Warren v. Fed. Nat'l Mortg. Ass'n

• Decision Date: 15 September 2014
• Docket Number: Civil Action No. 3:14–CV–0784–B.
• Citation: 55 F.Supp.3d 915
• Parties: Stephanie WARREN, Plaintiff, v. FEDERAL NATIONAL MORTGAGE ASSOCIATION, a/k/a Fannie Mae and Ray Donovan, Defendant.
• Court: U.S. District Court — Northern District of Texas

55 F.Supp.3d 915

Stephanie WARREN, Plaintiff

v.FEDERAL NATIONAL MORTGAGE ASSOCIATION, a/k/a Fannie Mae and Ray Donovan, Defendant.

Civil Action No. 3:14–CV–0784–B.

United States District Court, N.D. Texas, Dallas Division.

Signed Sept. 15, 2014.

John Henry Crouch, IV, Kilgore & Kilgore PPLC, Dallas, TX, for Plaintiff.

Angelina M. Lapenotiere, Kyle Austin Perkins, Carrington Coleman Sloman & Blumenthal LLP, Julie E. Heath, Farrow—Gillespie & Heath LLP, Dallas, TX, for Defendant.

MEMORANDUM OPINION AND ORDER

JANE J. BOYLE, District Judge.

Before the Court is Plaintiff Stephanie Warren's Motion to Remand (doc. 5), filed on March 7, 2014. Defendant Federal National Mortgage Association (Fannie Mae) has filed a Response (doc. 8) to Plaintiff's Motion and Plaintiff has filed a Reply (doc. 12) to that Response. After considering the Motion and the related briefings, the Court GRANTS the Motion and REMANDS this case to the 116th District Court of Dallas County, Texas.

I.BACKGROUND

This case arises from an employment dispute between Plaintiff Stephanie Warren (Warren) and Defendants Fannie Mae and Ray Donovan (Donovan). Doc. 5, Pl.'s Mot. Remand 2. Fannie Mae is a publicly traded company created by congressional charter under 12 U.S.C. § 1723a. Id. Donovan is a Fannie Mae employee accused of defaming Warren. Id. On January 30, 2014, Warren filed her first amended petition in the 116th Judicial District Court of Dallas County, Texas, alleging discrimination on the basis of her race and gender in violation of the Texas Human Rights Act. Id. Warren also asserts a defamation claim against both Fannie Mae and Donovan. Id. On March 3, 2014, Fannie Mae filed a notice of removal, contending that pursuant to its charter under 12 U.S.C. § 1723a, this Court has original jurisdiction over the case. Doc. 1, Def.'s Not. Removal at ¶ 8.¹

II.LEGAL STANDARD

A defendant may remove a state court action to federal district court if the district court has original jurisdiction over the case and Congress has not expressly prohibited removal. 28 U.S.C. § 1441(a). The removing party has the burden of proof on a motion to remand. Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir.2002). Removal jurisdiction is subject to strict scrutiny because it “deprives a state court of a case properly before it and thereby implicates important federalism concerns.” Frank v. Bear Stearns & Co., 128 F.3d 919, 922 (5th Cir.1997) (citing Carpenter v. Wichita Falls Indep. Sch. Dist., 44 F.3d 362, 365 (5th Cir.1995) ). Any doubts regarding whether removal jurisdiction is proper should be resolved against federal jurisdiction. Acuna v. Brown & Root, Inc., 200 F.3d 335, 339 (5th Cir.2000).

III.ANALYSIS

The Federal National Mortgage Association Charter Act authorizes Fannie Mae to “sue and to be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” 12 U.S.C. § 1723a(a). This form of charter language is known as a “sue and be sued” provision. Under its original 1934 charter, Fannie Mae's “sue and be sued” provision authorized it to “sue and be sued, complain and defend, in any court of law or equity, State or Federal.” Pub.L. No. 73–479, § 310(c)(3), 48 Stat. 1246, 1253 (1934). In 1954, Congress added the phrase “of competent jurisdiction” to Fannie Mae's “sue and be sued” provision. Pub.L. No. 83–560, § 309(a), 68 Stat. 590, 620 (1954). Fannie Mae contends that, as presently amended, its charter's “sue and be sued” provision confers original jurisdiction upon federal courts. Doc. 8, Def.'s Resp. 2. In support of this proposition, Fannie Mae relies on (a) the Supreme Court's interpretation of a similar, though not identical, statute; (b) the legislative history of Fannie Mae's charter; and (c) authority within and outside of the Fifth Circuit. Id. at 1, 6–8. Specifically, Fannie Mae argues that under American National Red Cross v. Solicitor General, Section 1723a(a) must confer original jurisdiction “because [Section 1723a(a) ] specifically mentions federal courts.” 505 U.S. 247, 255, 112 S.Ct. 2465, 120 L.Ed.2d 201 (1992) ; Doc. 8, Def.'s Resp. 2.

