Appendix — United Steelworkers of America v. R. H. Bouligny, Inc.

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1064 /725

No. 652° /7

UNITED STEELWORKERS OF AMERICA,

Fe AFL-CIO, PETITIONER,

¥

Le

i

“3

Ae

a

Le

: vs.

4 R. H. BOULIGNY, INC.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

INDEX

Original Print

Proceedings in the United States Court of Appeals

for the Fourth Circuit

Appendix to brief for appellant consisting oi por-

tions of the record from the United States D's-

trict Court for the Western District of North

Carolina, at Charlotte 1 1

Complaint filed in the Superior Court of Meck-

NEL PT We

lenburg County, North Carolina -.____ 1 1

Petition for removal 4 4

5 Motion to remand 6 6

3 Memorandum opinion, Craven, Ch. J. 7 7

2 Order denying motion to remand 9 8

Affidavit of N. F. White, Jr. 10 9

Notice for removal 11 10

Order allowing appeal from an interlocutory order,

ete. 21 11

Opinion, Bell, J. 33 12

Judgment 44 20

Clerk’s certificate (omitted in printing) ~~~. 56 21

Order allowing certiorari 57 21

REcorD PREss, PRINTERS, NEw York, N. Y., Fesruary 4, 1965

4 P SOR icant

(fol. 1]

APPENDIX TO BRIEF FOR APPELLANT

IN THE SUPERIOR COURT OF

MECKLENBURG COUNTY, NORTH CAROLINA

R. H. Bouuieny, Inc., a corporation, Plaintiff,

vs.

Unirep SteeLworkers oF AMerica, AFL-CIO,

an unincorporated association, Defendant.

CompLaInt—Filed May 29, 1963

The plaintiff, complaining of the defendant, says and

alleges:

1. That the plaintiff is a North Carolina corporation,

having its principal office and place of business in the City

of Charlotte, Mecklenburg County, North Carolina.

2. That the defendant, as the plaintiff is informed and

believes, is an unincorporated association, conducting in

North Carolina the business and purposes for which it is

organized.

3. That during the months of April and May, 1963, the

defendant has caused to be written, published and delivered

to many persons in the City of Charlotte and Mecklenburg

County, North Carolina, particularly to the employees of the

plaintiff, certain pamphlets and circulars containing state-

ments with respect to the plaintiff which are false and de-

famatory.

[fol.2] 4. That such pamphlets and circulars have con-

tained untruthful and false statements, for example: —that

the plaintiff has “lied to employees”; that after one, Mil-

lard Smith, had recently been discharged from the employ-

ment of the plaintiff, a representative of the management

of the plaintiff, went to a Company where the said Millard

Smith had subsequently found employment and “tried to

2

get” Millard Smith “fired” from the job which he had thus

obtained after being discharged from the employment of

the plaintiff; that, on such occasion and for such purpose,

the aforesaid representative of the plaintiff presented to

“the officials of the Company where Millard Smith had ob-

tained a job” the “work record and progression chart” of

Millard Smith “for the time he worked at Bouligny, with the

hope that by doing this Millard Smith would be fired”

from the job which he had obtained after being discharged

from the plaintiff’s employment; that the plaintiff’s repre-

sentative “would not only deny Millard Smith a chance

to make a decent living for himself, but he has absolutely no

feeling for Millard Smith’s wife and four children’’; that

the plaintiff’s representative could not “stand the thought

of one of his former slaves having a job where he is now

making” a rate of pay higher than he formerly made; that

this is a “dirty trick” on the part of the representative of

plaintiff’s management; that “there is no level to which he”,

as a representative of plaintiff’s management, “will not

sink”; and that unless they embrace the defendant, the em-

ployees of the plaintiff “will always have to live in fear

of people like” the representative of the plaintiff’s man-

agement “doing the same thing” to them and to their “wives

and children”.

5, That by such false statements the defendant, through

its agents and representatives, has intentionally, wilfully

and maliciously slandered and libeled the plaintiff and has

unlawfully defamed and injured the good name and reputa-

[fol. 3] tion of the plaintiff, and has injured the relations

between the plaintii¥ and its employees.

6. That by reason of the matters hereinabove set forth,

the plaintiff has been damaged in the sum of One Hundred

Thousand ($100,000.00) Dollars and is entitled to judgment

against the defendant in that amount.

7. That by reason of the matters hereinabove set forth,

the plaintiff is entitled to judgment against the defendant

for punitive damages in an additional amount of One Hun-

dred Thousand ($100,000.00) Dollars.

