Federal Home Loan Bank of Bost v. Moody's Corporation
821 F.3d 102
1st Cir.2016Background
- Federal Home Loan Bank of Boston (the Bank), a federally chartered entity under 12 U.S.C. § 1432(a), sued multiple defendants in Massachusetts state court alleging reliance on false triple‑A ratings for mortgage‑backed securities, including Moody's.
- Some defendants removed to federal district court; Moody's consented to removal but consistently contested personal jurisdiction in Massachusetts, arguing its relevant conduct occurred in New York.
- The district court initially found personal jurisdiction over Moody's, but after Daimler v. Bauman the court concluded Massachusetts lacked personal jurisdiction and dismissed the Bank’s claims against Moody's.
- The Bank asked the district court, in the alternative, to sever and transfer the claims against Moody's to the Southern District of New York under 28 U.S.C. § 1631 (and alternatively § 1406(a)); the district court refused, concluding it lacked statutory authority to transfer for lack of personal jurisdiction.
- The First Circuit reviewed (1) whether the Bank’s sue‑and‑be‑sued clause conferred federal subject‑matter jurisdiction and (2) whether § 1631 authorizes transfer where a court lacks personal jurisdiction, vacated the dismissal, and remanded for the district court to consider transfer in the first instance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Bank’s federal charter (sue‑and‑be‑sued clause) confers federal subject‑matter jurisdiction | The charter language ("in any court of competent jurisdiction, State or Federal") is sufficient under Red Cross and Lightfoot to confer federal jurisdiction | No meaningful dispute in this appeal; Moody's did not contest the Bank's Lightfoot‑based position | Court held the sue‑and‑be‑sued clause confers federal subject‑matter jurisdiction and federal court jurisdiction was proper |
| Whether 28 U.S.C. § 1631 permits transfer when a court lacks personal (in personam) jurisdiction | § 1631's unqualified phrase "want of jurisdiction" covers both subject‑matter and personal jurisdiction; statute and purpose support broad transfer power | § 1631 was intended to cure misfilings tied to subject‑matter jurisdiction only; legislative history and context limit it to subject‑matter defects | Court held § 1631 covers want of jurisdiction generally (including personal jurisdiction) and permits transfer where personal jurisdiction is lacking |
| Standard and burden for ordering transfer under § 1631 ("in the interest of justice") | § 1631 carries a rebuttable presumption in favor of transfer; district court must evaluate "interest of justice" factors (per Britell) | District court may decline transfer where factors weigh against it; court has discretion | Court reiterated Britell: presumption favoring transfer; remanded so district court can apply "interest of justice" analysis to transfer request |
| Proper remedy when a federal court lacks personal jurisdiction over a defendant | Transfer under § 1631 (rather than dismissal) is the preferred remedy when transfer is feasible and in the interest of justice | Dismissal is appropriate when the court lacks power to transfer under § 1631 | Court vacated dismissal and remanded for consideration of transfer rather than dismissal where appropriate |
Key Cases Cited
- American Nat'l Red Cross v. S.G., 505 U.S. 247 (1992) (interpreting sue‑and‑be‑sued clause and holding such clauses confer federal jurisdiction when they expressly authorize suits in federal courts)
- Lightfoot v. Cendant Mortgage Corp., 769 F.3d 681 (9th Cir. 2014) (construing a materially identical Fannie Mae charter clause to confer federal subject‑matter jurisdiction)
- Britell v. United States, 318 F.3d 70 (1st Cir. 2003) (explaining § 1631’s purpose, presumption in favor of transfer, and "interest of justice" framework)
- Roman v. Ashcroft, 340 F.3d 314 (6th Cir. 2003) (holding § 1631 applies to any jurisdictional defect, including personal jurisdiction)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Raines, 534 F.3d 779 (D.C. Cir. 2008) (concluding Fannie Mae’s sue‑and‑be‑sued clause confers federal subject‑matter jurisdiction)
- Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (limiting general personal jurisdiction and prompting reassessment of jurisdiction over Moody's)
- Milliken v. Meyer, 311 U.S. 457 (1940) (using "want of jurisdiction" to refer to lack of authority over person or subject matter)