Opposition Brief — American Nat. Red Cross v. SG

| | upreme Court, U.S.

¢? FILED

No. 91-594 _ NOVI i9gt

in The L OFFIWE OF THE CLERK

Supreme Court of the United States

_

October Term, 1991

AMERICAN NATIONAL RED CROSS,

Petitioner,

vs.

S.G. and A.E.,

Respondents.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the First Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

GARY B. RICHARDSON

Counsel of Record

GILBERT UPTON

DAVID P. SLAWSKY

UPTON, SANDERS & SMITH

Attorneys for Respondents

10 Centre Street

P.O. Box 1109

Concord, New Hampshire 03302-1109

(603) 224-7791

1191

tz * NJ (908) 257-6850+(800) 3 APPEAL *NY (212) 840-4640*MA (617) 542-1114

ws.ime. OC (202) 783-7288*PA (215) 925-6500°USA (800) 5 APPEAL

i/

QUESTIONS PRESENTED

1. Whether 28 U.S.C. § 1447 (d) (which makes unreviewable

District Court orders remanding actions to the state court from

which they were removed) precludes review of this action which

has been remanded to the state court.

2. Whether the American National Red Cross’ petition for

certiorari should be denied because:

(a) The substantive issue presented is not ripe for review;

(b) The judgment of the Court of Appeals was issued

on interlocutory review;

(c) The basis for federal jurisdiction does not appear

on the face of the complaint;

(d) The issue appealed is not of sufficient importance

to warrant certiorari review; and

(e) The decision of the Court of Appeals is correct.

il

TABLE OF CONTENTS

Questions Peapsated ... . oss 0s ese0serecsenns al

TERED GS COMBINED. occ cccccccceeccussese le

Fees GE CRINGE... «0 cc vcevecesseuneueeeee

rr

Reasons for Denying the Writ ........................

I.

II.

Ill.

IV.

Vi.

The District Court’s order remanding this action to

State court is unreviewable. ....................

The issue of federal juiisdiction is not yet ripe for

Geclsion Up dls Cau, « .v<cissccccuneenes

Since the judgment in the court below is interlocutory,

this Court should await a final disposition of the case

before exercising jurisdiction. ..................

This Court should deny certiorari because the basis

of Red Cross’ claim of federal jurisdiction, 36 U.S.C.

§ 2, does not appear on the face of the respondents’

well pleaded complaint. .......................

The issue raised by Red Cross is not of sufficient

importance to grant certiorari. .................

The decision of the Court of Appeals is correct.

eeseeoeeseooosa ceeeeaee Cees seeee eee ee eee ee ee ee eee

Page

iil

10

12

iil

Contents

Page

TABLE OF CITATIONS

Cases Cited:

American Construction Co. v. Jacksonville, T. & K.R.

eer eee eee &

American Well Works Co. v. Layne S. Bowler Co., 241 U.S.

DIE Dead bebeccecscsesecccccccccccccons 11

Anonymous Blood Recipient v. W. Beaumont Hosp., 721

F. Supp. 139 (E.D. Mich. 1989) .............5005. 17

Bowen v. Massachusetts, 487 U.S. 879 (1988) .......... 4

Brotherhood of Locomotive Firemen v. Bangor & Aroostock

EE ED CUED. oso vc cccccccccvcceces 8

Doe v. American Red Cross, 727 F. Supp. 186 (E.D. Pa.

Ee esau eestscccevecsccccccvccccces 1]

Doe v. Kerwood, No. 90-9101, Slip Op. (July 19, 1991)

een cscs vcacescccccccccces 7

D’Oench, Duhme & Co. v. Federal Deposit Insurance Corp.,

ites eseecccccccees 17, 18

Estelle v. Gamble, 429 U.S. 97 (1976) .............05.. 8

Georgia v. Rachel, 384 U.S. 780 (1966).............--. 4

Gilliard v. Mississippi, 464 U.S. 867 (1983)............. 7

iv

Contents

Page

Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473 (1981)

+eainen waited dalek e ees een ad ee eee eee eee 13

Gully v. First Nat. Bank, 299 U.S. 109 (1936) .......... ll

Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S.

te eden cae bee eae nik 8

In re Bear River Drainage District, 267 F.2d 849 (10th Cir.

a CN bee Bg IA oe os Rk Cua TRS ew 4

In re La Providencia Development Corporation, 406 F.2d

Fy er ry ee ar ame keremn 4

Kaiser v. Memorial Blood Center of Minneapolis, 938 F.2d

Se a SEN a sv ntudddeeseaeusécousksuaeen 6, 7

Luckette v. Harris Hospital-Fort Worth, 764 F. Supp. 436

SP: Ce NG Sik cde c cdcinbadud dabnchieeetkse ct 7,11

McCray v. New York, 461 U.S. 961 (1983)............. 7

Metropolitan Casualty Ins. Co. v. Stevens, 312 U.S. 563

SE 4.500 o0ud ds adhddadesenssade Canc cedeenl 4

Middlesex Ethics Comm. v. Garden State Bar Assn., 457 U.S.

SEN Se bd bo 80 bees ca edw noe de ac ee ee 13

Oklahoma Tax Commission v. Graham, 489 U.S. 838

UU 6244045 4905bedae cas weaned dolce me bane 10

Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738

ERR SE LAM tare 2, 3, 16,-17

Contents

Page

Rice v. Sioux City Cemetary, 349 U.S. 70 (1954)........ 12

Rose v. Lundy, 466 U.S. 509 (1982)..........: eis 13

Seedman v. U.S. Dist. Ct. for Cent. Dist. of California, 837

P.2d G13 CBtis Cle. IGGB) 2. wc cccccccccccsccccecees 4

S.G. and A.E. v. American National Red Cross, 938 F.2d

1494 (Ist Cir. July 24, 1991) ............ 3, 7, 11, 13, 16

Taylor v. Anderson, 234 U.S. 74 (1914) ............5-- 10

Thermtron Prods. Inc. v. Hermandorfer, 423 U.S. 336 (1976)

dcnuee nd td nbweeneedoes heehee ens $e00esesetet and +

United States v. Rice, 327 U.S. 742 (1946) ............. 4

Walker v. American National Red Cross, et al., No. 91-0749,

Slip Op. (D.D.C. May 10, 1991) ............0-eee- 6

Walton v. Howard University, 683 F. Supp. 826 (D.D.C.

ER APE Tere yee i4, 18

Statutes Cited:

PO cc coiccacaeenacnnaenscanesnesenagnans 18

OR BBs bcos cdc ccvwecnaes dudavenesopeewas 14

ER Be PE ncn cc cacnctcovaseencecesengeuss 14

8D UDG. © WOOTEN 2c cc cccccccccccvccccnscscccees 18

vi

Contents

Page

MAE TEED tS ATS bsvccaehecka adsl ds cc erent 18

CEE os. os chG ch oaduuseetcotccditeter. 17

PM EE Gl Cadi cke 6% cd edW chute tiosteckalie, 10

PS 6 ooo ta Jule ee ad 2

I IE Sb dips dbadu ld séuekecveccankteusulutis: 14

WEEE 0 hh cai Sade en 6d oceNs he vuten tute 14

See SU I oo 5 cos done oecevces cece kik i, 3, 4, 5

LE ET ean Sey ares 2

IT i co eee ioc ae ee 14

IE Steak chs Guess anc un dedas tuna 2, 3, 10, 15

Rules Cited:

Federal Rules of Civil Procedure:

PR Sea ck wideand aed wave ace hc dcakwkin bette: 6

IE Sede ce Lee ce Fas Tobe ee 2a re 6, 12

RE PE pe ee Aa ete ue 14

ER AD SE pme Fe tleee ier irae kane me tae MMs 3

vil

Contents

Other Authorities Cited:

12 J. Moore, H. Bendix & B. Ringle, Moore’s Federal Practice

ee cs donc cuv eenbussnesdanedns

14A C. Wright, A. Miller & E. Cooper, Federal Practice and

Procedure § 3740 (2d ed. 1985 and Supp. 1991) ....

APPENDIX

Appendix A — Writs of Summons in the Superior Court of

the State of New Hampshire ................0....

