Supreme Court Adopts Nerve Center Test for Corporate Citizenship

“[W]e conclude that the phrase 'principal place of business' refers to the place where the corporation's high level officers direct, control, and coordinate the corporation's activities,” Justice Breyer wrote earlier this year for the unanimous Supreme Court in Hertz Corp. v. Friend, 559 U.S. ___, 130 S. Ct. 1181, 1186 (2010), to resolve the conflict among the Circuits about how to determine a corporation's citizenship for purposes of federal diversity jurisdiction under 28 U.S.C. ' 1332. In adopting the “nerve center” test for determining corporate citizenship, the Court in Hertz Corp. rejected the far more complex “business activities” approach that attempts to determine citizenship based upon the volume of business a corporation carried on within a particular state. The “nerve center” approach, according to the Court, is superior to other approaches because it comports with the language and legislative history of ' 1332 and promotes administrative simplicity and economy.