Opinion ID: 3064461
Heading Depth: 2
Heading Rank: 1

Heading: Industrial Tectonics and Tosco

Text: In Industrial Tectonics, Inc. v. Aero Alloy,24 the corporation’s business activities were located in just two states, California and Michigan. We concluded that California was the corporation’s principal place of business for the purpose of diversity jurisdiction, after noting that California accounted for 61% of sales, 69% of operating income, 64% of receivables, and the location of 75% of its inventory.25 The California plant also had nearly double the book value of the corporation’s only other plant in Michigan, and employed more than 50% of the corporation’s employees.26 Thus, by every measure, well over half of the corporation’s business activities were in California. We held that “where a majority of a corporation’s business takes place in one state, that state is the corporation’s principal place of business, even if the corporate headquarters are located in a different state.”27 We Energy Corp., 692 F. Supp. 1070, 1074-75 (E.D. Mo. 1988). The total activities test considers factors such as the location of the corporation’s “nerve center,” administrative offices, production facilities, personnel, tangible property, sales, income earned, and balances these factors based on the facts of the case. See, e.g., Amoco Rocmount, 7 F.3d at 915. 23 See Danjaq, S.A. v. Pathe Commc’ns Corp., 979 F.2d 772, 776 (9th Cir. 1992) (deriving the “general rule” that a corporation’s principal place of business is the location of the “bulk of corporate activity, as evidenced by the location of daily operating and management activities”); Indus. Tectonics, 912 F.2d 1090, 1092 n.3 (9th Cir. 1990) (noting that the place of operations and nerve center tests “can be viewed as particular applications of a general rule that the ‘bulk of corporate activity,’ as evidenced by operating, administrative, and management activities, determines a corporation’s principal place of business”). 24 912 F.2d 1090. 25 Id. at 1094. 26 Id. 27 Id. 2794 DAVIS v. HSBC BANK NEVADA did not apply the nerve center test because California contained a substantial predominance of the corporation’s business activities.28 Our approach in Industrial Tectonics was consistent with our prior decisions, in which corporations with “substantially all” of their one (and only) business activity in a single state were found to have their “principal place of business” in that one state where all the operations were located.29 In Tosco Corp. v. Communities for a Better Environment30 we held that the “place of operations” test determines a corporation’s principal place of business “when a corporation conducts a substantial predominance of its business within a state.”31 The emphasis in Tosco on “substantial predominance,” rather than “majority,” as in Industrial Tectonics, arose because the corporation’s business activities in Tosco were more complex than in Industrial Tectonics. According to the district court opinion we adopted, Tosco’s refinery business had a majority of its refineries (63%), half of its lubricant blending and packaging facilities, and almost half (40%) of its refining capacity in California, but only about a third (37%) of its retail locations and inventory. California had more than twice the number of retail locations of any other state.32 Thus, in Tosco we applied the “substantial predominance” inquiry mentioned but not used in Industrial Tectonics to analyze a corporation operating in more than two states, with the majority of its most important business factor (refineries, since Tosco was an oil company) and 50% of the important and refinery-related production facilities were in California. At least on the facts con28 Id. 29 Bialac v. Harsh Bldg. Co., 463 F.2d 1185, 1186 (9th Cir. 1972); see also New Alaska Dev. Corp. v. Guetschow, 869 F.2d 1298, 1301 (9th Cir. 1989); Decker Coal Co. v. Commonwealth Edison Co., 805 F.2d 834, 842 (9th Cir. 1986). 30