Monday, March 1, 2010

Supreme Court Construes Diversity Jurisdiction Statute

Last week in Hertz Corp. v. Friend, the Supreme Court interpreted 28 U.S.C. §1332(c)(1), which provides that, for purposes of diversity jurisdiction, “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business.” In a unanimous opinion by Justice Breyer, the Court relied on the language and the legislative history of the statute, as well as "administrative and purposive criteria," to rule that "[t]he phrase 'principal place of business' * * * refers to the place where a corporation’s high level officers direct, control, and coordinate the corporation’s activities, i.e., its 'nerve center,' which will typically be found at its corporate headquarters." Interestingly, Justice Scalia joined the majority opinion in spite of its brief discussion of legislative history; one scholar suggests that this can be explained by the fact that, in introducing the legislative history, Justice Breyer wrote it was helpful in this case "for those who accept it" (p. 16).

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