Appendix B — Motion for Stay of Proceedings Dated August

Pi 1. te beet CRN Sete adeeneee ne aek eek ithe’ s

Appendix C — Order of the United States District Court for

the District of New Hampshire Dated September 24, 1991

gaeGceae ees oansenkcaeeeeeseeoceeseoeseseesese eae eae eeeseaec eer ese es eS

Appendix D — Slip Opinion in Walker v. American National

Red Cross Dated August 16, 1991.................

Page

la

8a

l3a

No. 91-594

In The

Supreme Court of the United States

October Term, 1991

AMERICAN NATIONAL RED CROSS,

Petitioner,

vs.

S.G. AND A.E.,

Respondents.

On Petition for a Writ of Certiorari to the United States Court

of Appeals for the First Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

The respondents, S.G. and A.E., respectfully request that

this Court deny the petition for writ of certiorari seeking review

of the First Circuit’s opinion in this case. That opinion is reported

at 938 F.2d 1494 (ist Cir. 1991).

STATEMENT OF FACTS

The respondent, S.G., in August, 1984 underwent a

hysterectomy at Concord Hospital in Concord, New Hampshire.

During this operation a blood transfusion was required. This blood

was contaminated with human immunodeficiency virus (HIV) and

as a result S.G. now suffers from AIDS.

Upon discovering that she had this disease S.G. and her

husband, A.E., commenced two actions in Merrimack County

Superior Court (state court), one against Kenneth L. McKinney

(the physician who performed the operation) and the other against

U.S. Surgical Corp. (the company that manufactured and sold

the surgical stapler used by Dr. McKinney during the operation).

These suits were commenced in April and August of 1988 in the

State court and were later joined (Appendix A, 3a, 6a). As

discovery progressed, it became evident that a third party,

American National Red Cross, was responsible for furnishing the

tainted blood. On March 2, 1990, the respondents commenced

suit against Red Cross in Merrimack County Superior Court

(Appendix A, la) and this writ was accompanied by a motion

to consolidate the action with the two pending suits against Dr.

McKinney and U.S. Surgical Corp.

Before the Superior Court could rule on this motion to

consolidate, Red Cross removed the action against it to United

States District Court for the District of New Hampshire on two

grounds, (a) that the Red Cross Charter, 36 U.S.C. § 2, conferred

on federal district courts original jurisdiction over actions involving

the Red Cross, and (b) that the parties are citizens of different

States and that federal jurisdiction is appropriate under 28 U.S.C.

§ 1332(a). Respondents filed a motion to join Dr. McKinney and

U.S. Surgical Corp. and remand the entire action to Merrimack

County Superior Court pursuant to 28 U.S.C. § 1447(e). Relying

principally on Osborn v. Bank of the United States, 22 U.S. (9

Wheat.) 738 (1824), the District Court ruled that legal actions

to which the Red Cross is a party fall within the exclusive (original)

jurisdiction of the federal courts. The court also ruled that but

for this issue, it would grant plaintiff’s motion to join and remand

the case to the state court pursuant to Rule 20 of the Federal

Rules of Civil Procedure and 28 U.S.C. § 1447(d).

Upon interlocutory review, the First Circuit Court of Appeals

reversed, finding that the Red Cross Charter did not confer original

federal jurisdiction. See S.G. and A.E. v. American National Red

Cross, 938 F.2d 1494 (Ist Cir. July 24, 1991). On August 13,

1991 the First Circuit denied petitioner’s motion for a stay of

the mandate, and remanded the action to the District Court. On

September 24, 1991, the District Court reaffirmed its prior order

joining the two non-diverse defendants (Dr. McKinney and United

States Surgical Corporation) and remanded the case to Merrimack

County Superior Court (Appendix C, 15a).

Following that remand Red Cross also petitioned this Court

for a stay of the mandate of the Court of Appeals which was

denied by Justice Souter on September 30, 1991. Presently before

this Court is the Red Cross petition for writ of certiorari which

seeks another determination of whether 36 U.S.C. § 2 vests federal

courts with original jurisdiction over actions involving the Red

Cross.

REASONS FOR DENYING THE WRIT

I.

THE DISTRICT COURT’S ORDER REMANDING THIS

ACTION TO STATE COURT IS UNREVIEWABLE.

28 U.S.C. § 1447(d) provides in relevant part that, ‘‘An order

remanding a case to the State court from which it was removed

is not reviewable on appeal or otherwise. . . . ’’' See Thermtron

Prods. Inc. v. Hermandorfer, 423 U.S. 336, 343 (1976) (District

Court’s decision to remand action that was removed

“‘improvidently and without jurisdiction’? is unreviewable):

Seedman v. U.S. Dist. Ct. for Cent. Dist. of California, 837 F .2d

413 (9th Cir. 1988) (per curiam) (remand order returns case to

State courts, and federal court has no power to retrieve it). See

generally, 14A C. Wright, A. Miller & E. Cooper, Federal Practice

and Procedure § 3740 (2d ed. 1985 and Supp. 1991); 12 J. Moore,

H. Bendix & B. Ringle, Moore’s Federal Practice 4 507.01 (2d

ed. 1990). Such orders were made unreviewable primarily because

Congress intended to bar prolonged litigation over questions of

the District Court’s jurisdiction. United States v. Rice, 327 U.S.

742, 751 (1946) (‘*Congress, by the adoption of these provisions,

as thus construed, established the policy of not permitting

interruption of the litigation of the merits of a removal cause

by prolonged litigation of questions of jurisdiction of the district

court to which the cause is removed.’’). See also, Metropolitan

Casualty Ins. Co. v. Stevens, 312 U.S. 563, 568-569 (1941); In

re La Providencia Development Corporation, 406 F.2d 251 (lst

Cir. 1969); Jn re Bear River Drainage District, 267 F.2d 849, 851

(10th Cir. 1959). This concern is reflected in Justice Scalia’s recent

observation that ‘‘({njothing is more wasteful than litigation about

where to litigate.’” Bowen v. Massachusetts, 487 U.S. 879, 930

(1988) (dissenting opinion).

|. Prior to 1875, a remand order was regarded as a nonfinal order reviewable

by mandamus but not by appeal. In 1875, Congress provided for review **by

the Supreme Court on writ of error or appeal, as the case may be.’’ Twelve

years later, Congress barred any such review. Georgia v. Rachel, 384 U.S. 780,

786 n.6 (1966). Until its amendment in 1964, the statutory bar prohibited review

of a remand order ‘‘on appeal or otherwise’’ in cases removed pursuant to any

statute. With an exception not pertinent to the instant case, the modern version

of the statutory bar, 28 U.S.C. § 1447(d), absolutely prohibits appellate review

of remand orders.

Although ignoring the issue in its petition for certiorari, the

Red Cross has previously conceded the validity of this argument.

In support of its motion in District Court for a stay of proceedings

pending appeal, the Red Cross asserted:

Because this Court has previously announced

how it would resolve the joinder and diversity issues

(Order of June 19, 1990 at 4, modifying Order

of May 24, 1991), the Red Cross is concerned that

without a stay of proceedings, this Court may

immediately resolve the diversity issue and remand

the action to state court. Such a remand (o State

court would foreclose the Red Cross from

appealing the charter issue to the United States

Supreme Court, because an order to remand is

unappealable under the circumstances of this case.

See 28 U.S.C. § 1447(d).

(Emphasis added) (Appendix B, 9a, 10a). The District Court did

resolve the diversity and joinder issues and it thereafter issued

an order remanding the case to state court. As the Red Cross

recognized, it is now precluded by operation of 28 U.S.C.

§ 1447(d) from pursuing the instant appeal.

The concerns announced by Congress in enacting § 1447(d)

and by Justice Scalia in the Bowen case are well illustrated by

the Red Cross’ evasive maneuvering in the instant action. Almost

two years after this action was initiated, the Red Cross continues

to avoid trial by repeatedly challenging the state court’s ability

to adjudicate a matter involving allegations of common law

negligence. There is no question that the related actions against

Dr. McKinney and United States Surgical will be decided in the

Merrimack County Superior Court. There is no reason to believe

that the Superior Court would not fairly adjudicate respondents’

claims against the Red Cross. There is also no good reason for

the Red Cross to fear state court jurisdiction.