3

Wherefore, the plaintiff prays the Court for judgment

against the defendant in the sum of Two Hundred Thousand

($200,000.00) Dollars, together with the costs of this action ;

and the plaintiff prays the Court for such other and further

relief as to the Court may seem just and proper.

Grier, Parker, Poe & Thompson, Attorneys for the

Plaintiff.

North Carolina

Mecklenburg County

Oliver R. Rowe, being first duly sworn, deposes and

says that he is an officer of the plaintiff above-named, to wit,

its Executive Vice-President; that he knows the contents of

the foregoing Complaint and that the same is true to his

own knowledge, except as to such matters as are therein

stated upon information and belief, and as to these he be-

[fol. 4] lieves the said Complaint to be true.

Oliver R. Rowe

Subscribed and sworn to before me, this the 28 day of

May, 1963.

In tHE Unrrep States District Court FOR THE

Western District or NortH Caro.ina,

At CHARLOTTE

No. 9326

R. H. Bovuieny, Inc., a corporation, Plaintiff,

vs.

Unttrep STEELWoRKERS oF America, AFL-CIO,

an unincorporated association, Defendant.

PETITION FOR REMOVAL

To the Honorable Judge of the United States District Court

for the Charlotte Division of the Western District of

North Carolina:

Your petitioner, United Steelworkers of America, AF'L-

CIO, a labor organization, existing under the laws of, and

having its principal place of business in the State of Penn-

sylvania, respectfully shows until this Honorable: Court

that it is the defendant in the suit which was filed in the

Superior Court of Mecklenburg County, North Carolina, on

the 29th day of May, 1963, wherein R. H. Bouligny, Inc.,

a North Carolina corporation having its principal office and

place of business in the State of North Carolina is plaintiff,

and the petitioner, United Steelworkers of America, AF'L-

CIO, an unincorporated association, is named as party de-

fendant (a copy of the summons and complaint in said case

being attached hereto) ; that the matter and amount in dis-

pute in said suit exceeds exclusive of costs and interest,

the sum of Ten Thousand Dollars ($10,000) ; that said R. H.

Bouligny, Inc., is engaged in interstate and the matters

and things complained of in said complaint allegedly arose

during a campaign conducted pursuant to the National

Labor Relations Act, as amended, and said corporation

right to proceed thereon, if any, is provided in, subject to

and limited by the provisions set forth in said act; that

[fol.5] the subject matter arises under the laws of the

5

United States, including but not limited to laws regulating

commerce; that purported service was attempted on May

31, 1963, and that the petitioner has not entered an appear-

ance in said case and does not by this petition waive its ob-

jections to attempted service of process herein.

Petitioner avers that it was not at the time of the occur-

rence of the events made the basis of this suit, nor at the

present time, nor at any time intervening said dates, a citi-

zen or resident of the State of North Carolina, but during all

of said time was, and is now, 4 citizen of the State of Penn-

sylvania, where it has its principal place of business; that

the plaintiff, R. H. Bouligny, Inc., a corporation, was at the

time of the occurrence of the events made the basis of this

suit and is at the present time and was at all times inter-

vening said dates, a citizen of the State of North Carolina.

Petitioner prays this Honorable Court to take jurisdiction

of this petition and to issue all necessary orders and process

in order to remove the hereinabove referred to case from the

Superior Court of Mecklenburg County, North Carolina, to

the District Court of the United States for the Charlotte

Division of the Western District of North Carolina.

United Steelworkers of America, AFL-CIO, By Led-

ford and Ledford, James B. Ledword, By Cooper,

Mitch & Crawford, Its Attorneys of Record.

State of North Carolina

Mecklenburg County

[fol.6] Before me, the undersigned authority in and for

said County and State, personally appeared James B. Led-

ford, wh, being by me first duly sworn, says that he is the

attorney for the petitioner in the above petition and is

authorized to make this affidavit in its behalf, and that the

facts in the foregoing petition are true, as he verily believes.

James B. Ledford.

Sworn to and subscribed before me this 18th day of June,

1963.

In tHE Unirep States District Court FoR THE

Western District or NortH Carona,

aT CHARLOTTE

Motion to Remanp—Filed July 3, 1963

Now Comes plaintiff and moves this court to remand

this cause to the Superior Court of Mecklenburg County,

North Carolina, from which Court it was attempted to be

removed to this Court, for the following reasons and

greene:

1. No federal question is presented by this cause.

2. There is no diversity of citizenship and consequently

no diversity jurisdiction by reason of the fact that the de-

fendant is an unincorporated association and has members

who are citizens of the State of North Carolina and Mecklen-

burg County and who are domiciled and reside therein.

