Case Information
*1 Bеfore WILKINSON and RICHARDSON, Circuit Judges, and Thomas E. JOHNSTON, Chief United States District Judge for the Southern District of West Virginia, sitting by designation.
Reversed by published opinion. Judge Richardson wrote the opinion, in which Judge Wilkinson and Judge Johnston join.
ARGUED: Michael Julian Gottlieb, WILLKIE, FARR & GALLAGHER LLP, Washington, D.C., for Appellant. Virginia Whitner Hoptman, REDMOND, PEYTON & BRASWELL, Alexandria, Virginia; David E. Gutowski, ZDARSKY SAWICKI & AGOSTINELLI, Buffalo, New York, for Appellees. ON BRIEF: Joshua Riley, Jon R. Knight, BOIES SCHILLER FLEXNER LLP, Washington, D.C., for Appellant. James S. Kurz, REDMOND, PEYTON & BRASWELL, Alexandria, Virginia; J. William Eshelman, III, Bradford G. Hughes, CLARK HILL PLC, Washington, D.C., for Appellees. Michael H. Pryor, Washington, D.C., Christine A. Samsel, Nicholas R. Santucci, BROWNSTEIN HYATT FARBER SCHRECK, LLP, Denver, Colorado, for Amicus Credit Union National Association. William M. Jay, Andrew Kim, GOODWIN PROCTER LLP, Washington, D.C., for Amicus National Association of Federally-Insured Credit Unions.
RICHARDSON, Circuit Judge:
This appeal centers on the meaning of a seemingly simple, three-letter word
connecting two clauses:
and
. For establishing diversity jurisdiction, Congress provides
that a corporation “shall be deemed a citizen of every State and foreign state by which it
has been incorporated
and
оf the State or foreign state where it has its principal place of
business.” 28 U.S.C. § 1332(c)(1) (emphasis added). We regularly apply this subsection
to your bread-and-butter,
state
-chartered corporations. But
federally
chartered
corporations (not incorporated in a State or foreign state) do not “fit comfortably” under
the first clause.
Wachovia Bank v. Schmidt
,
According to defendants and the district court, a federal corporation is not a citizen of the place where it has its principal place of business under § 1332(c)(1). In their view, the use of the word and between the clauses means that § 1332(c)(1) applies only to those corporations that satisfy both: those chartered by a “State or foreign state,” not by the federal government. Plaintiff Navy Federal Credit Union, a federally chartered credit union, disagrees. Acknowledging the first clause of § 1332(c)(1) does not grant state citizenship to a federal corporation, Navy Federal argues the second clause deems it a citizen of Virginia.
In our view, § 1332(c)(1)’s text, structure, and context show that Navy Federal is
correct. The plain meaning of
and
in context here is ‘in addition to,’ and when we add
something to nothing, something remains. Section 1332(c)(1) thus requires us to interpret
and
to give effect to the second clause even when the first clause does not specify a
citizenship. Moreover, the district court’s and defendants’ understanding of conflicts
*4
with circuit precedent.
Athena Automotive, Inc. v. DiGregorio
,
I. Background
This case arises from a contract dispute. In April 2012, Plaintiff Navy Federal Credit Union sold a portfolio of debt instruments to defendant Advantage Assets II. Advantage then turned around and resold those assets to its codefendants. This resale ostensibly violated Advantage’s asset-purchase agreement with Navy Federal. Adding insult to breach, the codefendants supposedly employed unscrupulous debt-collection practices that defamed the credit union, interfered with its business, and injured its members.
So Navy Federal filed this lawsuit in federal district court, asserting only state-law claims and invoking diversity jurisdiction. The substance of Navy Federal’s claims is not at issue today. Rather, this appeal concerns the federal courts’ jurisdiction over the controversy in the first place. Defendants’ citizenship—Delaware, Florida, New York, and *5 Texas—is uncontested. And Navy Federal is seeking damages above the jurisdictional minimum. See § 1332(a). The primary issue here is whether Navy Federal, as a federally chartered credit union, is a citizen of any state.
