Hertz Corp. v. Friend

• Court: U.S. Supreme Court
• Writing for the Court: Justice BREYER delivered the opinion of the Court.
• Citation: Hertz Corp. v. Friend, 130 S. Ct. 1181, 175 L. Ed. 2d 1029, 559 U.S. 77 (2010)
• Decision Date: 23 February 2010
• Docket Number: No. 08–1107.,08–1107.
• Parties: The HERTZ CORP., Petitioner, v. Melinda FRIEND et al.

559 U.S. 77

130 S.Ct. 1181

175 L.Ed.2d 1029

The HERTZ CORP., Petitioner,

v.Melinda FRIEND et al.

No. 08–1107.

Supreme Court of the United States

Argued Nov. 10, 2009.

Decided Feb. 23, 2010.

Sri Srinivasan, Washington, D.C., for petitioner.

Todd M. Schneider, San Francisco, CA, for respondents.

Frank B. Shuster, (Counsel of Record), Constangy, Brooks & Smith, LLP, Atlanta, GA, Robert A. Dolinko, Chris Baker, Nixon Peabody LLP, San Francisco, CA, Sri Srinivasan, Irving L. Gornstein, Kathryn E. Tarbert, Justin Florence, O'Melveny & Myers LLP, Washington, D.C., Louis R. Franzese, David B. Friedman, Park Ridge, NJ, for Petitioner.

Todd M. Schneider, Joshua G. Konecky, W.H. “Hank” Willson, IV, Megan M. Lewis, Schneider Wallace Cottrell Brayton Konecky LLP, San Francisco, CA, Norman Pine, Beverly Tillett Pine, Pine & Pine, Sherman Oaks, CA, Robert J. Stein III, Counsel of Record, William M. Hensley, Marc D. Alexander, Aileen M. Banellis, Valerie K. Brennan, Adorno Yoss, Alvarado & Smith, Santa Ana, CA, Arthur N. Abbey, Stephen T. Rodd, Stephanie Amin–Giwner, Orin Kurtz, Abbey Spanier Rodd & Abrams LLP, New York, NY, for Respondents.

Opinion

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 interpretations that the Circuits have given this phrase. In doing so, we place primary weight upon the need for judicial 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 coordinate the corporation's activities. Lower federal courts have often metaphorically called that place the corporation's “nerve center.” See, e.g., Wisconsin Knife Works v. National Metal Crafters, 781 F.2d 1280, 1282 (C.A.7 1986); Scot Typewriter Co. v. Underwood Corp., 170 F.Supp. 862, 865 (S.D.N.Y.1959) (Weinfeld, J.). We believe that the “nerve center” will typically be found at a corporation's headquarters.

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), 1453. 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.’ ” Friend v. Hertz, No. C–07–5222 MMC, 2008 WL 7071465 (N.D.Cal., Jan. 15, 2008), p. 3 (hereinafter Order); Tosco Corp. v. Communities for a Better Environment, 236 F.3d 495, 500–502 (C.A.9 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 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. Compare Tosco Corp., supra,

at 500–502, and Capitol Indemnity Corp. v. Russellville Steel Co., 367 F.3d 831, 836 (C.A.8 2004) (applying “total activity” test and looking at “all corporate activities”), with Wisconsin Knife Works, supra, at 1282 (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 implicitly modifying or limiting Supreme Court jurisdiction that another statute specifically grants. Felker v. Turpin, 518 U.S. 651, 660–661, 116 S.Ct. 2333, 135 L.Ed.2d 827 (1996); Ex parte Yerger, 8 Wall. 85, 104–105, 19 L.Ed. 332 (1869). Here, another, pre-existing federal statute 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 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 Aetna Casualty & Surety Co. v. Flowers, 330 U.S. 464, 466–467, 67 S.Ct. 798, 91 L.Ed. 1024 (1947); Gay v. Ruff, 292 U.S. 25, 28–31, 54 S.Ct. 608, 78 L.Ed. 1099 (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 “Controversies ... 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 constitutional limits. Kline v. Burke Constr. Co., 260 U.S. 226, 233–234, 43 S.Ct. 79, 67 L.Ed. 226 (1922); Mayor v. Cooper, 6 Wall. 247, 252, 18 L.Ed. 851 (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, 3 L.Ed. 38 (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 ...