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UNITED STEELWORKERS AMERICA v. R. H. BOULIGNY

SUPREME COURT OF THE UNITED STATES


decided: November 22, 1965.

UNITED STEELWORKERS OF AMERICA, AFL-CIO
v.
R. H. BOULIGNY, INC.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT.

Warren, Black, Douglas, Clark, Harlan, Brennan, Stewart, White, Fortas

Author: Fortas

[ 382 U.S. Page 146]

 MR. JUSTICE FORTAS delivered the opinion of the Court.

Respondent, a North Carolina corporation, brought this action in a North Carolina state court. It sought $200,000 in damages for defamation alleged to have occurred during the course of the United Steelworkers' campaign to unionize respondent's employees. The Steelworkers, an unincorporated labor union whose principal place of business purportedly is Pennsylvania, removed the case to a Federal District Court.*fn1 The union asserted not only federal-question jurisdiction, but that for purposes of the diversity jurisdiction it was a citizen of Pennsylvania, although some of its members were North Carolinians.

The corporation sought to have the case remanded to the state courts, contending that its complaint raised no federal questions and relying upon the generally prevailing principle that an unincorporated association's citizenship is that of each of its members. But the District Court retained jurisdiction. The District Judge noted "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." Divining "no common sense reason for treating an unincorporated national labor union differently from a corporation," he declined to follow what he styled "the poorer reasoned but more firmly established rule" of Chapman v. Barney, 129 U.S. 677.

On interlocutory appeal the Court of Appeals for the Fourth Circuit reversed and directed that the case be remanded

[ 382 U.S. Page 147]

     to the state courts. 336 F.2d 160. Certiorari was granted, 379 U.S. 958, so that we might decide whether an unincorporated labor union is to be treated as a citizen for purposes of federal diversity jurisdiction, without regard to the citizenship of its members.*fn2 Because we believe this properly a matter for legislative consideration which cannot adequately or appropriately be dealt with by this Court, we affirm the decision of the Court of Appeals.

Article III, ยง 2, of the Constitution provides:

"The judicial Power shall extend . . . to Controversies . . . between Citizens of different States . . . ."

Congress lost no time in implementing the grant. In 1789 it provided for federal jurisdiction in suits "between a citizen of the State where the suit is brought, and a citizen of another State."*fn3 There shortly arose the question as to whether a corporation -- a creature of state law -- is to be deemed a "citizen" for purposes of the statute. This Court, through Chief Justice Marshall, initially responded in the negative, holding that a corporation was not a "citizen" and that it might sue and be sued under the diversity statute only if none of its shareholders was a co-citizen of any opposing party.

[ 382 U.S. Page 148]

     It was in this climate that the Court in 1889 decided Chapman v. Barney, supra. On its own motion the Court observed that plaintiff was a joint stock company and not a corporation or natural person. It held that although plaintiff was endowed by New York with capacity to sue, it could not be considered a "citizen" for diversity purposes. 129 U.S., at 682.*fn7

In recent years courts and commentators have reflected dissatisfaction with the rule of Chapman v. Barney.*fn8 The distinction between the "personality" and "citizenship" of corporations and that of labor unions and other unincorporated associations, it is increasingly argued, has become artificial and unreal. The mere fact that a corporation is endowed with a birth certificate is, they say, of no consequence. In truth and in fact, they point out, many voluntary associations and labor unions are indistinguishable from corporations in terms of the reality

[ 382 U.S. Page 150]

     of function and structure, and to say that the latter are juridical persons and "citizens" and the former are not is to base a distinction upon an inadequate and irrelevant difference. They assert, with considerable merit, that it is not good judicial administration, nor is it fair, to remit a labor union or other unincorporated association to vagaries of jurisdiction determined by the citizenship of its members and to disregard the fact that unions and associations may exist and have an identity and a local habitation of their own.

