"Principal place of business" under 28 U.S.C.S. § 1332(c)(1) is best read as referring to the place where a corporation's officers direct, control, and coordinate the corporation's activities. 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.
California employees sued its employer in California state court alleging violations of California's wage and hour laws. The employer removed claiming federal court possessed diversity-of-citizenship jurisdiction. Finding that California was the employer's "principal place of business" under 28 U.S.C.S. § 1332(c)(1), the district court ordered a remand to California court, and the U.S. Court of Appeals for the Ninth Circuit affirmed. The case was elevated on a petition for certiorari to the Supreme Court of the United States.
Did the U.S. Supreme Court have jurisdiction to review a case?
The Court vacated the Ninth Circuit's judgment and remanded the case for further proceedings. It held: “Principal place of business under § 1332(c)(1) referred to where a corporation's officers directed, controlled, and coordinated the corporation's activities, a "nerve center." It would normally be a corporation's headquarters--provided it was not simply an office for board meetings. The "nerve center" was a single place. A more general business activities test led to incorrectly measuring the amount of business activities in a state. The simple "nerve center" jurisdictional rule promoted predictability. The "nerve center" approach was simple to apply, comparatively speaking. Section 1332(c)(1)'s legislative history suggested "principal place of business" was not to be interpreted to be complex. The employer's unchallenged declaration suggested its center of direction, control, and coordination, its "nerve center," and its corporate headquarters, were one and the same, located in New Jersey. But, the employees would have a fair opportunity to litigate that issue on remand.”