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Abstract

Since the early 1990s, the U.S. Circuit Courts of Appeals have been divided on how to determine the citizenship of dissolved or inactive corporations for the purposes of diversity jurisdiction. By the beginning of the twenty-first century, courts of appeals addressing the issue had settled on one of three conclusions: (1) citizenship should be determined only by the corporation’s state of incorporation; (2) citizenship should be determined both by the corporation’s state of incorporation and its last principal place of business; or (3) citizenship should always be determined by the corporation’s state of incorporation, but only be determined by principal place of business on a case-by-case basis. In 2010, the U.S. Supreme Court in Hertz Corp. v. Friend clarified the standard for determining an active corporation’s principal place of business. Two years later, the Eleventh Circuit Court of Appeals in Holston Investments, Inc. B.V.I. v. LanLogistics Corp. ruled that the reasoning of Hertz settled the debate over the citizenship of dissolved or inactive corporations: only the inactive or dissolved corporation’s state of incorporation determines citizenship. This Note argues that although Hertz provided useful guidance to the courts of appeals on how to determine the citizenship of dissolved and inactive corporations, the Eleventh Circuit misinterpreted that guidance. The Eleventh Circuit should have adopted a modified version of an existing rule, which always factors both an inactive or dissolved corporation’s state of incorporation and its last principal place of business when determining citizenship. This test better accords with the Court’s reasoning in Hertz, the intent behind the statutory definition of corporate citizenship, and broader principles of diversity of citizenship jurisdiction.

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