Hertz Corp. v. Friend

(Slip Opinion) OCTOBER TERM, 2009 1

Syllabus

NOTE: Where it is feasible, a syllabus (headnote) will be released, as is

being done in connection with this case, at the time the opinion is issued.

The syllabus constitutes no part of the opinion of the Court but has been

prepared by the Reporter of Decisions for the convenience of the reader.

See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES

Syllabus

HERTZ CORP. v. FRIEND ET AL.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE NINTH CIRCUIT

No. 08–1107. Argued November 10, 2009––Decided February 23, 2010

Respondents, California citizens, sued petitioner Hertz Corporation in a

California state court for claimed state-law violations. Hertz sought

removal to the Federal District Court under 28 U. S. C. §§1332(d)(2),

1441(a), claiming that because it and respondents were citizens of dif

ferent States, §§1332(a)(1), (c)(1), the federal court possessed diver

sity-of-citizenship jurisdiction. Respondents, however, claimed that

Hertz was a California citizen, like themselves, and that, hence, di

versity jurisdiction was lacking under §1332(c)(1), which provides

that “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 prin

cipal place of business.” To show that its “principal place of business”

was in New Jersey, not California, Hertz submitted a declaration

stating, among other things, that it operated facilities in 44 States,

that California accounted for only a portion of its business activity,

that its leadership is at its corporate headquarters in New Jersey,

and that its core executive and administrative functions are primar

ily carried out there. The District Court concluded that it lacked di

versity jurisdiction because Hertz was a California citizen under

Ninth Circuit precedent, which asks, inter alia, whether the amount

of the corporation’s business activity is “significantly larger” or “sub

stantially predominates” in one State. Finding that California was

Hertz’s “principal place of business” under that test because a plural

ity of the relevant business activity occurred there, the District Court

remanded the case to state court. The Ninth Circuit affirmed.

Held:

1. Respondents’ argument that this Court lacks jurisdiction under

§1453(c)—which expressly permits appeals of remand orders such as

the District Court’s only to “court[s] of appeals,” not to the Supreme

2 HERTZ CORP. v. FRIEND

Syllabus

Court, and provides that if “a final judgment on the appeal” in a court

of appeals “is not issued before the end” of 60 days (with a possible

10-day extension), “the appeal shall be denied”—makes far too much

of too little. The Court normally does not read statutory silence as

implicitly modifying or limiting its jurisdiction that another statute

specifically grants. E.g., Felker v. Turpin, 518 U. S. 651, 660–661.

Here, replicating similar, older statutes, §1254 specifically gives the

Court jurisdiction to “revie[w] . . . [b]y writ of certiorari” cases that

are “in the courts of appeals” when it grants the writ. The Court thus

interprets §1453(c)’s “60-day” requirement as simply requiring a

court of appeals to reach a decision within a specified time—not to

deprive this Court of subsequent jurisdiction to review the case. See,

e.g., Aetna Casualty & Surety Co. v. Flowers, 330 U. S. 464, 466–467.

Pp. 4–5.

2. The phrase “principal place of business” in §1332(c)(1) 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. Pp. 5–19.

(a) A brief review of the legislative history of diversity jurisdic

tion demonstrates that Congress added §1332(c)(1)’s “principal place

of business” language to the traditional state-of-incorporation test in

order to prevent corporations from manipulating federal-court juris

diction as well as to reduce the number of diversity cases. Pp. 5–10.

(b) However, the phrase “principal place of business” has proved

more difficult to apply than its originators likely expected. After

Congress’ amendment, courts were uncertain as to where to look to

determine a corporation’s “principal place of business” for diversity

purposes. If a corporation’s headquarters and executive offices were

in the same State in which it did most of its business, the test seemed

straightforward. The “principal place of business” was in that State.

But if those corporate headquarters, including executive offices, were

in one State, while the corporation’s plants or other centers of busi

ness activity were located in other States, the answer was less obvi

ous. Under these circumstances, for corporations with “far-flung”

business activities, numerous Circuits have looked to a corporation’s

“nerve center,” from which the corporation radiates out to its con

stituent parts and from which its officers direct, control, and coordi

nate the corporation’s activities. However, this test did not go far

enough, for it did not answer what courts should do when a corpora

tion’s operations are not far-flung but rather limited to only a few

States. When faced with this question, various courts have focused

more heavily on where a corporation’s actual business activities are

located, adopting divergent and increasingly complex tests to inter

pret the statute. Pp. 10–13.

Cite as: 559 U. S. ____ (2010) 3

Syllabus

(c) In an effort to find a single, more uniform interpretation of

the statutory phrase, this Court returns to the “nerve center” ap

proach: “[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. In practice it should normally be the place

where the corporation maintains its headquarters—provided that the

headquarters is the actual center of direction, control, and coordina

tion, i.e., the “nerve center,” and not simply an office where the corpo

ration holds its board meetings. Pp. 13–19.