A. Navy Federal Credit Union
Navy Federal Credit Union is a federally chartered, not-for-profit credit union. On July 17, 1947, the Bureau of Federal Credit Unions issued a certificate of incorporation to the “Navy Department Employees Federal Credit Union” under the Federal Credit Union Act of 1934. At the time of its incorporation, the credit union limited its membership to “military personnel [and employees] of the Navy Department in Washington, D.C. and adjoining counties of Maryland and Virginia,” as well as employees of the credit union and their families. J.A. 100. And at first, the credit union ran its operations from Washington, D.C.
Over the next seventy years, the credit union experienced explosive growth. Navy Federal now has over eight-million members in thirty states, the District of Columbia, two U.S. territories, and twelve foreign countries. All “[m]ilitary and civilian personnel regularly employed by the Department of Defense[, Coast Guard, or National Guard] . . . at any Government installation, facility, or unit, afloat or ashore” may join the credit union today. J.A. 104. Additionally, several idiosyncratic constituencies scattered across the *6 country have since become eligible for membership. As of December 2017, Navy Federal had accumulated over $63 billion in shares and member deposits.
Completing the transformation, the “Navy Department Employees Federal Credit Union” eventually shortened its name to “Navy Federal” and moved its corporate headquarters to Vienna, Virginia (nearby the Pentagon). This Vienna complex is home to 20 out of 21 executives serving on the Credit Union’s management committee. It is where Navy Federal’s directors and officers meet and where all of its operations (except customer service) are managed. Most of the credit union’s branches and members are located outside of Virginia, and a plurality of its employees now live and work in Florida.
B. Proceedings below
After Navy Federal initiated this suit in federal court, one defendant, Debt
Management Partners, moved to dismiss it for lack of subject-matter jurisdiction. Fed.
R. Civ. P. 12(b)(1). It argued that Navy Federal is not diverse under § 1332, so the district
court lacked federal-diversity jurisdiction. And with no other grounds for federal
jurisdiction, the case must be dismissed.
See generally Northern Virginia Foot & Ankle
Assocs., LLC v. Pentagon Federal Credit Union
, No. 10-cv-1640-RWT,
*7 The district court agreed. See Navy Federal Credit Union v. LTD Financial
Services, LP , 368 F. Supp. 3d 889, 900 (E.D. Va. 2019). First, the court reasoned that federal credit unions are, in fact, corporations under the plain languagе of the Federal Credit Union Act (“FCUA”). See id. at 894. But the court found that § 1332(c)(1), in which Congress provides for the citizenship of corporations, does not apply to federal corporations. The district court reasoned that § 1332(c)(1) “states that a corporation is a citizen of the state in which it was incorporated in which it has its principal place of business[, so] [t]he use of the word ‘and’ between the clauses . . . suggests that the provision contemplates only those corporations that have both, i.e., those chartered under state law.” Id. And since Navy Federal was chartered under federal law, the district court held that § 1332(c)(1) does not apply, meaning Navy Federal was not diverse. See id. at 898. [2] Thus the court dismissed the case for lack of subject-matter jurisdiction.
Navy Federal timely appealed, and we have jurisdiction. 28 U.S.C. § 1291. [3]
II. Discussion
We review de novo the district court’s determination that it lacked subject-matter
jurisdiction for lack of diversity.
Elliott v. American States Insurance Co.
,
The judicial Power of the inferior federal courts extends only as far as Article III
permits and Congress chooses to confer.
See
U.S. Const. Art. III, § 1, cl. 2;
Sheldon v. Sill
,
But Congress (so far) has declined to extend federal-diversity jurisdiction to this constitutional limit. As relevant here, § 1332(a) allows us to exercise diversity jurisdiction when two requirements are satisfied. First, the “matter in controversy” must “exceed[] the sum or value of $75,000.” § 1332(a). And second, the controversy must arise between “citizens of different States.” § 1332(a)(1); see also § 1332(a)(2)–(4) (governing suits that involve citizens of foreign states).
This appeal involves the latter requirement of § 1332(a). Unlike the constitutionally
permitted “minimal diversity” jurisdiction, diversity must be “complete” to satisfy this
Congressional grant.