3. For other reasons apparent upon the face of the

record.

Wherefore, plaintiff prays that this cause may be re-

manded to the Superior Court of Mecklenburg County,

[fol. 7] North Carolina, to be there proceeded with accord-

ing to the practice governing such cases.

Date the 3rd day of July, 1963.

Grier, Parker, Poe & Thompson, By Joseph W.

Grier, Jr., Attorneys for Plaintiff, Gaston H. Gage,

Attorney for Plaintiff, 400 Law Building, Char-

lotte, North Carolina.

In THE Unrrep States Districr CourT FOR THE

“’gstERN District or NortH CAROLINA,

at CHARLOTTE

Memoranpum Orrntion—November 12, 1963 .

Craven, Chief Judge:

On plaintiffs’ motion to remand the above-captioned cases,

the Court finds the ultimate facts to be that members of the

defendant unincorporated association are citizens of North

Carolina and that the defendant union is a juridical person

as fully and completely as if it were organized as a corpora-

tion, having as great unity of action and as much: power

centered in the governing officers, and that its principal of-

fice and place of business is in Pittsburgh, Pennsylvania.

See: American Federation of Musicians v. Stein, 213 F.2d

679 (6th Cir. 1954). There is a trend to treat unincorporated

associations in the same manner as corporations and to

treat them as citizens of the state wherein the principal

office is located for jurisdictional purposes. But, the greater

[fol.8] number of cases still hold that even in cases in

which labor unions may sue or be sued by association name

they have no juridical person citizenship for purposes of

diversity jurisdiction. Barron & Holtzoff, Federal Practice

& Procedure, Section 569. Neither the Supreme Court nor

the Court of Appeals for the Fourth Circuit has ever ruled

specifically upon the question. See: Textile Workers Union

of America v. Cone Mills, Corp., 268 F. 2d 920 (4th Cir.

1959).

The approach and rationale of the Stein case is extremely

persuasive. There appears to be no common sense reason

for treating an unincorporated national labor union differ-

ently from a corporation. See: 66 Yale L.J. 742.

I am caught on the horns of a dilemma. To remand is to

adopt the poorer reasoned but more firmly established rule.

To retain jurisdiction may result in several days wasted

trial time ending in ultimate dismissal for failure of juris-

diction.

An order remanding a case to the state court from which

it was removed is not reviewable on appeal. 28 U.S.C.A.

Section 1447(d); Barron & Holtzoff, Federal Practice ¢

oc oe

8

Procedure, Section 109. See: Santa Margarita Mutual

Water Co. v. State Water Rights Board of the State of Calr-

forma, 165 F. Supp. 870, 879, for an interesting attempt to

secure appellate review.

Retention of jurisdiction is appealable, and may be re-

viewed in the Court of Appeals for the Fourth Circuit. On

my own motion, I certify that I am of the opinion that the

order I am about to sign denying the motion to remand in-

volves a controlling question of law as to which there is sub-

.stantial ground for difference of opinion, and I am further

of the opinion that an immediate appéal from this order

would materially advance the ultimate determination of the

ffol.9] litigation, and would avoid an inherent risk of

several days wasted trial time, and be in the interest of

justice. Further proceedings in the district court are stayed

‘to permit appeal to-be taken from the order dismissing the

motion to remand, the application for such review to-be

made. within ten days after the date of the order denying

‘remand. 28 U.S.C.A. Section 1292(b).

Counsel. may submit an appropriate order.

This 12th day of November, 1963.

J. B. Craven, Jr., Chief Judge, United States District

Court for the Western District of North Carolina.

In THE Unitep States Districr Court FOR THE

Western District or NortH Caro.ina,

AT CHARLOTTE

-Orver Denyine Morton to Remanp—J anuary 9, 1964

This Cause coming on for hearing on plaintiff’s motion

to remand and the same having been duly considered and

pursuant to the memorandum opinion filed in this action on

the 13th day of November, 1963, and on the basis of the

facts found therein and admitted in the pleadings, the Court

concludes as a matter of law that the defendant unincorpo-

rated association is a juridical person with residence in the

State of Pennsylvania for the purpose of determining the

jurisdiction of the Federal Court under 28 U.S.C. 1332.

