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COLLINS v. AMERICAN

October 25, 1989

GERTRUDE COLLINS, Administrator of the Estate of JAMES T. COLLINS and GERTRUDE COLLINS, in her own right
v.
AMERICAN RED CROSS, AMERICAN NATIONAL RED CROSS, GRADUATE HOSPITAL, LOUIS F. PLZAK, M.D. and DANIEL J. WOODY, M.D.



The opinion of the court was delivered by: WALDMAN

 JAY C. WALDMAN, UNITED STATES DISTRICT JUDGE

 Presently before the court is plaintiff's motion to remand the above-captioned case to the Philadelphia Court of Common Pleas.

 I. Background

 The plaintiff has alleged state tort claims for damages sustained from an ultimately fatal transfusion of HIV contaminated blood supplied by defendant American Red Cross of Philadelphia, a local chapter of the American National Red Cross (hereinafter collectively referred to as "Red Cross"). Perfect diversity of citizenship between the parties does not exist. The case presents no substantive federal question.

 Removal was based on 28 U.S.C. § 1441(a) and (b) and premised strictly on 36 U.S.C. § 2, the provision in the Red Cross charter which 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." The plaintiff has moved to remand the case on the grounds that the court lacks subject matter jurisdiction and that, in any event, the removal petition is fatally flawed because all defendants did not join in the petition within 30 days after service of the complaint as required by 28 U.S.C. 1446(b).

 II. The District Court Lacks Subject Matter Jurisdiction in This Case

 Whether the Red Cross has the right to remove this case depends on whether it is an action over which the district court has original jurisdiction. There are 14 district court decisions from nine federal districts resolving the jurisdictional issue presented here on virtually identical facts. In seven cases, the court held that the "sue and be sued" language in the Red Cross charter conferred original federal subject matter jurisdiction. *fn1" In seven cases, the court held that there was not jurisdiction. *fn2"

 The courts which have held that original jurisdiction exists have relied on Osborn v. Bank of the United States, 22 U.S. (9 Wheat.) 738, 6 L. Ed. 204 (1824), which they read as holding that a reference to federal courts by Congress in a "sue and be sued" clause requires a finding of conferral of original federal jurisdiction in all subsequent cases. The courts which have held that there is not jurisdiction have skirted Osborn, determined that the Red Cross charter provision merely confirms the organization's capacity to sue and does not fall within the ambit of Osborn or, in at least two cases, appear to find that 28 U.S.C. § 1349 effectively vitiates Osborn. The Court held in Osborn that the power to confer federal jurisdiction was rooted in the "arising under . . . the Laws of the United States" language in Article 3, Section 2 of the Constitution, in that, all actions by or against a Congressionally created corporation necessarily arise under such a law.

 Section 1349 provides that "the district courts shall not have jurisdiction of any civil action by or against any corporation upon the ground that it was incorporated by or under an Act of Congress, unless the United States is the owner of more than one-half of its capital stock." It was enacted by Congress in 1925 in reaction to the Pacific Railroad Removal Cases, 115 U.S. 1, 29 L. Ed. 319, 5 S. Ct. 1113 (1885) and other cases in which the Courts held that federal incorporation conferred federal court jurisdiction, applying the Osborn rationale in view of the 1875 law giving federal courts jurisdiction in cases arising under the laws of the United States. *fn3" Congress moved to close the floodgate thus opened. See Crum v. Veterans of Foreign Wars, 502 F. Supp. 1377, 1382 (D. Del. 1980).

 In the case of non-stock corporations, federal government control is the touchstone for application of § 1349. See Jackson v. Tennessee Valley Authority, 462 F. Supp. 45, 52 (M.D. Tenn. 1978), aff'd, 595 F.2d 1120 (6th Cir. 1979). Courts on both sides of the jurisdiction question have held that the Red Cross is not subject to government control, and indeed it would lose its recognition by the International Red Cross if it were. See Griffith, supra, at 185-86; C.H., supra, 684 F. Supp. at 1020-22. For the reasons cogently set forth therein, this court concludes that for purposes of § 1349, there is not government control of the Red Cross.

 In granting motions to remand in what are likely destined to be known as the Red Cross blood cases or the Red Cross recipient cases, those courts relying on section 1349 may find some support in Puerto Rico v. Russell & Co., 288 U.S. 476, 77 L. Ed. 903, 53 S. Ct. 447 (1932). In that case the Court appears to question the viability of Osborn in the post-§ 1349 era. Id. at 485. See also Gully v. First National Bank, 299 U.S. 109, 113, 57 S. Ct. 96, 81 L. Ed. 70 (1936).

 The court is not persuaded, however, that § 1349 would negate a specific conferral of federal jurisdiction to a non-government controlled federally chartered organization. That section 1349 precludes an inference of jurisdiction from the mere grant of a federal charter and evinces a general intent of Congress to limit federal jurisdiction does not mean that Congress could not specifically confer federal jurisdiction on a particular federally chartered corporation if it chose to do so in a given instance. After 1925, however, it seems reasonable to assume that in doing so, Congress would specify that all cases involving the corporation "shall be deemed to arise under the laws of the United States" or that the corporation "shall be deemed to be an agency of the United States" or select other such language calculated to manifest an intent to confer federal jurisdiction.

 The critical question remains whether Congress did or did not confer original federal jurisdiction in all Red Cross cases when on May 8, 1947 it added the words "State or Federal" to the original 1900 charter clause which provided that the Red Cross shall have the power "to sue and be sued in courts of law and equity within the jurisdiction of the United States." *fn4" The language itself appears only to empower or authorize the Red Cross to litigate in federal courts where the jurisdictional prerequisites are satisfied. See Fed. R. Civ. P. 17(b). The Supreme Court in Osborn, however, found that in using a similar provision in the charter of the Second Bank of the United States, Congress had conferred original federal court jurisdiction. *fn5" As ...


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