Strawbridge v. Curtiss
,
Of course, this only dodges the question of
how
a court is to determine the
citizenship of the parties before it—particularly when one of those parties is an artificial
entity. At common law, this question was a difficult one, and it has a long, conflicted, and
contentious history.
See Hertz Corp. v. Friend
,
Congress has decided. Section 1332(c)(1) specifies the rules governing the citizenship of corporations. It provides:
“[A] corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.”
We note that, for assessing diversity jurisdiction, the term “citizenship” diverges
from its meaning in the immigration or passport context.
generally Gilbert v. David
,
§ 1332(c)(1). Here, we ask whether (and later how) this text applies to Navy Federal, a federally chartered credit union.
Defendants argue that § 1332(c)(1) cannot apply to Navy Federal in three thrusts.
First, they urge that a federal
credit union
is not a
corporation
, so different rules apply.
Second, defendants assert that since the first clause of § 1332(c)(1)
does not
apply to Navy
Federal, the second clause
cannot
apply. Thus, Navy Federal is stateless, and its stateless
status destroys diversity. Below, the district court based its holding on this second
argument. Third, they argue that the Supreme Court’s decision in
Bankers’ Trust Co. v.
Texas & Pacific Railway Co.
,
Navy Federal responds in three corresponding parries. According to Navy Federal, the statute creating federal credit unions classifies them as “corporations,” meaning § 1332(c)(1) applies. Next, Navy Federal argues that the plain meaning of the word shows that the second clause of § 1332(c)(1) provides a basis for citizenship independent of the first clause. Last, Navy Federal accepts the Bankers ’ Trust precedent and argues that—consistent with the Supreme Court’s instructions—we must give effect to Congress’s since-provided rule in § 1332(c)(1) for conferring state citizenship on corporations.
We consider each engagement and find that Navy Federal wins the bout: Navy Federal is a citizen of its principal place of business, Virginia.
A. Navy Federal is a corporation
We first consider whether Navy Federal is a “corporation.” Section 1332(c)(1)
governs the citizenship of only “true-blue ‘corporations.’”
Hawkins v. i-TV Digitalis
Tavkozlesi zrt.
,
To determine whether an entity is a “corporation” we look to the statute of its
formation to see if it is designated as such.
See Carden v. Arkoma Associates
, 494 U.S.
185, 189–90 (1990);
Hawkins
,
Defendants instead highlight other provisions of the FCUA that use the term “association.” See, e.g. , id. § 1752 (“the term ‘Federal credit union’ means a cooperative association organized in accordance with the provisions of this chapter”). Supposedly, the use of the word “association” shows that federal credit unions are unincorporated. This argument suffers from two flaws.
*13 First, defendants miss the point—the relevant line is between incorporated and unincorporated entities, not “associations” and “corporations.” See Hawkins , 935 F.3d at 222 (“Different rules apply for corporations and unincorporated associations.”) (emphasis added). An “association” merely signifies a group of persons, not how that group is organized. See “The Dicti onary Act,” 1 U.S.C. § 5 (The word “association” may be used “in reference to a corporation.”); Association , 1 Oxford English Dictionary 718 (“A body of persons who have combined to execute a common purpose or advance a common cause; the whole organization which they form to effect their purpose.”). For instance, the Home Owners’ Loan Act classifies “Federal savings associations” as corporations—despite the use of the word “association” in their name, see 12 U.S.C. § 1464(a)(1)–(2), (d)(5). Thus the mere use of the term “association” in the FCUA—without more—does not at all suggest that Congress intended for federal credit unions to be unincorporated entities.
Second, even if
association
could generally be read to imply an
unincorporated
entity, defendants ignore the context in which the word “association” is used.
See, e.g.
,
Taniguchi v. Kan Pacific Saipan, Ltd.
,
For these reasons, we hold that a federal credit union is a “corporation” and so turn to the application of § 1332(c)(1) to federal credit unions.
*15 B. Navy Federal is a citizen of the state of its principal place of business 1. Text, structure, and precedent support Navy Federal “As in all statutory construction cases,” we start with the plain text of the provision.
Marx v. General Revenue Corp.