7

| ee

-9

Upon the foregoing findings and conclusions it is ordered

that the plaintiff’s motion to remand be denied.

The Court upon its own motion and pursuant to the pro-

visions of 28 U.S.C. 1292 (b) certifies that denial of :plain-

[fol. 10] tiff’s motion to remand involves a controlling ques-

tion of law as to which there is substantial ground for dif-

ference of opinion and that an immediate appeal from this

order would materially advance the ultimate determination

of the litigation and would avoid an inherent risk of several

days wasted trial time and would be in the interest of jus-

tice and further orders that proceedings in this Court are

stayed to permit this application for suck review to be made

within ten (10) days after the date of this order.

Done this 9th day of January, 1964.

J. B. Craven, Jr., United States District Judge.

In THE Unrrep States District CourT FOR THE

Western District or NortH CAROLINA,

AT CHARLOTTE

AFFIDAVIT

N. F. White, Jr., being first duly sworn, deposes and

says:

That he is an officer of the plaintiff in the captioned

action; that the defendant in captioned action is an unin-

corporated association which has members who are citizens

of the State of North Carolina and which has for a number

of years and is now doing business in this State by per-

forming a great number of the acts for which it was formed

within Mecklenburg County, North Carolina; that the de-

fendant has unionized Republic Steel Corporation in Meck-

lenburg County and that corporation has many employees

who are members of the defendant association and the

defendant association customarily represents those em-

ployees in all manner of dealings and negotiations with

the management of Republic Stee! Corporation in Mecklen-

burg County; that the defendant association prior to the

filing of the captioned lawsuit attempted to organize the

[fol.11] plant of R. H. Bouligny, Inc. in Mecklenburg

County and in that plant conducted an active campaign to

10

solicit the votes of the said employees for the Union in

an election to determine whether the defendant associa-

tion would represent the employees of R. H. Bouligny, Inc.

in negotiations and dealings with the management of that

company; that the defendant association has a member

and representative named Joe Kirk, who is a citizen and

resident of the State of North Carolina and who has dealt

with R. H. Bouligny, Inc. in performing the acts for which

the defendant association was formed and who had so-

licited the votes of the employees of R. H. Bouligny, Inc.

iy an active and lengthy campaign in order to get the said

employees to appoint the defendant association as its agent

in bargaining and dealing with the management of R. H.

Bouligny, Inc.

TM Sisececetcenee day of July, 1963.

| N. F. White, Jr.

In tHe Unitep States District Court FoR THE

Western District or NortH Carona,

aT CHARLOTTE

Notice ror ReMovaL

' To: R. H. Bouligny, Inc., a corporation, Plaintiff, or

Grier, Parker, Poe & Thompson, Attorneys of Record for

Plaintiff.

Notice is hereby given that United Steelworkers of Amer-

ica, AFL-CIO, an unincorporated association, will forth-

with file in the District Court of the United States for

(fol. 12] the Charlotte Division of the Western District of

North Carolina its petition, a copy of which is hereto at-

tached, together with a copv of the bond referred to therein

for the removal of this cr use to the District Court of the

United States for the Charlotte Division of the Western

District of North Carolina.

United Steelworkers of America, AFL-CIO, By Led-

ford & Ledford, James B. Ledford, By Cooper,

Mitch & Crawford, Its Attorneys.

(Certificate omitted.)

[fol. 21] [File endorsement omitted]

In THE Unitep States Court or APPEALS

For THE Fourts CircuirT

No. 9326

R. H. Bouuiery, Inc., a corporation,

vs.

Unirep SterLworkers or America, AFL-CIO,

an unincorporated association.

On Application for Permission to Take an Appeal under

section 1292(b) of Title 28, United States Code, from an

interlocutory order.

Orper ALLowine AppEaL From an INTERLOCUTORY ORDER,

ETC.—January 24, 1964

The United States District Court for the Western Dis-

trict of North Carolina having certified by its order. of

January 9, 1964, that the denial of plaintiff’s motion to

remand involves a controlling question of law as to which

there is substantial ground for difference of anopinion and

that an immediate appeal would materially advance the

ultimate determination of the litigation; and R. H. Bou-

ligny, Ine., plaintiff, having applied to this court for per-

mission, in accordance with Section 1292(b) of Title 28,

U. S. Code, to take an appeal from said order of January. 9,

1964, and copies of said application having on January 15,

1964, been delivered co Ledford & Ledford, Esquires, at.

torneys for United Steelworkers of America, AFL-CIO, an

unincorporated association, and an answer as permitted by

Rule 35 of this court having been filed,

[fol. 22] On consideration whereof, it is ordered by this

court that permission be, and it is hereby, granted to take

an interlocutory appeal from said order of January 9, 1964,

12

of the United States District Court for the Western Dis-

trict of North Carolina.

