Little League Baseball v. Welsh Pub. Group, Inc.

• Decision Date: 01 February 1995
• Docket Number: No. 4:CV-94-1973.,4:CV-94-1973.
• Citation: 874 F. Supp. 648
• Parties: LITTLE LEAGUE BASEBALL, INCORPORATED, Plaintiff, v. WELSH PUBLISHING GROUP, INC., Defendant.
• Court: U.S. District Court — Middle District of Pennsylvania

874 F. Supp. 648

LITTLE LEAGUE BASEBALL, INCORPORATED, Plaintiff, v. WELSH PUBLISHING GROUP, INC., Defendant.

No. 4:CV-94-1973.

United States District Court, M.D. Pennsylvania.

February 1, 1995.

Charles J. McKelvey, Williamsport, PA, for plaintiff.

Ronald C. Travis, Rieders, Travis, Mussina, Humphrey & Harris, Williamsport, PA, for defendant.

MEMORANDUM

McCLURE, District Judge.

BACKGROUND:

On November 21, 1994, plaintiff Little League Baseball, Inc., a corporation chartered by federal statute, 36 U.S.C. §§ 1071-1088, initiated this action with the filing of a complaint in the Court of Common Pleas of Lycoming County, Pennsylvania. The complaint alleges breach of contract by defendant Welsh Publishing Group, Inc.

On December 5, 1994, defendant removed the action to this court. The notice of removal avers that plaintiff is a citizen of the Commonwealth of Pennsylvania, that defendant is a citizen of the State of New York, and that the amount in controversy exceeds $50,000.00. Notice of Removal at 2 ¶¶ 3, 5, 6. On that basis the court would have original jurisdiction pursuant to 28 U.S.C. § 1332, and removal would be proper under 28 U.S.C. §§ 1441, 1446.

Before the court is plaintiff's motion to remand to the Court of Common Pleas. Plaintiff argues that it is a citizen of the entire United States, and that there is no diversity of citizenship. Plaintiff also argues that remand is required by a "choice of forum" clause set forth in the parties' contract.

DISCUSSION:

I. REMOVAL

When an action over which a district court has original jurisdiction is brought in a state court, the defendant may remove the action to the district court embracing the place in which the state action is pending. 28 U.S.C. § 1441(a). Removal is effectuated by filing a notice of removal accompanied by all process, pleadings, and orders served upon the defendant. 28 U.S.C. § 1446(a). The notice of removal must contain a short and plain statement of the grounds for removal, id., and the removing defendant must provide notice of the removal to all adverse parties. 28 U.S.C. § 1446(d).

If it appears that the district court lacks subject matter jurisdiction over the matter, the case must be remanded to the state court. 28 U.S.C. § 1447(c). Remand is required in the absence of subject matter jurisdiction at any time before the entry of final judgment. Id.

A district court has original jurisdiction over civil actions between citizens of different states in which the amount in controversy exceeds $50,000.00. 28 U.S.C. § 1332(a). There must be complete diversity, i.e. all plaintiffs must be of different citizenship than all defendants, before a district court may exercise jurisdiction founded upon diversity of citizenship. Stanley v. Exxon Corp., 824 F.Supp. 52, 53 (E.D.Pa.1993) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806)).

II. LITTLE LEAGUE, INC.

Plaintiff was incorporated by an act of Congress in 1964. An Act to Incorporate the Little League Baseball, Incorporated, Pub.L. No. 88-378, §§ 1-18, 78 Stat. 325 (1964), codified at 36 U.S.C. §§ 1071-1088, as amended by An Act to amend the Act to Incorporate Little League Baseball to provide that the league shall be open to girls as well as to boys, Pub.L. No. 93-551, 88 Stat. 1744 (1974). The Act declares that the objects and purposes of the corporation are:

(1) To promote, develop, supervise, and voluntarily assist in all lawful ways the interest of young people who will participate in Little League baseball.

(2) To help and voluntarily assist young people in developing qualities of citizenship and sportsmanship.

(3) Using the disciplines of the native American game of baseball, to teach spirit and competitive will to win, physical fitness through individual sacrifice, the values of teamplay and wholesome well-being through healthful and social association with other youngsters under proper leadership.

36 U.S.C. § 1073.

Powers of the corporation include suing and being sued "in any court of competent jurisdiction; ..." 36 U.S.C. § 1074(1). However, the Act does not set forth any particular state of citizenship for the corporation. Instead, the principal office was established in Williamsport, Pennsylvania, "or in such other place as may later be determined by the board of directors," with the proviso that "the activities of the corporation shall not be confined to that place and may be conducted throughout the various States, the Commonwealth of Puerto Rico, and the possessions of the United States, and in other areas throughout the world." 36 U.S.C. § 1075(a) (emphasis added).¹ Service of process upon the corporation is made upon a designated agent located in the District of Columbia. 36 U.S.C. § 1075(b).