, 568 U.S. 371, 376 (2013). Section 1332(c)(1) states:
“[A] corporation shall be deemed to be a citizen of every State and foreign state by which
it has been incorporated and of the State or foreign state where it has its principal place of
business.” By its own terms, § 1332(c)(1) offers two grounds for corporate citizenship—
a corporation is (1) a citizen “of every State and foreign state by which it has been
incorporated”
and
(2) a citizen “of the State or foreign state where it has its principal place
of business.” § 1332(c)(1).
[8]
And the use of the mandatory “shall” requires us to deem a
corporation a citizen on the specified grounds where possible.
Holland v. Pardee Coal
Co.
,
‘Not so fast,’ defendants protest. Supposedly, an interpretive problem arises from the word that connects the two clauses: . According tо defendants, and means “along The parties refer to the relevant language of § 1332(c)(1) as “clauses”—as did the district court and as have commentators. See, e.g. , Navy Federal Credit Union , 368 F. Supp. 3d at 894; Marc Miller, Diversity Jurisdiction Over Alien Corporations , 50 C HI . L. R EV . 1458, (1983). But the most accurate grammatical description for each of these sets of words we think to be more nuanced. Chicago Manual of Style § 5.176 (17th ed. 2017). Yet, for the sake of consistency and simplicity—and because nothing here turns on the characterization—we adopt the terminology advanced by the parties.
with.” And in this conjunctive sense, it means two items to be “taken jointly.” Appellees Br. 13; see also J.A. 332. In defendants’ view, this creates a problem. If applying the state- of-incorporation clause yields a null set, there is nothing for the principal-place-of-business clause to go “along with.” So it just cannot be applied. Navy Federal counters that and simply signifies “‘in addition to.’” Appellant Br. 12. And there is no problem with adding to a null set: zerо plus one is one. This dispute requires us to bring our normal tools of statutory construction to bear on this simple conjunction.
We first look to the “‘ordinary or natural meaning’” of a term in dispute—a
“cardinal principle of statutory construction.”
United States v. Mills
,
Dictionaries do little to resolve the dispute. In fact, the parties here both find support
in the very same definition.
And
, 1 Oxford English Dictionary 449 (“Introducing a
word, phrase, clause, or sentence, which is to be taken side by side with,
along with
, or
in
addition to
, that which precedes it.”) (emphasis added). Accordingly, we think —as a
word with “many dictionary definitions” (the Oxford dictionary alone lists over thirty,
see
1 Oxford English Dictionary 449–50)—“must draw its meaning from its context.”
*17
Ardestani v. I.N.S.
,
Three structural and contextual features of § 1332(c)(1) confirm Navy Federal’s interpretation of . First, we note the structural independence of § 1332(c)(1)’s two clauses. Each provides a different basis for deeming a corporation a “citizen of” a jurisdiction. The parallel use of the preposition “of” confirms that both clauses (really, adjectival phrases) are directed toward the word “citizen,” not one another. See generally Chicago Manual of Style § 5.176 (17th ed. 2017). So this structural independence suggests that these clauses operate independently to deem a corporation a citizen of a particular jurisdiction.
Second, the clauses’ logical independence confirms their structural independence. Suppose a parent tells his child, “Today, we will go to the park and to the zoo.” It turns *18 out, however, that when the pair arrives at the first destination, the park is closed. Do they proceed to the still-open zoo? We think it clear they do. That the park was closed has no bearing on their also-expressed intention to go to the zoo. In this context, Navy Federal’s interpretation of and carries the day. Consider, on the other hand, the scenario where the zoo is in the park. Compare Central Park Zoo, NY (in Central Park), with Riverbanks Zoo, Columbia, SC (near Riverfront Park). Because the park is closed, the intention to visit the zoo is also defeated. In this circumstance, defendants’ interpretation of prеvails. This simple example highlights the importance of the logical connection between two items connected by a conjunction. When the objects connected are independent, they are generally taken “in addition.” Reed Dickerson, The Fundamentals of Legal Drafting § 6.2, at 105 (2d ed. 1986). When they are dependent, they must be taken “jointly.”
