For a corporation, the U.S. Supreme Court’s axiom may soon be: Home is where the headquarters is.

The Court heard oral arguments Tuesday in Hertz Corp. v. Friend, which raises a seemingly simple but vexing question crucial for corporations: For purposes of diversity jurisdiction, where is a company’s principal place of business?

The answer will be crucial in determining whether a corporation can be sued in federal court, as it might prefer, or in plaintiff-friendly state courts. Acting in a class action by Hertz employees over wages and hours filed in California, the 9th U.S. Circuit Court of Appeals determined that, even though its headquarters is in New Jersey, Hertz is a citizen of California because more business activities occur there than in any other state. With both sides deemed to be from California, there was no federal diversity jurisdiction, so the case went to state court. Hertz appealed to the high court.

Hertz’s lawyer, Sri Srinivasan of O’Melveny & Myers’ Washington office, argued for a simpler test, namely where a company’s headquarters is, or “the site from which a corporation directs and controls all the company’s operations throughout all of its locations.” That is a “relatively straightforward” determination that the public can easily ascertain, Srinivasan said, and it also preserves diversity jurisdiction in all but a company’s headquarters state.

via Law.com – Justices Sympathetic to Applying Headquarters Standard to Corporate Jurisdiction.