The United States Supreme Court recently answered a previously muddled question with broad implications for defendants seeking to remove cases to federal court. In Hertz v. Friend, 559 U.S. ___ (Feb. 23, 2010), a unanimous Court ruled that, for the purposes of federal diversity-of-citizenship jurisdiction, a corporation's "principal place of business" is the location of its "nerve center" - i.e., the place where its high-ranking officers direct, control, and coordinate the corporation's activities. As Hertz held, the "nerve center" normally will be the same place as the corporation's headquarters, so long as that is where the corporation's activities are truly directed, controlled, and coordinated, and not simply an office where it holds board meetings.

Before Hertz, different tests were applied to determine a corporation's "principal place of business." Now, all prior tests are replaced with the bright-line "nerve center" test, under which a which a corporation's "principal place of business" will likely be its headquarters. The practical result is that a corporation with its headquarters in one state can remove a lawsuit filed by a citizen of a different state, so long as the other requirements for federal diversity jurisdiction are satisfied.