300 F.3d 1129 (9th Cir. 2002), 01-16481, Strotek Corp. v. Air Transport Ass'n. of America
|Citation:||300 F.3d 1129|
|Party Name:||STROTEK CORPORATION, Plaintiff-Appellant, v. AIR TRANSPORT ASSOCIATION OF AMERICA; Airbus Industries of North America; Alaska Airlines, Inc.; America West Airlines, Inc.; American Airlines, Inc.; McDonnell Douglas Corporation; Continental Airlines Inc.; Delta Airlines, Inc.; Boeing Aircraft Co.; Federal Express Corporation; Regional Airline Associa|
|Case Date:||August 22, 2002|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
Argued and Submitted July 10, 2002.
Lee S. Molof and Robert C. Vohl, Molof & Vohl, Reno, NV, for the plaintiff-appellant.
Paul H. Friedman, Dechert Price & Rhoads, Washington, DC, for the defendants-appellees.
Appeal from the United States District Court for the District of Nevada, Edward C. Reed, Jr., District Judge, Presiding. D.C. No. CV-00-00065-ECR.
Before CANBY, Jr. and RYMER, Circuit Judges, and BERTELSMAN, Senior District Judge.[*]
RYMER, Circuit Judge.
This is the second round in a decade-long struggle by Strotek Corporation, a Nevada corporation, against three air frame manufacturers, eleven commercial airlines, and two trade associations who allegedly conspired to put Strotek out of business. Strotek claims that they conspired to defame its technology as a way of punishing it for convincing federal regulators to require testing of aircraft strobe lights. These allegations were first made in a federal action brought under the Sherman Act, Strotek Corp. v. Air Transport Ass'n of Am., et al., CV-N-96-742-ECR (D.Nev.) (Strotek I), but the district court entered summary judgment against Strotek on its antitrust claim and declined to exercise supplemental jurisdiction over the state law claims, which it dismissed without prejudice. It could do this because, at the time Strotek I was filed (December 1996), the district court lacked diversity jurisdiction: the defendant Airline Transport Association of America (ATA) was then an unincorporated trade association deemed a citizen of any state where it had members-which included Nevada.
Strotek refiled the state law claims in Nevada state court (Strotek II) on October 6,1999 against all but two of the same defendants named in Strotek I. The first amended complaint in Strotek II, which was filed December 6, 1999, names "Air Transport Association of America" as a defendant. Service was effected January 28, 2000 at the Washington, D.C. headquarters of the Air Transport Association of America, Inc. (ATA, Inc.)the corporation that had taken over ATA's activities over a year earlier. Unlike its predecessor, ATA, Inc. is a citizen of the District of Columbia and is therefore diverse from Strotek. ATA, Inc. appeared and all defendants timely removed on February 3, 2000 on the basis of diversity jurisdiction. 28 U.S.C. §§ 1332, 1441.
Strotek moved to remand on the ground that the Air Transport Association, the entity which its complaint actually names, continues to exist as an unincorporated trade association whose Nevada members destroy diversity. The district court denied the motion because of undisputed evidence that the ATA incorporated under the laws of the District of Columbia May 21, 1998; that the ATA ceased to operate as an unincorporated association December 31, 1998; and that as of that date all of ATA's operations, assets and liabilities were transferred to ATA, Inc. Because ATA, Inc. was a citizen of Washington, D.C. when the complaint in Strotek II was filed and the action was removed, its presence in the lawsuit does not destroy diversity. Having jurisdiction, the court then
granted summary judgment on the merits in favor of ATA, Inc. and the other defendants.
Strotek appeals both rulings. We now affirm denial of the motion to remand, because "Air Transport Association of America" was ATA, Inc. at the time the action was filed and removed. ATA, Inc. is a citizen of the District of Columbia and therefore diverse from Strotek. Even though Strotek asserts that its complaint is against the unincorporated association, ATA has no obvious stake in the outcome and even if it has capacity to be sued (which we question), it would appear to be purely a nominal party whose citizenship has no effect on diversity. As the federal court has subject matter jurisdiction, we separately affirm the judgment against Strotek in a memorandum disposition.
Strotek argues that an unincorporated association cannot avoid claims of a creditor by dissolving, and that its dissolution cannot terminate its capacity to be sued. Strotek insists that its complaint proceeds against ATA, the unincorporated associationnot the association's incorporated successor entity. The linchpin of Strotek's argument is the assertion that it had the prerogative to sue the unincorporated association notwithstanding that the ATA had ceased to operate in that form by the time that suit was brought. According to Strotek, this follows by analogy to partnership law: like a partnership following dissolution, the ATA continues to exist in its association form as a distinct entity until its obligations to third partiesincluding tort claimantsare discharged. In Strotek's view the district court erred by failing to respect that prerogative, and by deciding to disregard the citizenship of the members of the unincorporated association in deference to that of the incorporated entity that Strotek never sued.
ATA, Inc. responds that unincorporated trade associations regularly turn themselves into corporations upon the election of their members, and that there is no law requiring the unincorporated association to remain in existence until all possible claims are resolved against it. For one thing, it points out, a plaintiff seeking relief against a dissolved association may pursue the association's former members, see, e.g., Security-First Nat'l Bank of Los Angeles v. Cooper, 62 Cal.App.2d 653, 145 P.2d 722, 732 (1944) (plaintiff could maintain action against individual members of unincorporated association that ceased to exist upon incorporation), and must do so rather than proceeding against the dissolved entity itself. Strotek in fact named several former members (all...
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