state citizenship of corporations and other entities

§ 1332(c)(1)

Corporations has dual citizenship, but only 1 principal place of business

Does a corporation's principal place of business, for federal diversity jurisdiction purposes, refer to the place where the corporation's high level officers direct, control, and coordinate the company's activities?

A corporation's principal place of business, for federal diversity jurisdiction purposes, refers to the place where the corporation's high level officers direct, control, and coordinate the company's activities.

Determining principal place of business

Nerve center test, under which the corporate headquarters was deemed the corporation's principal place of business.

Hertz corp. v. friend

The federal diversity jurisdiction provides that a "corporation shall be deemed to be a citizen of any State in which it has been incorporated and of the State where it has its principal place of business." 28 U.S.C. § 1332(c)(1). (emphasis added). The respective circuits have reached different conclusions regarding the statute and more specifically the determination of where a corporation has its principal place of business. The Court holds 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. Many courts have called this location the company's "nerve center." The "nerve center" is likely where the company's headquarters is located and where the President, Chief Executive Officer, and other high-ranking company officials coordinate the company's activities. There are three considerations that support the company's "nerve center" being its principal place of business for federal diversity jurisdiction purposes. First, the plain language of the federal diversity jurisdiction statute supports it. Second, the "nerve center" approach is simple and easy to apply. Courts often spend excess time and money attempting to determine where a company's principal place of business is located. Those lower-court decisions often lead to inconsistent results, produce appeals, and lead to reversals of decisions. Third, the federal statute's legislative history offers supportive guidance. There, the Judicial Conference rejected a proposal that a corporation would be deemed a citizen of the State that accounted for more than half of its gross income as being too complex and impractical to apply.

[28 U.S.C. § 1332(c)] now § 1332(c)(1)(c)(1)

a Corporation shall be deemed a citizen of "every state and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business. Treats corporations as "local"