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WALTON v. HOWARD UNIV.

November 5, 1987

Mamie Walton, Individually and Michael L. Smith, personal representative of the Estate of Theodore Walton, Deceased, Plaintiffs,
v.
Howard University T/A Howard University Hospital, and The American Red Cross (D.C. Chapter), Defendants



The opinion of the court was delivered by: PENN

 JOHN GARRETT PENN, United States District Judge

 Defendant, The American Red Cross ("Red Cross"), *fn1" filed a Verified Petition for Removal ("Petition") from the Superior Court of the District of Columbia to this Court on May 20, 1987, in which defendant Howard University T/A Howard University Hospital ("Howard University") joined. Defendants base their petition on 36 U.S.C. § 2 (1982) and 28 U.S.C. § 1441(a), or alternatively, upon 28 U.S.C. § 1442(a)(1) (1982). After carefully considering the Red Cross' petition, plaintiff's opposition to it, and the entire record in this case, the court concludes that the petition should be dismissed for the reasons stated below, and that the case should be remanded to the Superior Court of the District of Columbia pursuant to 28 U.S.C. § 1447(c).

 I.

 Defendants first rely upon the removal power under 28 U.S.C. § 1441(a) (1982), on the presumption that 36 U.S.C. § 2 (1982) provides a grant of original jurisdiction to federal district courts in suits to which the Red Cross is a party. *fn2" Under 28 U.S.C. § 1441(a), a civil action in any state court is removable by defendant(s) to the district court of the United States in the district and division where the action is pending, provided that the district courts have original jurisdiction over the action. The Red Cross has the "power to sue or be sued in courts of law or equity, State or Federal, within the jurisdiction of the United States . . ." pursuant to 36 U.S.C. § 2. The question here is whether Congress created original jurisdiction in the federal courts by empowering the Red Cross to sue there.

 In Bank of the United States v. Deveaux, the Supreme Court held that the statutory grant of the power to "sue and be sued . . . in any courts of record, or any other place whatsoever" endowed the first Bank of the United States with the capacity to litigate, but did not enlarge the jurisdiction of any court. 9 U.S. 61, 85-86, 3 L. Ed. 38 (1809). Then, in Osborn v. Bank of the United States, 22 U.S. 738, 817, 6 L. Ed. 204 (1824), the Court held that a clause which gave the second Bank of the United States the power "to sue and be sued . . . in all state courts having competent jurisdiction, and in any circuit court of the United States," amounted to a grant of original jurisdiction to the circuit courts. In light of those two cases, the Court later concluded that a clause which allowed the Texas and Pacific Railway Company "to sue and be sued . . . in all courts of law and equity within the United States" only gave the railroad a general capacity to sue and be sued, and it did not establish "an exceptional or privileged jurisdiction." Bankers Trust Co. v. Tex. & Pac. Ry., 241 U.S. 295, 304, 60 L. Ed. 1010, 36 S. Ct. 569 (1916). The Court, however, did not apply any mechanical rule, and it looked instead to the intent of Congress. See id. at 303.

 Defendants also cite the more recent case of D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 62 S. Ct. 676, 86 L. Ed. 956 (1942), for the proposition that a provision which allows an entity to sue or be sued in "State or Federal" courts establishes original jurisdiction in federal courts. That case illustrates, however, that Congress differentiates grants of corporate powers to sue from grants of original jurisdiction, and that Congress did not intend the mere grant of a power to litigate in federal courts to be a grant of original jurisdiction.

 As defendants point out, the Court in D'Oench allowed the F.D.I.C. to sue in federal court pursuant to the corporation's charter. Id. at 455-456. Defendants, however, fail to note footnote 2 in which the Court cited to a part of the statute at issue, which 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 (citing 12 U.S.C. § 264(j) (1940)). *fn3" The history of the statute shows that Congress added this latter provision to make the civil matters brought by or against the corporation fall under the article III judicial power, and also, therefore, under the 28 U.S.C. § 1331 original jurisdiction of the federal district courts.

