382 U.S. 145 (1965), 19, United Steelworkers of America v. R. H. Bouligny, Inc.

Docket Nº:No. 19
Citation:382 U.S. 145, 86 S.Ct. 272, 15 L.Ed.2d 217
Party Name:United Steelworkers of America v. R. H. Bouligny, Inc.
Case Date:November 22, 1965
Court:United States Supreme Court

Page 145

382 U.S. 145 (1965)

86 S.Ct. 272, 15 L.Ed.2d 217

United Steelworkers of America

v.

R. H. Bouligny, Inc.

No. 19

United States Supreme Court

Nov. 22, 1965

Argued October 21, 1965

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Syllabus

Respondent, a North Carolina corporation, brought this defamation action in a North Carolina court against petitioner, an unincorporated labor union. Petitioner's principal place of business purportedly is Pennsylvania, where, for purposes of diversity jurisdiction, it claimed citizenship, though some of its members reside in North Carolina. Petitioner removed the case to a Federal District Court, which refused to remand, finding no proper basis for treating an unincorporated labor union differently from a corporation. On interlocutory appeal, the Court of Appeals reversed and directed that the case be remanded to the state court.

Held:

1. Article III, § 2, of the Constitution extends federal jurisdiction to suits between "citizens" of different States. A corporation for diversity purposes has long been deemed to be a citizen of the State in which it is incorporated, Louisville, C. & C. R. Co. v. Letson, 2 How. 497; Marshall v. Baltimore & O. R. Co., 16 How. 314, and such status is recognized by statute. 28 U.S.C. § 1332(c). Pp. 147-148.

2. An unincorporated labor union is not a "citizen" for purposes of the statute conferring diversity jurisdiction, its citizenship being deemed that of each of its members. Chapman v. Barney, 129 U.S. 677, followed; Puerto Rico v. Russell & Co., 288 U.S. 476, distinguished. Whether any change in that rule is to be made so as to assimilate unincorporated labor unions to the status of corporations for diversity purposes is a matter for legislative, and not judicial, determination. Pp. 149-153.

336 F.2d 160, affirmed.

Page 146

FORTAS, J., lead opinion

MR. JUSTICE FORTAS delivered the opinion of the Court.

Respondent, a North Carolina corporation, brought this action in a North Carolina state court. It sought $200,000 in damages for defamation alleged to have occurred during the course of the United Steelworkers' campaign to unionize respondent's employees. The Steelworkers, an unincorporated labor union whose principal place of business purportedly is Pennsylvania, removed the case to a Federal District Court.1 The union asserted not only federal question jurisdiction, but that, for purposes of the diversity jurisdiction, it was a citizen of Pennsylvania, although some of its members were North Carolinians.

The corporation sought to have the case remanded to the state courts, contending that its complaint raised no federal questions and relying upon the generally prevailing principle that an unincorporated association's citizenship is that of each of its members. But the District Court retained jurisdiction. The District Judge noted

a trend to treat unincorporated associations in the same manner as corporations, and to treat them as citizens of the state wherein the principal office is located.

Divining "no common sense reason for treating an unincorporated national labor union differently from a corporation," he declined to follow what he styled "the poorer reasoned but more firmly established rule" of Chapman v. Barney, 129 U.S. 677.

On interlocutory appeal, the Court of Appeals for the Fourth Circuit reversed and directed that the case be remanded

Page 147

to the state courts. 336 F.2d 160. Certiorari was granted, 379 U.S. 958, so that we might decide whether an unincorporated labor union is to be treated as a citizen for purposes of federal diversity jurisdiction, without regard to the citizenship of its members.2 Because we believe this properly a matter for legislative consideration which cannot adequately or appropriately be dealt with by this Court, we affirm the decision of the Court of Appeals.

Article III, § 2, of the Constitution provides:

The judicial Power shall extend . . . to Controversies . . . between Citizens of different States. . . .

Congress lost no time in implementing the grant. In 1789, it provided for federal jurisdiction in suits "between a citizen of the State where the suit is brought, and a citizen of another State."3 There shortly arose the question as to whether a corporation -- a creature of state law -- is to be deemed a "citizen" for purposes of the statute. This Court, through Chief Justice Marshall, initially responded in the negative, holding that a corporation was not a "citizen," and that it might sue and be sued under the diversity statute only if none of its shareholders was a co-citizen of any opposing party.

Page 148

Bank of United States v. Deveaux, 5 Cranch 61. In 1844, the Court reversed itself and ruled that a corporation was to be treated as a citizen of the State which created it. Louisville, C. & C. R. Co. v. Letson, 2 How. 497. Ten years later, the Court reached the same result by a different approach. In a compromise destined to endure for over a century,4 the Court indulged in the fiction [86 S.Ct. 274] that, although a corporation was not itself a citizen for diversity purposes, its shareholders would conclusively be presumed citizens of the incorporating State. Marshall v. Baltimore & O. R. Co., 16 How. 314.

Congress reentered the lists in 1875, significantly expanding diversity jurisdiction by deleting the requirement, imposed in 1789, that one of the parties must be a citizen of the forum State.5 The resulting increase in the quantity of diversity litigation, however, cooled enthusiasts of the jurisdiction, and, in 1887 and 1888, Congress enacted sharp curbs. It quadrupled the jurisdictional amount, confined the right of removal to nonresident defendants, reinstituted protections against jurisdiction by collusive assignment, and narrowed venue.6

Page 149

It was in this climate that the Court, in 1889, decided Chapman v. Barney, supra. On its own motion, the Court observed that plaintiff was a joint stock company, and not a corporation or natural person. It held that, although plaintiff was endowed by New York with capacity to sue, it could not be considered a "citizen" for diversity purposes. 129 U.S. at 682.7

In recent years, courts and commentators have reflected dissatisfaction with the rule of Chapman v. Barney.8 The distinction between the "personality" and "citizenship" of corporations and that of labor unions and other unincorporated associations, it is increasingly argued, has become artificial and unreal. The mere fact that a corporation is endowed with a birth certificate is, they say, of no consequence. In truth and in fact, they point out, many voluntary associations and labor unions are indistinguishable from corporations in terms of the reality

Page 150

of function and structure, and to say that the latter are juridical persons and "citizens," and the former are not, is to base a distinction upon an inadequate and irrelevant difference. They assert, with considerable merit, that it is not good judicial administration, nor is it fair, to remit a labor union or other unincorporated association to vagaries of jurisdiction determined by the citizenship of its members and to disregard the fact that unions and associations may [86 S.Ct. 275] exist and have an identity and a local habitation of their own.

The force of these arguments in relation to the diversity jurisdiction is particularized by petitioner's showing in this case. Petitioner argues that one of the purposes underlying the jurisdiction -- protection of the nonresident litigant from local prejudice -- is especially applicable to the modern labor union. According to the argument, when the nonresident defendant is a major union, local juries may be tempted to favor local interests at its expense. Juries may also be influenced by the fear that unionization would adversely affect the economy of the community and its customs and practices in the field of race relations. In support of these contentions, petitioner has exhibited material showing that, during organizational campaigns like that involved in this case, localities have been saturated with propaganda concerning such economic and racial fears. Extending diversity jurisdiction to unions, says petitioner, would make available the advantages of federal procedure,...

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