase. In doing so, we place primary weight upon the need for judicial administration of a jurisdictional statute to remain as simple as possible. And we conclude that the phrase “principal place of business” refers to the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities. Lower federal courts have often metaphorically called that place the corporation’s “nerve center.” (Citations omitted) We believe that the “nerve center” will typically be found at a corporation’s headquarters.