Roche v. American Red Cross

• Decision Date: 29 January 1988
• Docket Number: Civ. A. No. 87-2293-K.
• Citation: 680 F. Supp. 449
• Parties: Frances E. ROCHE, Individually on Behalf of the Decedent's Next of Kin, and as Executrix of the Estate of Thomas J. Roche, Plaintiff, v. AMERICAN RED CROSS, the Children's Hospital, and John Doe, Defendants.
• Court: U.S. District Court — District of Massachusetts

680 F. Supp. 449

Frances E. ROCHE, Individually on Behalf of the Decedent's Next of Kin, and as Executrix of the Estate of Thomas J. Roche, Plaintiff, v. AMERICAN RED CROSS, the Children's Hospital, and John Doe, Defendants.

Civ. A. No. 87-2293-K.

United States District Court, D. Massachusetts.

January 29, 1988.

Leo V. Boyle, Meehan, Boyle & Cohen, Boston, Mass., for plaintiff.

Peter B. Ellis, Amy Woodward, Foley, Hoag & Eliot, Boston, Mass., for defendants.

MEMORANDUM AND ORDER

KEETON, District Judge.

The plaintiff, Frances Roche, originally filed this action in Suffolk County Superior Court. The complaint alleges that plaintiff's late husband contracted AIDS from contaminated blood products negligently supplied by defendant American Red Cross ("Red Cross") and/or defendant Children's Hospital. On September 16, 1987, the Red Cross, joined by co-defendant Children's Hospital, filed a petition for removal to this court (Docket No. 2). Pursuant to 28 U.S. C. § 1447(c), the plaintiff filed a motion and memorandum in support for remand to Suffolk Superior Court (Docket Nos. 9, 10). The Red Cross opposed the motion for remand and filed a memorandum in support of its opposition (Docket Nos. 13, 14).

Since removal, the Children's Hospital has filed a number of motions unrelated to the issue of removal. Because I conclude that this court lacks subject matter jurisdiction over this action, it is unnecessary (and inappropriate) for me to consider these motions.

I.

The Red Cross asserts two bases for removal. The first is 28 U.S.C. § 1441, and the second is 28 U.S.C. § 1442. Section 1441 is the general removal provision. As a rule, an action is removable from state court to federal court by the defendant only if the action might have been brought in federal court originally. In other words, removal is proper only where the federal court would have had subject matter jurisdiction over the matter if the plaintiff had filed the action in federal court originally. "The burden of establishing federal jurisdiction rests with the party seeking removal." Miller v. Grgurich, 763 F.2d 372, 373 (9th Cir.1985); see also Wilson v. Republic Iron & Steel, 257 U.S. 92, 97, 42 S.Ct. 35, 37, 66 L.Ed. 144 (1921).

Section 1442 is a wholly distinct basis for removal. It authorizes removal of a civil action or criminal prosecution commenced in state court against a federal officer for acts done under color of office. Where section 1442 applies, the right of removal is absolute and may be exercised even though the action might not have been brought initially in a federal court. See 14A Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3727 (2d ed. 1985).

A district court's decision to remand a case to state court is not reviewable on appeal or otherwise. 28 U.S.C. § 1447(d). Therefore, courts should be cautious about remand. Nevertheless, the trend of decisions is that removal statutes will be strictly construed and that doubts should be resolved against removal. See Butler v. Polk, 592 F.2d 1293, 1296 (5th Cir.1979) (stating that "it is axiomatic that ambiguities are generally construed against removal"); Jones v. General Tire & Rubber Co., 541 F.2d 660, 664 (7th Cir.1976) (stating that "the case should be remanded if there is doubt as to the right of removal in the first instance"). There are two reasons for this trend. First, a plaintiff's choice of forum should not be denied lightly. Second, major inefficiencies result where a district court's decision that removal was proper is ultimately overturned on appeal after a full trial on the merits.

II.

The Red Cross argues that removal is proper under section 1441 because the Congressional charter of the Red Cross directly gives the federal courts original jurisdiction over any suit to which the Red Cross is a party. The charter includes the following provision:

The name of this corporation shall be "The American National Red Cross" and by that name it shall have perpetual succession, with the power to sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States; and to have and to hold such real and personal estate as shall be deemed advisable....