(i) Three sets of considerations, taken together, convince the

Court that the “nerve center” approach, while imperfect, is superior

to other possibilities. First, §1332(c)(1)’s language supports the ap

proach. The statute’s word “place” is singular, not plural. Its word

“principal” requires that the main, prominent, or most important

place be chosen. Cf., e.g., Commissioner v. Soliman, 506 U. S. 168,

174. And the fact that the word “place” follows the words “State

where” means that the “place” is a place within a State, not the State

itself. A corporation’s “nerve center,” usually its main headquarters,

is a single place. The public often considers it the corporation’s main

place of business. And it is a place within a State. By contrast, the

application of a more general business activities test has led some

courts, as in the present case, to look, not at a particular place within

a State, but incorrectly at the State itself, measuring the total

amount of business activities that the corporation conducts there and

determining whether they are significantly larger than in the next

ranking State. Second, administrative simplicity is a major virtue in

a jurisdictional statute. Sisson v. Ruby, 497 U. S. 358, 375. A “nerve

center” approach, which ordinarily equates that “center” with a cor

poration’s headquarters, is simple to apply comparatively speaking.

By contrast, a corporation’s general business activities more often

lack a single principal place where they take place. Third, the stat

ute’s legislative history suggests that the words “principal place of

business” should be interpreted to be no more complex than an ear

lier, numerical test that was criticized as too complex and impractical

to apply. A “nerve center” test offers such a possibility. A general

business activities test does not. Pp. 14–17.

(ii) While there may be no perfect test that satisfies all admin

istrative and purposive criteria, and there will be hard cases under

the “nerve center” test adopted today, this test is relatively easier to

apply and does not require courts to weigh corporate functions, assets

or revenues different in kind, one from the other. And though this

test may produce results that seem to cut against the basic rationale

of diversity jurisdiction, accepting occasionally counterintuitive re

sults is the price the legal system must pay to avoid overly complex

4 HERTZ CORP. v. FRIEND

Syllabus

jurisdictional administration while producing the benefits that ac

company a more uniform legal system. Pp. 17–18.

(iii) If the record reveals attempts at jurisdictional manipula

tion—for example, that the alleged “nerve center” is nothing more

than a mail drop box, a bare office with a computer, or the location of

an annual executive retreat—the courts should instead take as the

“nerve center” the place of actual direction, control, and coordination,

in the absence of such manipulation. Pp. 18–19.

(d) Although petitioner’s unchallenged declaration suggests that

Hertz’s “nerve center” and its corporate headquarters are one and the

same, and that they are located in New Jersey, not in California, re

spondents should have a fair opportunity on remand to litigate their

case in light of today’s holding. P. 19.

297 Fed. Appx. 690, vacated and remanded.

BREYER, J., delivered the opinion for a unanimous Court.

Cite as: 559 U. S. ____ (2010) 1

Opinion of the Court

NOTICE: This opinion is subject to formal revision before publication in the

preliminary print of the United States Reports. Readers are requested to

notify the Reporter of Decisions, Supreme Court of the United States, Wash

ington, D. C. 20543, of any typographical or other formal errors, in order

that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES

_________________

No. 08–1107

_________________

THE HERTZ CORPORATION, PETITIONER v.

MELINDA FRIEND ET AL.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF

APPEALS FOR THE NINTH CIRCUIT

[February 23, 2010]

JUSTICE BREYER delivered the opinion of the Court.

The federal diversity jurisdiction statute provides that

“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.” 28 U. S. C. §1332(c)(1)

(emphasis added). We seek here to resolve different inter

pretations that the Circuits have given this phrase. In

doing so, we place primary weight upon the need for judi

cial administration of a jurisdictional statute to remain as

simple as possible. And we conclude that the phrase

“principal place of business” refers to the place where the

corporation’s high level officers direct, control, and coordi

nate the corporation’s activities. Lower federal courts

have often metaphorically called that place the corpora

tion’s “nerve center.” See, e.g., Wisconsin Knife Works v.

National Metal Crafters, 781 F. 2d 1280, 1282 (CA7 1986);

Scot Typewriter Co. v. Underwood Corp., 170 F. Supp. 862,

865 (SDNY 1959) (Weinfeld, J.). We believe that the

“nerve center” will typically be found at a corporation’s

headquarters.

2 HERTZ CORP. v. FRIEND

Opinion of the Court

I

In September 2007, respondents Melinda Friend and

John Nhieu, two California citizens, sued petitioner, the

Hertz Corporation, in a California state court. They

sought damages for what they claimed were violations of

California’s wage and hour laws. App. to Pet. for Cert.

20a. And they requested relief on behalf of a potential

class composed of California citizens who had allegedly

suffered similar harms.

Hertz filed a notice seeking removal to a federal court.

28 U. S. C. §§1332(d)(2), 1441(a). Hertz claimed that the

plaintiffs and the defendant were citizens of different

States. §§1332(a)(1), (c)(1). Hence, the federal court

possessed diversity-of-citizenship jurisdiction. Friend and

Nhieu, however, claimed that the Hertz Corporation was a

California citizen, like themselves, and that, hence, diver

sity jurisdiction was lacking.

