About Time

It's only been 52 years since Congress decreed that corporations are deemed to be citizens of their "principal place of business" for diversity purposes, so it was about time the Supreme Court got around to deciding what that means. The circuits have spent decades debating between the "muscle" test, which considers that the principal place is business is the place where the corporation does its main business activity, and the "nerve center" test, which locates the p.p.o.b. at the corporate headquarters. The statute has meant different things in different parts of the country all this time.

Finally, the Supreme Court has stepped in and settled the debate. The principal place of business is the nerve center -- the corporate headquarters. It was unanimous, and the Court even wrote a pretty good opinion, pointing out that the nerve center test has the virtue of being easier to apply, even though it will lead to occasional anomalies.

The only question is why it took so long!