Court Opinion

ID: 9487855
Source: CourtListenerOpinion
Date Created: 2023-08-05 12:28:06.970988+00
Date Added: 2024-06-11T17:52:31.169889
License: Public Domain

SEITZ, Circuit Judge, dubitante.
I agree with the majority that our court has appellate jurisdiction of these appeals. However, I have serious doubt as to the standard that should be adopted by our court to determine the citizenship of an inactive corporation for diversity jurisdiction purposes.
The diversity statute, which confers jurisdiction on federal courts in certain circumstances, is of considerable age. Its principal purpose is to provide a federal forum where out of state citizens, including corporations, could presumably avoid the prejudices of local courts and juries.
Before 1958, a corporation was deemed a citizen of the state in which it was incorporated for purposes of diversity. In the 1950s, Congress became concerned with the ease with which corporations removed essentially “local” cases to the federal courts based solely on their place of incorporation.1 In 1958, Congress amended the diversity statute to provide that “a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State in which *701it has its principal place of business.” 28 U.S.C. § 1332(c) (amended portion emphasized). However, neither the amendment itself nor the legislative history to section 1332(c) refers to the citizenship of an inactive corporation.
The general view in the federal courts that have addressed the present issue is that an inactive corporation is a citizen of both the state where it is incorporated and the state where it had its last principal place of business. See, e.g., Harris v. Black Clawson Co., 961 F.2d 547 (5th Cir.1992); Wm. Passalacqua Builders, Inc. v. Resnick Developers South Inc., 933 F.2d 131 (2d Cir.1991).2 This rule seems to embrace Congress’ intent to deny a federal forum to “local” corporations in actions involving local citizens.
On the other hand, the majority’s bright line test certainly has simplicity to recommend it, and it may reflect the reality that an inactive corporation has no business activities, let alone a principal place of business. However, the rule seems to run counter to the congressional purpose underlying the 1958 amendment to the diversity statute.
The issue here is one that Congress should address. After weighing the conflicting considerations, I remain doubtful as to the proper application of section 1332(c). In view of my doubt, it would serve no purpose for me to address the other issues in the case.

. The legislative history to the 1958 amendment of section 1332(c) centered around the perceived *701evil of allowing an essentially local corporation to remove a case to the federal court simply because the corporate charter was obtained in another state. See S.Rep. No. 1830, 85th Cong., 2d Sess. 2 (1958), reprinted in 1958 U.S.C.C.A.N. 3099, 3102.

. In Harris, the Fifth Circuit adopting a more flexible approach, stated, “[A]s a matter of law, where a corporation has been inactive in a state for a substantial period of time, in this case five years, that state is not the corporation's principal place of business.” Harris, 961 F.2d at 551 (footnote omitted). The court added that the question of substantiality must be determined case-by-case. Id. at 551 n. 10.