To support its position, Hertz submitted a declaration

by an employee relations manager that sought to show

that Hertz’s “principal place of business” was in New

Jersey, not in California. The declaration stated, among

other things, that Hertz operated facilities in 44 States;

and that California—which had about 12% of the Nation’s

population, Pet. for Cert. 8—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 approximately

21 million annual transactions, i.e., rentals. The declara

tion also stated that the “leadership of Hertz and its do

mestic subsidiaries” is located at Hertz’s “corporate head

quarters” in Park Ridge, New Jersey; that its “core

executive and administrative functions . . . are carried out”

there and “to a lesser extent” in Oklahoma City, Okla

homa; and that its “major administrative operations . . .

are found” at those two locations. App. to Pet. for Cert.

26a–30a.

Cite as: 559 U. S. ____ (2010) 3

Opinion of the Court

The District Court of the Northern District of California

accepted Hertz’s statement of the facts as undisputed.

But it concluded that, given those facts, Hertz was a citi

zen of California. In reaching this conclusion, the court

applied Ninth Circuit precedent, which instructs courts to

identify a corporation’s “principal place of business” by

first determining the amount of a corporation’s business

activity State by State. If the amount of activity is “sig

nificantly larger” or “substantially predominates” in one

State, then that State is the corporation’s “principal place

of business.” If there is no such State, then the “principal

place of business” is the corporation’s “ ‘nerve center,’ ” i.e.,

the place where “ ‘the majority of its executive and admin

istrative functions are performed.’ ” Friend v. Hertz, No.

C–07–5222 MMC (ND Cal., Jan. 15, 2008), p. 3 (hereinaf

ter Order); Tosco Corp. v. Communities for a Better Envi

ronment, 236 F. 3d 495, 500–502 (CA9 2001) (per curiam).

Applying this test, the District Court found that the

“plurality of each of the relevant business activities” was

in California, and that “the differential between the

amount of those activities” in California and the amount

in “the next closest state” was “significant.” Order 4.

Hence, Hertz’s “principal place of business” was Califor

nia, and diversity jurisdiction was thus lacking. The

District Court consequently remanded the case to the

state courts.

Hertz appealed the District Court’s remand order. 28

U. S. C. §1453(c). The Ninth Circuit affirmed in a brief

memorandum opinion. 297 Fed. Appx. 690 (2008). Hertz

filed a petition for certiorari. And, in light of differences

among the Circuits in the application of the test for corpo

rate citizenship, we granted the writ. Compare Tosco

Corp., supra, at 500–502, and Capitol Indemnity Corp. v.

Russellville Steel Co., 367 F. 3d 831, 836 (CA8 2004) (ap

plying “total activity” test and looking at “all corporate

activities”), with Wisconsin Knife Works, supra, at 1282

4 HERTZ CORP. v. FRIEND

Opinion of the Court

(applying “nerve center” test).

II

At the outset, we consider a jurisdictional objection.

Respondents point out that the statute permitting Hertz

to appeal the District Court’s remand order to the Court of

Appeals, 28 U. S. C. §1453(c), constitutes an exception to a

more general jurisdictional rule that remand orders are

“not reviewable on appeal.” §1447(d). They add that the

language of §1453(c) refers only to “court[s] of appeals,”

not to the Supreme Court. The statute also says that if “a

final judgment on the appeal” in a court of appeals “is not

issued before the end” of 60 days (with a possible 10-day

extension), “the appeal shall be denied.” And respondents

draw from these statutory circumstances the conclusion

that Congress intended to permit review of a remand

order only by a court of appeals, not by the Supreme Court

(at least not if, as here, this Court’s grant of certiorari

comes after §1453(c)’s time period has elapsed).

This argument, however, makes far too much of too

little. We normally do not read statutory silence as implic

itly modifying or limiting Supreme Court jurisdiction that

another statute specifically grants. Felker v. Turpin, 518

U. S. 651, 660–661 (1996); Ex parte Yerger, 8 Wall. 85,

104–105 (1869). Here, another, pre-existing federal stat

ute gives this Court jurisdiction to “revie[w] . . . [b]y writ

of certiorari” cases that, like this case, are “in the courts of

appeals” when we grant the writ. 28 U. S. C. §1254. This

statutory jurisdictional grant replicates similar grants

that yet older statutes provided. See, e.g., §1254, 62 Stat.

928; §1, 43 Stat. 938–939 (amending §240, 36 Stat. 1157);

§240, 36 Stat. 1157; Evarts Act, §6, 26 Stat. 828. This

history provides particularly strong reasons not to read

§1453(c)’s silence or ambiguous language as modifying or

limiting our pre-existing jurisdiction.

We thus interpret §1453(c)’s “60-day” requirement as

Cite as: 559 U. S. ____ (2010) 5

Opinion of the Court

simply requiring a court of appeals to reach a decision

within a specified time—not to deprive this Court of sub

sequent jurisdiction to review the case. See Aetna Casu

alty & Surety Co. v. Flowers, 330 U. S. 464, 466–467

(1947); Gay v. Ruff, 292 U. S. 25, 28–31 (1934).

