Pierson v. Alaska USA Federal Credit Union

• Court: District Court, W.D. Washington
• Decided: February 14, 2020
• Docket: 2:19-cv-01685
• Status: Unknown

Opinion

HONORABLE RICHARD A. JONES 1

6 UNITED STATES DISTRICT COURT 7 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 EMILY PIERSON, 9

Plaintiff, 10 Case No. 2:19-cv-1685-RAJ v. 11 ORDER GRANTING MOTION TO REMAND ALASKA USA FEDERAL CREDIT 12 UNION, 13 Defendant. 14

15 I. INTRODUCTION 16 This matter is before the Court on Plaintiff Emily Pierson’s motion for remand. 17 Dkt. # 11. For the reasons below, the Court GRANTS the motion. 18 II. BACKGROUND 19 Pierson, a Washington resident, moves to remand her case involving only state law 20 claims to King County Superior Court. Dkt. # 11. On November 18, 2019, Defendant 21 Alaska USA Federal Credit Union (“Alaska USA”) removed the case to this Court alleging 22 diversity jurisdiction. Dkt. # 1. Pierson claims that federal credit unions like Alaska USA 23 are stateless national citizens not amenable to diversity jurisdiction. Dkt. # 11. She also 24 contends that Alaska USA’s significant national activities means the Court cannot apply 25 the “localization” exception to invoke diversity jurisdiction. Id. Alaska USA principally 26 argues that the text of 28 U.S.C. § 1332 permits the exercise of diversity jurisdiction based 27 on its principal place of business in Alaska. Dkt. # 14. 1 III. DISCUSSION 2 Removal jurisdiction is strictly construed in favor of remand, and any doubt as to 3 the right of removal must be resolved in favor of remand. Harris v. Bankers Life & Cas. 4 Co., 425 F.3d 689, 698 (9th Cir. 2005). The party seeking a federal forum has the burden 5 of establishing that federal jurisdiction is proper. Abrego Abrego v. Dow Chem. Co., 443 6 F.3d 676, 682-83 (9th Cir. 2006). The removing party must carry this burden not only at 7 the time of removal, but also in opposition to a motion for remand. See Moore-Thomas v. 8 Alaska Airlines, Inc., 553 F.3d 1241, 1244 (9th Cir. 2009). 9 28 U.S.C. § 1332 sets forth two criteria for the federal district courts to have 10 diversity jurisdiction over a matter: (1) complete diversity of the parties; and (2) an amount 11 in controversy exceeding $75,000. In Bankers’ Trust Co. v. Texas & Pacific Railway, Co., 12 241 U.S. 295, 309-10 (1916), the Supreme Court held that a “corporation chartered 13 pursuant to an Act of Congress with activities in different states ... [is] not a citizen of any 14 state for diversity jurisdiction purposes.” Following Bankers’ Trust, certain courts have 15 concluded that federal credit unions are not considered citizens of any particular state for 16 the purpose of establishing diversity of citizenship. See, e.g., Navy Fed. Credit Union v. 17 LTD Fin. Servs., LP, 368 F. Supp. 3d 889 (E.D. Va. Mar. 18, 2019); Broadbridge Fin. 18 Solutions, Inc. v. CNBS, LLC, No. 15-cv-4978 (PAC), 2016 WL 1222339, at *1 (S.D.N.Y. 19 Mar. 23, 2016). 20 Nevertheless, many courts recognize a limited exception to the general rule, which 21 has become known as the “localization doctrine.” See, e.g., Feuchtwanger Corp. v. Lake 22 Hiawatha Fed. Credit Union, 272 F.2d 453 (3d Cir. 1959); Arlington Cmty. Fed. Credit 23 Union v. Berkley Reg’l Ins. Co., 57 F. Supp. 3d 589, 593 (E.D. Va. 2014); Elwert v. Pacific 24 First Fed. Sav. & Loan Ass’n, 138 F.Supp. 395 (D. Or. 1956). Under the “localization 25 doctrine,” a corporation organized under federal law, whose activities were confined to a 26 single state, was regarded as a citizen of that state for jurisdictional purposes. Therefore, 27 a “localized” corporation could invoke the diversity jurisdiction of the federal courts. On 1 the other hand, a federal corporation which had been organized to do business in several 2 states, and which in fact was doing business in several states, was viewed as having national 3 citizenship only. 4 Against this backdrop, Alaska USA insists that the “principal place of business” text 5 in 28 U.S.C. § 1332(c)(1) applies to federally-chartered corporations. According to Alaska 6 USA, “the text of 28 U.S.C. § 1332(c)(1) should be the beginning and end of the analysis.” 7 Dkt. # 14 at 6. It is a well known canon of statutory construction that the starting point for 8 interpreting a statute is the language of the statute itself. See Consumer Product Safety 9 Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 108 (1980). “Absent a clearly expressed 10 legislative intention to the contrary, that language must ordinarily be regarded as 11 conclusive.” Id. 12 However, reading § 1332(c) to permit jurisdiction over federally-chartered 13 corporations based their principal place of business would directly contravene the statute’s 14 primary purpose to reduce the caseload in the federal courts. S. Rep. No. 1830 (1958) 15 (explaining, explicitly, that adopting this legislation would “ease the workload of our 16 federal courts will federal court by reducing the number of cases involving corporations 17 which come into federal district courts on the fictional premise that a diversity of 18 citizenship exists”); see also Hancock Fin. Corp. v. Federal Sav. and Loan Ins. Co., 492 19 F.2d 1325, 1329 (9th Cir. 1974) (“If federal corporations whose principal place of business 20 is located in the District of Columbia were to be considered citizens of that District, 21 diversity jurisdiction would be expanded to almost all suits involving federally chartered 22 corporations. This would be a result not intended by Congress.”). As one court recently 23 noted, Congress subsequently passed legislation to provide state citizenship for certain 24 federally-chartered corporations; an action that would have been superfluous if § 1332(c) 25 applied to these entities. See Navy Federal Credit Union, 386. F. Supp.3d at 897-98 26 (detailing that 12 U.S.C. § 2258 gives farm credit banks, federal land bank associations, 27 and other such entities citizenship in states where their “principal office is located”). This 1 Court agrees and adopts the position that federal credit unions are not considered citizens 2 of any particular state for the purpose of establishing diversity of citizenship. 3 Even if this Court were to apply the “localized exception” to Alaska USA, the result 4 would be no different. Alaska USA boasts 74 locations in Washington, Arizona, and 5 California and serves members in all 50 states. See Dkt. # 15-1. Therefore, Alaska USA 6 is not the kind of “peculiarly local” federally-chartered corporation that Feuchtwanger and 7 other courts have deemed to be citizens of a given state for diversity purposes. 8 Feuchtwanger, 272 F.2d at 455 (federal credit union at issue was a “peculiarly local 9 institution of a single community in the state of New Jersey”); Arlington Cmty. Fed. Credit 10 Union, 57 F. Supp. 3d at 595 (finding localization applied where “overwhelming” amount 11 the credit union’s members and business were in Virginia). Because the Court lacks 12 jurisdiction over this action, it will be remanded to King County Superior Court by separate 13 order. 14 IV. CONCLUSION 15 For the reasons stated above, the Court GRANTS the motion to remand. Dkt. # 16 11. 17 DATED this 14th day of February 2020. 18 19 A 20 21 The Honorable Richard A. Jones 22 United States District Judge 23 24 25 26 27