 The Banking Act of 1933 expressly provided that the F.D.I.C. could sue or be sued "in any court of law or equity, State or Federal." 48 Stat. 162, 168, 172. The Banking Act of 1935 amended that act, and one of the changes was the addition of the language quoted above. The express purpose of this amendment was to "give[e] jurisdiction, in the case of suits of a civil nature to which the Corporation is a party, to courts having jurisdiction of suits arising under the laws of the United States." S. Rep. No. 1007, 74th Cong., 1st Sess. 5 (1935). See also Federal Deposit Insurance Corp. v. George Howard, 153 F.2d 591, 593 (8th Cir. 1946) cert. denied, 329 U.S. 719, 91 L. Ed 623, 67 S. Ct. 53 (1946) (special provision can only mean that suit involving F.D.I.C. is within jurisdiction of federal district courts). Clearly, if Congress believed that the express power to litigate in federal courts was sufficient to create original jurisdiction in those courts, this amendment would not have been necessary. Nothing in the committee report cited above indicates that the amendment was meant to clarify any pre-existing federal question jurisdiction.

 Congress added the words "State or Federal" to the sue-or-be-sued clause of the Red Cross charter in 1947. Act of May 8, 1947, Pub. L. No. 47, § 2, 61 Stat. 80, 81 (1947) (codified at 36 U.S.C. § 2 (1982)). *fn4" Based on this Court's analysis of the statute at issue in D'Oench, the Court concludes that the amendment to the Red Cross' charter did not create original federal jurisdiction, for if Congress had intended to do so, it would have made that intent clear. *fn5" The amendment included essentially the same language that was in the F.D.I.C.'s charter before suits involving that corporation were deemed to arise under the laws of the United States. As is discussed above, the history of the F.D.I.C.'s charter shows that Congress did not intend the grant of a corporate power to litigate in federal court to cause a case involving the grantee to arise under the laws of the United States. Furthermore, the legislative history of the amendment to the Red Cross' charter does not show a congressional intent to cause all cases involving the Red Cross to arise under the laws of the United States.

 Relying upon a recommendation made by the advisory committee which studied the Red Cross' charter, defendants argue that it was already assumed that there was federal jurisdiction in suits involving the Red Cross when the charter was changed, and that the amendment was meant to clarify this. Red Cross' Memorandum, filed July 22, 1987, at 8-10. However, this argument lacks support, as there was no such grant of jurisdiction in the original charter, and the mere fact of federal incorporation was an insufficient basis upon which to infer such a grant in light of 28 U.S.C. § 1349. *fn6"

 The Senate hearing on the charter amendments does not indicate that the Senate Committee on Foreign Relations intended to grant original federal jurisdiction for suits involving the Red Cross. See American National Red Cross: Hearing on S. 591 Before the Senate Comm. on Foreign Relations, 80th Cong., 1st Sess. 7-11 (1947). In fact, the discussion of the provision at issue here centered on the question of whether that provision actually limited the corporate powers of the Red Cross by not giving it the ability to litigate in foreign courts. Id. That discussion shows that at least Senators White, Connally, and Thomas viewed the provision as an endowment of corporate power, rather than subject matter jurisdiction. Id. Although Senator George spoke of "giv[ing] the jurisdiction in the State and Federal Courts," Id. at 10, he went on to explain that "there might be some question about the right of a Federal corporation to be sued in a State court. I thought that was, and I still think it is, the purpose of this provision." Id. at 11. It would be difficult to conclude from the remarks made during the hearing that the Committee intended to cause litigation involving the Red Cross to arise under the laws of the United States, and thereby to expand the original jurisdiction of the federal courts.

 The inclusion of the word "Federal" in the charter amendment apparently did have the effect of clarifying the Red Cross' ability to sue in diversity under 28 U.S.C. § 1332. Although the Red Cross was created as "a body corporate and politic in the District of Columbia," 36 U.S.C. § 1, it is also a federally created corporation. Generally, federal corporations are considered citizens of the United States, but not of any particular state, and they cannot sue in diversity. See Burton v. U.S. Olympic Comm., 574 F. Supp. 517 (C.D. Cal. 1983). Notwithstanding the Red Cross' status as a District of Columbia corporation, its ability to litigate under diversity jurisdiction was questioned in Patterson v. American Nat. Red Cross, 101 F.Supp 655 (S.D. Fla. 1951). There, the court held that the Red Cross could remove a case to federal court on the grounds of diversity. Both that court, and the one in Rice v. Disabled American Veterans, 295 F. Supp. 131, 133 (D. D.C. 1968), which noted that the Red Cross can sue in diversity, emphasized not only that the Red Cross was created as a "body ...


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