[A company's] "principal place of business" is . . . where a corporation's officers direct, control, and coordinate the corporation's activities. It is . . . 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 hold its board meetings (for example, attended by directors and officers who have traveled there for the occasion).
Civil Procedure I, Pages 227–229
⭐Hertz Corp. v. Friend
Supreme Court of the United States, 2010
Hertz employees filed a class action alleging that Hertz had failed to conform to California's wage and hour laws.
Defendant sought to remove to federal court, invoking diversity jurisdiction. Plaintiffs resisted, arguing that California was defendant's principal place of business, as that was where they derived the most revenue and where a plurality of its business activities occurred. District court found that defendant was a citizen of California, based on that state's revenue being significantly larger. The Ninth Circuit affirmed this.
What constitutes a corporation's principal place of business?
- The statute specifies a singular "place" of business.
- Simple tests are better as save court time and expenses.
- The Judicial Conference abandoned a proposed test of where at least half the corporation's gross income came from for being too complex. A "nerve center" test could be simpler than this. A general business activities test could not.