Question

Profita Corporation is incorporated in Illinois. It has its central offices in Ohio, where the officers and directors meet and have their offices. The business of the corporation is to produce shirts, which it does at a large factory in Kentucky. Two hundred and fifty employees work at the factory, and three of the four vice presidents spend three days a week there, returning to the Ohio offices for meetings the other two days. Profita has a website, which announces that ""the company's principal place of business is in Frankfort, Kentucky, where our sole factory is located, and manufactures a fine line of shirts for both men and women."" Profita is a citizen for diversity purposes of Illinois and Ohio.

(A) True
(B) False

Answer 1

Profita Corporation is a citizen of Illinois, where it is incorporated, and Ohio, where the central offices and primary business activities are located, as per the "nerve center" test established by Hertz Corp. v. Friend. The statement that Profita is a citizen of Illinois and Ohio for diversity purposes is true.

Step-by-step explanation:

The question you are asking pertains to corporate citizenship for the purpose of diversity jurisdiction in the United States federal courts. The concept of diversity jurisdiction relates to whether a federal court can hear a case. For a corporation, citizenship is determined by two factors: the place of incorporation and the corporation's principal place of business. In this scenario, Profita Corporation is incorporated in Illinois and claims that its principal place of business is in Frankfort, Kentucky, where its sole factory is located, although the officers and directors operate primarily out of Ohio.

According to the precedent set by the Supreme Court in the case Hertz Corp. v. Friend, the "nerve center" test is applied to determine a corporation's principal place of business, which is typically where the corporation's high-level officers direct, control, and coordinate the corporation's activities. In this instance, despite Profita Corporation's claim on its website, the principal place of business is likely Ohio, where high-level officers and directors meet and make decisions, not Kentucky where the manufacturing takes place. Therefore, for diversity purposes, Profita Corporation should be considered a citizen of both Illinois and Ohio, not Kentucky.