505 U.S. 247 (1992), American National Red Cross v. S.G.

Citation:505 U.S. 247, 112 S.Ct. 2465, 120 L.Ed.2d 201, 60 U.S.L.W. 4631
Party Name:American National Red Cross v. S.G.
Case Date:June 19, 1992
Court:United States Supreme Court
 
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Page 247

505 U.S. 247 (1992)

112 S.Ct. 2465, 120 L.Ed.2d 201, 60 U.S.L.W. 4631

American National Red Cross

v.

S.G.

United States Supreme Court

June 19, 1992

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIRST CIRCUIT

Syllabus

In a state court tort action, respondents alleged that one of them had contracted AIDS from a transfusion of contaminated blood supplied by petitioner American National Red Cross. The Red Cross removed the suit to the Federal District Court, claiming federal jurisdiction based on, inter alia, the provision in its federal charter authorizing it "to sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States." The court rejected respondents' motion to remand the case to state court, holding that the charter provision conferred original federal jurisdiction. The Court of Appeals reversed.

Held: The charter's "sue and be sued" provision confers original federal court jurisdiction. Pp. 250-265.

(a) A congressional charter's "sue and be sued" provision may be read to confer federal court jurisdiction if, but only if, it specifically mentions the federal courts. The charter must [112 S.Ct. 2467] contain an express authorization, such as "in all state courts . . . and in any circuit court of the United States," Osborn v. Bank of the United States, 9 Wheat. 738, 818, or "`in any court of law or equity, State or Federal,'" D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 455-456, rather than a mere grant of general corporate capacity to sue, such as "`in courts of record, or any other place whatsoever,'" Bank of the United States v. Deveaux, 5 Cranch 61, 85-86, or "in all courts of law and equity within the United States," Bankers Trust Co. v. Texas and Pacific R. Co., 241 U.S. 295, 304-305. The Red Cross charter provision has an express authorization, and thus should be read to confer jurisdiction. Pp. 250-257.

(b) Respondents' several arguments against this conclusion -- that the well-pleaded complaint rule bars the removal; that language in congressional charters enacted closely in time to the 1947 amendment of the Red Cross charter incorporating the provision in dispute show a coherent drafting pattern that casts doubt on congressional intent to confer federal jurisdiction over Red Cross cases; and that the 1947 amendment was meant not to confer jurisdiction, but to clarify the Red Cross' capacity to sue in federal courts where an independent jurisdictional basis exists -- are all unavailing. Pp. 257-263.

(c) The holding in this case leaves the jurisdiction of the federal courts well within Article III's limits. This Court has consistently held

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that Article III's "arising under" jurisdiction is broad enough to authorize Congress to confer federal court jurisdiction over actions involving federally chartered corporations. P. 264-265.

938 F.2d 1494 (CA1 1991), reversed and remanded.

SOUTER, J., delivered the opinion of the Court, in which WHITE, BLACKMUN, STEVENS, and THOMAS, JJ., joined. SCALIA, J., filed a dissenting opinion, in which REHNQUIST, C.J., and O'CONNOR and KENNEDY, JJ., joined, post, p. 265.

SOUTER, J., lead opinion

JUSTICE SOUTER delivered the opinion of the Court.

The charter of the American National Red Cross authorizes the organization "to sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States." 33 Stat. 600, as amended, 36 U.S.C. § 2. In this case, we consider whether that "sue and be sued" provision confers original jurisdiction on federal courts over all cases to which the Red Cross is a party, with the consequence that the organization is thereby authorized to removal from state to federal court of any state law action it is defending. We hold that the clause does confer such jurisdiction.

I

In 1988, respondents filed a state law tort action in a court of the State of New Hampshire, alleging that one of respondents

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had contracted AIDS from a transfusion of contaminated blood during surgery, and naming as defendants the surgeon and the manufacturer of a piece of medical equipment used during the procedure. After discovering that the Red Cross had supplied the tainted blood, respondents sued it, too, again in state court, and moved to consolidate the two actions. Before the state court decided that motion, the Red Cross invoked the federal removal statute, 28 U.S.C. § 1441, to remove the latter suit to the United States District Court for the District of New Hampshire. The Red Cross claimed federal jurisdiction [112 S.Ct. 2468] based both on the diversity of the parties and on the "sue and be sued" provision of its charter, which it argued conferred original federal jurisdiction over suits involving the organization. The District Court rejected respondents' motion to remand the case to state court, holding that the charter provision conferred original federal jurisdiction, see District Court order of May 24, 1990, reprinted at App. to Pet. for Cert. 18a-25a.

