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A Nervy Decision by the Supreme Court

Posted by Frank Steinberg | Feb 23, 2010 | 0 Comments

Today the Supreme Court decided Hertz Corp. v. Friend, and thus put to rest the burning question of what constitutes a corporation's "principal place of business."  It actually is an important question for purposes of federal diversity jurisdiction.  Here's a link to the opinion, and here's one to our prior post which gives some background on the case.

The crux of the decision is that the principal place of business will usually be its "nerve center," the place where is executives and managerial functions are located.  In a word, headquarters.  Here's how Justice Breyer explained it for the unanimous Court:

We conclude that  “principal place of business” is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. It is the place that Courts of Appeals have called the corporation's “nerve center.” And in practice it should normally be the place where the corporation maintains its headquarters—provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corporation holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).

There's more, but you get the idea.  So from now on, when you think about where a corporation's principal place of business, remember how "nervy" the Court was in making this decision.

About the Author

Frank Steinberg

Frank is the founder and principal of Steinberg Law, LLC. A Jersey boy born and bred, he focuses on employment litigation and counseling, business litigation,  and aviation law. Following law school and a clerkship in the federal district court Frank spent his early career with large litigation ...

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