Warren v. Federal National Mortgage Ass'n
55 F. Supp. 3d 915
N.D. Tex.2014Background
- Plaintiff Stephanie Warren sued Fannie Mae and a Fannie Mae employee in Texas state court alleging discrimination (Texas Human Rights Act) and defamation; Fannie Mae removed to federal court relying on its congressional charter’s “sue and be sued” clause (12 U.S.C. § 1723a(a)).
- Fannie Mae’s charter authorizes it to “sue and be sued... in any court of competent jurisdiction, State or Federal”; Congress added the phrase “of competent jurisdiction” in 1954.
- Fannie Mae argued the charter independently confers original federal jurisdiction because it expressly mentions federal courts and relied primarily on American Nat’l Red Cross and the D.C. Circuit’s Pirelli decision.
- Warren argued Red Cross is distinguishable, the phrase “of competent jurisdiction” limits the charter’s reach and requires an independent basis for federal subject-matter jurisdiction, and removal was improper.
- The district court analyzed Red Cross, the charter’s legislative history, and the statutory meaning of “of competent jurisdiction” and concluded Fannie Mae’s charter does not automatically vest federal courts with original jurisdiction.
- The court granted remand to state court and denied an award of attorneys’ fees, finding Fannie Mae’s removal arguments were objectively reasonable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Fannie Mae’s §1723a(a) “sue and be sued” clause independently confers original federal jurisdiction in any case where Fannie Mae is a party | Warren: The added phrase “of competent jurisdiction” limits the clause; federal courts need an independent basis (federal-question or diversity) to exercise subject-matter jurisdiction | Fannie Mae: Because the charter expressly mentions federal courts, Red Cross and related precedent mean federal courts have original jurisdiction whenever Fannie Mae is sued | The court held Red Cross does not compel automatic federal jurisdiction here; §1723a(a) is qualified by “of competent jurisdiction” and requires an independent ground for federal subject-matter jurisdiction |
| Whether Red Cross controls interpretation of §1723a(a) | Warren: Red Cross is distinguishable and not dispositive because Fannie Mae’s charter includes the qualifying phrase | Fannie Mae: Red Cross means express mention of federal courts is sufficient to confer federal jurisdiction | The court held Red Cross is of limited applicability; express reference to federal courts is not always sufficient when Congress included qualifying language |
| Effect of legislative history adding “of competent jurisdiction” in 1954 | Warren: Legislative history shows Congress intended to qualify—not eliminate—federal jurisdiction, requiring independent jurisdictional basis | Fannie Mae: Congress would not have added that phrase if it intended to limit federal forum; retaining “Federal” shows intent to permit federal jurisdiction | The court concluded the 1954 amendment differentiated Fannie Mae’s clause from those held to confer automatic federal jurisdiction and indicates qualification of federal jurisdiction |
| Whether to award attorneys’ fees under 28 U.S.C. § 1447(c) | Warren: Seek fees because removal was improper | Fannie Mae: Removal was legally justified by plausible interpretations and precedent | The court denied fees, finding Fannie Mae had objectively reasonable grounds to remove |
Key Cases Cited
- American Nat’l Red Cross v. Solicitor Gen., 505 U.S. 247 (Sup. Ct.) (a charter’s “sue and be sued” clause that specifically mentions federal courts may suffice to confer federal jurisdiction)
- D’Oench, Duhme & Co. v. Fed. Deposit Ins. Corp., 315 U.S. 447 (Sup. Ct.) (construed a charter clause as conferring federal jurisdiction when phrased to include federal courts)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust v. Raines, 534 F.3d 779 (D.C. Cir.) (held §1723a(a) confers federal jurisdiction; concurrence argued mention of federal courts is necessary but not always sufficient)
- Industrial Indem., Inc. v. Landrieu, 615 F.2d 644 (5th Cir.) (distinguishes waiver of immunity from grant of subject-matter jurisdiction; §1702 functions as waiver and requires independent jurisdictional basis)
- Knuckles v. RBMG, Inc., 481 F.Supp.2d 559 (S.D.W.Va.) (construed “of competent jurisdiction” to require independent grounds for jurisdiction and cautioned against rendering the phrase superfluous)