On interlocutory appeal, the United States Court of Appeals for the First Circuit reversed. 938 F.2d 1494 (1991). The Court of Appeals compared the Red Cross charter's "sue and be sued" provision with analogous provisions in federal corporate charters previously examined by this Court, and concluded that the relevant language in the Red Cross charter was similar to its cognates in the charter of the First Bank of the United States, construed in Bank of the United States v. Deveaux, 5 Cranch 61 (1809), and in that of the federally chartered railroad construed in Bankers Trust Co. v. Texas and Pacific R. Co., 241 U.S. 295 (1916), in neither of which cases did we find a grant of federal jurisdiction. The Court of Appeals distinguished Osborn v. Bank of the United States, 9 Wheat. 738 (1824), where we reached the opposite result under the charter of the second Bank of the United States, the Court of Appeals finding it significant that the second Bank's authorization to sue and be sued spoke of a particular federal court and of state courts already possessed

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of jurisdiction. The Court of Appeals also discounted the Red Cross's reliance on our opinion in D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447 (1942), concluding that, in that case, we had "not[ed] only incidentally" that federal jurisdiction was based on the "sue and be sued" clause in the FDIC's charter. See 938 F.2d at 1497-1499. The Court of Appeals found support for its conclusion in the location of the Red Cross charter's "sue and be sued" provision in the section "denominat[ing] standard corporate powers," id. at 1499, as well as in legislative history of the amendment to the Red Cross charter adding the current "sue and be sued" language, and in the different form of analogous language in other federal corporate charters enacted contemporaneously with that amendment. See id. at 1499-1500.

We granted certiorari, 502 U.S. 976 (1991), to answer this difficult and recurring question.[1]

II

Since its founding in 1881 as part of an international effort to ameliorate soldiers' wartime suffering, the American Red Cross has expanded its activities to include, among others, the civilian blood supply services here at issue. The organization was reincorporated in 1893, and in 1900 received its first federal charter, which was revised in 1905. See American National Red Cross, Report of the Advisory Committee on Organization 4 (1946) (hereinafter Advisory Report), reprinted at App. to Brief for Appellants in No. 90-1873 (CA1), pp. 94, 101.

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The 1905 charter empowered the Red Cross "to sue and be sued in courts of law and equity within the jurisdiction of the United States." Act of Jan. 5, 1905, ch. 23, § 2, 33 Stat. 600. At that time, the provision would not have had the jurisdictional significance of its modern counterpart, since the law of the day held the involvement of a federally chartered corporation sufficient to render any case one "arising under" federal law for purposes of general statutory federal question jurisdiction. See Pacific R. Removal Cases, 115 U.S. 1, 14 (1885). In 1925, however, Congress restricted the reach of this jurisdictional theory to federally chartered corporations in which the United States owned more than one-half of the capital stock. Act of Feb. 13, 1925, ch. 229, § 12, 43 Stat. 941; codified as amended at 28 U.S.C. § 1349.[2] Since the effect of the 1925 law on nonstock corporations like the Red Cross is unclear, see, e.g., C.H. v. American Red Cross, 684 F.Supp. 1018, 1020-1022 (ED Mo.1987) (noting split in authority over whether § 1349 applies to nonstock corporations),[3] its enactment invested the charter's "sue and be sued" clause with a potential jurisdiction significance previously unknown to it.

Its text, nevertheless, was left undisturbed for more than twenty years further, until its current form, authorizing the Red Cross "to sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States," took shape with the addition of the term "State or Federal" to the 1905 language, as part of an overall revision of the organization's charter and by-1aws. See Act of May 8, 1947,

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Pub.L. 80-47, § 3, 61 Stat. 80, 81. It is this language upon which the Red Cross relies, and which the Court of Appeals held to have conferred no federal jurisdiction.

III

A

As indicated earlier, we do not face a clean slate. Beginning with Chief JUSTICE Marshall's opinion in 1809, we have had several occasions to consider whether the "sue and be sued" provision of a particular federal corporate charter conferred original federal jurisdiction over cases to which that corporation was a party, and our readings of those provisions not only represented our best efforts at divining congressional intent retrospectively, but have also placed Congress on prospective...

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