January 24, 1964.

Simon E. Sobeloff, Chief Judge, Fourth Circuit;

Clement F. Haynsworth, United States Circuit

Judge, Herbert S. Boreman, United States Circuit

Judge.

[fol. 33]

In tHE UNITED States Court or APPEALS

For tHe Fourts Circuit

No. 9326

R. H. Bovuieny, Inc., Appellant,

versus

Untrep STeeLworkers or America, AFL-CIO,

an unincorporated association, Appellee.

Appeal from the United States District Court for the

Western District of North Carolina, at Charlotte.

J. Braxton Craven, Jr., District Judge.

Argued April 28, 1964. Decided August 6, 1964.

Before Sobeloff, Chief Judge, and Boreman and J. Spen-

cer Bell, Circuit Judges.

Gaston H. Gage and Joseph W. Grier, Jr. (Grier, Parker,

Poe & Thompson on brief), for Appellant, and Michael H.

Gottesman (David E. Feller, Elliot Bredhoff, Jerry D.

Anker, James Ledford, and Cooper, Mitch & Crawford on

brief) for Appellee.

Opinton—Filed and Entered August 6, 1964

13

(fol. 34] J. Spencer Bexu, Circuit Judge:

This is an appeal from an order of the district court

denying a motion to remand the case to the state court.

The district court has certified the appeal under 28

.8.C.A. §1292(b) (1958). We exercised our discretion to

permit the appeal.

The plaintiff, a North Carolina corporation, brought suit

for libel growing out of an organizational campaign in the

state court against the defendant, United Steelworkers of

America, an unincorporated labor union having its head-

quarters and principal place of business at Pittsburgh,

Pennsylvania. The defendant removed the case to the

district court on the grounds both of diversity of citizenship

and that the subject matter of the action arises under the

laws of the United States. Plaintiff moved to remand the

case to the state court. In contesting plaintiffs motion the

defendant contended that it is a citizen of Pennsylvania with

its principal place of business in that state, conceding, how-

ever, that certain of its members are citizens of North

Carolina. The district court found the defendant to be “a

juridical person as fully and completely as if it were

organized as a corporation .. . and that its principal office

and place of business is in Pittsburgh, Pennsylvania.” It

thereupon entered an order denying the motion to remand

and certified an appeal to this court. We conclude that the

order of the district court must be reversed with instruc-

tions to grant the motion to remand.

We discuss first the question of diversity of jurisdiction.

In Bank of the United States v. Deveaux, 9 U.S. (5 Cranch)

37 (1809), Chief Justice Marshall laid down the principle

that a corporation is “ ...a mere creature of the law,

[fol. 35] invisible, intangible and incorporeal” which for

purposes of diversity jurisdiction could not be treated as

a citizen, notwithstanding the fact that the corporation

could sue and be sued in its own name. In 1844, the court

departed from this doctrine in the case of Louisville, C. d

C.R.R. v. Letson, 43 (2 Howard) 497 (1844), holding a

14

corporation to be “deemed” a citizen of the chartering state.

Pressure from the dissenters eventually forced the Court

to return to Marshall’s concept in Marshall v. Baltimore

and Ohio R.R., 57 U.S. (16 Howard) 334 (1853), where it

held that a corporation was not a citizen but an artificial

being and that the citizenship of its stockholders must con-

trol. However, the court achieved the same end result as

in Letson (diversity jurisdiction) by creating a conclusive

presumption that all of the stockholders were, citizens of

the chartering state. This doctrine remained unchanged

until 1958 when 28 U.S.C.A. § 1332 was amended by adding

section (c). Wricut, Feperat Courts 76 (1963). The doc-

trine has been criticized as an unjustifiable expansion of

federal jurisdiction by means of a fiction; nevertheless, un-

incorporated associations have sought unsuccessfully to

bring themselves within the rule.

In Chapman v. Barney, 129 U.S. 677 (1889), the Su-

preme Court laid down the rule with respect to unincorpo-

rated associations. It held that, for purposes of diversity

jurisdiction, the actual citizenship of each of the members

of an unincorporated association (in that case a joint stock

company) is controlling. In Great Southern Fireproof

Hotel Co. v. Jones, 177 U.S. 449, 454-55 (1900), the Court

reaffirmed its holding:

“This court does not hold that either a voluntary

association of persons, or an association into a body

[fol. 36] politic created by law, is a citizen of a State

within the meaning of the Constitution.

