Litigation

U.S. Supreme Court to choose test for a corporation's "principal place of business"

By Shemia Fagan

Among the grounds for subject matter jurisdiction in federal court is diversity jurisdiction, which is available when the plaintiff and defendant are citizens of different states.  A corporation's citizenship is defined as its "principal place of business," and if a corporate defendant's principal place of business is in the state where plaintiff is a citizen, federal court may be unavailable as a forum.  A case currently pending before the U.S. Supreme Court will resolve which of several tests is appropriate for determining a corporation's principal place of business.

On November 10, 2009 the Supreme Court heard oral argument in the case of Hertz Corp. v. Friend.   In that case, the Ninth Circuit had applied the "place of operations" test, rather than the "nerve center," "center of activity," or "totality of the circumstances" tests favored in other circuits.  The court's ruling will be of vital importance to corporations looking to avoid being sued in state courts, which can be more plaintiff-friendly than federal courts.

Full post as published by Northwest Business Litigation Blog on November 12, 2009 (boomark / email).