Case Information
*3 BEFORE: NYGAARD, LEWIS and McKEE, Circuit Judges. (Filed February 6, 1997) ___________
Mary M. O'Day Donald E. Seymour John K. Baillie Michael G. Zanic (ARGUED) Kirkpatrick & Lockhart 1500 Oliver Building Pittsburgh, PA 15222
Attorneys for Appellants
Edward R. Dunham, Jr.
Miller, Dunham & Doering
1515 Market Street
13th Floor
Philadelphia, PA 19102
Martin R. Baach
James P. Davenport (ARGUED)
Nussbaum & Wald
One Thomas Circle, N.W.
Suite 200
Washington, DC 20005
Attorneys for Appellees
___________
OPINION OF THE COURT ___________
LEWIS, Circuit Judge.
The principal question we are asked to decide in this appeal is whether federal courts have jurisdiction to entertain a suit between diverse citizens when, in addition to those citizens, aliens appear as both plaintiffs and defendants. We conclude they do, pursuant to 28 U.S.C. § 1332(a)(3), and will reverse the district сourt's decision to the contrary.
I.
Dresser Industries, Inc. ("Dresser"), a publicly held company incorporated in the State of Delaware with its principal place of business in Texas, and its subsidiary, Dresser Canada, Inc. ("Dresser Canada"), a corporation organized under Canadian law with its principal place of business in Ontario, Canada brought this action in the United States District Court for the Eastern District оf Pennsylvania against the London Market Insurers for insurance coverage. Dresser alleged that the district court had subject matter jurisdiction under 28 U.S.C. § 1332(a)(3). The London Market Insurers are comprised of underwriting syndicates at Lloyd's of London and companies participating in the London insurance market. One of the Insurers, New Hampshire Insurance Company, is a corporation organized under the laws of the Commonwealth of Pennsylvania with its principal place of business in the State of New York. The remaining London Market Insurers are aliens.
The underlying dispute involves seven insurance
policies that provide for $150,000,000 in excess liability *5 coverage. The policies in question were not issued by a single insurer. Each policy was "subscribed to" by a number of entities with each assuming a set percentage of the risk (and receiving a set percentage of the premium). The percentages rаnged from approximately 0.03% to 5.5%. In addition, under the terms of the policies each of the insuring entities was to be severally liable for the particular percentage of the risk that it assumed. New Hampshire Insurance had a 0.564% share of one of the policies at issue, which represented $282,000 in potential liability.
The London Market Insurers moved to dismiss the action for lack of subject matter jurisdiction, arguing that the presence of an alien as one of the plaintiffs and aliens as several of the defendants destroyed complete diversity. The district court agreed and granted the motion to dismiss. Relying upon dicta in two opinions of this Circuit interpreting 28 U.S.C. § 1332(a)(2), the court concluded: Under the rule of complete diversity, there is no
federal subject matter jurisdiction over claims between the aliеn plaintiff and the alien defendants. Moreover, the reference in § 1332(a)(3) to aliens as "additional parties" does not apply to the instant action. The dispute is between Dresser and Dresser Canada and a lengthy list of insurers only one of which is a citizen, and whose exposure is limited to 0.564% of one of the three policies at issue. The alien insurers in this case cannot be considered additional parties.
Dresser Industries, Inc. & Dresser Canada, Inc. v. Underwriters
at Lloyd's, London, No. 95-4578, slip op. at 4 (E.D. Pa. Dec. 22,
1995) (interpreting Field v. Volkswagenwerk AG,
Cir. 1980) and Singh v. Daimler-Benz AG,
II.
The district court's jurisdiction was predicated upon
28 U.S.C. § 1332(a)(3). We have jurisdiction over the appeal
from the final order of the district court pursuant to 28 U.S.C.
§ 1291. Our review of the district court's decision to dismiss
for lack of subject matter jurisdiction is plenary. Singh v.
Daimler-Benz AG,
III.
A. Section 1332(a) provides in pertinent part that: The district courts shall have original jurisdiction of
all civil actions where the matter in controversy exceeds the sum or value of $50,000, exclusive of interests and costs, and is between --
(1) citizens of different States;
(2) citizens of a State and citizens or subjects
of a foreign state; (3) citizens of different States and in which
citizens or subjects of a foreign state are additional pаrties . . . .
28 U.S.C. § 1332(a). To determine whether the district court had
jurisdiction over this matter, we must interpret section
1332(a)(3), which grants jurisdiction in cases between citizens
of different states in which aliens are "additional parties."
Toward that end, we begin with the plain language of the statute.
See Commissioner v. Engle,
The language of section 1332(a)(3) grants federal jurisdiction when aliens are additional parties. The statute makеs no distinction based upon which side of the controversy -- plaintiff, defendant, or both -- the aliens appear. Although the statute plainly requires that the dispute be between citizens of different states, it includes the phrase "additional parties" without any such limitation. Dresser and the London Market Insurers disagree over how this language, or lack thereof, should be interpreted.