III

We begin our “principal place of business” discussion

with a brief review of relevant history. The Constitution

provides that the “judicial Power shall extend” to “Contro

versies . . . between Citizens of different States.” Art. III,

§2. This language, however, does not automatically confer

diversity jurisdiction upon the federal courts. Rather, it

authorizes Congress to do so and, in doing so, to determine

the scope of the federal courts’ jurisdiction within constitu

tional limits. Kline v. Burke Constr. Co., 260 U. S. 226,

233–234 (1922); Mayor v. Cooper, 6 Wall. 247, 252 (1868).

Congress first authorized federal courts to exercise

diversity jurisdiction in 1789 when, in the First Judiciary

Act, Congress granted federal courts authority to hear

suits “between a citizen of the State where the suit is

brought, and a citizen of another State.” §11, 1 Stat. 78.

The statute said nothing about corporations. In 1809,

Chief Justice Marshall, writing for a unanimous Court,

described a corporation as an “invisible, intangible, and

artificial being” which was “certainly not a citizen.” Bank

of United States v. Deveaux, 5 Cranch 61, 86 (1809). But

the Court held that a corporation could invoke the federal

courts’ diversity jurisdiction based on a pleading that the

corporation’s shareholders were all citizens of a different

State from the defendants, as “the term citizen ought to be

understood as it is used in the constitution, and as it is

used in other laws. That is, to describe the real persons

who come into court, in this case, under their corporate

name.” Id., at 91–92.

In Louisville, C. & C. R. Co. v. Letson, 2 How. 497

6 HERTZ CORP. v. FRIEND

Opinion of the Court

(1844), the Court modified this initial approach. It held

that a corporation was to be deemed an artificial person of

the State by which it had been created, and its citizenship

for jurisdictional purposes determined accordingly. Id., at

558–559. Ten years later, the Court in Marshall v. Balti

more & Ohio R. Co., 16 How. 314 (1854), held that the

reason a corporation was a citizen of its State of incorpora

tion was that, for the limited purpose of determining

corporate citizenship, courts could conclusively (and artifi

cially) presume that a corporation’s shareholders were

citizens of the State of incorporation. Id., at 327–328.

And it reaffirmed Letson. 16 How., at 325–326. Whatever

the rationale, the practical upshot was that, for diversity

purposes, the federal courts considered a corporation to be

a citizen of the State of its incorporation. 13F C. Wright,

A. Miller, & E. Cooper, Federal Practice and Procedure

§3623, pp. 1–7 (3d ed. 2009) (hereinafter Wright & Miller).

In 1928 this Court made clear that the “state of incorpo

ration” rule was virtually absolute. It held that a corpora

tion closely identified with State A could proceed in a

federal court located in that State as long as the corpora

tion had filed its incorporation papers in State B, perhaps

a State where the corporation did no business at all. See

Black and White Taxicab & Transfer Co. v. Brown and

Yellow Taxicab & Transfer Co., 276 U. S. 518, 522–525

(refusing to question corporation’s reincorporation motives

and finding diversity jurisdiction). Subsequently, many in

Congress and those who testified before it pointed out that

this interpretation was at odds with diversity jurisdiction’s

basic rationale, namely, opening the federal courts’ doors

to those who might otherwise suffer from local prejudice

against out-of-state parties. See, e.g., S. Rep. No. 530, 72d

Cong., 1st Sess., 2, 4–7 (1932). Through its choice of the

State of incorporation, a corporation could manipulate

federal-court jurisdiction, for example, opening the federal

courts’ doors in a State where it conducted nearly all its

Cite as: 559 U. S. ____ (2010) 7

Opinion of the Court

business by filing incorporation papers elsewhere. Id., at

4 (“Since the Supreme Court has decided that a corpora

tion is a citizen . . . it has become a common practice for

corporations to be incorporated in one State while they do

business in another. And there is no doubt but that it

often occurs simply for the purpose of being able to have

the advantage of choosing between two tribunals in case of

litigation”). See also Hearings on S. 937 et al. before a

Subcommittee of the Senate Committee on the Judiciary,

72d Cong., 1st Sess., 4–5 (1932) (Letter from Sen. George

W. Norris to Attorney General William D. Mitchell (May

24, 1930)) (citing a “common practice for individuals to

incorporate in a foreign State simply for the purpose of

taking litigation which may arise into the Federal courts”).

Although various legislative proposals to curtail the corpo

rate use of diversity jurisdiction were made, see, e.g.,

S. 937, S. 939, H. R. 11508, 72d Cong., 1st Sess. (1932),

none of these proposals were enacted into law.

At the same time as federal dockets increased in size,

many judges began to believe those dockets contained too

many diversity cases. A committee of the Judicial Confer

ence of the United States studied the matter. See Reports

of the Proceedings of the Regular Annual Meeting and

Special Meeting (Sept. 24–26 & Mar. 19–20, 1951), in

H. R. Doc. No. 365, 82d Cong., 2d Sess., pp. 26–27 (1952).

And on March 12, 1951, that committee, the Committee on

Jurisdiction and Venue, issued a report (hereinafter Mar.

Committee Rept.).

