American National Red Cross v. S. G.

Background

In 1988 people in New Hampshire sued after a transfusion of contaminated blood that they say caused AIDS. They named a surgeon and a manufacturer, then later added the American Red Cross after learning it supplied the blood. The patients filed in state court. The Red Cross removed the later suit to federal court, citing diversity and a clause in its federal charter saying it may "sue and be sued in... State or Federal" courts. The district court kept the case in federal court, but the First Circuit reversed.

Reasoning

The central question was whether the Red Cross charter phrase lets federal courts hear any case involving the organization, so it can move state-law lawsuits into federal court. The majority reviewed earlier cases about similar charter language (Deveaux, Osborn, Bankers Trust, and D'Oench, Duhme) and concluded that when Congress's charter expressly mentions federal courts, a "sue and be sued" clause can create federal-court jurisdiction. Because the Red Cross charter explicitly authorizes suits in "State or Federal" courts, the Court held the clause grants federal jurisdiction. The Court rejected arguments based on the well-pleaded-complaint rule and on certain drafting history, reversed the Court of Appeals, and sent the case back for further proceedings.

Real world impact

The decision lets the Red Cross keep removed cases in federal court. It also means other federally chartered organizations with the same wording may be able to bring or remove state-law suits to federal courts. The Court said this statutory grant fits within Article III limits so federal courts may hear such cases.

Dissents or concurrances

Justice Scalia dissented, arguing the clause only gives the Red Cross the capacity to be a party in court, not a new federal-court power, and would have left the First Circuit's ruling intact.