Online Exclusive: Hertz v. Friend May Add to Overburdened Federal Docket
Shuster says one advantage of a federal court's much larger geographic area is that it provides a more diverse pool of jurors than a state court, which may only draw jurors from a single county. In addition, federal judges are appointed for life, unlike state court judges who may be subject to political pressure to ensure re-election or re-appointment.
Under the Class Action Fairness Act (CAFA), courts can remove state cases to federal court if certain criteria are met. Neither side in Hertz v. Friend disputed that the class action met some of these requirements, including the fact that the amount in controversy exceeded $5 million. However, what was in contention was the issue of diversity jurisdiction.
The Supreme Court agreed, citing many examples outside of the diversity statute where the phrase "place of business" is used to mean a specific business establishment.
"A number of federal statutes make sense only if the phrase 'place of business' refers to a particular business location rather than a State as a whole," Justice Breyer wrote. "[C]ertain statutes require corporations to identify the 'address' of their 'place of business.' Related statutes provide for service on corporations by delivery or mail to a 'place of business.'"
The nerve center test, unlike the substantial predominance test, pinpoints a single location from which a company conducts business, usually a company's headquarters.
"The headquarters is the most important location because it bears responsibility for directing and controlling all of the corporation's business activities in all states," Justice Breyer wrote. "Thus, by definition, a corporation's 'headquarters' is its 'chief place of business.'"