In response, Warren contends that (a) Red Cross is distinguishable; (b) because Section 1723a(a) is distinguishable, statutory meaning must be given to the phrase “of competent jurisdiction”; and (c) the decisions within and outside the Fifth Circuit upon which Fannie Mae relies are neither controlling nor persuasive. See generally doc. 12, Pl.'s Reply. The Court will begin by analyzing the Supreme Court's decision in Red Cross to determine the extent of its applicability to the language in Fannie Mae's charter. The Court will then examine the legislative history and the statutory function of the phrase “of competent jurisdiction” as found in Section 1723a(a) in order to determine whether Fannie Mae's charter confers automatic federal jurisdiction or rather requires an independent ground for removal to federal courts.

A. The Applicability of Red Cross

In Red Cross, the Supreme Court reviewed the “sue and be sued” provision found in the congressional charter for the American Red Cross. 505 U.S. at 252–57, 112 S.Ct. 2465. Its language is similar, but not identical to Fannie Mae's charter.² Originally, the American Red Cross's charter stated that it may “sue and be sued in courts of law and equity within the jurisdiction of the United States.” Red Cross, 505 U.S. at 251, 112 S.Ct. 2465 ; Act of Jan. 5, 1905, ch. 23, § 2, 33 Stat. 600. As part of an overall revision in 1947, Congress added the phrase “State or Federal” to the Red Cross's charter. Act of May 8, 1947, Pub.L. 80–47, § 3, 61 Stat. 80, 81. The charter as amended authorizes the Red Cross to “sue and be sued in courts of law and equity, State or Federal, within the jurisdiction of the United States.” 36 U.S.C. § 300105(a)(5) (2000) (emphasis added). The addition of “State or Federal” was of utmost importance to the Red Cross court; its review of Supreme Court precedent dating back to 1809 “support [ed] the rule that 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.”Red Cross, 505 U.S. at 252–57, 112 S.Ct. 2465 (discussing D'Oench, Duhme, & Co. v. Fed. Deposit Ins. Corp., 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942) ; Bankers' Trust Co. v. Texas & Pacific R. Co., 241 U.S. 295, 36 S.Ct. 569, 60 L.Ed. 1010 (1916) ; Osborn v. Bank of U.S., 22 U.S. 738, 9 Wheat. 738, 6 L.Ed. 204 (1824) ; Bank of U.S. v. Deveaux, 9 U.S. 61, 5 Cranch 61, 3 L.Ed. 38 (1809) ).

The court in Red Cross further noted that its past decisions considering “sue and be sued” provisions should have “placed Congress on prospective notice of the language necessary and sufficient to confer jurisdiction.” Id. at 252, 112 S.Ct. 2465 (citing Cannon v. University of Chicago, 441 U.S. 677, 696–98, 99 S.Ct. 1946, 60 L.Ed.2d 560 (1979) ; United States v. Merriam, 263 U.S. 179, 186, 44 S.Ct. 69, 68 L.Ed. 240 (1923) ). The court pointed to the notice provided by D'Oench, which was decided five years prior to the amendment of the Red Cross charter and held that language authorizing the Federal Deposit Insurance Corporation to “sue or be sued in any court of law or equity, State or Federal ” did confer federal jurisdiction. Id. at 254, 112 S.Ct. 2465 (emphasis added); D'Oench, 315 U.S. at 455, 62 S.Ct. 676. Thus, the language in the “sue and be sued” provision of the Red Cross charter, which was “in all relevant respects identical to [the language in D'Oench ] on which [the Supreme Court] based a holding of federal jurisdiction just five years before ... suffice[d] to confer federal jurisdiction.” 505 U.S. at 257, 112 S.Ct. 2465.

Fannie Mae contends that the Red Cross rule stands for the proposition that “if a congressional charter's ‘sue and be sued’ provision specifically mentions federal courts, then the provision confers federal jurisdiction.” Doc. 8, Def.'s Resp. 2. In support of this assertion, Fannie Mae turns to Justice Scalia's dissent in Red Cross:

The Court today concludes that whenever a statute granting a federally chartered corporation the “power to sue and be sued” specifically mentions the federal courts (as opposed to merely embracing them within general language), the law will be deemed not only to confer on the corporation the capacity to bring and suffer suit (which is all that the words say), but also to confer on federal district courts jurisdiction over any and all controversies to which that corporation is a party.

Red Cross, 505 U.S. at 265, 112 S.Ct. 2465 (Scalia, J., dissenting) (emphasis in original).

Fannie Mae's reliance on the dissenting opinion in Red Cross reveals the weakness of its position. Yet Fannie Mae cannot conceal the language of the court's holding in Red Cross by seeking refuge in the dissent's attempt at summarizing the majority's opinion. In fact, the majority in Red Cross held that “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.” 505 U.S. at 255, 112 S.Ct. 2465. In so holding, the court established that “sue and be sued” provisions must be specific and explicit in their grant of federal jurisdiction. Id. at 255–56, 112 S.Ct. 2465. Thus, unambiguous provisions referring to federal courts may confer federal jurisdiction and are to be distinguished from ones broadly authorizing suits “in all courts of law and equity within the United States.” See id. (distinguishing the language of the statute at issue in Deveaux from that found in the Red Cross charter).

The Court finds no opinion of the United States Court of Appeals for the Fifth Circuit applying Red Cross to the “sue and be sued” provision in Fannie Mae's charter. The United States Court of Appeals for the District of Columbia and several district courts across the country have addressed the issue and have reached conflicting...