United Steelworkers of America v. Bouligny, Inc

• Decision Date: 22 November 1965
• Docket Number: No. 19,P,AFL-CI,19
• Citation: 382 U.S. 145,86 S.Ct. 272,15 L.Ed.2d 217
• Parties: UNITED STEELWORKERS OF AMERICA,etitioner, v. R. H. BOULIGNY, INC
• Court: U.S. Supreme Court

382 U.S. 145

86 S.Ct. 272

15 L.Ed.2d 217

UNITED STEELWORKERS OF AMERICA, AFL-CIO, Petitioner,

v R. H. BOULIGNY, INC.

No. 19.

Argued Oct. 21, 1965.

Decided Nov. 22, 1965.

Michael H. Gottesman, Washington, D.C., for petitioner.

Joseph W. Grier, Jr., Charlotte, N.C., for respondent.

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, 9 S.Ct. 426, 32 L.Ed. 800.

On interlocutory appeal the Court of Appeals for the Fourth Circuit reversed and directed that the case be re- manded to the state courts. 336 F.2d 160. Certiorari was granted, 379 U.S. 958, 85 S.Ct. 666, 13 L.Ed.2d 554, 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. Bank of United States v. Deveaux, 5 Cranch 61, 3 L.Ed. 38. 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, 11 L.Ed. 353. 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 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, 14 L.Ed. 953.

Congress re-entered 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

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, 9 S.Ct., at 427.⁷

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 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 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, Article III judges less exposed to local pressures than their state court counterparts, juries selected from wider geographical areas, review in appellate courts reflecting a multistate perspective, and more effective review by this Court.

We are of the view that these arguments, however appealing, are addressed to an inappropriate forum, and that pleas for extension of the diversity jurisdicton to hitherto uncovered broad categories of litigants ought to be made to the Congress and not to the courts.

Petitioner urges that in People of Puerto Rico v. Russell & Co., 288 U.S. 476, 53 S.Ct. 447, 77 L.Ed. 903, we have heretofore breached the doctrinal wall of Chapman v. Barney and, that step having been taken, there is now no necessity for enlisting the assistance of Congress. But Russell does not furnish the precedent which petitioner seeks. The problem which it presented was that of fitting an exotic creation of the civil law, the sociedad en comandita, into a federal scheme which knew it not. The Organic Act of Pureto Rico conferred jurisdiction upon the federal court if all the parties on either side of a controversy were citizens of a foreign state or 'citizens of a State, Territory, or District of the United States not domiciled in Porto Rico.'⁹ All of the sociedad's members were nonresidents of Puerto Rico, and jurisdiction lay in the federal court if they were the 'parties' to the action. But this Court held that the sociedad itself, not its members, was the party, doing so on a basis that is of no help to petitioner. It did so because, as Justice Stone stated for the Court, in '(t)he tradition of the civil law, as expressed in the Code of Puerto Rico,' 'the sociedad is consistently regarded as a juridical person.' 288 U.S., at 480—481, 53 S.Ct., at 448—449. Accordingly, the Court held that the sociedad, Russell & Co., was a citizen domiciled in Puerto Rico, within the meaning of the Organic Act, and ordered the case remanded to the insular courts. It should be noted that the effect of Russell was to contract jurisdiction of the federal court in Puerto Rico.¹⁰

If we were to accept petitioner's urgent invitation to amend diversity jurisdiction so as to accommodate its case, we would be faced with difficulties which we could not adequately resolve. Even if the record here were adequate, we might well hesitate to assume that petitioner's situation is sufficiently representative or typical to form the predicate of a general principle. We should, for example, be obliged to fashion a test for ascertaining of which State the labor union is a citizen. Extending the jurisdiction to corporations raised no such problem, for the State of incorporation was a natural candidate, its arguable irrelevance in terms of the policies underlying the jurisdiction being outweighed by its certainty of application. But even that easy and apparent solution did not dispose of the problem; in 1958 Congress thought it necessary to enact legislation providing that corporations are citizens both of the State of incorporation and of the State in which their principal place of business is located.¹¹ Further, in contemplating a rule which would accommodate petitioner's claim, we are acutely aware of the complications arising from...