A State of Statelessness: The Indeterminate Domesticity of Federally Chartered Corporations

Abstract

Although federally- and state- chartered corporations function similarly, federal law privileges the former in at least one significant respect: their access to this nation’s federal courts. Pursuant to the language now codified in Section 1332 of the twenty-eighth title of the United States Code (“Code”), as amended and construed over the last century, any state-chartered corporation may claim citizenship in the state of its formal incorporation or within whose borders its principal place of business lies. So long as any and all its adversaries claim no citizenship in any such state(s) and “the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs,” the miscellany of citizenship necessary to engender a federal court’s diversity jurisdiction exists as a matter of law. In such cases, a state-chartered corporation can sue in any federal trial court, or remove an already pending one from state court to its federal counterpart, in accordance with the procedures specified in the Code. In contrast, as a result of two centuries of judicial and legislative emendation, federal common law classifies federally chartered corporations as national citizens, not “citizen[s] of any state.” With the exclusion of nationally chartered banks, these entities’ statelessness generally nullifies their ability to invoke the courts’ diversity jurisdiction with the same aplomb as their state counterparts. Only one non-statutory exception, as determined by utilization of a complex multifactor test, has survived centuries’ worth of juridical and legislative culling. To this law’s explication, this article dedicates itself. Final pre-publication copy attached. Official copy may be reprinted from Banking & Financial Services Policy Report, with permission of Wolters Kluwer. Copyright © 2020. Further use without the permission of Wolters Kluwer is prohibited. For further information about this publication, please contact at WKLBpermissions@wolterskluwer.com or 212-771-0619.