Dresser contends that the words "additional parties," which are unaccompanied by any limiting language, unequivocally vest federal courts with jurisdiction over disputes in which aliens appear on both sides of the controversy. In other words, Dresser suggests that we need look no further than the language of the statute to answer the jurisdictional question.
London Market Insurers maintains, however, that the
statute as written is ambiguous. They contend thаt the statute's
failure to limit the phrase "additional parties" cannot be
plainly interpreted to allow aliens on both sides of a
controversy. In support of this view, London Market Insurers
offers two hypothetical constructions of the statute. They claim
that, had the statute contained language to qualify "additional
parties," such as: (1) "on either side of the controversy but
not on both sides"; or (2) "on еither or both sides of the
controversy," then the statute would be unambiguous, but the
*8
words "additional parties" standing alone render the statute as
currently written subject to two interpretations. Accordingly,
they suggest, we must look to the statute's legislative history.
We disagree. Because we find that the language of § 1332(a)(3)
is plain, we need not consider the legislative history.
[1]
1.
Nevertheless, assuming arguendo that the legislative
histоry is relevant to our analysis, we disagree with London
Market Insurers' contention that a review of section 1332(a)(3)'s
legislative history confirms that Congress intended this section
to allow aliens on one side of the controversy only. At best,
the legislative history is incomplete and does little to
illuminate the statute. See James W. Moore, Moore's Judicial
Code: Commentary 64 n.3 (1949). Although we agree with London
Market Insurers thаt the Reviser's Notes to the statute indicate
a specific congressional intention to allow for suits by a
citizen against a diverse citizen and an alien, the Notes do not
explicitly disallow suits between diverse citizens and aliens on
both sides of the controversy. Moreover, other parts of the
legislative history indicate that Congress was motivated by a
desire to provide diverse citizens with a federal forum despite
the presence of alien parties. K&H Business Consultants Ltd. v.
Cheltonian, Ltd.,
Our holding is consistent with the circuits that have
squarely addressed this issue and have uniformally concluded that
jurisdiction exists when diverse citizens are joined with aliens
even if they appear on both sides of the dispute. See Goar v.
Compania Peruana de Vapores,
In dismissing this case for lack of jurisdiction, the district court concluded that the "complete diversity" requirement announced in Strawbridge v. Curtiss, 7 U.S.
(3 Cranch) 267 (1806), precludes such a result. We disagree. In
Strawbridge, the Supreme Court concluded that the precursor to 28
U.S.C. § 1332(a)(1) required that "each distinct interest should
be represented by persons, all of whom are entitled to sue, or
may be sued, in the federal courts." Id. As the Supreme Court
later noted, however, the requirement of complete diversity is
derived from "the words of the act of Congress," and not the
*10
Constitution. State Farm Fire & Casualty Co. v. Tashire, 386
U.S. 523, 531 (1967). Article III of the Constitution requires
only minimal diversity. Id.; Verlinden B.V. v. Central Bank of
Nigeria,
Again, the plain language of 28 U.S.C. § 1332(a)(3) grants federal courts jurisdiction over controversies between diverse citizens joined with aliens. Strawbridgе's complete diversity requirement is, therefore, inapplicable. As such, section 1332(a)(3) can best be understood as a congressional abrogation of the complete diversity rule. 1 Moore's Federal Practice ¶ 0.75[1.-2-4], at 800.44. First, in addition to the plain language of the statute, this conclusion is supported by the fact that section 1332(a)(3) was added in the 1948 revision and codification of the Judicial Cоde, Title 28. While the general diversity and alienage jurisdiction provisions had existed previously, section 1332(a)(3) was new. As Strawbridge was decided long before Congress created this new provision, we must assume that Congress was well aware of the complete diversity requirement when it adopted section 1332(a)(3).
Second, the language used by section 1332(a)(3) differs from the language used in both section 1332(a)(1) and seсtion 1332(a)(2). 1 Moore's Federal Practice ¶ 0.75[1.-2-4], at 800.44 ("The language of the additional provision for aliens mirrors the language of neither the diversity provision in § 1332(a)(1) nor the general alienage provision in § 1332(a)(2)."). Taken together, because Congress was well aware of the judicial interpretation of the diversity statute requiring complete *11 diversity, specifically used language that differs from the sections in which complete diversity had been applied, and used language which encompasses situations such as this, we must conclude that "complete diversity" of alien parties is not required under section 1332(a)(3).