The force of these arguments in relation to the diversity jurisdiction is particularized by petitioner's showing in this case. Petitioner argues that one of the purposes underlying the jurisdiction -- protection of the nonresident litigant from local prejudice -- is especially applicable to the modern labor union. According to the argument, when the nonresident defendant is a major union, local juries may be tempted to favor local interests at its expense. Juries may also be influenced by the fear that unionization would adversely affect the economy of the community and its customs and practices in the field of race relations. In support of these contentions, petitioner has exhibited material showing that during organizational campaigns like that involved in this case, localities have been saturated with propaganda concerning such economic and racial fears. Extending diversity jurisdiction to unions, says petitioner, would make available the advantages of federal procedure, Article III judges less exposed to local pressures than their state court counterparts, juries selected from wider geographical areas, review in appellate courts reflecting a multi-state perspective, and more effective review by this Court.

We are of the view that these arguments, however appealing, are addressed to an inappropriate forum, and that pleas for extension of the diversity jurisdiction to

[ 382 U.S. Page 151]

     hitherto uncovered broad categories of litigants ought to be made to the Congress and not to the courts.

Petitioner urges that in Puerto Rico v. Russell & Co., 288 U.S. 476, we have heretofore breached the doctrinal wall of Chapman v. Barney and, that step having been taken, there is now no necessity for enlisting the assistance of Congress. But Russell does not furnish the precedent which petitioner seeks. The problem which it presented was that of fitting an exotic creation of the civil law, the sociedad en comandita, into a federal scheme which knew it not. The Organic Act of Puerto Rico conferred jurisdiction upon the federal court if all the parties on either side of a controversy were citizens of a foreign state or "citizens of a State, Territory or District of the United States not domiciled in Puerto Rico."*fn9 All of the sociedad's members were nonresidents of Puerto Rico, and jurisdiction lay in the federal court if they were the "parties" to the action. But this Court held that the sociedad itself, not its members, was the party, doing so on a basis that is of no help to petitioner. It did so because, as Justice Stone stated for the Court, in "the tradition of the civil law, as expressed in the Code of Puerto Rico," "the sociedad is consistently regarded as a juridical person." 288 U.S., at 480-481. Accordingly, the Court held that the sociedad, Russell & Co., was a citizen domiciled in Puerto Rico, within the meaning of the Organic Act, and ordered the case remanded to the insular courts. It should be noted that

[ 382 U.S. Page 152]

     the effect of Russell was to contract jurisdiction of the federal court in Puerto Rico.*fn10

If we were to accept petitioner's urgent invitation to amend diversity jurisdiction so as to accommodate its case, we would be faced with difficulties which we could not adequately resolve. Even if the record here were adequate, we might well hesitate to assume that petitioner's situation is sufficiently representative or typical to form the predicate of a general principle. We should, for example, be obliged to fashion a test for ascertaining of which State the labor union is a citizen. Extending the jurisdiction to corporations raised no such problem, for the State of incorporation was a natural candidate, its arguable irrelevance in terms of the policies underlying the jurisdiction being outweighed by its certainty of application. But even that easy and apparent solution did not dispose of the problem; in 1958 Congress thought it necessary to enact legislation providing that corporations are citizens both of the State of incorporation and of the State in which their principal place of business is located.*fn11 Further, in contemplating a rule which would accommodate petitioner's claim, we are acutely aware of the complications arising from the circumstance that petitioner, like other labor unions, has local as well as national organizations and that these,

[ 382 U.S. Page 153]

     perhaps, should be reckoned with in connection with "citizenship" and its jurisdictional incidents.*fn12

Whether unincorporated labor unions ought to be assimilated to the status of corporations for diversity purposes, how such citizenship is to be determined, and what if any related rules ought to apply, are decisions which we believe suited to the legislative and not the judicial branch, regardless of our views as to the intrinsic merits of petitioner's argument -- merits stoutly attested by widespread support for the recognition of labor unions as juridical personalities.*fn13

We affirm the decision below.

Disposition

336 F.2d 160, affirmed.


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