J.A. Olson Co. v. City of Winona

Brief Fact Summary.

Plaintiff sued Defendant in federal court based on diversity jurisdiction. The district court dismissed the case for lack of jurisdiction, holding that Plaintiff was a citizen of the same state as Defendant because Plaintiff’s primary place of business was in the same state as Defendant’s state of incorporation.

Synopsis of Rule of Law.

A corporation’s principal place of business is the state in which, given the totality of the circumstances, it predominately operates and makes managerial decisions, even if the corporation is headquartered in another state.

Facts.

J.A. Olson Company (Plaintiff) alleged federal subject matter jurisdiction based on diversity of citizenship. Plaintiff sued the City of Winona (Defendant), which was incorporated in Mississippi. Plaintiff was incorporated in Illinois and had various operations in Mississippi. Plaintiff maintained its only manufacturing plant in Mississippi. Plaintiff also made significant managerial decisions in Mississippi, including: employment, production, and account management decisions. Plaintiff maintained bank accounts in Mississippi and was involved in various Mississippi organizations and associations. Plaintiff was not a member of similar organizations or associations in other states. While Plaintiff was headquartered in Illinois, the decisions made in Illinois were based on information derived from Mississippi. The district court held that Plaintiff’s primary place of business was in Mississippi and dismissed the case for lack of jurisdiction.

Issue.

Whether a corporation’s principal place of business is the state in which, given the totality of the circumstances, it predominately operates and makes managerial decisions, even if the corporation is headquartered in another state.

Held.

Yes. The trial court’s dismissal for lack of jurisdiction is affirmed. A corporation’s principal place of business is the state in which, given the totality of the circumstances, it predominately operates and makes managerial decisions, even if the corporation is headquartered in another state.

Discussion.

In determining a corporation’s principal place of business, the court first looks to the place from where the company is primarily controlled. When the corporation is controlled from one state yet has its operations in another, the court will give significant consideration to the place from where the company is operated and look at the company’s operations as a whole to determine the principal place of business. In this case, Plaintiff is headquartered in Illinois and executive-level decisions are made there. However, Plaintiff’s operations are concentrated in Mississippi. Additionally, Plaintiff’s only manufacturing facility is in Mississippi. The majority of Plaintiff’s employees work in Mississippi. Plaintiff is a member of Mississippi organizations and associations, and Plaintiff is not a member of similar organizations in other states. Plaintiff makes employment and production decisions in Mississippi, and Plaintiff maintains corporate banking records and accounts in Mississippi. While managerial decisions are made in Illinois, those decisions are based on information derived from Mississippi. Plaintiff’s principal place of business is Mississippi, as that is where the company operates and makes managerial decisions.