Hertz Corp. v. Friend

175 L. Ed. 2d 1029 · Supreme Court of the United States · 2010

Facts

California citizens sued Hertz in state court for wage and hour violations. Hertz sought removal to federal court, claiming diversity jurisdiction because its principal place of business was in New Jersey. The District Court and Ninth Circuit, applying a 'business activity' test, found Hertz's principal place of business was California, thus denying diversity jurisdiction.

Procedural history

Melinda Friend and John Nhieu sued Hertz in a California state court. Hertz sought removal to the Federal District Court for the Northern District of California, claiming diversity jurisdiction. The District Court, applying Ninth Circuit precedent, found Hertz's principal place of business to be California and remanded the case to state court. The Ninth Circuit affirmed this decision. The Supreme Court granted certiorari to resolve conflicting interpretations of "principal place of business" among the circuits, then vacated the Ninth Circuit's judgment and remanded the case.

Issue

Does the phrase 'principal place of business' in 28 U.S.C. §1332(c)(1) refer to the state where a corporation conducts the most business activity, or to its 'nerve center' where high-level officers direct and control its operations?

Holding

The Supreme Court held that 'principal place of business' refers to the corporation's 'nerve center,' typically its corporate headquarters, where high-level officers direct, control, and coordinate its activities. The case was vacated and remanded for further proceedings consistent with this new interpretation.

Rule

For diversity jurisdiction purposes, a corporation's 'principal place of business' is its 'nerve center,' defined as the place where its high-level officers direct, control, and coordinate the corporation's activities. This is typically found at its corporate headquarters, provided it is the actual center of direction and control.

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