The Red Cross’ attempt to obtain review of the District

Court’s unreviewable order should be summarily rejected.

THE ISSUE OF FEDERAL JURISDICTION IS NOT YET

RIPE FOR DECISION BY THIS COURT.

Rule 10 of the Rules of the Supreme Court states that review

on writ of certiorari is available to resolve a conflict between

decisions rendered by different courts of appeals. As Rule 10.1

makes clear, however, such review is not a matter of right but

of judicial discretion.

Until the last six months, the jurisdictional issue raised by

the Red Cross had only been considered by federal district courts.

Approximately half of those courts concluded that federal courts

have original jurisdiction over actions involving the Red Cross.

Only two courts of appeals have as yet addressed the issue.

In Kaiser v. Memorial Blood Center of Minneapolis, 938 F.2d

90 (8th Cir. 1991), the Eighth Circuit ruled that the ‘‘sue and

be sued’’ clause in the Red Cross charter creates original federal

jurisdiction. The Kaiser court’s discussion of the issue, however,

is exceedingly brief. The two paragraphs devoted to this issue

contain very little exposition of the reasoning behind its ruling.

Two recent federal district courts that have had occasion to address

the jurisdictional question presented have expressly found Kaiser

unpersuasive. See Walker v. American National Red Cross, et

al., No. 91-0749, Slip Op. (D.D.C. May 10, 1991) (Revercomb,

J.) (holding that the Red Cross’ charter does not create original

federal jurisdiction: ‘‘The opinion of the United States Court of

Appeals for the Eighth Circuit, Kaiser v. Memorial Blood Center,

supra, which does not state the reasons for its conclusions, does

not persuade this court otherwise.’’) (Appendix D, 21a) and

Luckett v. Harris Hospital-Fort Worth, 764 F. Supp. 436 (N.D.

Tex. 1991) (finding Kaiser unpersuasive and noting that the Kaiser

order was primarily concerned with certifying questions to the

Minnesota Supreme Court).

In contrast to the Kaiser decision, the First Circuit has given

the jurisdictional issue presented a searching and painstaking

analysis, and has fully set forth the reasons for and the reasoning

behind, its conclusions. See S.G. and A.E., 938 F.2d 1494 (lst

Cir. 1991). It may well be that the First Circuit decision, once

it has had full circulation and analysis will lead to greater

uniformity in the decisions which follow so that the present conflict

will gradually resolve itself. :

Even if the First Circuit decision does not gain wide

acceptance, there is another compelling reason why consideration

of the issue at this time is premature. This Court has often followed

the policy that it will allow the lower courts an opportunity for

further study and analysis before offering a resolution to a conflict

between Circuits. See McCray v. New York, 461 U.S. 961, 963

(1983) and Gilliard v. Mississippi, 464 U.S. 867 (1983) (Marshall

J. dissenting). This approach is particularly appropriate in this

case for two reasons. First, only one Circuit Court decision has

given this issue searching and definitive analysis. Second, as

pointed out by the Red Cross in its petition for certiorari, the

Fifth Circuit has recently accepted the issue on interlocutory appeal

in Doe v. Kerwood, No. 90-9101, Slip Op. (July 19, 1991). The

Fifth Circuit decision may indicate a trend toward uniformity on

this issue. At the very least, the Fifth Circuit’s decision should

provide this Court with considerably greater illumination and

exposition of the issue than it now has.

SINCE THE JUDGMENT IN THE COURT BELOW IS

INTERLOCUTORY, THIS COURT SHOULD AWAIT A

FINAL DISPOSITION OF THE CASE BEFORE EXERCISING

JURISDICTION.

This Court has long followed a policy of not entertaining

petitions for certiorari in interlocutory appeals unless the case

presents some extraordinary issue. In American Construction Co.

v. Jacksonville, T. & K.R. Co., 184 U.S. 372, 384 (1893), this

Court stated that it ‘‘should not issue a writ of certiorari to review

a decree of the circuit court of appeals on appeal from an

interlocutory order, unless it is necessary to prevent extraordinary

inconvenience and embarrassment in the conduct of the cause.”’

In a later case, Hamilton-Brown Shoe Co. v. Wolf Bros. & Co.,

240 U.S. 251, 258 (1916), this Court stated that certiorari

jurisdiction is ‘to be exercised sparingly, and only in cases of

peculiar gravity and general importance, or in order to secure

uniformity of decision . . . . And except in extraordinary cases,

the writ is not issued until final decree.’’ The lack of finality of

the judgment below, without more, may furnish sufficient ground

for denial of the application. See Brotherhood of Locomotive

Firemen v. Bangor & Aroostock R. Co., 389 U.S. 327, 328 (1967)

and Estelle v. Gamble, 429 U.S. 97, 115 (1976) (Stevens, J.

dissenting) (referring to ‘‘the Court’s normal practice of denying

interlocutory review’’).

Rather than ‘‘prevent{ing] extraordinary inconvenience and

embarrassment’”’ in the conduct of this case, the granting of this

petition will inflict extraordinary harm on the respondents.

Respondent S.G. is dying of AIDS. She should not be required

to wait indefinitely for a resolution of her suit against the Red

Cross. She commenced her suit in April, 1990 and for the last

year and a half the parties, at the instance of the Red Cross, have

been litigating about where to litigate, rather than litigating the

merits of her case. The granting of this petition will probably

delay the resolution of this jurisdictional issue for another year.

S.G. deserves a better fate from the legal system than a two-and-

a-half year delay.of her case, while Red Cross wrangles over the

proper forum for her case.

The prejudice to the respondents is not difficult to show.

Because of the jurisdictional dispute, discovery is now on hold

and the respondents have been unable to obtain the identity of

the donor, whether he is still living and whether he would have

given blood had the Red Cross followed proper donor screening

procedures. Further delay will make it difficult, if not impossible,

to get the answers to these and many other vital and pertinent

questions.

In addition, it is difficult to understand why Red Cross will

experience extraordinary inconvenience or embarrassment if the

interlocutory petition is denied. The case will simply proceed to

trial in state court along with the other two defendants. State

courts have presided over approximately twenty similar cases. See

Petition for Certiorari, pp. 11-12 (and cases cited therein). There

is no claim by the Red Cross that it did not receive fair treatment

in those cases. To the contrary, justice may have been better served

since all concerned parties were before the same forum at the

same time.

Finally, it is entirely possible that if this case proceeds to

trial on the merits in state court a result may be produced (such

as settlement) which will make it unnecessary for this Court to

address the issue.

10

IV.

THIS COURT SHOULD DENY CERTIORARI BECAUSE

THE BASIS OF RED CROSS’ CLAIM OF FEDERAL

JURISDICTION, 36 U.S.C. § 2, DOES NOT APPEAR ON THE

FACE OF THE RESPONDENTS’ WELL PLEADED

COMPLAINT.

The claim of the respondents against Red Cross arises out

of the common law of the State of New Hampshire. Their

complaint alleges that the Red Cross negligently failed to properly

screen blood donors and as a consequence the respondent, S.G.,

became infected with the HIV virus, and now suffers from AIDS.

There is no mention in the respondents’ complaint of the Red

Cross Charter or 36 U.S.C. § 2.

Red Cross claims federal jurisdiction under the provision in

its charter (36 U.S.C. § 2) that provides that the Red Cross shall

have ‘‘the power to sue and be sued in courts of law and equity,

State or federal, within the jurisdiction of the United States.’’

This is a congressionally enacted statute and Red Cross contends

that it falls within the purview of 28 U.S.C. § 1331 which confers

on district courts ‘‘original jurisdiction of all civil actions arising

under the Constitution, laws, or treaties of the United States.”’

However the presence or absence of federal question

jurisdiction is governed by the ‘‘well pleaded complaint’’ rule.