“But the express company cannot be a citizen of New

York, within the meaning of the statutes regulating

jurisdiction, unless it be a corporation.”

The Court, referring to the rule with respect to cor-

porations, made it clear that the rule was not to be ex-

tended :

“That a limited partnership association created under

the Pennsylvania Statute may be described as a ‘quasi

corporation,’ having some of the characteristics of a

15

corporation, or as a ‘new artificial person,’ is not a

sufficient reason for regarding it as a corporation within

the jurisdictional rule heretofore adverted to. That

rule must not be extended. We are unwilling to extend

it so as to embrace partnership associations.” (Em.

phasis added.) 177 U.S. at 457.

We find no subsequent decision of the Court which would

justify us in concluding that the rule has been extended.

The Court did not do so in United Mine Workers v. Coro-

nado Coal Co., 259 U.S. 344 (1922). In that case the Coro-

nado Coal Company brought suit against the international

and district and local unions of the United Mine Workers

for damages under Section 7 of the Sherman Anti-Trust

Act for conspiracy to restrain interstate commerce and

to damage plaintiff’s property. The unions moved to dis.

miss on the ground that as unincorporated associations

they were not subject to suit. Since there wae federal ques-

[fol. 37] tion jurisdiction, the diversity of citizenship issue

was not involved. In an extended discussion the Court held

that unions were suable as such but the Court was careful

to limit the application of the rule it was laying down.

“Though such a conclusion as to the suability of trades

unions is of primary importance in the working out

of justice and in protecting individuals and society

from possibility of oppression and injury in their

lawful rights from the existence of such powerful en-

tities as trade unions, it is after all in essence and

principle merely a procedural matter. As a matter

of substantive law, all the members of the union en-

gaged in a combination doing unlawful injury are

liable to suit and recovery... .” (Emphasis added.)

259 U.S. at 390.

We now come to the case which purportedly has furnished

the principal support for those who contend that the rule

has been weakened. We think that the case furnishes no

support whatsoever for such a position. In Puerto Rico v.

Russell & Co., 288 U.S. 476 (1933), the petitioner, People

16

of Puerto Rico’ brought suit in the insular court of Puerto

Rico again Russell & Co. to collect a Puerto Rican tax as-

sessment. Russell & Co. was an unincorporated association

organized under Puerto Rican law as a Sociedad en Com-

andita (S. en C.). In the tradition of the civil law a

Sociedad en Comandita has many of the characteristics

[fol. 38] which both corporations and limited partnerships

have under the common law although those of the former

predominate. The individual members of the Sociedad were

not named as parties. They appeared specially and removed

the case to the United States District Court for the District

of Puerto Rico. The Supreme Court reversed and directed

the district court to remand the case to the Puerto Rican

insular court. The petition to remove and the decision of

the Court were expressly based upon sections 41 and 42 of

the Organic Act of Puerto Rico, now 48 U.S.C.A. $$863,

864 (1948). Section 41 provided that in addition to the

jurisdiction possessed by the United States District Courts

generally, the United States District Court for the District

of Puerto Rico should have additionally jurisdiction of

“all controversies where all of the parties on either side

of the controversy are citizens or subjects of a foreign

State or States, or citizens of a State, Territory, or District

of the United States not domiciled in Puerto Rico. ...”*

(Emphasis added.) Section 42 provided for removal of

any case in which the court had original jurisdiction under

Section 41. Although in view of the character of the plain-

tiff, the suit could on no theory be entertained as a diversity

1The fact that the plaintiff was the Puerto Rican Government

was itself enough to warn the reader that the case could not involve

constitutional diversity jurisdiction. A state, or territory, or politi-

cal unit cannot be a citizen in that sense. Postal Tel. Cable v.

Alabama, 155 U.S. 482, 487 (1894).

?It is obvious that this statute would not be constitutional as

applied to an Article III district court. It was valid as enacted

because the district court of Puerto Rico was a territorial court

created by virtue of the power conferred on the Congress by Article

IV §3 to make all needful rules and regulations respecting the

territory belonging to the United States. Balzac v. People of Porto

Rico, 258 U.S. 298 (1922); Porto Rico Ry., Light & Power Co. v.

