Wachovia Bank v. Schmidt
Schmidt, a resident of South Carolina, filed suit against Wachovia Bank in state court. In response, Wachovia brought this action in federal court to compel arbitration of Schmidt’s claims against Wachovia. Wachovia, which has its principal place of business in North Carolina, invoked diversity jurisdiction (which requires the parties to be citizens of different states) as the basis of federal jurisdiction. The district court reviewed and rejected Wachovia’s petition to compel arbitration. On appeal, Schmidt argued that the district court did not have jurisdiction to review the case because there was no diversity of citizenship between the parties; Wachovia is a citizen of South Carolina because it operates branches within the state.
Federal law provides that “All national banking associations shall, for the purposes of all other actions by or against them, be deemed citizens of the States in which they are respectively located.” 28 U.S.C. § 1348. The Fourth Circuit Court of Appeals ruled in favor of Schmidt, holding that the ordinary meaning of “located”unambiguously indicates that banks should be considered citizens of all states in which they operate branches. Accordingly, the court vacated the district court’s judgment and dismissed it for lack of federal jurisdiction.
Questions Presented:
The questions presented are (i) whether, for purposes of federal diversity jurisdiction, a national banking association is "located" in, and thus deemed
to be a citizen of, every state in which the association maintains a branch, as held by the court below, or instead has a more limited citizenship, as held by three other courts of appeals; and
(ii) whether the word "located," as used in 28 U.S.C. § 1348, is ambiguous.