Whether a case is one arising under federal law in the sense of

the jurisdictional statute must be determined by what necessarily

appears in the plaintiff’s statement of his own claim in the bill

or declaration, unaided by anything alleged in anticipation or

avoidance of defenses which it is thought the defendant may

interpose. Taylor v. Anderson, 234 U.S. 74 (1914), Oklahoma

Tax Commission v. Graham, 489 U.S. 838 (1989). Moreover ‘‘to

bring a case within the statute, a right or immunity created by

11

the Constitution or laws of the United States must be an element,

and an essential one, of the plaintiff’s cause of action.’’ Gully

v. First Nat. Bank, 299 U.S. 109, 112 (1936). The vast majority

of cases which fall under federal question jurisdiction are covered

by Justice Holmes’ statement that a ‘‘suit arises under the law

that creates the cause of action.’’ American Well Works Co. v.

Layne S. Bowler Co., 241 U.S. 257, 260 (1916).

In the suit of S.G. and A.E. against Red Cross, the ‘‘sue

and be sued clause’’ in the Red Cross Charter is not an essential

element of the respondents’ state law claim, and there is no reason

or justification for it to appear in their complaint. Therefore this

Court should deny federal question jurisdiction on the basis of

this very salutary rule.’ This is a case arising under state law,

and it is quite appropriate that a state forum should resolve it.

As the court said in Doe v. American Red Cross, 727 F. Supp.

186, 192 (E.D. Pa. 1989): |

The thrust of Congressional policy since 1925 has

been to limit federal-question jurisdiction of cases

not involving government instrumentalities to those

situations in which the governing law is federal.

The policy is a sound one. It respects the balance

of authority between state and federal courts which

is an essential ingredient of the federal system.

See also, Luckett v. Harris Hospital-Fort Worth, supra at 441.

2. This issue was raised in the lower court but not addressed by its opinion

because its ruling on the charter issue disposed of the case. S.G. v. American

National Red Cross, supra at 1496.

12

Vv.

THE ISSUE RAISED BY RED CROSS IS NOT OF

SUFFICIENT IMPORTANCE TO GRANT CERTIORARI.

Rule 10.1 of the Supreme Court Rules provides that ‘‘[a]

petition for a writ of certiorari will be granted only when there

are special and important reasons therefor.’’ In Rice v. Sioux

City Cemetery, 349 U.S. 70, 74 (1954) this Court defined in a

general way the phrase ‘‘special and important’’.

A federal question raised by a petitioner may be

‘“‘of substance’ in the sense that, abstractly

considered, it may present an_ intellectually

interesting and solid problem. But this Court does

not sit to satisfy a scholarly interest in such issues.

Nor does it sit for the benefit of the particular

litigants. .. . ‘*Special and important reasons’’

imply a reach beyond the academic or the episodic.

No doubt the issue presented by Red Cross has academic

appeal as it raises the question of whether a decision rendered

by Chief Justice wiarshall in 1824 should be used to determine

the meaning of a statute enacted in 1947. However this issue is

much more important to tne Red Cross, and to the parties who

have claims against it, than to the general public.

Whether the cases — now totalling about 40 — are tried in

federal court or state court, they will eventually proceed to

judgment, and presumably justice will be done. Citizens of the

State of New Hampshire will sit on this case whether it is tried

in federal or state court, and it is difficult to perceive how Red

Cross will suffer more bias in state court than federal court.

(Compare the prejudice to the plaintiffs of having to try their

case twice with the possibility of inconsistent verdicts since all

13

defendants will not be present in either forum.) Each forum is

equally competent to dispose of the issues in this case.

Red Cross suggests that it will promote uniformity to have

certain federal questions—such as whether it can be subjected

to a jury trial or punitive damages — determined in a federal

court. However, this Court has frequently recognized that state

courts are quite competent to entertain federal claims and litigation

over federal rights. See Gulf Offshore Co. v. Mobil Oil Corp,

453 U.S. 473, 477-478 (1981); Rose v. Lundy, 466 U.S. 509, 518

(1982); Middlesex Ethics Comm. v. Garden State Bar Assn., 457

U.S. 423, 437 (1982). As for uniformity, if the question is an

easy one, it is likely that uniformity will be achieved whether a

federal or state forum decides it; if it is a difficult one, as in this

case, the courts will disagree, whether the issue is decided

exclusively in a federal or state forum, or in both forums.

Red Cross’ argument also ignores the fact that these claims

arise under state tort law rather than federal law, and uniformity

under differing state tort systems may be impossible to achieve.

As the First Circuit observed, ‘‘We note, however, that a grant

of original federal jurisdiction over cases involving the Red Cross

would not lead to increased uniformity in the determination of

that organization’s liability in HIV cases. The tort law of the forum

state would provide the rule of decision for the case, whether

it is brought in state or federal court.’’ S.G. v. American Nat.

Red Cross, supra at 1501.

Red Cross also suggests that a federal forum is necessary

to insulate it from ‘‘local or regional needs or prejudices’’ which

may exert undue pressure on it. While it is possible such needs

and pressures exist, it is also likely that the motives of Red Cross

in seeking a federal forum are more mundane and tactical than

the achievement of uniformity and insulation from local prejudice.

In almost all of the suits against Red Cross, if not all, there are

14

multiple defendants. When Red Cross removes a case to federal

court, the other defendants are often left behind in state court,

thereby forcing the plaintiff to try his case twice in two different

forums. This puts the Red Cross in a position to cast blame on

the absent defendants when the cases are tried in federal court.

Red Cross has attempted to broaden the issue to include the

charters of the Department of Housing and Urban Development

(12 U.S.C. § 1702), the Pension Benefit Guarantee Corporation

(29 U.S.C. § 1302) and the Federal National Mortgage Association

and Government National Mortgage Association (12 U.S.C.

§ 1723a(a)), each of which has a ‘*‘sue and be sued”’ clause similar

to, but not the same as the Red Cross. It should be noted that

this language in each charter falls within an enumeration of the

powers of the corporation; thus it is more likely a grant of capacity

to litigate than a grant of jurisdiction. Cf. Federal Rules of Civil

Procedure 17(b). Also, it is significant that each of these charters

relates to a corporation under the control of the United States

or an agency of the United States. Under 28 U.S.C. § 1349 the

district courts are granted jurisdiction over corporations under

the control of the United States, and under 28 U.S.C. § 1345

district courts are granted jurisdiction over agencies of the United

States which commence civil actions. The Red Cross, in contrast,

is a private charitable corporation which is neither controlled by

nor an agency of the United States. See Walton v. Howard

University, 683 F. Supp 826, 831-2 (D.D.C. 1987). Therefore,

Red Cross’ reliance on these charters is clearly misplaced. It is

unlikely that the decision of the First Circuit in this case had any

effect whatever on these substantially distinct charters, as Congress

had already granted each corporation a separate basis of

jurisdiction under Sections 1345 and 1349. In short, Red Cross’

Charter should be analyzed in the light of its own language and

legislative history, rather than resorting to charters of federal

agencies and instrumentalities quite different in nature and

purpose.

15

Finally the respondents submit that the most appropriate

solution to the problem confronting the Red Cross is a legislative

one. If Congress intended to confer federal jurisdiction over suits

against the Red Cross, then the Charter was ineptly drafted. As

the First Circuit observed, ‘‘{If] modern demands now require

conferring federal jurisdiction over Red Cross cases, the Congress

has plenary power to act.’’ Rather than seek a judicial solution

to its problem, with all the attendant expenditure of scarce judicial

resources, Red Cross should present its problem without further

delay to Congress. In the past Congress has often demonstrated

its capacity to cut such Gordian Knots.

VI.

THE DECISION OF THE COURT OF APPEALS IS

CORRECT.

Red Cross asserts that its charter (36 U.S.C. § 2) creates

original federal jurisdiction which entitles Red Cross to remove

to federal court actions to which it is a party. Section 2 in pertinent

part reads as follows:

2 Name of Corporation; Powers

The name of the corporation shall be ‘The

American National Red Cross’’ and bythatname ~—

it shall have perpetual succession, with the power

to sue and be sued in courts of law and equity,

State and Federal within the jurisdiction of the

United States.

(Emphasis added).

As stated above, the district courts have about evenly divided

over whether this clause is a special grant of federal jurisdiction,

16

allowing Red Cross access to federal court in all cases. The reason

for this split is obvious; the charter does not clearly and

unambiguously grant federal jurisdiction to the Red Cross. Federal

jurisdiction can only be found by implication and by looking at

other corporate charters. Courts which have ruled against Red

Cross have interpreted the ‘‘sue and be sued”’ clause as a grant

of capacity to litigate, since it appears in an enumeration of

corporate powers. These courts have reasoned that if Congress

wishes to directly confer jurisdiction it usually does so expressly

in a separate clause.

