concluding that for diversity purposes, the inquiry into the relevant citizenship of an incorporated trade association depends upon whether the members or the association are the real parties in interest
How later courts described this case
- concluding that for diversity purposes, the inquiry into the relevant citizenship of an incorporated trade association depends upon whether the members or the association are the real parties in interest
- stating that the rule governing citizenship of corporations in diversity cases “presupposes that the wrong is to the corporation rather than to the shareholders *862 or members directly”
- explaining that a non-profit corporation’s citizenship is that of the corporation
- the general rule that, for diversity purposes, the relevant citizenship is that of the corporation rather than the shareholders applies equally to member corporations
Written by the judges who cited it.
The opinion
CUDAHY, Circuit Judge,
concurring:
The majority opinion, in which I join, is analytically defensible but pragmatically questionable — to say the least.
There is an important policy underlying the delimitation of diversity jurisdiction in 28 U.S.C. § 1332 (c), which provides that a corporation is to be considered a citizen of its state of incorporation and the state encompassing its principal place of .business. That policy is the desire to keep primarily local suits out of the federal courts. See S.Rep. No. 1830, 85th Cong., 2d Sess., reprinted in U.S.Code Cong. & Admin.News 3099, 3101-3102 (1958) (It is an abuse of federal jurisdiction when “a local institution, engaged in a local business and in many cases locally owned, is enabled to bring its litigation into the Federal courts simply because it has obtained a corporate charter from another State.”). The instant suit does not appear to be primarily local since it involves two national real estate associations. In that connection, the majority concedes that section 1332(c) is applicable to membership corporations like the NAR. Section 1332(c) was clearly designed to obviate any need to pierce the corporate veil in order to determine corporate citizenship in a case like this.
Moreover, recognizing the NAR “as the real party in interest under Rule 17(a) not only avoids a multiplicity of actions by the individual members of the association, but also assures that the interests of the members as a collective group can be fully presented on litigation of the matter, due to the pooling of financial resources which is possible.” Mass. Ass’n, Etc. v. Commissioner of Ins., 373 Mass. 290 , 367 N.E.2d 796, 802 (1977). The consequences of subordinating section 1332(c) to the significant (yet highly elusive) considerations given prominence in the majority opinion may be to unsettle severely the law in this area as it affects corporate citizenship and diversity jurisdiction. These consequences may actually run counter to the explicit purpose of a real party in interest rule designed to avoid a multiplicity of suits. I am afraid that the result of the majority’s opinion may be to invite satellite litigation on this somewhat obscure point.
Despite these practical concerns, the majority’s approach does not seem analytically incorrect, and the majority’s opinion is persuasive — especially given current trends in this court’s approach to matters of jurisdiction. With the reservations I have noted, I join the majority opinion.