Colom, 106 F’. 2d 345 (1 Cir.), cert. denied, 308 U.S. 617 (1939).

17

suit by an Article III court, the Supreme Court said that

“admittedly, if the individual members of the Sociedad are

‘parties’ within the meaning of the Organic Act .. . the

(fol. 39] suit is one within the jurisdiction of the District

Court because of their non-residence, diversity of citizen-

ship being unnecessary.” 228 U.S. at 478. (Emphasis

added.) Thus the question before the Court was simply

one of the interpretation of the statute—not a question of

constitutional diversity jurisdiction. The Court by analogy

to a common law corporation held that the defendant, a civil

law Sociedad had a domicil in Puerto Rico and thus could

not claim the domicil of its individual members to acquire

the non-resident status required by the Organic Act. Clearly

the case does not by any stretch of the imagination hold

that the Sociedad was a citizen of Puerto Rico for purposes

of diversity jurisdiction under Article III. Nor can the

Court’s analogy between the civil law Sociedad and the

common law corporation justify a contention that it was

consciously expanding federal diversity jurisdiction.

American Federation of Musicians v. Stein, 213 F.2d

679 (6 Cir.), cert. denied, 348 U.S. 873 (1954), since it

rested upon Puerto Rico v. Russell ¢ Co., supra, can furnish

no support for defendant’s contention. Furthermore, al-

though it expressed sympathy with the argument, the case

did not hold that a labor union was a citizen for diversity

purposes. It merely held that the district court was jus-

tified in. issuing a temporary injunction until the issue

could be fully studied. It.is interesting to note that the

district court, when it did reach the issue, rejected the

contention. Stein v. American Federation of Musicians, 183

F.Supp. 99 (M.D. Tenn. 1960). After reviewing the cases,

the court reached the conclusion that the courts were fol-

lowing the rule that in cases where federal jurisdiction

was based on diversity grounds “citizenship of an unincor-

porated association, including labor unions, is determined

[fol. 40] by the citizenship of its individual members.” 183

F.Supp. at 100.*

* The rationale of Van Sant v. American Express Co., 169 F.2d

855 (3 Cir. 1947), which found diversity, appears to be that since

a New York joint stock association is treated by the New York

18

Whatever basis there once was for the belief that Russell

intended to lay down new principles for the determination

of citizenship for diversity jurisdiction purposes, it was

reversed by the passage of the 1958 amendment to the

diversity statute. Prior to the 1958 amendment which

added subparagraph (c) to 28 U.S.C. § 1332 the argument

that the courts could substantially equate unincorporated

associations with corporations by a minor feat of inter-

pretation was easy to make. The statute spoke only of

citizens; the question was whether an unincorporated as-

sociation should be treated as a citizen—a question merely

of interpretation-—-and the court could resolve it by ap-

plication of the same kind of presumption that had served

in the cuse of corporations. The 1958 amendment, however,

did two things that upset the argument: (1) For the

first time, it referred specifically to corporations, provid-

ing that they shall be “deemed” citizens. The old presump-

tion that all the stockholders are citizens of the state of

incorporation has been abandoned; it is now no necessary

part of the argument for attributing citizenship to these

{fol. 41] entities. Corporations are treated as citizens be-

cause the Act of Congress directs that they be so treated.

(2) For many corporations the statute now provides dual

citizenship: a corporation is to be treated as a citizen of

any state by which it is incorporated, and also of the state

in which it maintains its principal place of business. This

is, in the first place, confirmation of the fact that the fiction

as to the citizenship of the stockholders has been aban-

doned.

courts “for all practical purposes” as a corporation it does not fall

within the rule of Chapman v. Barney. The court lays stress on

the fact that the issue was not raised by the defendant until re-

hearing on appeal. The court also cites Prof. Moore’s comment on

Puerto Rico v. Russell & Co., 288 U.S. 476, at 2 Moore’s Feprerau

Practice, 2100, to the effect that the Chapman rule is itself begin-

ning to show signs of being outmoded. Cf. 33 Cotum. L. Rev. 540

(1933). We have rejected this interpretation of Russell.

In Mason v. American Express Co., 33 L.W. 2016 (2 Cir. decided

7/2/64) the Second Circuit was persuaded by the language of

Russell to extend citizenship to a New York joint stock association

for diversity purposes. We must respectfully disagree with that

opinion.