Likewise, the cases in which courts have stated that
complete diversity is required among aliens when interpreting
section 1332(a)(2) are simply inapplicable here. See, e.g.,
Singh ,
Finally, our conclusion that the presence of aliens on both sides of thе controversy does not defeat federal jurisdiction under section 1332(a)(3) is consistent with the policy considerations that form the foundation for diversity and alienage jurisdiction. As one commentator has noted, "[i]t is the generally accepted view that diversity jurisdiction was established to provide access to a competent and impartial tribunal, free from local prejudice or influеnce . . . ." 1 Moore's Federal Practice ¶ 0.71[3.-1], at 709. Whether this prejudice or influence does in fact exist is not the question. As Chief Justice Marshall observed:
However true the fact may be, that the tribunals of the
states will administer justice as impartially as those of the nation, to parties of every description, it is not less true that the Constitution itself either entertains apprehensions on this subject, or views with such indulgence the possible fears and 2. They also do nоt fit the pigeonhole created by section 1332(a)(3) because section 1332(a)(3) requires citizens to be present on both sides of the controversy.
apprehensions of suitors, that it has established national tribunals for the decision of controversies between aliens and a citizen, or between citizens of different states.
Bank of the United States v. Deveaux,
In addition to fears of prejudice and bias, alienage jurisdiction is alsо based upon significant foreign policy concerns, which are exclusively within the province of the federal government. As Alexander Hamilton explained: As the denial or perversion of justice by the sentences
of courts, as well as in any other manner, is with reason classed among the just causes of war, it will follow that the federal judiciary ought to have cognizance of all causes in whiсh the citizens of other countries are concerned. This is not less essential to the preservation of the public faith, than to the security of the public tranquility.
The Federalist No. 80 , at 536 (Alexander Hamilton) (Jacob E. Cooke ed., 1961). Alienage jurisdiction, therefore, reflects a national concern over our relations with foreign governments and how they may be affected by the resolution of controversies involving their citizens.
Given the justification for diversity jurisdiction, there is a reasonable basis for the complete diversity rule. If diversity jurisdiction exists because of a fear that the state tribunal would be prejudiced towards the out-of-state plaintiff or defendant, that concern is understandably allayed when that party is joined with a citizen from the forum state. Indeed, when members from the forum state are present on both sides of *14 the controversy, it becomes more difficult to imagine that a state tribunal would favor one side based upon biases in favor of its own citizens. Bank of New York v. Bank of America, 861 F. Supp. 225, 229 (S.D.N.Y. 1994).
The same cannot be said, however, for applying the complete diversity rule to cases involving aliens. The mere presence of aliens on both sides of the controversy does nоthing to allay concerns that the in-state party will receive more favorable treatment. While the bias towards aliens may be somewhat abated due to the presence of aliens on both sides of a case, the bias in favor of an in-state resident is not. Consider a case brought in New York state court where a
citizen of New York and a citizen of Lithuania sue a Texan and a co-defendant. If the co-defendant is a New Yorker, the Texan's fear of bias will be allayed -- for in order to penalize the Texan the judge will have to harm one of his or her neighbors. On the other hand, if the co-defendant is a Lithuanian, the nervous Texan will be little comforted -- he or she has no reason to think that the judge will be any less willing to penalize a Texan and a Lithuanian than to penalize a Texan alone. For diversity purposes, an alien is an alien is an alien.
Id. at 229. More important, the international relations concerns remain. Indeed, the presence of aliens on both sides of the controversy heightens those federal concerns.
Thus, while the need for diversity jurisdiction has been questioned, see 1 Moore's Federal Practice ¶ 0.71[3.-2], at 713-19, the need for alienage jurisdiction has not. In fаct, while legislation passed by the House of Representatives in 1978 would have abolished diversity jurisdiction, it left the alienage *15 jurisdiction sections, 28 U.S.C. § 1332(a)(2) and (3), intact. Id. at 800.31 n.7. Given the globalization of the United States economy, and the fact that citizens of the United States are becoming increasingly involved in international transactions, the need for impartial national tribunals remains unchanged.
B.
The London Market Insurers alternatively argue, and the district court agreed, that even if section 1332(a)(3) grants jurisdiction when aliens are present on both sides of a case, they cannot be considered "additional parties." The thrust of their argument is that because New Hampshire Insurance is only responsible for 0.564% of a single policy, the alien defendants are the principal parties. As such, the main suit is betweеn Dresser and the alien defendants -- not New Hampshire Insurance, which serves merely as "window dressing." In effect, the London Market Insurers argue that section 1332(a)(3) requires us to weigh the relevant interests at stake. We disagree.
In support of this argument, the London Market Insurers
rely upon L'Europeenne de Banque v. La Republica de Venezuela ,
Under the plain language of the statute, we conclude that so long as there is a legitimate dispute between the citizens involved, jurisdiction exists under 28 U.S.C.
§ 1332(a)(3). Bank of New York ,
IV.
For the foregoing reasons, the decision of the district court will be reversed, and the case will be remanded for further consideration.
_________________________
TO THE CLERK:
Please file the foregoing opinion. _______________________________ Circuit Judge