Here, the state-of-incorporation clause and principal-place-of-business clause are
logically independent: the park is closed, but the zoo remains open. It is a central feature
of corporate law that firms may choose where to incorporate, and so select which State,
federal, or foreign corporate law will govern them.
See
Lucian A. Bebchuck and Alma
Cohen,
Firms’ Decisions Where to Incorporate
46 J. L. & E CON . 383, 383 (2003) (“A
central feature of the U.S. corporate environment is the presence of regulatory competition
in corporate law.”);
see also
Note,
OCC Allows Finteсh Companies to Apply for National
Bank Charters
, 132 H ARV . L. R EV . 1361, 1363–66 (2019) (discussing these considerations
for FinTech companies);
cf. Agency for International Development v. Alliance for Open
Society International, Inc.
,
Third, consider the way that
and
is used throughout § 1332(c).
Lomax v. Ortiz-
Marquez
,
The latter reading would destroy diversity jurisdiction as we know it: § 1332(c)(1)
would apply only to entities incorporated both domestically and overseas—which, we feel
safe to say, is not most corporations. No court, to our knowledge, has adopted such an
illogical construction of that provision. And this flawed reading becomes particularly stark
*20
when we recall that Congress only added the words “and foreign state” in 2011.
See
Federal Courts Jurisdiction and Venue Clarification Act of 2011, PL 112-63, 125 Stat 758.
We doubt that this three-word addition can reasonably be read to dramatically curtail most
corporate diversity jurisdiction as we know it. Congress “does not, one might say, hide
elephants in mouseholes.”
Whitman v. American Trucking Associations
,
And
is also used in § 1332(c)(1) in reference to insurers—a usage that similarly
supports Navy Federal’s reading. Section 1332 contains three bases for conferring
citizenship on an insurer in an insurance lawsuit: (1) where the insured is a citizen,
(2) where the insurer has been incorporated,
and
(3) where the insurer has its principal
place of business. § 1332(c)(1)(A)–(C). Because these clauses apply “whether [an insurer
is] incorporated оr unincorporated,” Navy Federal’s reading of
and
, again, must apply here.
If we were to adopt defendants’ reading of
and
, the instruction to apply these clauses to
unincorporated insurers would be self-defeating. Section 1332(c)(1)(B) (“every State and
*21
foreign state by which the insurer has been incorporated”) yields only a null set for
unincorporated associations, thus also precluding the application of § 1332(c)(1)(A) and
(C) to unincorporated insurers. This result is nonsensical. For § 1332(c)(1) to apply to
unincorporated insurers, as Congress has expressly instructed, we must invoke Navy
Federal’s interpretation of
and
.
Fontenot v. Taser International, Inc.
,
In contrast, other provisions show that when Congress wishes to restrain a grant of citizеnship, it uses words of limitation. See, e.g. , § 1332(c)(2) (“[T]he legal representative . . . shall be deemed to be a citizen only of . . .”) (emphasis added). When Congress imposes a conjunctive requirement in other subsections (as defendants ask us to do here), it combines and with that language of limitation. So, in § 1332(a) for example, Congress uses the word “where” to specify that diversity jurisdiction exists only “where” both “A” “B” are satisfied. See also § 1332(d)(2) (“in which” both “A” and “B”). But § 1332(c)(1) speaks in the language of conferral: “a corporation shall be deemed to be a citizen of [both] . . . .” Id . (emphasis added). And § 1332(c)(1) confers generously at that: “… of every State and foreign state . . . .” Id . (emphasis added). This distinction shows that Congress knew precisely how to impose conjunctive requirements but declined to do so here. And it is not for this court to write that restriction in.
For all these reasons, we find that in § 1332(c)(1) must be interpreted as Navy Federal argues. The textual reading offered by defendants is simply implausible given § 1332(c)(1)’s text, structure, and context.
Defendant’s reading also conflicts with our precedent. In
Athena Automotive, Inc.
,
we considered how § 1332(c)(1) applied to determine the citizenship of an inactive
corporation with no principal place of business.