19

It is hardly reasonable to presume that all the stock-

holders are domiciled in each of two separate states. But

the principal point is that, even laying aside the matter of

multiple incorporation, unincorporated associations can-

not be equated with corporations by a simple judicial deci-

sion attributing citizenship to them. They are ineapable

of dual citizenship, and hence would be treated more ‘fa:

vorably than corporations for diversity purposes.

Such associations, if treated as citizens, would also be

treated more favorably than corporations in the matter of

venue. A corporation may be sued in any district in which

it is incorporated, or licensed to do business, or is doing

business, . 28 U.S.C. §1391(c¢) (1958).-By- no stretch of the

process of interpretation can this section be read as apply-

ing to an unincorporated association, Hence such an asso-

ciation, if treated as a citizen for diversity purposes, would

probably be held to be a resident of the district in which

its principal office is located, making that district the only

proper venue other than the district of the plaintiff’s

residence,

The Reporters for the American Law Institute’s Study

of the Division of Jurisdiction between State and Federal

Courts are proposing that unincorporated associations be

treated as citizens (of the state where the principal place

of business is located) for purposes of diversity jurisdic-

[fol. 42] tion. See Tent. Draft No. 2, $1301 (b)(2) (1964),

This indicates that there is informed sentiment in favor of

such a development. Cf. Comment, Unions as Juridical

Persons, 66 Yate L.J. 712 ( 1957). The proposal, however,

is that the change be brought about by an Act of Congress

amending the Judicial Code—not by judicial interpretation.

The fact that such a change is proposed recognizes the

propriety of addressing such a proposal to Congress.‘ It

also recognizes the fact that under existing law unincor-

porated associations cannot be treated as citizens; indeed,

in the Commentary (id., p. 61), the law existing to this

* We readily concede that vis-a-vis a corporation it would be quite

feasible to treat a modern labor union as a citizen for diversity

purposes. But the question of policy is certainly not one for deci-

sion of an intermediate appellate court.

20

effect is expressly recognized, though it is said there have

been some “inroads” on the rule in recent years.

Having found no diversity, we also think that no federal

question jurisdiction exists. The National Labor Relations

Act is concerned only with the coercive effect of an alleged

libel and not with its character as a common law tort. Radio

Corporation of America, 106 NLRB No. 251 (1953). In

accordance with the doctrine announced in Erie R.R. v.

Tompkins, 304 U.S. 64 (1938), federal courts uniformly

have held that libel and slander actions are to be governed

by the substantive law of the state in which the torts

allegedly occur. Schenectady Union Publishing Co. v.

Sweeney, 122 F.2d 288 (2 Cir. 1941), aff'd per curiam,

316 U.S, 642 (1942). Since the National Labor Relations

Act is not concerned with libel as a common law tort and

the offense is specifically within the aegis of the substantive

state law, we find no federal question.

Reversed.

[fol. 44] [File endorsement omitted]

In THE Untitep States Court or APPEALS

For tHe Fourts Circuit

No. 9326

R. H. Bovuieny, Inc., Appellant,

vs.

Unitep Steziworkers or America, AFL-CIO,

an unincorporated association, Appellee.

Appeal From the United States District Court for the

Western District of North Carolina.

J upGMENT—Filed and Entered August 6, 1964

This Cause came on to be heard on the record from the

United States District Court for the Western District of

North Carolina, and was argued by counsel.

*

21

On Consideration Whereof, It is now here ordered and

adjudged by this Court that the order of the said District

Court appealed from, in this cause, be, and the same is

hereby, reversed with costs; and that this cause be, and the

same is hereby, remanded to the United States District

Court for the Western District of North Carolina, at Char-

lotte, for further proceedings not inconsistent with the opin-

ion of the Court filed herein.

Simon E. Sobeloff, Chief Judge, Fourth Circuit;

H. S. Boreman, United States Circuit Judge, J.

Spencer Bell, United States Circuit Judge.

[fol. 56] Clerk’s Certificate to foregoing transcript

(omitted in printing).

[fol. 57]

Supreme Court or tHE Unrtep States

No. 652, October Term, 1964

Unirep StezLworkers or America, AFL-CIO, Petitioner,

vs.

R. H. Bouuieny, Ino.

Orver ALLow1ne Certionani—January 18, 1965

The petition herein for a writ of certiorari to the United

States Court of Appeals for the Fourth Circuit is granted,

and the case is placed on the summary calendar.

And it is further ordered that the duly certified copy of

the transcript of the proceedings below which accompanied

the petition shall be treated as though filed in response to

such writ.

Mr. Justice Goldberg took no part in the consideration or

decision of this petition.