Among its observations, the committee found a general

need “to prevent frauds and abuses” with respect to juris

diction. Id., at 14. The committee recommended against

eliminating diversity cases altogether. Id., at 28. Instead

it recommended, along with other proposals, a statutory

amendment that would make a corporation a citizen both

of the State of its incorporation and any State from which

it received more than half of its gross income. Id., at 14–

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Opinion of the Court

15 (requiring corporation to show that “less than fifty per

cent of its gross income was derived from business trans

acted within the state where the Federal court is held”).

If, for example, a citizen of California sued (under state

law in state court) a corporation that received half or more

of its gross income from California, that corporation would

not be able to remove the case to federal court, even if

Delaware was its State of incorporation.

During the spring and summer of 1951 committee mem

bers circulated their report and attended circuit confer

ences at which federal judges discussed the report’s rec

ommendations. Reflecting those criticisms, the committee

filed a new report in September, in which it revised its

corporate citizenship recommendation. It now proposed

that “ ‘a corporation shall be deemed a citizen of the state

of its original creation . . . [and] shall also be deemed a

citizen of a state where it has its principal place of busi

ness.’ ” Judicial Conference of the United States, Report of

the Committee on Jurisdiction and Venue 4 (Sept. 24,

1951) (hereinafter Sept. Committee Rept.)—the source of

the present-day statutory language. See Hearings on

H. R. 2516 et al. before Subcommittee No. 3 of the House

Committee on the Judiciary, 85th Cong., 1st Sess., 9

(1957) (hereinafter House Hearings). The committee

wrote that this new language would provide a “simpler

and more practical formula” than the “gross income” test.

Sept. Committee Rept. 2. It added that the language

“ha[d] a precedent in the jurisdictional provisions of the

Bankruptcy Act.” Id., at 2–3.

In mid-1957 the committee presented its reports to the

House of Representatives Committee on the Judiciary.

House Hearings 9–27; see also H. Rep. No. 1706, 85th

Cong., 2d Sess., 27–28 (1958) (hereinafter H. R. Rep. 1706)

(reprinting Mar. and Sept. Committee Repts.); S. Rep. No.

1830, 85th Cong., 2d Sess., 15–31 (1958) (hereinafter

S. Rep. 1830) (same). Judge Albert Maris, representing

Cite as: 559 U. S. ____ (2010) 9

Opinion of the Court

Judge John Parker (who had chaired the Judicial Confer

ence Committee), discussed various proposals that the

Judicial Conference had made to restrict the scope of

diversity jurisdiction. In respect to the “principal place of

business” proposal, he said that the relevant language

“ha[d] been defined in the Bankruptcy Act.” House Hear

ings 37. He added:

“All of those problems have arisen in bankruptcy

cases, and as I recall the cases—and I wouldn’t want

to be bound by this statement because I haven’t them

before me—I think the courts have generally taken

the view that where a corporation’s interests are

rather widespread, the principal place of business is

an actual rather than a theoretical or legal one. It is

the actual place where its business operations are co

ordinated, directed, and carried out, which would or

dinarily be the place where its officers carry on its

day-to-day business, where its accounts are kept,

where its payments are made, and not necessarily a

State in which it may have a plant, if it is a big corpo

ration, or something of that sort.

“But that has been pretty well worked out in the

bankruptcy cases, and that law would all be available,

you see, to be applied here without having to go over it

again from the beginning.” Ibid.

The House Committee reprinted the Judicial Conference

Committee Reports along with other reports and relevant

testimony and circulated it to the general public “for the

purpose of inviting further suggestions and comments.”

Id., at III. Subsequently, in 1958, Congress both codified

the courts’ traditional place of incorporation test and also

enacted into law a slightly modified version of the Confer

ence Committee’s proposed “principal place of business”

language. A corporation was to “be deemed a citizen of

any State by which it has been incorporated and of the

10 HERTZ CORP. v. FRIEND

Opinion of the Court

State where it has its principal place of business.” §2, 72

Stat. 415.

IV

The phrase “principal place of business” has proved

more difficult to apply than its originators likely expected.

Decisions under the Bankruptcy Act did not provide the

firm guidance for which Judge Maris had hoped because

courts interpreting bankruptcy law did not agree about

how to determine a corporation’s “principal place of busi

ness.” Compare Burdick v. Dillon, 144 F. 737, 738 (CA1

1906) (holding that a corporation’s “principal office, rather

than a factory, mill, or mine . . . constitutes the ‘principal

place of business’ ”), with Continental Coal Corp. v.

Roszelle Bros., 242 F. 243, 247 (CA6 1917) (identifying the

“principal place of business” as the location of mining

activities, rather than the “principal office”); see also

Friedenthal, New Limitations on Federal Jurisdiction, 11

Stan. L. Rev. 213, 223 (1959) (“The cases under the Bank

ruptcy Act provide no rigid legal formula for the determi

nation of the principal place of business”).

After Congress’ amendment, courts were similarly

uncertain as to where to look to determine a corporation’s

“principal place of business” for diversity purposes. If a

corporation’s headquarters and executive offices were in

the same State in which it did most of its business, the

test seemed straightforward. The “principal place of

business” was located in that State. See, e.g., Long v.

