RESPONDENT: Melinda Friend, et al.
LOCATION: U.S. Court of Appeals for the Ninth Circuit, San Francisco
DOCKET NO.: 08-1107
DECIDED BY: Roberts Court (2009-2010)
LOWER COURT: United States Court of Appeals for the Ninth Circuit
CITATION: 559 US 77 (2010)
GRANTED: Jun 08, 2009
ARGUED: Nov 10, 2009
DECIDED: Feb 23, 2010
Sri Srinivasan - for the petitioner
Todd M. Schneider - on behalf of the respondents
Facts of the case
Plaintiffs brought a class action suit against Hertz in a California state court. Hertz moved to remove the case to a California federal district court based on diversity jurisdiction. The plaintiffs argued that there was no diversity jurisdiction as Hertz's principal place of business was California and not Florida. The federal district court agreed and remanded the case to the state court.
On appeal, the U.S. Court of Appeals for the Ninth Circuit affirmed the federal district court. It held that the district court correctly applied the "place of operations test" to determine Hertz's principal place of business. Therefore, there was no diversity jurisdiction and the district court had no authority over the case.
1) Does the Supreme Court retain jurisdiction over this case even though the court of appeals failed to render a decision within the 60 days required by 28 U.S.C. § 1453(c)?
2) For the purposes of determining a corporation's principal place of business, can a court disregard the location of the corporation's headquarters?
Media for Hertz Corp. v. FriendAudio Transcription for Oral Argument - November 10, 2009 in Hertz Corp. v. Friend
Audio Transcription for Opinion Announcement - February 23, 2010 in Hertz Corp. v. Friend
John G. Roberts, Jr.:
Justice Breyer has our opinion this morning in case 08-1107 Hertz Corporation versus Friend.
Stephen G. Breyer:
The Constitution provides that federal courts may hear controversies between citizens of different states.
Let’s supposed the citizen of Nebraska brings a federal diversity case in Federal Court against the corporation that does some business in Nebraska, and some business elsewhere.
Is the corporation a citizen of Nebraska, same state so they couldn’t bring it or of a different state in which case they could?
A congressional statute answers this question by stating that, “a corporation shall be deemed to a citizen of any State by which it has been incorporated and of the State where it has its principal place of business” that helps, but what does principal place of business mean?
Lower courts have reached different conclusions, taking highly divergent approaches to the interpretive problem.
One major treaty for example devotes 73 pages to describing a host of different tests used in different circuits, with some circuits emphasizing the locus of operations, others, the corporate nerve center and still others working with various combinations of plant size, service or sales centers, employment and other factors designed to locate a center of gravity.
Ultimately, we conclude that the phrase “principal place of business” refers to what some lower courts have called the corporation's nerve center.
The place where a corporation's officers direct, control and coordinate the corporations activities.
Typically, the nerve center will be found at a corporation's headquarters.
Our opinion sets forth our reasons for reaching this conclusion in some detail.
They include our reliance upon the statute language, for example, the phrase “principal place of business” that word place is singular not plural and the word principal requires us to pick out the main, prominent or leading place.
But we also place considerable weight upon the practical need for administrative simplicity.
Many of the lower court tests complicate the case, eating up time and money as the parties litigate not the merits of their claims but which court is the right court to decide those merits.
We’ve recognized that there maybe no perfect test that satisfies all administrative and purposive criteria, but we believe a nerve center approach will point courts in the right direction.
It will provide a test that is easier to apply most of the time perhaps not all the time.
Though it will indeed sometimes produce counterintuitive results because the Ninth Circuit approached the jurisdictional problem before us differ.
We vacate its judgment and we remand the case for further proceedings.
Our decision is unanimous.