ACCT 352 question

   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, diversity 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 declaration also stated that the “leadership of Hertz and its domestic subsidiaries” is located at Hertz’s “corporate headquarters” in Park Ridge, New Jersey; that its “core executive and administrative functions . . . are carried out” there and “to a lesser extent” in Oklahoma City, Oklahoma; and that its “major administrative operations . . . are found” at those two locations. App. to Pet. for Cert. 26a–30a.

   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 citizen 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 “significantly 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 administrative functions are performed.’ ”

   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 amounts 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 California, 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 corporate citizenship, we granted the writ.

   A “nerve center” approach, which ordinarily equates that “center” with a corporation’s headquarters, is simple to apply comparatively speaking. The metaphor of a corporate “brain,” while not precise, suggests a single location. By contrast, a corporation’s general business activities more often lack a single principal place where they take place. That is to say, the corporation may have several plants, many sales locations, and employees located in many different places. If so, it will not be as easy to determine which of these different business locales is the “principal” or most important “place.”

   The burden of persuasion for establishing diversity jurisdiction, of course, remains on the party asserting it. When challenged on allegations of jurisdictional facts, the parties must support their allegations by competent proof. 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 Commission’s Form 10–K listing a corporation’s “principal executive offices” would, without more, be sufficient proof to establish a corporation’s “nerve center.” Such possibilities 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 manipulation—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.

   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- opportunity 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.

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