You would think that it would be easy to determine where a corporation’s “principal place of business” is located. If so, you would be wrong. (Hertz Corp. v. Friend)
Hertz was sued in state court in California by employees claiming unpaid overtime and vacation pay. Hertz maintained that its principal place of business was in New Jersey, where its corporate headquarters is located, and moved for a transfer to federal court, based on its claimed “diversity of citizenship” (legalspeak for “the parties are citizens of different states”). Not so, argued the defendants; Hertz’s principal place of business is in California because it has more sales in California than any other state.
A federal district court judge agreed with the defendants and sent the case back to state court. The 9th Circuit Court of Appeals affirmed the district court judge.
Hertz – which is not No. 1 without good reason – did not accept defeat, but appealed to the U.S. Supreme Court. The Supreme Court heard the case and sided with Hertz, holding 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.”
So, now we know.