J.A. Olson Co. v. City of Winona
818 F.2d 401 (1987)
Author: Jim

Facts:  P, a corporation, brought a diversity action in a federal court against a Mississippi D.  P was incorporated in Illinois and had bank accounts and made all important decisions in Illinois.  But its only manufacturing plant and almost all of its employees were based in Mississippi.

Procedure: Trial court dismissed for lack of subject matter jrx.

Issue:  Was P’s principal place of business Illinois or Mississippi?

Holding: Mississippi

Rationale: Courts generally use place of activity (here Mississippi) and nerve center (here Illinois) to determine in which place the corporation conducts principal business.  Here the court used total activity test to see where the substantial part of P’s business was conducted and the court went with Mississippi. Illinois had P’s bank accounts and many major decisions were made in Illinois.  But information supporting these decisions was provided from Mississippi.  Also, majority of P’s employees and P’s only manufacturing plant was based in Mississippi.  Therefore, Mississippi was P’s principal place of business and hence there was no complete diversity in this case.

Note:  Corporate defendants was dual citizenship: place of incorporation and the principal place of business.  Both of these states of residency must be diverse from the opposing party’s residency in order to maintain a federal claim based on diversity of jurisdiction.