Red Cross acknowledges the general rule that a sue and be

sued clause does not normally confer jurisdiction; however, 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 particular, Red Cross relies on the case of Osborn v. Bank

of the United States, 22 U.S. (9 Wheat.) 738 (1824) where the

Supreme Court ruled that the bank’s charter, which allowed it

to “‘sue and be sued ... in all 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. The First Circuit noted in its decision below

that the language of the bank’s charter was different from that

of Red Cross and could legitimately be construed to grant original

federal jurisdiction whereas the Red Cross Charter treats state

and federal courts in a parallel fashion, and on the basis of its

language cannot be deemed to have expanded the jurisdiction of

federal courts. S.G. v. American Nat. Red Cross, supra at 1498.

Attempting to discern congressional intent in 1947 from the

language used in a bank charter in 1824 is open to serious question.

As one court commented, ‘‘[Osborn] interpreted a different federal

charter, a charter from a different era, with a different purpose,

17

set in a different context.’” Anonymous Blood Recipient v. W.

Beaumont Hosp., 721 F. Supp. 139, 143 (E.D. Mich. 1989).

Since Osborn only one case has arisen in which this Court

has construed similar language. D’Oench, Duhme & Co. v. Federal

Deposit Insurance Corp., 315 U.S. 447 (1942). In that case this

Court construed 17 U.S.C. § 264(j) to confer federal jurisdiction

over the FDIC. That section authorized the FDIC ‘‘to sue or be

sued in any court of law or equity; State or Fedeval,’’ and further

provided that ‘‘all suits of a civil nature at common law or equity

shall be deemed to arise under the law of the United States.”’

This latter language clearly distinguishes the FDIC charter from

the Red Cross charter. Thus the bank and FDIC charters are clearly

distinguishable from the Red Cross charter both as to the language

used and the context in which each was adopted.

Red Cross also contends that the legislative history of its

charter shows an intent to confer federal jurisdiction on the Red

Cross. The charter was amended in 1947 with the addition of

the words ‘‘State or Federal’’ so that it reads ‘‘with the power

to sue and be sued in courts of law and equity, State or Federal,

within the jurisdiction of the United States.’’ This change was

urged by the Harriman Committee, a Red Cross advisory

committee, and was derived in particular from Recommendation

22 of its report, which reads as follows:

Recommendation No. 22. The Charter should

make it clear that the Red Cross can sue and be

sued in the Federal Courts.

The present Charter gives the Red Cross the

power ‘to sue and be sued in courts of law and

equity within the jurisdiction of the United States.’

The Red Cross has in several instances sued in the

federal Courts, and its powers in this respect have

18

not been questioned. However, in view of the

limited nature of the jurisdiction of the Federal

Courts it seems desirable that this right be clearly

stated in the Charter.

This language does not automatically confer original

jurisdiction on federal courts. Rather it permits the Red Cross

to sue and be sued in federal court if there is independent federal

question jurisdiction or diversity jurisdiction. It is likely that the

intent of the amendment was to make it clear that the Red Cross,

a federally created corporation, could sue in diversity in federal

court. See Walton v. Howard University, 683 F. Supp. 826, 829

(D.D.C. 1987).

Finally, as the First Circuit observed, Congress, prior to and

during the time the Red Cross charter was adopted, was using

explicit and specific language to confer federal jurisdiction over

other federally created corporations. See Federal Crop Insurance

Corporation, (7 U.S.C. § 1506) (‘‘jurisdiction is hereby conferred

upon such district courts to determine controversies’’); The

Commodity Credit Corporation, (15 U.S.C. § 714) (‘‘the district

courts of the United States shall have exclusive original jurisdiction

.. . Of all suits brought by and against the Corporation,’’) and

Federal Deposit Insurance Corporation, (12 U.S.C. § 1819(b)(2))

(‘‘all suits . . . to which the corporation is a party shall be deemed

to arise under the laws of the United States’’). No comparable

language appears in the Red Cross charter and the conclusion

is inescapable that Congress, by the language used in the Red

Cross Charter, did not intend to confer original federal jurisdiction

over actions involving the Red Cross.

19

CONCLUSION

For these reasons, the petition for writ of certiorari should

be denied.

Respectfully submitted

GARY B. RICHARDSON

Counsel of Record

GILBERT UPTON

DAVID P. SLAWSKY

UPTON, SANDERS & SMITH

Attorneys for Respondents

10 Centre Street

P.O. Box 1109

Concord, NH 03302-1109

(603) 224-7791

la

APPENDIX A — WRITS OF SUMMONS IN THE SUPERIOR

COURT OF THE STATE OF NEW HAMPSHIRE

THE STATE OF NEW HAMPSHIRE

MERRIMACK, SS. SUPERIOR COURT

WRIT OF SUMMONS

Susan Gladstone and Arthur Ellison

59 Rumford St.

Concord, NH 03301

American Red Cross Blood Services

Vermont-New Hampshire Region, a Division of American Red

Cross, a federally chartered non-profit association having a place

of business at 425 Reservoir Ave., Manchester, NH 03105

To the Sheriff of any County or his Deputy

WE COMMAND YOU TO SUMMON the defendant, American

Red Cross Blood Service Vermont-New Hampshire Region, a

Division of American Red Cross

if to be found in your precinct, to appear at the SUPERIOR

COURT at Concord in said County of Merrimack, on the first

Tuesday of April 1990, to answer to Susan Gladstone and Arthur

Ellison

IN A PLEA OF THE CASE for that on or about August

22, 1984 and prior thereto the defendant, American Red Cross

Blood Services Vermont-New Hampshire Region, a Division of

American Red Cross, was engaged in the business of acquiring

2a

Appendix A

and selling blood and blood products to health care providers

for transfusion to patients; that the defendant had a duty to screen

blood donors to prevent persons in certain high risk groups from

donating blood which the defendant knew or should have known

involved risk of transmission of th H.I.V. virus to persons such

as the piaintiff; the defendant was negligent in failing to properly

screen blood donors and on or about August 1, 1984 procured

blood from a donor who was infected with the H.1.V. virus; the

infected blood was supplied to the Concord Hospital in Concord,

New Hampshire and on August 22, 1984 transfused to the plaintiff;

that as a result, the plaintiff became infected with the H.I.V. virus

and currently is suffering from the Acquired Immune Deficiency

Syndrome (A.1.D.S.) which has caused her loss of enjoyment of

life, loss of probable life expency, extreme mental anguish and

past, present and future pain and suffering, medical costs, loss

of earning capacity and loss of wages, all to her damage, as she

Says, greatly in excess of the jurisdictional minimum requirements

of the Superior Court, together with interest and costs.

Witness, Richard P. Dunfey, Esquire, the 2nd day of Mar. A.D.

1990

Susan Gladstone and Arthur Ellison

by their attorneys

UPTON, SANDERS & SMITH Indorser

By Gary B. Richardson

10 Centre St., Box 1109, Concord, NH 03302-1109

Marshall A. Buttrick

Clerk

3a

Appendix A

THE STATE OF NEW HAMPSHIRE

RIMACK, SS. SUPERIOR COURT

WRIT OF SUMMONS

Susan Gladstone and Arthur Ellison

both of 59 Rumford Street

Condord, N.H. 03301

Vv.

