On January 17, 2006, the Supreme Court gave national banks a victory in their efforts to be treated at least as well as state
banks, in Wachovia Bank, N.A. v. Schmidt, No. 04-1186. The specific question presented in the case was the citizenship of national banks for purposes of the diversity
jurisdiction of federal courts. For diversity jurisdiction purposes, Congress has provided that national banks "shall . .
. be deemed citizens of the States in which they are respectively located." 28 U.S.C. § 1348. The Court held that "a national
bank, for § 1348 purposes, is a citizen of the State in which its main office, as set forth in its articles of association,
is located."
The Court reversed the Fourth Circuit and expressly rejected the view of that court that "a national bank is additionally
a citizen of every State in which it has established a branch." The Court reasoned that Congress did not intend to create
an "anomaly" whereby "the access of a federally chartered bank to a federal forum would be drastically curtailed in comparison
to the access afforded state banks and other state-incorporated entities." Examining the text and history of Section 1348,
the Court found that the term "located" is ambiguous and has no "fixed, plain meaning." The Court distinguished its decision
in Citizens & Southern National Bank v. Bougas, 434 U.S. 35 (1977), which held that the term "located" in the former venue statute for national banks encompassed every
county in which a bank maintains a branch office, because of the different roles that venue and jurisdiction play in federal
courts. "Significantly," the Court explained, its "reading of the venue provision in Bougas effectively aligned the treatment of national banks for venue purposes with the treatment of state banks and corporations."
By contrast, the Fourth Circuit’s decision would lead to an "incongruous outcome" that would "singularly disfavor[] corporate
bodies with regard to their access to federal courts." That result, the Court held, was required neither by the language
of Section 1348 nor by the Court’s precedent.
Justice Ginsburg authored the opinion for a unanimous eight-member Court. (Justice Thomas did not participate in the case.
Consistent with the general practice of the Supreme Court, he did not provide any explanation for his recusal.)
A copy of the decision is available online at:
http://a257.g.akamaitech.net/7/257/2422/17jan20061050/
www.supremecourtus.gov/opinions/05pdf/04-1186.pdf
