Class Action

U.S. Supreme Court takes up CAFA case: Hertz v. Friend

By Kimberly A. Kralowec

In June, the U.S. Supreme Court granted certiorari in a CAFA case, Hertz Corp. v. Friend, no. 08-1107.  Copies of the cert. petition and other briefs are available at SCOTUSBlog.   This is the statement of the question presented:

Whether, for purposes of determining principal place of business for diversity jurisdiction citizenship under 28 U.S.C. § 1332, a court can disregard the location of a nationwide corporation's headquarters - i.e., its nerve center.

I did not previously report on the very short, unpublished Ninth Circuit opinion in this case, Friend v. Hertz Corp.,  297 Fed. Appx. 690, 2008 WL 4750198 (9th Cir. Oct. 30, 2008). The opinion reads, in full:

MEMORANDUM

Hertz's Notice of Appeal makes clear that Hertz removed this class action under the Class Action Fairness Act (CAFA). 28 U.S.C. § 1453(c). Therefore, even assuming we lack authority ?to accept an appeal from the denial of a motion to remand when a class action has been removed to federal court on the basis of traditional diversity jurisdiction,? Saab v. Home Depot U.S.A., Inc., 469 F.3d 758, 759 (8th Cir.2006), rather than pursuant to CAFA, we have jurisdiction over Hertz's timely appeal from the district court's order remanding this class action to state court. 28 U.S.C. § 1453(c)(1).

The district court correctly applied the ?place of operations? test to determine Hertz's principal place of business. Tosco Corp. v. Communities for a Better Env't., 236 F.3d 495 (9th Cir.2001); Industrial Tectonics v. Aero Alloy, 912 F.2d 1090 (9th Cir.1990). Taking the facts as set forth in the Declaration of Krista Memmelaar, Hertz's relevant business activities are ?significantly larger? in California than in the next largest state, Florida. Although the difference between the amount of Hertz's business activity in California and the amount of its activity in Florida is not as large as the difference deemed to be significant in Tosco, California nevertheless ?contains a substantial predominance? of Hertz's operations. Tosco Corp., 236 F.3d at 500.

Neither Tosco nor Industrial Tectonics supports Hertz's argument that we must consider the comparative population of states in which a corporation operates to determine whether activities are significantly larger in one state than another. Id.; Industrial Tectonics, 912 F.2d at 1092. Nor do policy concerns mandate the application of a per capita calculation. With its extensive California contacts and business activities, Hertz is not in jeopardy of being mistreated in California courts.

Because California is Hertz's principal place of business under the ?place of operations? test, we do not apply the nerve center test. Tosco, 236 F.3d at 500.

AFFIRMED.

(Footnote omitted.)  Another Ninth Circuit case, Davis v. HBSC Bank Nevada, N.A., 557 F.3d 1026 (2009), will probably be impacted as well.  See this blog post for more on Davis.  The petitioner devoted an entire supplemental brief to a discussion of Davis. 

Full post as published by The UCL Practitioner on July 15, 2009 (boomark / email).