INDUSTRY NEWS: US SUPREME COURT CLARIFIES ‘PRINCIPAL PLACE OF BUSINESS’

The US Supreme Court issued a ruling earlier this week, in which they held that a corporations "principal place of business" for purposes of federal jurisdiction is the corporations "nerve center," typically where its headquarters is located. This is a long-running - 51 years, in fact - debate in the US among the federal circuits - that is, how to answer the jurisdictional question.
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US SUPREME COURT CLARIFIES ‘PRINCIPAL PLACE OF BUSINESS’


WASHINGTON – The U.S. Supreme Court issued a ruling earlier this week wherein they held that a corporation's "principal place of business" for purposes of federal jurisdiction is its "nerve center," typically where its headquarters is located.

The Court, in an opinion by Justice Stephen Breyer, resolved a long-simmering debate among the federal circuits, which, for the past 51 years, have used a hodgepodge of tests to answer the jurisdictional question. The ruling in Hertz Corp. v. Friend will help to determine the battlefields on which class action and other litigation involving multistate corporations will be fought -- what corporations perceive to be the friendlier forum of the federal courts or state courts seen as more sympathetic to plaintiffs. While he noted that there is no perfect test, Breyer wrote, "Our test nonetheless points courts in a single direction, towards the center of overall direction, control and coordination. Our approach provides a sensible test that is relatively easier to apply, not a test that will, in all instances, automatically generate a result." The high court ruling stems from a lawsuit brought by two Hertz employees in California who are seeking damages and relief for themselves and a potential class of California citizens for violations of that state's wage-and-hour laws.

Source: Lawday