February 23, 2010
SCOTUS Decision In Hertz Corp. v. Friend: Where Is A Corporation's Principal Place Of Business?
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 of the State where it has its principal place of business." 28 U.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." We believe that the “nerve center” will typically be found at a corporation’s headquarters.
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A striking opinion -- could serve as an illustration in a textbook on Formalism 101.
The Court unanimously rejects the flexible approaches to this question long favored by a majority of Circuits in favor of a relatively bright-line rule of subject matter jurisdiction. It's also notable how the Court's statutory interpretation of 1332(c)(1) mixes textualist, purposivist, and administrative/pragmatic considerations to reach that unanimous conclusion.
Posted by: Mike O'Shea | Feb 23, 2010 9:40:03 AM