Silver, 248 F. 3d 309, 314–315 (CA4 2001); Pinnacle Con

sultants, Ltd. v. Leucadia Nat. Corp., 101 F. 3d 900, 906–

907 (CA2 1996).

But suppose those corporate headquarters, including

executive offices, are in one State, while the corporation’s

plants or other centers of business activity are located in

other States? In 1959 a distinguished federal district

judge, Edward Weinfeld, relied on the Second Circuit’s

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Opinion of the Court

interpretation of the Bankruptcy Act to answer this ques

tion in part:

“Where a corporation is engaged in far-flung and var

ied activities which are carried on in different states,

its principal place of business is the nerve center from

which it radiates out to its constituent parts and from

which its officers direct, control and coordinate all ac

tivities without regard to locale, in the furtherance of

the corporate objective. The test applied by our Court

of Appeals, is that place where the corporation has an

‘office from which its business was directed and con

trolled’—the place where ‘all of its business was under

the supreme direction and control of its officers.’ ”

Scot Typewriter Co., 170 F. Supp., at 865.

Numerous Circuits have since followed this rule, applying

the “nerve center” test for corporations with “far-flung”

business activities. See, e.g., Topp v. Compair Inc., 814

F. 2d 830, 834 (CA1 1987); see also 15 J. Moore et al.,

Moore’s Federal Practice §102.54[2], p. 102–112.1 (3d ed.

2009) (hereinafter Moore’s).

Scot’s analysis, however, did not go far enough. For it

did not answer what courts should do when the operations

of the corporation are not “far-flung” but rather limited to

only a few States. When faced with this question, various

courts have focused more heavily on where a corporation’s

actual business activities are located. See, e.g., Diaz-

Rodriguez v. Pep Boys Corp., 410 F. 3d 56, 60–61 (CA1

2005); R. G. Barry Corp. v. Mushroom Makers, Inc., 612

F. 2d 651, 656–657 (CA2 1979); see also 15 Moore’s

§102.54, at 102–112.1.

Perhaps because corporations come in many different

forms, involve many different kinds of business activities,

and locate offices and plants for different reasons in differ

ent ways in different regions, a general “business activi

ties” approach has proved unusually difficult to apply.

12 HERTZ CORP. v. FRIEND

Opinion of the Court

Courts must decide which factors are more important than

others: for example, plant location, sales or servicing

centers; transactions, payrolls, or revenue generation.

See, e.g., R. G. Barry Corp., supra, at 656–657 (place of

sales and advertisement, office, and full-time employees);

Diaz-Rodriguez, supra, at 61–62 (place of stores and in

ventory, employees, income, and sales).

The number of factors grew as courts explicitly com

bined aspects of the “nerve center” and “business activity”

tests to look to a corporation’s “total activities,” sometimes

to try to determine what treatises have described as the

corporation’s “center of gravity.” See, e.g., Gafford v.

General Elec. Co., 997 F. 2d 150, 162–163 (CA6 1993);

Amoco Rocmount Co. v. Anschutz Corp., 7 F. 3d 909, 915

(CA10 1993); 13F Wright & Miller §3625, at 100. A major

treatise confirms this growing complexity, listing Circuit

by Circuit, cases that highlight different factors or empha

size similar factors differently, and reporting that the

“federal courts of appeals have employed various tests”—

tests which “tend to overlap” and which are sometimes

described in “language” that “is imprecise.” 15 Moore’s

§102.54[2], at 102–112. See also id., §§102.54[2], [13], at

102–112 to 102–122 (describing, in 14 pages, major tests

as looking to the “nerve center,” “locus of operations,” or

“center of corporate activities”). Not surprisingly, differ

ent circuits (and sometimes different courts within a

single circuit) have applied these highly general multifac

tor tests in different ways. Id., §§102.54[3]–[7], [11]–[13]

(noting that the First Circuit “has never explained a basis

for choosing between ‘the center of corporate activity’ test

and the ‘locus of operations’ test”; the Second Circuit uses

a “two-part test” similar to that of the Fifth, Ninth, and

Eleventh Circuits involving an initial determination as to

whether “a corporation’s activities are centralized or de

centralized” followed by an application of either the “place

of operations” or “nerve center” test; the Third Circuit

Cite as: 559 U. S. ____ (2010) 13

Opinion of the Court

applies the “center of corporate activities” test searching

for the “headquarters of a corporation’s day-to-day activ

ity”; the Fourth Circuit has “endorsed neither [the ‘nerve

center’ or ‘place of operations’] test to the exclusion of the

other”; the Tenth Circuit directs consideration of the “total

activity of the company considered as a whole”). See also

13F Wright & Miller §3625 (describing, in 73 pages, the

“nerve center,” “corporate activities,” and “total activity”

tests as part of an effort to locate the corporation’s “center

of gravity,” while specifying different ways in which differ

ent circuits apply these or other factors).

This complexity may reflect an unmediated judicial

effort to apply the statutory phrase “principal place of

business” in light of the general purpose of diversity juris

diction, i.e., an effort to find the State where a corporation

is least likely to suffer out-of-state prejudice when it is

sued in a local court, Pease v. Peck, 18 How. 595, 599

(1856). But, if so, that task seems doomed to failure.

