Federal Home Loan Bank of Bost v. Moody's Corporation

United States Court of Appeals
For the First Circuit
No. 14-2148
FEDERAL HOME LOAN BANK OF BOSTON,
Plaintiff, Appellant,
v.
MOODY'S CORPORATION;
MOODY'S INVESTORS SERVICE, INC.,
Defendants, Appellees,
ALLY FINANCIAL INC., f/k/a GMAC, INC.; BCAP LLC; BARCLAYS
CAPITAL, INC.; BEAR STEARNS ASSET BACKED SECURITIES I LLC,
f/k/a The Bear Stearns Companies, Inc.; CHEVY CHASE FUNDING,
LLC; CITIMORTGAGE, INC.; CITICORP MORTGAGE SECURITIES, INC.;
CITIGROUP FINANCIAL PRODUCTS, INC.; CITIGROUP GLOBAL MARKETS
REALTY CORP.; CITIGROUP GLOBAL MARKETS, INC.; CITIGROUP
MORTGAGE LOAN TRUST, INC.; CITIGROUP, INC.; CREDIT SUISSE
(USA), INC.; CREDIT SUISSE FIRST BOSTON MORTGAGE SECURITIES
CORP.; CREDIT SUISSE HOLDINGS (USA), INC.; CREDIT SUISSE
SECURITIES (USA) LLC; DB STRUCTURED PRODUCTS, INC.; DB U.S.
FINANCIAL MARKET HOLDING CORPORATION; DLJ MORTGAGE CAPITAL,
INC.; DEUTSCHE ALT-A SECURITIES, INC.; DEUTSCHE BANK
SECURITIES, INC.; EMC MORTGAGE CORPORATION; LANA FRANKS;
RICHARD S. FULD, JR.; GMAC MORTGAGE GROUP, LLC; EDWARD GRIEB;
IMH ASSETS CORP.; IMPAC FUNDING CORPORATION; IMPAC MORTGAGE
HOLDINGS, INC.; IMPAC SECURED ASSETS CORP.; J.P. MORGAN
ACCEPTANCE CORPORATION I; J.P. MORGAN CHASE & CO.; JP MORGAN
SECURITIES HOLDINGS, LLC; JPMORGAN ACQUISITION CORP.;
JPMORGAN CHASE BANK, N.A.; MIT HOLDINGS, INC.; RICHARD
MCKINNEY; MORGAN STANLEY; MORGAN STANLEY & CO., INC.; MORGAN
STANLEY CAPITAL I INC.; MORGAN STANLEY MORTGAGE CAPITAL
HOLDINGS, LLC; MORTGAGE ASSET SECURITIZATION TRANSACTIONS,
INC.; MORTGAGEIT SECURITIES CORP; MORTGAGEIT, INC.;
MORTGAGEIT HOLDINGS, INC.; NOMURA ASSET ACCEPTANCE
CORPORATION; NOMURA CREDIT & CAPITAL, INC.; NOMURA HOLDING
AMERICA, INC.; NOMURA SECURITIES INTERNATIONAL, INC.; BARRY
J. O'BRIEN; CHRISTOPHER M. O'MEARA; RBS ACCEPTANCE INC.,
f/k/a Greenwich Capital Acceptance, Inc.; RBS FINANCIAL
PRODUCTS, INC., f/k/a Greenwich Capital Financial Products,
Inc.; RBS HOLDINGS USA INC.; RBS SECURITIES INC., f/k/a
Greenwich Capital Markets, Inc.; RESIDENTIAL ACCREDIT LOANS,
INC.; RESIDENTIAL FUNDING COMPANY, LLC, f/k/a Residential
Funding Corporation; KRISTINE SMITH; STRUCTURED ASSET
MORTGAGE INVESTMENTS II INC.; JAMES J. SULLIVAN; SAMIR TABET;
THE BEAR STEARNS COMPANIES LLC; UBS AMERICAS, INC.; UBS REAL
ESTATE SECURITIES, INC.; UBS SECURITIES, LLC; WAMU CAPITAL
CORP.; WELLS FARGO & COMPANY; WELLS FARGO ASSET SECURITIES
CORPORATION; WELLS FARGO BANK, N.A.; MARK ZUSY; BANC OF
AMERICA FUNDING CORPORATION; BANK OF AMERICA CORPORATION;
BANK OF AMERICA, NATIONAL ASSOCIATION; CAPITAL ONE FINANCIAL
CORPORATION; CAPITAL ONE, NATIONAL ASSOCIATION; COUNTRYWIDE
FINANCIAL CORPORATION; COUNTRYWIDE HOME LOANS, INC.;
COUNTRYWIDE SECURITIES CORPORATION; CWALT, INC.; CWMBS, INC.;
FITCH, INC.; GOLDMAN, SACHS & CO.; MERRILL LYNCH MORTGAGE
INVESTORS, INC.; MERRILL LYNCH & CO., INC.; MERRILL LYNCH
MORTGAGE LENDING, INC.; MERRILL LYNCH, PIERCE, FENNER &
SMITH, INC.; SANDLER, O'NEILL & PARTNERS, L.P.; JOHN DOES 1-
50; STANDARD & POOR'S FINANCIAL SERVICES, LLC; THE MCGRAW
HILL COMPANIES, INC.,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. George A. O'Toole, Jr., U.S. District Judge]
Before
Thompson and Kayatta, Circuit Judges,
and Mastroianni,* District Judge.
