1. Why did respondents claim that Hertz was a citizen of California?

2. Why did the Court reject respondent’s claim?

Plaintiffs, on behalf of a potential class of California citizens, brought an action in state court against a corporation alleging violations of California's wage and hour laws. The U.S. Supreme Court held that the phrase “principal place of business” in the federal diversity jurisdiction statute refers to the place where a corporation's high level officers direct, control, and coordinate the corporation's activities. The Court concluded that the “nerve center” approach is superior to the “business activity” test.