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

  • Volume 97 Lead Piece Profiled in New York Times

    The Volume 97 Lead Piece, a study of how the Supreme Court treats business interests by distinguished legal scholars Lee Epstein, William M. Landes, and Richard A. Posner, was profiled in the May 5, 2013 edition of the New York Times. The story, titled Corporations Find a Friend in the Supreme Court, [...]

  • Volume 98 Spring Submissions Closed

    The Minnesota Law Review has closed the spring submissions period for Volume 98. Submissions for Volume 98 will reopen on Thursday, August 1. Please see the submissions page for more details.

  • Volume 98 Submissions Will Open Feb. 15

    The Minnesota Law Review will begin accepting submissions for Volume 98 on Friday, February 15, 2013. Please see this page for more details.

  • Minnesota Law Review Announces Volume 98 Editorial Board

    The Minnesota Law Review is pleased to announce its Volume 98 editorial board, headed by Editor in Chief Jake Vandelist.

  • Minnesota Law Review Announces 2013 Symposium Topic

    The Minnesota Law Review is pleased to announce that its 2013 symposium will address the legal and political issues facing organized labor in the United States. The symposium will be held at the University of Minnesota Law School on October 25, 2013.

Newsletter

cforms contact form by delicious:days