The import of our
Athena Automotive
ruling is that a corporation may still be a
citizen of the State of incorporation
even if it has no principal place of business
under
§ 1332. So although defendants’ conjunctive requirement would violate this rule,
See also Midlantic Nat. Bank v. Hansen
,
*23 plaintiff’s additive interpretation follows. Under the district court’s contrary reading, Athena Automotive could not have been a citizen of Georgia unless we had also determined that it had a principal place of business somewhere . Thus, its reading cannot be correct.
2. Defendants’ statutory counterarguments fail Defendants also object that Navy Federal’s reading of § 1332(c)(1) violates the canon against superfluousness, see Freeman v. Quicken Loans, Inc. , 566 U.S. 624, 635 (2012), and is precluded by negative implication, see N.L.R.B. v. SW General, Inc. , 137 S. Ct. 929, 940 (2017). Appellee Br. 22–25, 27–28. For both arguments, defendants look to the same sources: statutes where Congress has conferred state citizenship on other federal corporations. First, we disagree with the premise—the statutes identified trigger neither canon. And second, even if they did, Congress has spoken with sufficient clarity to overcome those canons here.
*24 Supposedly, two categories of statutes create this problem. Defendants start by looking to special legislation that provides a fixed citizenship for certain federally chartered corporations. For instance, Congress deemed the National Railroad Passenger Corporation (“Amtrak”) and the Telecommunications Development Fund citizens of the District of Columbia. See 49 U.S.C. § 24301(b); 12 U.S.C. § 2258. But these statutes do not implicate the canon against surplusage (nor do they conflict with § 1332(c)(1)). They simply give a fixed, specific provision for D.C. citizenship, which controls over the dynamic, two-pronged, general rule in § 1332(c)(1). See Varity Corp. v. Howe , 516 U.S. 489, 511 (1996) (“‘[T]he specific governs the general.’”).
Similarly, no negative implication militates against Navy Federal’s interpretation.
Negative implication, also called the
expressio unius
canon, instructs that the “expressi[on]
[of] one item of an associated group or series excludes another left unmentioned.”
N.L.R.B.
v. SW General, Inc.
,
Defendants next call our attention to legislation that provides different rule-based
mechanisms for determining the citizenships of certain federal entities.
[13]
These kinds of
enactments govern the citizenship of entities such as national banks and federal savings
associations. 28 U.S.C. § 1348 (“national banking associations” are “deemed citizens of
the States in which they are respectively located”); 12 U.S.C. § 1464(x) (federal savings
associations are citizens of the state where their “home office” is located). But again, these
are different rules applicable to different entities, not surplusage.
See Wachovia Bank
, 546
U.S. at 317 n.9.
[14]
And these specific rules likely control over § 1332(c)(1)’s general
provision.
OneWest Bank, N.A. v. Melina
,
*26
Our circuit, however, has not yet definitively construed the relationship between the
provisions cited by defendants and § 1332(c)(1). And we see no need to do so today.
Assuming, for the sake of argument, that some surplusage would result from Navy
Federal’s reading of , we would not reach defendants’ conclusion. “The canon against
surplusage is strongest when an interpretation would render superfluous another part of the
same statut
[
e
].”
Marx
,
3.
Bankers’ Trust
supports Navy Federal
Defendants also point to the Supreme Court’s 1916 decision in
Bankers’ Trust
as
support for their interpretation.
In
Bankers’ Trust
, the Supreme Court considered whether federal courts had
subject-matter jurisdiction over a suit to foreclose on a railroad mortgage.
The Court evaluated three grounds for conferring state citizenship on Texas &
Pacific Railway, but it rejected each. First, it considered the then-existing federal-
common-law rule for determining corporate citizenship.
Id.
at 309. At that time, the
federal common law generally presumed that a corporation possessed the citizenship of the
State where it was incorporated.
Marshall v. Baltimore & Ohio Railroad Co.
,
Second, the Supreme Court considered whether there was a constitutional basis for conferring state citizenship on a federal corporation. The Court found none, explaining that the 14th Amendment “declares that native born and naturalized citizens of the United *28 States shall be citizens of the state wherein they reside,” but that it says nothing about corporations. Id. at 310.
