SUPREME COURT RESOLVES DIVERSITY JURISDICTION SPLITS

SUPREME COURT RESOLVES DIVERSITY JURISDICTION SPLITS

By: Michael J. Ernst and Rachel A. Humphrey

In Hertz Corporation v. Friend, No. 08-1107 (2/23/10), the U.S. Supreme Court resolved a split among the circuits and provided a clear test for determining a corporation’s “principal place of business� for diversity jurisdiction purposes.

Generally for a lawsuit to be filed in Federal Court based upon diversity of citizenship, pursuant to 28 U.S.C. § 1332(c), there must be diversity between all plaintiffs and all defendants.  Corporations may be citizens of the state in which they are incorporated, but also citizens of the state where they conduct “their principal place of business.�  28 U.S.C. § 1332(c)(1).  In an effort to resolve the split among circuits as to a corporation’s principal place of business, the U.S. Supreme Court adopted the “nerve center test� which defines a corporation’s principal place of business as “the place where a corporation’s officers direct, control, and coordinate the corporation’s activities . . . normally . . . the place where the corporation maintains its headquarters – provided that the headquarters is the actual center of direction, control, and coordination.�  Hertz, at p. 14.  While simple in nature, this adoption by the U.S. Supreme Court will eliminate the application of different standards to the process of evaluating diversity jurisdiction for corporate litigants.

Stokes Lazarus & Carmichael LLP has represented companies in corporate and litigation matters for over 30 years and is rated “AV� by Martindale-Hubbell, the highest rating given.  SLC provides sound legal advice at reasonable costs nationwide.  If we can assist your company with its corporate or litigation needs, please contact Michael J. Ernst at mje@slclaw.com or at 404-352-1465, extension 41.