Carol Leonard-McKinney, Administratrix of the Estate of Kenneth

L. McKinney, Jr., M.D. of Hopkinton Rd., Hopkinton, N.H.

and

Kenneth L. McKinney, Jr., M.D. Professional Association, a

professional association having a place of business at 33 Warren

Street, Concord, N.H. 03301

To the Sheriff of any County or his Deputy

We Command You To Summon

if to be found in your precinct, to appear at the SUPERIOR

COURT at Concord in said County of Merrimac, on the first

Tuesday of April 1988, to answer to

COUNT |

In a plea of the case for that at all times relevant to this

complaint Kenneth L. McKinney, M.D. (hereinafter ‘‘McKinney’’)

was licensed to practice medicine in the State of New Hampshire,

4a

Appendix A

held tumself out as a specialist in the areas of obstetrics and

gynecology, and acted as an employee, officer and director of

Kenneth L. McKinney, Jr., M.D., Professional Association; that

in August of 1984 the plaintiff, Susan Gladstone, employed

McKinney to treat her for a fibroid tumor in her uterus and to

perform a hysterectomy; that in endeavoring to perform said

hysterectomy McKinney did not exercise the due care ordinarily

exercised by other gynecologists in his profession in that he failed

to adequately tie off the blood vessels to the uterus, failed to

inform the plaintiff of the risks of such a procedure such as a

contaminated blood transfusion and failed to take adequate

precautions to avoid those risks; that as a proximate result, the

plaintiff, Susan Gladstone, suffered severe abdominal bleeding

which required a second operation and blood transfusions; that

the blood received by Susan Gladstone was contaminated with

the virus associated with Acquired Immune Deficiency Syndrome

(A.1.D.S.) and Susan Gladstone has developed symptoms

consistent with said disease; that as a further result, Susan

Gladstone has suffered loss of enjoyment of life, loss of probable

life expectancy, extreme mental anguish and past, present and

future pain and suffering, medical costs, loss of earning capacity

and loss of wages all to her damage as she says greatly in excess

of the jurisdictional minimum requirements of the Superior Court

together with interest and costs.

COUNT II

In a plea of the case for that Arthur Ellison is the husband

of Susan Gladstone having been married to her on June 8, 1973

and they are the parents of two children, Jerome, age 11, and

Anna, age 8; that as a result of the injuries sustained by Susan

Gladstone, as alleged in Count I, Arthur Ellison has suffered the

loss of the enjoyment of his wife’s companionship, consortium

and family relationship all to his damage as he says in excess of

Sa

Appendix A

the jurisdictional minimum requirements cf the Superior Court

together with interest and costs.

COUNT III

In a plea of the case for that the allegations of Counts | &

Il are realleged and incorporated by reference; that the plaintiffs

did not become aware that Susan Gladstone had received

contaminated blood until August of 1986; that between August

of 1984 and August of 1986 the plaintiffs engaged in sexual

intercourse; that as a result Arthur Ellison has been exposed to

the A.I.D.S. virus although it has not yet been positively

determined whether or not Arthur Ellison has contracted A.1.D.S.;

however at the very least the exposure to A.I.D.S. has caused

Arthur Ellison extreme mental anguish and emotional distress as

approximate result of the defendant’s negligence all to his damage

as he says in excess of the jurisdictional minimum requirements

of the Superior Court together with interest and costs.

6a

Appendix A

THE STATE OF NEW HAMPSHIRE

MERRIMACK. SS. SUPERIOR COURT

WRIT OF SUMMONS

Susan Gladstone and Arthur Ellison

59 Rumford Street

Concord, NH 03301

Auto Suture Company, a Division of United States Surgical

Corporation, a New York Corporation having a business address

of 150 Glover Avenue, Norwalk, Conn. 06856

To the Sheriff of any County or his Deputy

We Command You To Summon

if to be found in your precinct, to appear at the SUPERIOR

COURT at Concord in said County of Merrimack, on the first

Tuesday of August 1988.

COUNT I — Products Liability

In a plea of the law for that on or about August 22, 1984

and prior thereto the defendant, Auto Suture Company, a division

of United States Surgical Corporation, was engaged in the business

of selling surgical staplers; that on said date a surgical stapler

sold by the defendant was used by Kenneth L. McKinney, Jr.,

M.D. during a hysterectomy performed on the plaintiff, Susan

Gladstone; that said stapler was in a defective condition

unreasonably dangerous to the plaintiff Susan Gladstone in that

the device failed to adequately ligate the blood vessels, the device

7a

Appendix A

was sold without adequate warnings to the patient and instructions

to the physician and the device was sold for use without ensuring

that the physician using it had training in its use; that at the time

of its use said stapler was without substantial change in the

condition in which it was sold; that as such the defendant is legally

responsible for the damages thereby caused; that as a result of

the inadequate ligation of the blood vessels the plaintiff, Susan

Gladstone, sufered severe abdominal bleeding which required a

second operation and blood transfusions; that the blood received

by Susan Gladstone was contaminated with the virus associated

with Acquired Immune Deficiency Syndrome (A.1.D.S.) and Susan

Gladstone has developed symptoms consistent with said disease;

that as a further result, Susan Gladstone has suffered loss of

enjoyment of life, loss of probable life expectancy, extreme mental

anguish and past, present and future pain and suffering, medical

costs, loss of earning capacity and loss of wages all to her damage

as she says greatly in excess of the jurisdictional minimum

requirements of the Superior Court together with interest and costs.

COUNT II — Negligence

In a plea of the case for the allegations of Count I are realleged

and incorporated by reference; that the failure to give adequate

warnings to the patient and instructions to the physician in the

use of the surgical stapler and the failure to ensure that the

physician using said device was trained in its use was negligent

and violated a duty of ordinary care owed to the plaintiff, Susan

Gladstone, suffered the damages described in Count I all to her

damage as she says together with interest and costs in an amount

greatly in excess of the jurisdictional minimum requirements of

the Superior Court.

8a

APPENDIX B — MOTION FOR STAY OF PROCEEDINGS

DATED AUGUST 16, 1991

UNITED STATES DISTRICT COURT

FOR THE

DISTRICT OF NEW HAMPSHIRE

Civil Action

No. C.90-145-D

S.G. and A.E.,

Plaintiffs

We

American National Red Cross (sued herein under the name

‘*American Red-Cross Blood Services Vermont-New Hampshire

Region, a Division of American Red Cross’’),

Defendant

DEFENDANT’S MOTION FOR STAY OF PROCEEDINGS

PENDING APPEAL TO UNITED STATES SUPREME COURT

The American National Red Cross (‘‘Red Cross’’), defendant,

moves this Court for a stay of further proceedings in this case,

to permit the Red Cross to petition the United States Supreme

Court for a writ of certiorari to resolve what is now a split in

United States Courts of Appeals as to whether the Red Cross’s

congressional charter confers original federal jurisdiction on

actions involving the Red Cross. Unless such a Stay is granted,

the issue may be mooted by remand of the case to New Hampshire

Superior Court, thereby depriving the Red Cross of the opportunity

to present the issue to the United States Supreme Court. In support

9a

Appendix B

of this Motion, the Red Cross states as follows:

1. On July 24, 1991, the United States Court of Appeals

for the First Circuit reversed the ruling of this Court that 36 U.S.C.

§ 2 confers original federal jurisdiction on actions involving the

Red Cross, a decision which is contrary to the decision reached

by the United States Court of Appeals for the Eighth Circuit.

Compare S.G. & A.E. v. American National Red Cross, No.

90-1873 (Ist Cir., July 24, 1991) with Kaiser v. Memorial Blood

Center, No. 89-5533 (8th Cir., April 10, 1991). In addition, the

First Circuit remanded S.G. & A.E. to this Court to determine

whether joinder of nondiverse parties is appropriate so as to

destroy diversity, the other basis for federal jurisdiction, and thus

require remand to the state court. S.G. & A.E., slip op. at 2, 19.

2. The Red Cross moved the First Circuit for a stay of its

mandate pursuant to Federal Rule of Appellate Procedure 41 to

assure that the Red Cross would have time to petition the Supreme

Court for a writ of certiorari. Appellee’s Motion for stay of

Mandate, August 9, 1991 (attached). On August 13, 1991, the

First Circuit declined to enter a stay, apparently because the matter

was being remanded to this Court for further proceedings on the

issue of joinder and diversity, and because the Red Cross would

have the opportunity to seek a stay of such further proceedings

from this Court.

3. Because this Court has previously announced how it would

resolve the joinder and diversity issues (Order of June 19, 1990

at 4, modifying Order of May 24, 1991), the Red Cross is

concerned that without a stay of proceedings, this Court may

immediately resolve the diversity issue and remand the action to

state court. Such a remand to state court would foreclose the Red

Cross from appealing the charter issue to the United States

10a

Appendix B

Supreme Court, because an order to remand is unappealable under

the circumstances of this case. See 28 U.S.C. § 1447(d).