Last, the Court considered whether Congress had provided a statutory basis for jurisdiction “as is done in respect of national banks.” Id. But finding none, the Court held that “there is no ground upon which the company can be deemed a citizen of Texas, and this being so, the suit is not one between citizens of different states.” Id.
As defendants point out, several district courts—including in our Circuit—have
relied on
Bankers’ Trust
to find that federal corporations are not diverse under
§ 1332(c)(1).
See Hukic v. Aurora Loan Services
, 588 F.3d 420, 428 (7th Cir. 2009)
(collecting cases). These courts have generally read
Bankers’ Trust
to hold “that a
corporatiоn chartered pursuant to an act of Congress was not a citizen of any state, and
therefore was ineligible to invoke federal diversity jurisdiction.”
Lehman Brothers Bank,
Defendants also assert that the Second, Eleventh, and Ninth Circuits have held
that § 1332(c) does not apply to federally chartered corporations. Appellee Br. 18–19 n.58
(citing
OneWest Bank, N.A.
,
In
One West
, the Second Circuit focused its interpretation on 28 U.S.C. § 1348,
which provides a different rule establishing the citizenship of national banks. But to the
extent that the specific controls the general,
One West
says nothing about the applicability
of § 1332(c)(1) to federal corporations writ large.
See
*29
FSB v. Frank T. Yoder Mortgage
, 415 F. Supp. 2d 636, 639 (E.D. Va. 2006);
see also Federal Deposit Insurance Corp.
,
We take Bankers’ Trust to stand for something different. Bankers’ Trust teaches that we look to three sources to determine whether a corporation is diverse: the common law, the constitution, and the word of Congress. And based on an analysis of these sources, the Court reasoned that the federal corporation in that case was not diverse. By focusing on the conclusion and ignoring the reasons for the Bankers’ Trust decision, we think the Lehman Brothers court (and others) misjudged the holding of Bankers’ Trust and applied too blunt a rule. See Pierre N. Leval, Judging Under the Constitution: Dicta about Dicta , 81 N.Y.U. L. R EV . 1249, 1256 (2006) (explaining that a holding “explains why the court’s judgment goes in favor of the winner”); id . at n.20 (“It is only by reference to the court’s reasoning that one can determine whether the factual differences between the earlier case and the later one should change the result.”).
*30
Since
Bankers’ Trust
, the final ground considered by the Court—whether Congress
has spoken to the issue—changed. Forty-two years after that decision, Congress passed
§ 1332(c)(1), providing a general rule for determining the citizenship of a corporation. It
was well within Congress’ prerogative to do so: “‘[w]hatever [the courts] say regarding
the scope of [our] jurisdiction . . . can of course be changed by Congress.”
Exxon Mobil
Corp. v. Allapattah Servs., Inc.
,
For these reasons, we agree that the holding of Bankers’ Trust supports Navy Federal’s reading of § 1332(c)(1).
* * *
We think this a case that “begins, and pretty much ends, with [§ 1332(c)(1)’s text].”
Lomax
,
REVERSED
Notes
[1] See, e.g. , J.A. 104–121 (Voting members of Elsinore Women’s Club in Lake Elsinore, California; Employees of Inspire Kitchen and Bath in National City, California; employees of the United States Congress who work in San Diego County, California; Members of Serra High Football Boosters in San Diego, California; Employees of Jenks Holdings in Las Vegas, Nevada; and Employees of Share Computing in San Diego, California).
[2] The district court also considered, and rejected, the so-called “localization
exception.”
Navy Federal Credit Union
, 368 F. Supp. 3d at 898–900 (discussing
Feuchtwanger Corp. v. Lake Hiawatha Fed. Credit Union
,
[3] The question on appeal is whether § 1332(c)(1) applies at all. Defendants do not
contest that if § 1332(c)(1) provides that Navy Federal is a citizen of its principal place of
business, then that place would be Virginia.
See, e.g.
, J.A. 25;
see also
Dist Ct. Dkt. 149
at 9, 10, 19;
Navy Fed. Credit Union
,
[5] Only in special circumstances—such as when a foreign corporation lacks a clear
domestic analogue—may we look to the structure of an entity to determine whether it
classifies as a corporation.
