Don’t Dissolve the “Nerve Center”: A Status-Linked Citizenship Test for Principal Place of Business

Abstract

28 U.S.C. § 1332 requires complete diversity among parties to invoke a federal court’s jurisdiction. The statute provides that a corporation is a citizen of its incorporating state and its principal place of business. In the 2010 case Hertz Corp. v. Friend, the U.S. Supreme Court adopted the “nerve center” test as the exclusive test for determining a corporation’s principal place of business. Although the Court intended to adopt a simple standard, applying the rule to dissolved and inactive corporations remains complex. This Note argues for a status-linked nerve center test. This approach is consistent with the text of § 1332 because it ensures that every corporation has a principal place of business under the dual citizenship requirements of the statute. In addition, a status-linked nerve center test is consistent with Hertz, as it creates a simple, predictable rule that reflects a corporation’s true center of control. Given the consistency with the statute and with Hertz</em, the status-linked nerve center rule is the best way to apply the nerve center test to atypical corporations.