After all, the relevant purposive concern—prejudice

against an out-of-state party—will often depend upon

factors that courts cannot easily measure, for example, a

corporation’s image, its history, and its advertising, while

the factors that courts can more easily measure, for exam

ple, its office or plant location, its sales, its employment, or

the nature of the goods or services it supplies, will some

times bear no more than a distant relation to the likeli

hood of prejudice. At the same time, this approach is at

war with administrative simplicity. And it has failed to

achieve a nationally uniform interpretation of federal law,

an unfortunate consequence in a federal legal system.

V

A

In an effort to find a single, more uniform interpretation

of the statutory phrase, we have reviewed the Courts of

Appeals’ divergent and increasingly complex interpreta

14 HERTZ CORP. v. FRIEND

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tions. Having done so, we now return to, and expand,

Judge Weinfeld’s approach, as applied in the Seventh

Circuit. See, e.g., Scot Typewriter Co., 170 F. Supp., at

865; Wisconsin Knife Works, 781 F. 2d, at 1282. We con

clude that “principal 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 corpora

tion’s “nerve center.” And in practice it should normally

be the place where the corporation maintains its head

quarters—provided that the headquarters is the actual

center of direction, control, and coordination, i.e., the

“nerve center,” and not simply an office where the corpora

tion holds its board meetings (for example, attended by

directors and officers who have traveled there for the

occasion).

Three sets of considerations, taken together, convince us

that this approach, while imperfect, is superior to other

possibilities. First, the statute’s language supports the

approach. The statute’s text deems a corporation a citizen

of the “State where it has its principal place of business. ”

28 U. S. C. §1332(c)(1). The word “place” is

in the singular, not the plural. The word “principal” re

quires us to pick out the “main, prominent” or “leading”

place. 12 Oxford English Dictionary 495 (2d ed. 1989)

(def. (A)(I)(2)). Cf. Commissioner v. Soliman, 506 U. S.

168, 174 (1993) (interpreting “principal place of business”

for tax purposes to require an assessment of “whether any

one business location is the ‘most important, consequen

tial, or influential’ one”). And the fact that the word

“place” follows the words “State where” means that the

“place” is a place within a State. It is not the State itself.

A corporation’s “nerve center,” usually its main head

quarters, is a single place. The public often (though not

always) considers it the corporation’s main place of busi

ness. And it is a place within a State. By contrast, the

Cite as: 559 U. S. ____ (2010) 15

Opinion of the Court

application of a more general business activities test has

led some courts, as in the present case, to look, not at a

particular place within a State, but incorrectly at the

State itself, measuring the total amount of business activi

ties that the corporation conducts there and determining

whether they are “significantly larger” than in the next

ranking State. 297 Fed. Appx. 690.

This approach invites greater litigation and can lead to

strange results, as the Ninth Circuit has since recognized.

Namely, if a “corporation may be deemed a citizen of

California on th[e] basis” of “activities [that] roughly

reflect California’s larger population . . . nearly every

national retailer—no matter how far flung its operations—

will be deemed a citizen of California for diversity pur

poses.” Davis v. HSBC Bank Nev., N. A., 557 F. 3d 1026,

1029–1030 (2009). But why award or decline diversity

jurisdiction on the basis of a State’s population, whether

measured directly, indirectly (say proportionately), or with

modifications?

Second, administrative simplicity is a major virtue in a

jurisdictional statute. Sisson v. Ruby, 497 U. S. 358, 375

(1990) (SCALIA, J., concurring in judgment) (eschewing

“the sort of vague boundary that is to be avoided in the

area of subject-matter jurisdiction wherever possible”).

Complex jurisdictional tests complicate a case, eating up

time and money as the parties litigate, not the merits of

their claims, but which court is the right court to decide

those claims. Cf. Navarro Savings Assn. v. Lee, 446 U. S.

458, 464, n. 13 (1980). Complex tests produce appeals and

reversals, encourage gamesmanship, and, again, diminish

the likelihood that results and settlements will reflect a

claim’s legal and factual merits. Judicial resources too are

at stake. Courts have an independent obligation to de

termine whether subject-matter jurisdiction exists, even

when no party challenges it. Arbaugh v. Y & H Corp., 546

U. S. 500, 514 (2006) (citing Ruhrgas AG v. Marathon Oil

16 HERTZ CORP. v. FRIEND

Opinion of the Court

Co., 526 U. S. 574, 583 (1999)). So courts benefit from

straightforward rules under which they can readily assure

themselves of their power to hear a case. Arbaugh, supra,

at 514.

Simple jurisdictional rules also promote greater predict

ability. Predictability is valuable to corporations making

business and investment decisions. Cf. First Nat. City

Bank v. Banco Para el Comercio Exterior de Cuba, 462

U. S. 611, 621 (1983) (recognizing the “need for certainty

and predictability of result while generally protecting the

justified expectations of parties with interests in the cor

poration”). Predictability also benefits plaintiffs deciding

whether to file suit in a state or federal court.

