Lapp Libra recently obtained a key victory on behalf of its client, Wells Fargo, concerning access to the Federal Courts. Under the U.S. Constitution, Federal Courts generally cannot decide state-law disputes unless the parties are citizens of different states. The more the number of states of which an entity is deemed a citizen, therefore, the less the doors of the Federal Courts are open to it.
On September 2, 2011, the Eighth Circuit Court of Appeals affirmed the decision of the U.S. District Court for the District of Minnesota that national banking associations are citizens of only one state for purposes of Federal jurisdiction. The Eighth Circuit became the first Court of Appeals in the nation to address this question since the U.S. Supreme Court raised the issue in 2006.
In Wells Fargo Bank, N.A. v. WMR e-PIN, LLC et al., Wells Fargo obtained a favorable arbitration award in a dispute over banking technology. The defendants in the case fought Wells Fargo’s efforts to convert the arbitration award into a legally enforceable judgment, chiefly on the grounds that that the Federal courts did not have jurisdiction to hear the case. The District Court determined, however, that it possessed jurisdiction to decide the outcome of the dispute.
The specific issue in this case was whether under the Federal citizenship statute for national banks, 28 U.S.C. § 1348, national banks should be treated as citizens of just one state or as citizens of two states. The defendants argued that national banks should be treated the same way that a different Federal law treats corporations – as citizens of both the state where the bank has its registered office and the state where the bank has its principal place of business.
The Eighth Circuit panel of three judges agreed with Wells Fargo that a national banking association, such as Wells Fargo, is a citizen of just one state. The Eighth Circuit reasoned that by enacting different laws, Congress intended to not treat national banks in the same way as corporations. The Eighth Circuit held that a national banking association is a citizen of only the one state listed in its articles of association as the bank’s “main office.” A national bank is not also a citizen of any different state where its principal place of business might be located. The Eighth Circuit later rejected the defendants’ request to have the matter re-heard by the entire Court sitting en banc.
With co-counsel from the law firm of Baker & McKenzie, Lapp Libra shareholder Richard Thomson led the Minneapolis-based team of Tyler Candee and Amy Schwartz that obtained the arbitration award and judgment in the District Court, and successfully defended the appeal before the Eighth Circuit.
The Eighth Circuit’s opinion is published as Wells Fargo Bank, N.A. v. WMR e-PIN, LLC, 653 F.3d 702.
8th Cir Opinion Eighth Circuit Opinion in Wells Fargo Bank, N.A. v. WMR e-PIN, LLC et al.