determining citizenship of a corp

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Lupton Pittman
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determining citizenship of a corp

Postby Lupton Pittman » Mon Dec 06, 2010 4:07 pm

the two big factors are a) where it was incorporated, and b) nerve center...right?

aren't its corporate activities relevant? Less relevant then the other factors?

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beach_terror
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Re: determining citizenship of a corp

Postby beach_terror » Mon Dec 06, 2010 4:11 pm

Lupton Pittman wrote:the two big factors are a) where it was incorporated, and b) nerve center...right?

aren't its corporate activities relevant? Less relevant then the other factors?

They aren't two "big factors" - they're the two factors. Nerve center incorporates the "corporate activities".
Last edited by beach_terror on Mon Dec 06, 2010 4:13 pm, edited 1 time in total.

Lupton Pittman
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Re: determining citizenship of a corp

Postby Lupton Pittman » Mon Dec 06, 2010 4:13 pm

thanks man, I really appreciate it.

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Unitas
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Re: determining citizenship of a corp

Postby Unitas » Mon Dec 06, 2010 4:16 pm

Why don't I have hertz in my notes? Hmm...
Last edited by Unitas on Mon Dec 06, 2010 4:19 pm, edited 1 time in total.

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beach_terror
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Re: determining citizenship of a corp

Postby beach_terror » Mon Dec 06, 2010 4:18 pm

Unitas wrote:
beach_terror wrote:
Lupton Pittman wrote:the two big factors are a) where it was incorporated, and b) nerve center...right?

aren't its corporate activities relevant? Less relevant then the other factors?

They aren't two "big factors" - they're the two factors.


a) is certainly one, but b) courts differ on and have three tests:

1-Nerve center test: where the brains of the company is (A stock company that sells intangible goods will usually fall into this one)
2-Daily activites test: Definable center of production if possible use (Company that produces all out of Texas, but nerve center is in NY may fall into this one and be found to be in Texas not NY)
3-And a hybrid test: Some courts will weigh all the facts to come up with a conclusion.

Remember also that corporations can at MOST have 2 places. Always a) and whichever test for b). Some can only have 1 place if a) and b) are same place.


Read Hertz? SCOTUS picked the nerve center test.
Last edited by beach_terror on Mon Dec 06, 2010 11:49 pm, edited 1 time in total.

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Unitas
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Re: determining citizenship of a corp

Postby Unitas » Mon Dec 06, 2010 4:21 pm

beach_terror wrote:
Unitas wrote:
beach_terror wrote:
Lupton Pittman wrote:the two big factors are a) where it was incorporated, and b) nerve center...right?

aren't its corporate activities relevant? Less relevant then the other factors?

They aren't two "big factors" - they're the two factors.


a) is certainly one, but b) courts differ on and have three tests have nerve test


Read Hertz? SCOTUS picked the nerve center test. And no, courts can have 50 places if they incorporate in all 50 states.


We never discussed hertz in my class that I can see, our professor just stated only the nerve center test. (I may have just not noted it, cause this was the only law now to be applied). Then when I read or listened to glannon I must have added it to make the three tests. Damnit... Well this thread helped me a bunch..

Can you incorporate in multiple states? Pretty sure you can only incorporate in 1 state and are limited to two states for citizenship.

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SeymourShowz
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Re: determining citizenship of a corp

Postby SeymourShowz » Mon Dec 06, 2010 7:23 pm

A corporation is a domiciliary of the state in which it is incorporated and the state in which it maintains its principle place of business. The nerve center test is used to determine principle place of business. It is the place of actual direction, control, and coordination of the corporation.

From what I understand a corporation can only be incorporated in one state, but (I think) there are some corporations that are incorporated under federal law, like national banks. I have no idea how that plays into diversity jurisdiction. Fortunately, there is no way on earth a prof will throw a question to you like that on a 1L exam.

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BriaTharen
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Re: determining citizenship of a corp

Postby BriaTharen » Mon Dec 06, 2010 7:27 pm

Hertz Corp v. Friend settled it. Nerve center for diversity jurisdiction.

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Na_Swatch
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Re: determining citizenship of a corp

Postby Na_Swatch » Mon Dec 06, 2010 7:28 pm

Yeah be careful guys, the Nerve Center test is the only one now out of the original multi-factor one... and its a recent enough change that Glannon + Old outlines won't have it.

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Unitas
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Re: determining citizenship of a corp

Postby Unitas » Mon Dec 06, 2010 8:51 pm

SeymourShowz wrote:A corporation is a domiciliary of the state in which it is incorporated and the state in which it maintains its principle place of business. The nerve center test is used to determine principle place of business. It is the place of actual direction, control, and coordination of the corporation.

From what I understand a corporation can only be incorporated in one state, but (I think) there are some corporations that are incorporated under federal law, like national banks. I have no idea how that plays into diversity jurisdiction. Fortunately, there is no way on earth a prof will throw a question to you like that on a 1L exam.


Yeah, banks and some other companies still need charters I think... Above my 1L status though to care too much about it. I am just pretty sure corps are still a citizen of just two states at most. Incorporation is just making a baby in my mind, creates a legal person. Can't be born in two places unless Obama.

