## Facts

- J.A. Olson Company was incorporated in Illinois and maintained executive offices in Chicago.
- Olson’s sole manufacturing plant, storage facility, and substantial administrative offices (accounting, bookkeeping, payroll, and data processing) were located in Winona, Mississippi.
- The Winona facility also included a photography studio used to produce sales catalogues and a retail showroom generating about 3% of sales.
- The Mississippi plant employed roughly 113 employees, with a 1984 payroll exceeding $1.7 million.
- The plant’s general manager in Winona oversaw day-to-day facility functions, including hiring and firing, training supervision, and handling employee grievances and workers’ compensation matters, and contributed to production scheduling.
- Olson maintained multiple bank accounts in Winona; checks were processed through the Winona data-processing office based on information generated at the plant, with funding tied to Chicago oversight.
- Olson sued the City of Winona (a Mississippi municipality) in federal court under diversity jurisdiction; the district court dismissed for lack of complete diversity after finding Olson’s principal place of business was Mississippi.
- Olson argued on appeal that its principal place of business was Illinois or, alternatively, that it should be treated as sharing its parent corporation’s principal place of business under an alter-ego theory.

## Issues

1. Whether Olson’s “principal place of business” under 28 U.S.C. § 1332(c) was Mississippi or Illinois, given Chicago executive offices but concentrated operations in Mississippi.
2. Whether Olson could apply an alter-ego theory to attribute its parent corporation’s principal place of business to Olson in order to establish diversity jurisdiction.

## Decision

- The Fifth Circuit affirmed dismissal for lack of subject-matter jurisdiction.
- The court held Olson’s principal place of business was Mississippi, making Olson a citizen of both Illinois (incorporation) and Mississippi (principal place of business).
- Because the City of Winona was a Mississippi citizen, complete diversity was absent.
- The court rejected Olson’s attempt to use the alter-ego doctrine to import its parent’s citizenship to create diversity jurisdiction.

## Legal Principles

- A corporation’s principal place of business for diversity purposes is determined by a fact-intensive assessment of the corporation’s overall activity, considering both the locus of executive direction and the location of operational activity.
- When executive offices and the operational center are in different states, courts weigh the competing contacts to identify where the corporation is most at home in practical terms.
- Concentrated production, workforce, administrative functions, and economic presence in a state may establish the principal place of business there even if executive-level decisions occur elsewhere.
- Corporate-disregard/alter-ego principles may be used to defeat or test jurisdiction, but not to manufacture federal jurisdiction that otherwise would not exist.

## Conclusion

The Fifth Circuit held that Olson’s concentrated manufacturing and administrative operations in Mississippi made Mississippi its principal place of business, defeating complete diversity with a Mississippi municipal defendant, and it refused to permit alter-ego arguments to create diversity jurisdiction.


J.A. Olson Co. v. City of Winona, 818 F.2d 401 (5th Cir. 1987)