Hertz Corp. v. Friend

175 L. Ed. 2d 1029 · Supreme Court of the United States · 2010

Facts

California citizens sued Hertz in state court for state-law violations. Hertz sought removal to federal court, claiming diversity jurisdiction because its principal place of business was in New Jersey. The District Court and Ninth Circuit, applying a "business activity" test, found Hertz's principal place of business was California, thus denying diversity jurisdiction.

Issue

Does the phrase "principal place of business" in 28 U.S.C. §1332(c)(1) refer to the state where a corporation conducts the most business activity, or to its "nerve center" where high-level officers direct and control its operations?

Holding

The Supreme Court vacated the Ninth Circuit's judgment and remanded. It held that "principal place of business" refers to the corporation's "nerve center," typically its corporate headquarters, where high-level officers direct, control, and coordinate its activities.

Rule

The "nerve center" test defines a corporation's "principal place of business" as the place where its high-level officers direct, control, and coordinate the corporation's activities, usually its corporate headquarters. This test prioritizes administrative simplicity and predictability in determining diversity jurisdiction.

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Case brief last reviewed 2026-04-18. Prepared by CaseReader from the published opinion.