Recent Supreme Court Removes Litigation Uncertainty for Multi-State Life Sciences Companies

A recent ruling by the United States Supreme Court could have a significant impact on life sciences companies that may have research, manufacturing and sales operations in different states.

“In Hertz Corporation v. Friend, the Supreme Court clarified how to determine whether companies involved in litigation have access to federal courts by defining the location of a corporation’s principal place of business,” says Brian M. Vines, an attorney in the Life Sciences group at Bradley Arant Boult Cummings LLP (Birmingham, Ala.). “For most product liability or contract disputes, federal courts are available only when the dispute is between citizens of different states. A corporation is a citizen of any state in which it is incorporated and of the state where it has its principle place of business. In Hertz, the Supreme Court concluded that a corporation’s principle place of business is where its officers direct, control and coordinate its activities, essentially, its nerve center.”

Vines says Hertz now provides multi-state life sciences companies either defending or bringing lawsuits with a measure of certainty regarding jurisdiction.

“Under Hertz, a corporation can control and know in advance where it will be deemed a citizen for purposes of federal jurisdiction,” says Vines. “Before Hertz, there was a great deal of uncertainty regarding corporation’s citizenship and the citizenship of a corporation often depended on what court was asking this question. Now, a corporation’s headquarters, where its operations are controlled and coordinated, will be its principal place of business for jurisdictional purposes. ”

Vines is available to discuss the implications of Hertz for life sciences companies, and to write on the issue. [05/24/2010]