Hertz Corp. v. Friend

Brief Fact Summary.

Plaintiffs sued Defendant in California state court. Defendant sought to remove the case, basing diversity jurisdiction on its principal place of business in New Jersey.

Synopsis of Rule of Law.

A corporation’s principal place of business, for purpose of determining citizenship under diversity jurisdiction, means the one place where high level officers direct, control, and coordinate the corporation’s activity, otherwise known as the corporation’s “nerve center.”

Facts.

Melinda Friend and John Nhieu (Plaintiffs) sued Hertz Corporation (Defendant) in California state court on behalf of a class of California citizens for violations of California’s wage and hour laws. Defendant sought to remove the case to federal court. Plaintiffs argued the case lacked diversity jurisdiction because all parties were California citizens. Defendant argued that it was not a citizen of California because it had its principal place of business in New Jersey.

Issue.

For purposes of diversity jurisdiction, is a corporation’s principal place of business defined as the state where the corporation’s business activity substantially predominates its activity in other states?

Held.

No, the corporation’s principal place of business is defined by its nerve center. The case is remanded to be determine Defendant’s principal place of business under this definition.

Discussion.

The Court defined “principal place of business” for purposes of citizenship under diversity jurisdiction based on (1) the language of 28 U.S.C. § 1332(c)(1), which signifies the definition is about a single location; (2) administrative simplicity, which signifies the definition’s efficient and predictable application; and (3) the legislative history of 28 U.S.C. § 1332(c)(1), which signifies the legislator’s intent for the definition to be easy to apply.