36 U.S.C. § 2. The Red Cross relies particularly on the "sue-and-be-sued" clause as a conferral of federal jurisdiction.

In general, a provision in a corporate charter that grants the right to sue and be sued merely creates in the corporation a capacity to litigate, see Fed.R.Civ.P. 17(b), or, in the case of a government corporation, waives sovereign immunity, see Federal Housing Admin. v. Burr, 309 U.S. 242, 244-47, 60 S.Ct. 488, 490-91, 84 L.Ed. 724 (1940). If Congress wishes to directly confer jurisdiction, it commonly does so expressly in a separate clause. For example, Congress provided in the enabling legislation for the Federal Crop Insurance Corp. that the corporation "may sue and be sued in its corporate name in any court of record of a state having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court...." 7 U.S.C. § 1506(d) (emphasis added). The Red Cross acknowledges the general rule that a sue-and-be-sued clause does not normally confer jurisdiction; however, the Red Cross argues that an exception to this rule exists where Congress has specifically referred to capacity to sue and be sued in the federal courts.

In Osborn v. Bank of United States, 22 U.S. (9 Wheat.) 738, 6 L.Ed. 204 (1824), the Supreme Court held that the Bank's charter, which allowed it to "sue and be sued ... in all State Courts having competent jurisdiction, and in any Circuit Court of the United States," was a Congressional grant of federal jurisdiction in all cases to which the Bank was a party. Extensive comments upon the Osborn decision disclose that it is one of the most inscrutable in the history of Supreme Court jurisprudence. Almost every aspect of Chief Justice Marshall's opinion has been questioned at one time or another, including that portion of the opinion relevant to the case at bar. See C. Wright, Law of Federal Courts § 17 n. 5 (3d ed. 1976). Nevertheless, Osborn has not been overruled, and if the language of the Red Cross charter is within its holding this court is bound to give effect to that holding.

Osborn does not support the position that a Congressional charter that contains a sue-and-be-sued clause automatically confers federal jurisdiction on the corporation so enabled. In Bankers Trust Co. v. Texas & Pacific Ry., 241 U.S. 295, 36 S.Ct. 569, 60 L.Ed. 1010 (1916), for example, the Court held that a Congressional charter granting the defendant the right "to sue and be sued ... in all courts of law and equity within the United States" did not confer jurisdiction. Id. at 302-04, 36 S.Ct. at 569-71. The court distinguished the "general" language of Texas & Pacific's charter with the "specific" reference in the Bank's charter to "a circuit court of the United States." Id. at 304-05, 36 S.Ct. at 570-71. Thus, it is only where the charter contains certain "specific" language that a jurisdictional grant will be inferred. The parties and this court have identified only one Supreme Court case decided in the 160 years since Osborn (and one case that relied on it), in which, arguably, a sue-and-be-sued clause was held to contain "specific" language sufficient to confer federal jurisdiction. That case is D'Oench, Duhme & Co. v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942).

D'Oench involved interpretation of the FDIC charter, which authorized the FDIC to sue and be sued "in any court of law or equity, State or Federal." Id. at 455, 62 S.Ct. at 678. This language is nearly identical to the language Congress adopted when it revised the Red Cross charter in 1947. On the basis of this similarity, the United States District Court for the Eastern District of Missouri held that the Red Cross charter contains a direct grant of federal jurisdiction. See C.H. v. American Red Cross, No. 86-1713-C-A (E.D.Mo. Apr. 2, 1987) (denying removal on other grounds). The charter at issue in D'Oench, however, is readily distinguishable. The FDIC's charter not only gave it the right to sue and be sued but also provided that "all suits of a civil nature at common law or in equity to which the Corporation shall be a party shall be deemed to arise under the laws of the United States." D'Oench, 315 U.S. at 455 n. 2, 62 S.Ct. at 678 n. 2.

Significantly, only three years after D'Oench was decided, the Eighth Circuit failed to rely on the sue-and-be-sued clause in the FDIC charter when the identical jurisdictional issue was presented in that court. The FDIC charter, the Eighth Circuit wrote,

after giving the Corporation power generally to "sue and be sued, complain and defend, in any court of law or equity, State or Federal", further expressly provides ... that "All suits of a civil nature at common law or in equity to which the Corporation in its own capacity shall be a party shall be deemed to arise under the laws of the United States." This special provision reasonably can only mean that all such suits ... must legally be regarded as arising under the laws of the United States....

FDIC v. George-Howard, 153 F.2d 591, 593 (8th Cir.), cert. denied, 329 U.S. 719, 67 S.Ct. 53, 91 L.Ed. 623 (1946). But cf. FSLIC v. Kearney Trust Co., 151 F.2d 720, 725 (8th Cir.1945) (relying on D'Oench to conclude that the case arose under the laws of the United States and the rights of the FSLIC were governed by federal law). I conclude that the similarity between the sue-and-be-sued clause in the Red Cross charter and that in the FDIC charter does not support the conclusion that the Red Cross charter similarly contains a direct grant of federal jurisdiction; the FDIC charter contained another jurisdictional grant outside the sue-and-be-sued clause.

The Red Cross argues, however, that the legislative history surrounding the 1947 amendment of...