A “nerve center” approach, which ordinarily equates

that “center” with a corporation’s headquarters, is simple

to apply comparatively speaking. The metaphor of a cor

porate “brain,” while not precise, suggests a single loca

tion. By contrast, a corporation’s general business activi

ties more often lack a single principal place where they

take place. That is to say, the corporation may have sev

eral plants, many sales locations, and employees located in

many different places. If so, it will not be as easy to de

termine which of these different business locales is the

“principal” or most important “place.”

Third, the statute’s legislative history, for those who

accept it, offers a simplicity-related interpretive bench

mark. The Judicial Conference provided an initial version

of its proposal that suggested a numerical test. A corpora

tion would be deemed a citizen of the State that accounted

for more than half of its gross income. Mar. Committee

Rept. 14–15; see supra, at 8. The Conference changed its

mind in light of criticism that such a test would prove too

complex and impractical to apply. Sept. Committee Rept.

2; see also H. Rep. 1706, at 28; S. Rep. 1830, at 31. That

history suggests that the words “principal place of busi

ness” should be interpreted to be no more complex than

Cite as: 559 U. S. ____ (2010) 17

Opinion of the Court

the initial “half of gross income” test. A “nerve center” test

offers such a possibility. A general business activities test

does not.

B

We recognize that there may be no perfect test that

satisfies all administrative and purposive criteria. We

recognize as well that, under the “nerve center” test we

adopt today, there will be hard cases. For example, in this

era of telecommuting, some corporations may divide their

command and coordinating functions among officers who

work at several different locations, perhaps communicat

ing over the Internet. That said, our test nonetheless

points courts in a single direction, towards the center of

overall direction, control, and coordination. Courts do not

have to try to weigh corporate functions, assets, or reve

nues different in kind, one from the other. Our approach

provides a sensible test that is relatively easier to apply,

not a test that will, in all instances, automatically gener

ate a result.

We also recognize that the use of a “nerve center” test

may in some cases produce results that seem to cut

against the basic rationale for 28 U. S. C. §1332, see su

pra, at 6. For example, if the bulk of a company’s business

activities visible to the public take place in New Jersey,

while its top officers direct those activities just across the

river in New York, the “principal place of business” is New

York. One could argue that members of the public in New

Jersey would be less likely to be prejudiced against the

corporation than persons in New York—yet the corpora

tion will still be entitled to remove a New Jersey state case

to federal court. And note too that the same corporation

would be unable to remove a New York state case to fed

eral court, despite the New York public’s presumed preju

dice against the corporation.

We understand that such seeming anomalies will arise.

18 HERTZ CORP. v. FRIEND

Opinion of the Court

However, in view of the necessity of having a clearer rule,

we must accept them. Accepting occasionally counterin

tuitive results is the price the legal system must pay to

avoid overly complex jurisdictional administration while

producing the benefits that accompany a more uniform

legal system.

The burden of persuasion for establishing diversity

jurisdiction, of course, remains on the party asserting it.

Kokkonen v. Guardian Life Ins. Co. of America, 511 U. S.

375, 377 (1994); McNutt v. General Motors Acceptance

Corp., 298 U. S. 178, 189 (1936); see also 13E Wright &

Miller §3602.1, at 119. When challenged on allegations of

jurisdictional facts, the parties must support their allega

tions by competent proof. McNutt, supra, at 189; 15

Moore’s §102.14, at 102–32 to 102–32.1. And when faced

with such a challenge, we reject suggestions such as,

for example, the one made by petitioner that the mere

filing of a form like the Securities and Exchange Commis

sion’s Form 10–K listing a corporation’s “principal execu

tive offices” would, without more, be sufficient proof to

establish a corporation’s “nerve center.” See, e.g., SEC

Form 10–K, online at http://www.sec.gov/about/forms/

form10-k.pdf. (as visited Feb. 19, 2010, and available in

Clerk of Court’s case file). Cf. Dimmitt & Owens Finan

cial, Inc. v. United States, 787 F. 2d 1186, 1190–1192 (CA7

1986) (distinguishing “principal executive office” in the tax

lien context, see 26 U. S. C. §6323(f)(2), from “principal

place of business” under 28 U. S. C. §1332(c)). Such possi

bilities would readily permit jurisdictional manipulation,

thereby subverting a major reason for the insertion of the

“principal place of business” language in the diversity

statute. Indeed, if the record reveals attempts at manipu

lation—for example, that the alleged “nerve center” is

nothing more than a mail drop box, a bare office with a

computer, or the location of an annual executive retreat—

the courts should instead take as the “nerve center” the

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Opinion of the Court

place of actual direction, control, and coordination, in the

absence of such manipulation.

VI

Petitioner’s unchallenged declaration suggests that

Hertz’s center of direction, control, and coordination, its

“nerve center,” and its corporate headquarters are one and

the same, and they are located in New Jersey, not in

California. Because respondents should have a fair op-

portunity to litigate their case in light of our holding,

however, we vacate the Ninth Circuit’s judgment and

remand the case for further proceedings consistent with

this opinion.

It is so ordered.