The United States Supreme Court recently resolved a split of authority as to the citizenship of corporations for purposes of federal diversity jurisdiction. Corporations are deemed citizens of the state in which they are incorporated and the state in which they have their "principal place of business." In Hertz Corp. v. Friend, the Court adressed the interpretation of the phrase "prinicipal place of business." The Court first discussed the various tests developed and applied by the courts of appeals focusing on the "nerve center" test and "business activities" test. In this case, the Ninth Circuit employed the business activities test and held that because Hertz did more business in California than any other state, it was a citizen of California. The Supreme Court disagreed and held that
“[P]rincipal place of business" is best read as referring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.” And in practice it should normally be the place where the corporation maintains its headquarters . . .
The Court concluded by acknowledging that "seeming anomalies" will arise under this test, but the Court was willing to accept them "in an effort to find a single, more uniform, interpretation of the statutory phrase" and "in view of the necessity of having a clearer rule." Thus, a corporation’s dual citizenship for diversity purposes consists of the state of incorportation and the state in which the headquarters is located. Accordingly, the Court reversed the Ninth Circuit and remanded for reconsideration in light of this test. The Supreme Court’s unaminous opinion can be found here.