4. At a minimum, the Red Cross believes the joinder and

remand issue should be briefed in light of the Supreme Court’s

recent decision, Freeport-McMoRan, Inc. et al. v. K.N. Energy,

Inc., 111 S. Ct. 858, 860 (Feb. 19, 1991), which holds that

‘*[d]iversity jurisdiction, once established, is not defeated by the

addition of a nondiverse party to the action.”’ Although Freeport-

McMoRan does not deal specifically with removal issues under

28 U.S.C. § 1447(e), the court does cite with approval an earlier

Supreme Court decision which held that jurisdiction is not

‘‘defeated by the intervention, by leave of court, of a party whose

presence is not essential to a decision of the controversy between

the original parties .. . .”” (Emphasis added.) Accordingly, it

would appear that 28 U.S.C. § 1447(e) is not to be applied to

permit joinder and remand except where the party to be joined

is indispensable. This construction is also consistent with the

legislative history of 1447(e), which provides that **[jJoinder

coupled with remand may be more attractive than either dismissal

under Civil Rule 19(b) or denial of joinder.”” H.R. REP. No.

889, 100th Cong., 2d Sess. 72-73, reprinted in 1988 U.S. Code

Cong. & Ad. News, 5982, 6033. (Rule 19(d) deals specifically with

indispensable parties.)

5. The Red Cross represents to this Court that it is in the

process of preparing a petition for certiorari to the Supreme Court

and intends to file the petition promptly, so that the Supreme

Court will have the opportunity to decide whether to grant the

petition within this calendar year.

6. As this Court held in its Order of June 19, 1990, the issue

of whether the Red Cross charter confers Original federal

lla

Appendix B

jurisdiction to permit removal is *‘one of those ‘rare cases’ which

cry out’’ for appellate resolution. Moreover, the First Circuit

recognized ‘‘the importance of the jurisdictional issue presented,

especially in light of the increasing litigation concerning the

transmission of HIV virus through the transfusion of tainted

blood.” S.G. & A.E., slip op. at 1. While reaching a conclusion

different from that of the Eighth Circuit, the First Circuit

acknowledged that ‘‘[t}his is not to say that the question whether

Congress intended to convert all Red Cross cases into federal

question cases when it amended the Red Cross Charter is easily

decided.’’ Jd. at 18.

7. Numerous courts throughout the country are continuing

to face this jurisdictional issue, and they continue to reach

divergent decisions. It would be especially regrettable if Supreme

Court review were to be frustrated by remand of the action to

state court before the Supreme Court could be given the

opportunity to determine the issue definitively.

WHEREFORE, the American National Red Cross

respectfully moves this Court to stay further proceedings in the

case to permit the Red Cross to file a timely petition in the United

States Supreme Court for a writ of certiorari and to permit the

Supreme Court to take appropriate action on the petition. In the

event this Court is not inclined to stay proceedings, the Red Cross

moves, in the alternative, for seven days’ advance notice to permit

it to seek emergency relief from the Supreme Court. Alternative

proposed Orders are attached.

The Red Cross has made a good faith attempt, pursuant to

Local Rule 11(c), to obtain concurrence of the plaintiffs in the

relief sought by this Motion, but has been unable to obtain such

concurrence. As the present Motion is addressed to the Court’s

12a

Appendix B

discretion, no memorandum with citations of supporting

authorities is being submitted.

AMERICAN NATIONAL RED

CROSS

By Its Attorneys,

SULLOWAY HOLLIS & SODEN

By s/Irvin Gordon

Irvin D. Gordon (0962)

9 Capitol Street

Concord, NH 03302-1256

(603) 224-2341

DATE: August 16, 1991

l3a

APPENDIX C — ORDER OF THE UNITED STATES

DISTRICT COURT FOR THE DISTRICT OF NEW

HAMPSHIRE DATED SEPTEMBER 24, 1991

UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Civil No. 90-145-D

Susan Gladstone;

Arthur Ellison

American National Red Cross

ORDER

On July 24, 1991, the Court of Appeals, acting on

interlocutory appeal, reversed and remanded with respect to this

court’s order of May 24, 1990. Document no. 10. S.G. & A.E.

v. American Nat’! Red Cross, No. 90-1873 (ist Cir. July 24, 1991)

In such order, this court had held that 36 U.S.C. § 2 vested

exclusive jurisdiction in actions to which American Red Cross

(‘*Red Cross’’) is a party in federal courts. The mandate of the

court of appeals issued on August 21, 1991.'

In the interim, however, Red Cross moved the court for a

stay of proceedings pending a petition for certiorari to the Supreme

Court of the United States. Document no. 23. Alternatively, Red

Cross sought a stay by this court of seven days to allow it to

1. The mandate was here received on August 22, 1991.

l4a

Appendix C

apply to a justice of the Supreme Court for such relief.’

Simultaneously, plaintiffs filed their second motion to join

parties and remand this matter to state court. Document no. 24.

Under the provisions of 28 U.S.C. § 2101(f), a stay pending

an application for certiorari to the Supreme Court ‘‘may be granted

by a judge of the court rendering the judgment or decree or by

a justice of the Supreme Court... .’’ The courts which have

considered this statute have ruled that it vests authority to grant

a stay in the court of appeals or a justice of the Supreme Court.

In re Stumes, 681 F.2d 524, 525 (8th Cir. 1982); Gander v. FMC

Corp., 733 F. Supp. 1346, 1347 (E.D. Mo. 1990) (and cases therein

cited). The district court is without jurisdiction to grant a stay

of execution of its judgment pending a defendant’s application

for certiorari. Jd. Red Cross has moved for a stay from the court

of appeals, but this motion has been denied. Inasmuch as this

court lacks jurisdiction to grant the relief of a stay, the motion

of Red Cross seeking such relief must also be and is herewith

denied.

With respect to the plaintiffs’ second motion, it is true that,

were it not for the jurisdictional issues raised by 36 U.S.C. § 2,

this court had previously ruled, upon balancing the requisite

factors, that it would grant joinder and order remand. Document

no. 10, at 4-6. The court perceives no changes in circumstances

which require it to reconsider such ruling, and, accordingly, it

2. The proposed petition for certiorari is grounded on a dispute between

circuits. As noted in S.G. & A.E. v. American Nat’! Red Cross, supra, slip

op. at 5, 6, the Eighth Circuit has held that the ‘‘sue and be sued’”’ language

in 36 U.S.C. § 2 vests original federal jurisdiction over Red Cross. See Kaiser

v. Memorial Blood Center, No. 89-5533 (8th Cir. Apr. 10, 1991).

15a

Appendix C

herewith grants the second motion for joinder and remand.

Accordingly, pursuant to the mandate of the court of appeals,

joinder of parties is granted, and this case is herewith remanded

to the Superior Court of Merrimack County, New Hampshire.

SO ORDERED.

s/ Shane Devine

Chief Judge

United States District Court

September 24, 1991

ce: Gary B. Richardson, Esq.

Irvin D. Gordon, Esq.

Bruce M. Chadwick, Esq.

16a

APPENDIX D—SLIP OPINION IN WALKER V. AMERICAN

NATIONAL RED CROSS DATED AUGUST 16, 1991

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

Civil Action No. 91-0749

Judge George H. Revercomb

BESSIE WALKER, Personal Representative of the estate of

TANYA M. TAYLOR,

Plaintiff,

AMERICAN NATIONAL RED CROSS, et al.,

Defendants.

MEMORANDUM AND ORDER

The plaintiff, Bessie Walker, alleges that the decedent, Tanya

Taylor, contracted Acquired Immune Deficiency Syndrome

(‘‘AIDS’’) as the result of receiving a blood transfusion that was

contaminated with the human immundeficiency virus (“‘HIV’’).

The plaintiff alleges that the defendant, the American National

Red Cross, was negligent in its testing and screening of blood

received by Ms. Taylor. The plaintiff filed suit in the Superior

Court of the District of Columbia on March 1, 1990 and the

American Red Cross filed a notice of removal in this court on

April 10, 1991.

