Does the phrase 'principal place of business' in the federal diversity jurisdiction statute, 28 U.S.C. §1332(c)(1), refer to the place where a corporation's high-level officers direct, control, and coordinate its activities, rather than the State where the corporation conducts the largest share of its business activity?

Melinda Friend and John Nhieu, two California citizens, sued the Hertz Corporation in California state court for alleged violations of California's wage and hour laws and sought relief on behalf of a potential class of California citizens. Hertz sought removal to federal court on the basis of diversity of citizenship, claiming that it and the plaintiffs were citizens of different States. Friend and Nhieu contended that Hertz was a California citizen because its principal place of business was in California, which would defeat diversity jurisdiction.

Hertz submitted a declaration stating that it operated facilities in 44 States. California, with about 12% of the Nation's population, accounted for 273 of Hertz's 1,606 car rental locations, about 2,300 of its 11,230 full-time employees, about $811 million of its $4.371 billion in annual revenue, and about 3.8 million of its roughly 21 million annual transactions. The declaration also stated that Hertz's leadership and core executive and administrative functions were located at its corporate headquarters in Park Ridge, New Jersey, and to a lesser extent in Oklahoma City, Oklahoma.

Friend and Nhieu filed suit in California state court in September 2007. Hertz removed the case to the United States District Court for the Northern District of California under 28 U.S.C. §§1332(d)(2) and 1441(a). The District Court accepted Hertz's statement of facts as undisputed but, applying Ninth Circuit precedent focused on the State-by-State amount of business activity, concluded that a significant plurality of Hertz's business activities occurred in California. It held that California was Hertz's principal place of business, found diversity jurisdiction lacking, and remanded the case to state court. Hertz appealed under 28 U.S.C. §1453(c), and the Ninth Circuit affirmed in a brief memorandum opinion. The Supreme Court granted certiorari to resolve differences among the Circuits regarding corporate citizenship.

(Breyer, J.)

Yes. A corporation's 'principal place of business' under §1332(c)(1) is the place where its high-level officers direct, control, and coordinate its activities, its 'nerve center,' which will normally be its corporate headquarters. The Court first rejected a jurisdictional objection. Section 1453(c)'s sixty-day appeal provision addresses only the court of appeals' deadline. It does not by silence strip the Court of its preexisting certiorari jurisdiction under 28 U.S.C. §1254. See Felker v. Turpin, 518 U.S. 651 (1996).

Three considerations support the nerve center test. First, the statutory text points to it: 'place' is singular, 'principal' means the main or most important place, and 'place' following 'State where' means a place within a State, not the State itself. A corporation's headquarters is a single place within a State, whereas a general business-activities test led courts to measure activity by State and invited strange results, such as treating nearly every national retailer as a California citizen. Cf. Commissioner v. Soliman, 506 U.S. 168 (1993).

Second, administrative simplicity is a major virtue in a jurisdictional statute. Complex tests waste time and resources, encourage gamesmanship, and reduce predictability. Sisson v. Ruby, 497 U.S. 358 (1990). A nerve center test is comparatively simple to apply, while multifactor business-activities tests had produced divergent and increasingly complex tests across the Circuits.

Third, the legislative history shows the Judicial Conference abandoned its proposed numerical gross-income test after criticism that it was too complex, suggesting the phrase should be no more complex than that test.

The test will produce hard cases and occasionally counterintuitive results, which is the price of a clearer rule. The party asserting jurisdiction bears the burden of proof by competent evidence. The nerve center must be an actual center of direction, control, and coordination, not a mail drop box, a bare office with a computer, or the location of an annual executive retreat, and a mere SEC Form 10-K listing of 'principal executive offices' is insufficient proof. The Ninth Circuit's judgment was vacated and the case remanded so that respondents could litigate in light of this holding.