In the Hertz Corporation v. Melinda Friend et al., 2009, the U.S. Supreme Court was asked to clarify how to determine a corporation's "principal place of business" for purposes of diversity jurisdiction under federal law. The plaintiffs, California citizens, filed a class action lawsuit against Hertz in state court alleging violations of California’s wage and hour laws. Hertz sought to remove the case to federal court based on diversity jurisdiction which requires that parties be from different states; however, it was disputed whether Hertz could be considered a citizen of California where it did significant amount of business or Delaware where it is incorporated and has its headquarters. The Supreme Court unanimously held that for purposes of determining corporate citizenship under 28 U.S.C §1332(c)(1), a corporation's principal place of business refers primarily to the place where its officers direct, control and coordinate activities - typically known as its nerve center - rather than simply looking at location with most operations or revenue generation. This ruling clarified an area previously marked by conflicting interpretations among lower courts about what constitutes company’s “principal place” thus providing clearer guidelines for future cases involving questions around corporations' state citizenships.

In the dissenting opinion for The Hertz Corporation v. Melinda Friend et al., Justice Sotomayor, joined by Justices Stevens and Ginsburg, argued that the majority's interpretation of "principal place of business" was too narrow. They believed it should not be limited to a corporation’s nerve center but rather where its primary business activities occur. They contended that this approach would better reflect Congress' intent when drafting the diversity jurisdiction statute - to ensure local bias does not impact out-of-state corporations unfairly in state courts. Furthermore, they suggested that focusing on a company's nerve center could lead to manipulation by companies seeking federal court jurisdiction or trying to avoid it.