The plaintiff filed a motion to remarid the case to the Superior

Court, the defendant filed an opposition as well as a supplement

17a

Appendix D

to its Opposition, and argument was heard on the motion on May

10, 1991.

Under the removal statute, 28 U.S.C. § 1441(a), this case

would be properly removed to this Court if it would have original

jurisdiction over the action. The defendant argues that the Red

Cross Charter, 36 U.S.C. § 2 (1988) confers federal jurisdiction

in all cases involving the Red Cross. 36 U.S.C. § 2 states that

the Red Cross shall have ‘‘the power to sue and be sued in courts

of law and equity, State or Federal, within the jurisdiction of

the United States. . .”’ The plaintiff argues that this language

does not create original jurisdiction, but is merely a grant of

corporate power.

The courts have been split on this issue of whether Congress

intended that 36 U.S.C. § 2 create original jurisdiction in the

federal courts. Judges Penn and Harold Greene of this Court have

held that 36 U.S.C. § 2 does not confer original jurisdiction in

the federal courts for actions to which the Red Cross is a party. '

~ On the other hand, the United States Court of Appeals for the

Eighth Circuit, in the first appellate decision addressing this issue,

held that the clause does grant federal jurisdiction. Kaiser v.

Memorial Blood Center, No. 89-5533, slip op. (8th Cir. Apr. 11,

1991).?

1. See Walton v. Howard University, 638 F. Supp. 826 (D.D.C. 1987);

Okoro v. Children’s Hospital, No. 87-2114 (D.D.C. July 12, 1988); Ray v.

American. National Red Cross, Civil Action No. 90-1882, slip op. (D.D.C. Oct.

19, 1990); Boutar v. American National Red Cross and American Red Cross,

Civil Action No. 90-3155, slip op. (D.D.C. April 9, 1991).

2. In addition, both parties have cited numerous cases that support their

positions. The courts are almost evenly split on this issue.

18a

Appendix D

The Supreme Court has considered whether sue and be sued

language confers federal jurisdiction. In Bank of the United States

v. Deveaux, 9 U.S. 61 (1809), the Supreme Court held that the

language ‘‘sue and be sued, plead and be impleaded, answer and

be answered, defend and de defended, in courts of record, or

any other place whatsoever. . .’’ was insufficient to create federal

jurisdiction. In Osborn v. Bank of the United States, 22 U.S.

738, 817 (1824), the Supreme Court held that the language ‘‘to

sue and be sued, .. . in all state courts having competent

jurisdiction, and in any circuit court of the United States”’ explicitly

granted jurisdiction in the circuit courts to hear any case in which

the bank was a party. The Court stated that ‘‘general words, which

are usual in all acts of incorporation, gave only a general capacity

to sue, not a particular privilege to sue in the courts of the United

States.’’ Jd. Continuing this rationale in Bankers Trust Co. v.

Texas and Pac. Ry., 241 U.S. 295 (1916), the Court found that

the statute, which stated ‘‘shall be able to sue and be sued. . .

in all courts of law and equity within the United States,’’ did

not intend to confer jurisdiction upon any court.

In 1942, the Supreme Court in D’Oench, Duhme & Co. v.

Federal Deposit Insurance Corp., 315 U.S. 447 (1942), allowed

the F.D.1.C. to sue in federal court pursuant to the corporation’s

charter, 12 U.S.C. § 1829. The defendants argue that the language

in this charter, ‘‘sue or be sued in any court of law or equity,

State or Federal,’’ is almost identical to the language in the Red

Cross charter. However, the F.D.1.C. charter contains subsequent

language, referenced by the Supreme Court in D’Oench, 315 U.S.

at 455, which expressly confers federal jurisdiction on the F.D.1.C.

12 U.S.C. § 1819 (1935) provided:

‘‘To sue and be sued, complain and defend, in

any court of law or equity, State or Federal. All

19a

Appendix D

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, and the United States district courts shall

have original jurisdiction thereof, without regard

to the amount in controversy; and the Corporation

may .. remove any such action, suit, or

proceeding from a State court to the United States

district court.’”’

It is this subsequent language that creates the right to removal

to federal court of actions against the F.D.1.C.* Thus, it is obvious

that Congress knew how to create original jurisdiction in the

F.D.1.C. in 1935. Yet, Congress did not specifically include this

type of language in the Red Cross charter’s amendment in 1947.

Absent similar language specifically conferring federal jurisdiction

upon the Red Cross, the Court finds that 36 U.S.C. § 2 was merely

a grant of corporate authority and not an explicit creation of

federal jurisdiction.

3. 12 U.S.C. § 1819 presently reads:

(b 2A). . . all suits of a civil nature at common law

or in equity to which the Corporation, in any Capacity, is

a party shall be deemed to arise under the laws of the United

States.

(b)(2)(B) . . the Corporation may . . . remove any

action, suit, Or proceeding from a State court to the

appropriate United States district court.

Section D of the statute specifies actions in which the FDIC would not

have federal jurisdiction.

4. See Jeanne, et al. v. The Hawkes Hospital of Mt. Carmel, et al., No.

C-2-87-509 (S.C. Ohio 1988).

20a

Appendix D

The defendants argue that the subsequent language in the

F.D.I.C. charter was not necessary to confer jurisdiction and that

the language used in Osborn should be considered to be the

minimum language required. However, the Court finds that the

language used in the Red Cross charter does not even meet the

minimum requirements of Osborn. At the time the charter in

Osborn was written, circuit courts of the United States were the

federal courts of original jurisdiction and the charter stated that

the bank shall be able to sue and be sued ‘‘in any circuit court

of the United States.’’ Unlike the charter in Osborn, the Red Cross

charter does not specify that the Red Cross shall be able to sue

or be sued in federal courts of original jurisdiction. If the Court

interpreted the Red Cross charter as the defendant suggests it

should, the Red Cross would also be permitted to sue or be sued

in the Supreme Court, a Circuit Court of Appeals, or the Claims

Court, which are federal courts of law and equity.* The Court

refuses to adopt this interpretation.

The defendant also urges the Court to rely on legislative

history that it asserts supports a finding that 36 U.S.C. § 2 confers

federal jurisdiction. Specifically, the defendant cites to a report

by a Red Cross advisory committee, the ‘Harriman Committee.”’

S. Rep. No. 38, 80th Cong., Ist Sess. 1 (1947); H.R. Rep. No.

337, 80th Cong., Ist Sess. 6 (1947). However, contrary to the

defendant’s assertion, Recommendation No. 22 does not make

clear that the purpose of the clause was to confer original

jurisdiction upon the Red Cross solely as a result of this statute.

Instead, the recommendation simply reiterates the power of the

Red Cross as a corporation to sue and be sued, similar to any

other litigant, in the federal courts if federal jurisdiction applies,

5. See Boutar v. American Red Cross, No. 90-3155 (D.D.C. April 9, 1991).

2la

Appendix D

such as in the instance of diversity or the presence of a federal

question.

In addition, as pointed out by the court in Walton v. Howard

University, 683 F. Supp. 826, 829 (D.D.C. 1987), the Senate

hearing on the charter amendments does not indicate that the

committee 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., Ist Sess. 7-11 (1947). Instead, the discussion centered

on the issue of whether the provision actually limited the corporate

powers of the Red Cross by not giving it the ability to litigate

in foreign courts.

Based upon the foregoing reasons, the Court finds that 36

U.S.C. § 2 is merely a grant of corporate power. It does not

explicitly confer federal jurisdiction upon the Red Cross as is

required under Osborn. At the time the amendment was added,

Congress was well aware of the subsequent language referred to

in D’Oench, which explicitly conferred federal jurisdiction upon

the F.D.1.C. Congress chose not to use this language. Therefore,

this Court agrees with Judge Penn and Judge Harold Greene that

Original jurisdiction is not conferred on the Red Cross by means

of its charter. The opinion from the United States Court of Appeals

for the Eighth Circuit, Kaiser v. Memorial Blood Center, supra,

which does not state the reasons for its conclusions, does not

persuade this Court otherwise.

it is therefore ORDERED that the Motion to Remand is

GRANTED.

Dated: May 10, 1991

22a

Appendix D

s/ George H. Revercomb

George H. Revercomb

United States District Judge