Minnesota Law Review

Note, Determining a Corporation’s Principal Place of Business: A Uniform Approach to Diversity Jurisdiction

For purposes of federal diversity jurisdiction under 28 U.S.C. § 1332, a corporation is a citizen of both its state of incorporation and the state where it has its principal place of business. In adopting that provision, Congress provided very little guidance to the federal courts as to the method by which they should determine a corporation’s principal place of business. Rather, the federal courts of appeal apply three different tests to make that decision: the nerve center test, the corporate activities test, and the total activity test. This nonuniformity encourages forum-shopping at the federal level, breeds uncertainty, and, in many cases, serves to thwart Congress’s intent to generally limit federal jurisdiction.

The adoption of the Class Action Fairness Act of 2005, which makes it easier for corporate defendants to get into federal court, further complicates the situation. Although Congress intended for this Act to increase federal jurisdiction over class actions, certain of the principal place of business tests defeat that intent. Moreover, there are now increased opportunities for plaintiffs, defendants, and their attorneys to shop around for the best forum, class of plaintiffs, or parties to sue.

In order to address the problems raised by the nonuniform application of § 1332, Congress or the Supreme Court should adopt a uniform test for determining a corporation’s principal place of business. This Note proposes a test based on the total activity test, which balances factors relating to a corporation’s managerial, production, and service activities. This test is well-suited to a modern business environment and will produce results in accordance with congressional intent.


:: View PDF

News & Events

  • Fall Submissions Open – Headnotes

    The Minnesota Law Review: Headnotes fall submissions period is open. For more information, please visit our submissions page. Share this: on Twitter on Facebook on Google+

  • Vol. 97 Piece Quoted in Mother Jones Article

    A recent Mother Jones article predicting how the Roberts Court would resolve King v. Burwell draws on How Business Fares in the Supreme Court from Volume 97. You can read the article here. Share this: on Twitter on Facebook on Google+

  • Welcome to De Novo

    For nearly one hundred years, the Minnesota Law Review has been a leader amongst academic legal publications. When Professor Henry J. Fletcher launched the journal in 1917, his goal was simple. It was to “contribute a little something to the systematic growth of the whole law.” Since then, the Law [...]

  • Minnesota Law Review Alum Remembered 45 Years After Death

    Minnesota Law Review alumnus Tom Cranna was honored at the Annual Banquet this Spring, 45 years after his death. Mr. Cranna was remembered for his contributions to the journal, the school, and the positive impact he had on his family and friends. The Devil’s Lake Journal published a memorial which [...]

  • Follow MLR on Twitter!

    The Minnesota Law Review is proud to announce that we are now on Twitter. Follow us @MinnesotaLawRev for information and updates concerning the petition period and deadlines, the opening and closing of article submissions, our 2014 Symposium: Offenders in the Community, and all other news concerning our authors and publications. [...]


cforms contact form by delicious:days