Na_Swatch wrote:Yeah be careful guys, the Nerve Center test is the only one now out of the original multi-factor one... and its a recent enough change that Glannon + Old outlines won't have it.


Anyone at his school? Someone needs to go yell at him for me.. I want all of my money back from my E&E's and such. My professor taught me right then he tricked me....

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Na_Swatch
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Re: determining citizenship of a corp

Postby Na_Swatch » Mon Dec 06, 2010 9:08 pm

Unitas wrote:
SeymourShowz wrote:A corporation is a domiciliary of the state in which it is incorporated and the state in which it maintains its principle place of business. The nerve center test is used to determine principle place of business. It is the place of actual direction, control, and coordination of the corporation.

From what I understand a corporation can only be incorporated in one state, but (I think) there are some corporations that are incorporated under federal law, like national banks. I have no idea how that plays into diversity jurisdiction. Fortunately, there is no way on earth a prof will throw a question to you like that on a 1L exam.


Yeah, banks and some other companies still need charters I think... Above my 1L status though to care too much about it. I am just pretty sure corps are still a citizen of just two states at most. Incorporation is just making a baby in my mind, creates a legal person. Can't be born in two places unless Obama.

Na_Swatch wrote:Yeah be careful guys, the Nerve Center test is the only one now out of the original multi-factor one... and its a recent enough change that Glannon + Old outlines won't have it.


Anyone at his school? Someone needs to go yell at him for me.. I want all of my money back from my E&E's and such. My professor taught me right then he tricked me....


well Glannon was published before this change... not much he can do it about it. Still the Glannon E&E is good for almost everything else

viking138
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Re: determining citizenship of a corp

Postby viking138 » Mon Dec 06, 2010 9:13 pm

Important to note that nerve center is nothing but where business is directed from...the place where all the CEOs and stuff work. Although principal place of business sounds as though they're conducting business, it's only where business is conducted FROM. So even if 90% of business is conducted in CA, if the CEOs and managers and such operate in Seattle then the nerve center is WA.

It's supposed to be construed as a specific place in a state, according to the SCOTUS blog.

mbutterfly
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Re: determining citizenship of a corp

Postby mbutterfly » Mon Dec 06, 2010 11:24 pm

Can a corporation have more than one principal place of business? For example, BP or Boeing may have headquarters in Seattle, Texas, and other states that do equally important functions.

Basically, can a corporation have more than 2 places of domicile (one being where it is incorporated and second being principal place of business)?

Like can BP or Walmart be considered as present in every jurisdiction since they satisfy the minimum contacts test for all states?

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beach_terror
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Re: determining citizenship of a corp

Postby beach_terror » Mon Dec 06, 2010 11:41 pm

mbutterfly wrote:Can a corporation have more than one principal place of business? For example, BP or Boeing may have headquarters in Seattle, Texas, and other states that do equally important functions.

Basically, can a corporation have more than 2 places of domicile (one being where it is incorporated and second being principal place of business)?

Like can BP or Walmart be considered as present in every jurisdiction since they satisfy the minimum contacts test for all states?

Not for citizenship purposes. Citizenship and minimum contacts are totally different, don't confuse them. If that was the case, you could never sue some corporations in a diversity suit.

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Sogui
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Re: determining citizenship of a corp

Postby Sogui » Mon Dec 06, 2010 11:43 pm

mbutterfly wrote:Can a corporation have more than one principal place of business? For example, BP or Boeing may have headquarters in Seattle, Texas, and other states that do equally important functions.

Basically, can a corporation have more than 2 places of domicile (one being where it is incorporated and second being principal place of business)?

Like can BP or Walmart be considered as present in every jurisdiction since they satisfy the minimum contacts test for all states?


You need to review your law.

Diversity jurisdiction is not the same as Personal jurisdiction.

Corporations can have a maximum of two different states as their "residence" for the purposes of diversity at any given time. You cannot simply go around "incorporating" wherever you want, reincorporation is a very serious process with many costs associated with it that would almost never make it worthwhile.

Simply put, a corporation is only ever a citizen of the state it's incorporated in + nerve center. The needs of large corporations make it so that finding a "nerve center" is rarely a difficult choice (compared to other gray areas at least). Keep in mind we are talking "nerve center" as in the "brain" of a corporation, not the heart or the lungs, etc...

So even if they have major production facilities in 3 different states, if the corporate headquarters is in a 4th state with all the executive offices then that is your nerve center.

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vamedic03
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Re: determining citizenship of a corp

Postby vamedic03 » Mon Dec 06, 2010 11:44 pm

SeymourShowz wrote:A corporation is a domiciliary of the state in which it is incorporated and the state in which it maintains its principle place of business. The nerve center test is used to determine principle place of business. It is the place of actual direction, control, and coordination of the corporation.

From what I understand a corporation can only be incorporated in one state, but (I think) there are some corporations that are incorporated under federal law, like national banks. I have no idea how that plays into diversity jurisdiction. Fortunately, there is no way on earth a prof will throw a question to you like that on a 1L exam.


Corporations are only incorporated in 1 place. There are no federal incorporations.




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