People of Puerto Rico v. Russell & Co., Sucesores S. En.
C.
, 288 U.S. 476 , 479−80 (1933) (analyzing a
sociedad en comandita
(a Puerto Rican
business entity that has some features of a corporation));
see also Hawkins
, 935 F.3d at
224–25 (discussing
BouMatic, LLC v. Idento Operations, BV
,
[6] Defendants also look for support in
First Nat’l Bank & Tr. Co. v. Nat’l Credit
Union Admin.
,
[7] Other courts have suggested that the word corporation in § 1332(c)(1) is at issue for a separate reason. In Beaman v. Mountain Am. Fed. Credit Union , No. 19-cv-00053- HCN, ---- F. Supp. 3d ----,2020 WL 2085266 , at *5 (D. Utah Apr. 30, 2020), the district court reasoned that corporation is implicitly limited to entities incorporated by a State or foreign state. We see no basis for reading this limitation into corporation . In fact, we think this reading of § 1332(c)(1) puts the cart before the horse. “State” and “foreign state,” following the preposition “of,” modify the object “citizen,” and thus specify the types of citizenships that § 1332(c)(1) confers on “corporations.” They do not impose an ex-ante limitation upon the kinds of corporations to which citizenship may be conferred.
[9] The rest of § 1332(c)(1) states: [I]n any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of— (A) every State and foreign state of which the insured is a citizen; (B) every State and foreign state by which the insurer has been incorporated; (C) the State or foreign state where the insurer has its principal place of business. (emphasis added).
[11] To avoid Athena Automotive , defendants seem to abandon the district court’s “taken together” reading and suggest a “two-step” reading of § 1332(c)(1). In the first step, they urge us to ask whether an entity is incorporated in a State or foreign state. If not, we stop—the corporation is not a citizen of any State or foreign state. But if the corporation is incorporated in a State or foreign state, then it may also have a second place of citizenship: the State of its principal place of business. In contrast, if the corporation does not have a principal place of business, then it remains a citizen of only its State of incorporation. In other words, a corporation may be a citizen of its State of incorporation or a citizen of both its State of incorporation and its principal place of business, but it may never be a citizen of its principal place of business without a State of incorporation. Assuming defendants could be understood to have advanced this argument below (or even in other sections of their appellate brief), we reject it now. This “two-step” reading defies any common understanding of the word . And it runs into the same structural and contextual difficulties discussed above.
[12] Congress has provided that the District of Cоlumbia is a “State” for purposes of § 1332. 28 U.S.C. § 1332(e).
[13] Note that federal law provides for chartering a variety of distinct financial entities—each with their own structure, requirements, and regulators. National banking associations (chartered by the Office of the Comptroller of the Currency) are thus distinct from federal credit unions (chartered by the NCUA), which are distinct from Farm Credit Banks (overseen by the Farm Credit Administration), and so on. See generally Marc Labonte, Congressional Research Service, Who Regulates Whom? An Overview of the U.S. Financial Regulatory Framework (2020).
[14] In Hertz , the Supreme Court explained that the “principal place of business” of a corporation is its actual headquarters—the “nerve center” of the corporation. 559 U.S. at 81. But national banking associations, “deemed citizens of the States in which they are respectively located,” 28 U.S.C. § 1348, are “respectively located” based on where they have designated their “main office” in their articles of incorporation. Wachovia Bank , 546 U.S. at 318. This may or may not be the same location as the nerve center. Id. at 317 n.9.
[16] Other courts have relied on the supposed Congressional “purpose” behind
§ 1332(c)(1) to reach their conclusion.
Hancock Financial Corp.
,
[17] We acknowledge that Congress should not be taken to overrule, sub silentio,
statutory decisions of the Supreme Court.
See Forest Grove Sch. Dist. v. T.A.
, 557 U.S.
230, 243 (2009);
see generally
William N. Eskridge,
Overruling Statutory Precedents
76
G EO . L.J. 1361 (1987–88). For that, we may need a “clear expression . . . of Congress’
intent.”
Forest Grove
,