III. CITIZENSHIP OF A FEDERALLY CHARTERED CORPORATION

Normally, for diversity purposes, a corporation is a citizen both of the state of its incorporation and the state in which its principal place of business is located. 28 U.S.C. § 1332(c). However, when the corporation is federally chartered, citizenship depends upon the language of the statute and the activities authorized by the statute. If the activities of a federally chartered corporation are limited to a single state, either factually or by charter, then the corporation is a citizen of that state. Burton v. United States Olympic Committee, 574 F.Supp. 517, 519 (C.D.Cal. 1983) (citing, inter alia, Feuchtwanger Corp. v. Lake Hiawatha Fed. Credit Union, 272 F.2d 453, 454-456 (3d Cir.1959)).

Conversely, if the corporation is organized to do business in several states, and in fact does so, it has national citizenship only. Burton, 574 F.Supp. at 519 (citing Bankers Trust Co. v. Texas & Pacific Rw. Co., 241 U.S. 295, 309, 36 S.Ct. 569, 572, 60 L.Ed. 1010 (1916)). A federally chartered corporation with widespread activities, authorized and actual, may not be the subject of diversity jurisdiction absent specific statutory language providing for citizenship in a particular state or incorporating the entity as a "body corporate" of a particular state. Burton, 574 F.Supp. at 519 (citing Bankers Trust, 241 U.S. at 310, 36 S.Ct. at 573; Patterson v. American National Red Cross, 101 F.Supp. 655 (S.D.Fla.1951)). See also 28 U.S.C. § 1348 (providing that national banking associations are deemed citizens of the state in which they are located); 36 U.S.C. § 1 (American National Red Cross is a "body corporate and politic in the District of Columbia"). Other federally chartered corporations which have been held to be national citizens include: the United States Olympic Committee, Burton, 574 F.Supp. at 522; the Federal Deposit Insurance Corporation, FDIC v. Nat'l Surety Corp., 345 F.Supp. 885, 887 (S.D.Iowa 1972); the Federal Savings and Loan Insurance Corporation, Hancock Financial Corp. v. FSLIC, 492 F.2d 1325, 1329 (9th Cir.1974); the American Legion, Harris v. American Legion, 162 F.Supp. 700, 712 (S.D.Ind.), aff'd, 261 F.2d 594 (7th Cir. 1958) (adopting opinion of district court); the Disabled American Veterans, Rice v. Disabled American Veterans, 295 F.Supp. 131, 134 (D.D.C.1968); the Tennessee Valley Authority, Monsanto v. TVA, 448 F.Supp. 648, 651 (N.D.Ala.1978); and the Veterans of Foreign Wars, Crum v. VFW, 502 F.Supp. 1377 (D.Del.1980).

IV. APPLICATION

Defendant points to no specific statutory language which provides for citizenship of Little League Baseball, Inc., in any particular state, nor any statute which provides that corporations such as Little League Baseball, Inc., are deemed citizens of the state in which they are located. In order to be a citizen of a particular state for diversity purposes, then, the activities of the corporation, either as authorized or as actually taking place, must be localized.

As noted above, Little League Baseball, Inc., is authorized by statute to conduct its activities throughout the United States and abroad. 36 U.S.C. § 1075(a). The sole remaining question, then, is whether in fact the activities of the corporation are confined within the territory of the Commonwealth of Pennsylvania such that the activities may be said to be localized. Only if this is the case would the corporation be a citizen of Pennsylvania for diversity purposes, so that this court would have original jurisdiction under § 1332.

Defendant contends that the activities of Little League Baseball, Inc., are localized. It provides affidavits to support this contention, reciting that: (1) plaintiff has admitted to being a Pennsylvania corporation in other litigation, Swanson Holding LTD v. Little League Baseball, Inc., No. 92-01170 (C.P. Lycoming County); (2) plaintiff has admitted to being a New York corporation in other litigation, Little League Baseball, Inc. v. Hannigan, No. 93-01063 (C.P. Lycoming County); (3) plaintiff owns land, buildings and baseball facilities in South Williamsport; (4) the Little League World Series is held in South Williamsport; (5) the parties' negotiations took place in South Williamsport; and (6) the daily operations of plaintiff are carried out in South Williamsport. See Affidavit of David Sprout (record document no. 11); Affidavit of Donald E. Welsh (record document no. 12). Defendant also pointed out in its brief that there were no facts of record to indicate that plaintiff's activities are conducted outside of Pennsylvania.

Defendant's contention, however, confuses the concepts of proving the citizenship of a corporation incorporated under state law with evidence of its principal place of business and proving the citizenship of a federally chartered corporation with evidence that its activities are localized. In fact, in Crum v. Veterans of Foreign Wars, discussed at length below, the court "adapted" the analysis normally applied to a determination of which of two states is the principal place of business of a state corporation. In making this adaptation, the Crum court relied upon factors which normally constitute the operations of a corporation. Defen...