Benjamin Gould, with whom Derek W. Loeser; Amy Williams-
Derry; Gary A. Gotto; Lynn L. Sarko; Keller Rohrback L.L.P.; Thomas
G. Shapiro; Adam M. Stewart; and Shapiro Haber & Urmy LLP were on
brief, for appellant.
Joshua M. Rubins, with whom Ralph T. Lepore, III; Michael T.
Maroney; Nathaniel F. Hulme; Holland & Knight LLP; Glenn C.
Edwards; James J. Coster; and Satterlee Stephens Burke & Burke LLP
were on brief, for appellees.
* Of the District of Massachusetts, sitting by designation.
May 2, 2016
THOMPSON, Circuit Judge. The allegations in this case
hearken back to the days of the recent financial crisis and the
near-collapse of the mortgage-backed securities market. The
issues we deal with today, though, are of the technical, legalistic
variety: we have to figure out whether the district court erred
in finding that it lacks statutory power to transfer this action
to another federal court in which personal jurisdiction over
certain defending parties may be met. Concluding that the district
court does in fact have authority to effectuate such a transfer,
we vacate its dismissal order and remand for further proceedings.
WHAT THE CASE IS ABOUT
In April of 2011, appellant Federal Home Loan Bank of
Boston ("Bank"), a federally-chartered entity pursuant to 12
U.S.C. § 1432(a) (more on this statute later), filed suit against
a slew of defendants in Massachusetts state court. These
defendants included appellees Moody's Corporation and Moody's
Investors Service, Inc. (collectively, "Moody's"). The Bank's
complaint generally alleges that the Bank follows a conservative
investment philosophy and that it is only able to purchase
mortgage-backed securities that have a triple-A rating. So,
whenever it bought a mortgage-backed security the Bank made sure
that it had received a triple-A rating from a rating agency like
Moody's. Briefly, the Bank alleges that various rating agencies,
including Moody's, falsely gave out triple-A ratings to mortgage-
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backed securities they knew were far riskier than indicated by
their pristine ratings. Per the Bank, its unwitting purchase of
"low-quality, high-risk" securities -- all of which have since
been downgraded to "junk" status -- has caused it to suffer losses
on the order of hundreds of millions of dollars.
But none of these allegations matter to us today. The
issues we have to contend with, while perhaps not as sexy as fraud
claims involving bucketloads of money, are nevertheless of
tremendous import to our federal system. What we're talking about
today are both flavors of jurisdiction -- subject-matter and
personal. So, on we go.
HOW THE CASE GOT HERE
Some of the defendants (but not Moody's) removed the
case to the Massachusetts federal district court. In doing so,
they relied on the fact that the Bank is federally chartered to
invoke the district court's original jurisdiction.1 The following
day, Moody's -- "appear[ing] specifically for the purpose of
removal only and reserv[ing] all defenses as to jurisdiction . . .
available to it in this action" -- filed a Notice of Consent to
Removal with the district court.
1 The Notice of Removal also asserted that the district court
had original jurisdiction because the action was "related to"
various ongoing bankruptcy cases. As it turns out, we won't need
to touch this jurisdictional allegation to resolve the appeal.
And so we make no further mention of it.
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Moody's next moved to dismiss on the ground that the
Massachusetts district court lacks personal jurisdiction over it.
The details of its legal position are not especially important
here. It is enough to note that Moody's asserted that it is
incorporated in Delaware, that its headquarters are located in New
York, that it has only limited contacts with Massachusetts, and
that the ratings the Bank complained about were all prepared by
Moody's analysts in New York and issued from its New York
headquarters. Based on all this, Moody's argued that the
Massachusetts district court may not exercise general or specific
jurisdiction over it.2
2
Federal courts "differentiate[] between general or all-
purpose jurisdiction, and specific or case-linked jurisdiction."
Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846,
2851 (2011) (citing Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 414 nn. 8, 9 (1984)). When a court "exercises
personal jurisdiction over a defendant in a suit not arising out
of or related to the defendant's contacts with the forum [State],
the State has been said to be exercising 'general jurisdiction'
over the defendant." Helicopteros Nacionales, 466 U.S. at 414
n.9. The proper exercise of "general jurisdiction requires
affiliations 'so "continuous and systematic" as to render [the
foreign corporation] essentially at home in the forum State.'"
Daimler AG v. Bauman, 134 S. Ct. 746, 758 n.11 (2014) (alteration
in original) (quoting Goodyear Dunlop, 131 S. Ct. at 2851).
On the other hand, when a court "exercises personal
jurisdiction over a defendant in a suit arising out of or related
to the defendant's contacts with the forum [State], the State is
exercising 'specific jurisdiction' over the defendant."
Helicopteros Nacionales, 466 U.S. at 414 n.8. "In contrast to
general, all-purpose jurisdiction, specific jurisdiction is
confined to adjudication of issues deriving from, or connected
with, the very controversy that establishes jurisdiction."
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The district judge disagreed. He concluded that the
contacts Moody's had with Massachusetts were sufficiently
extensive to subject it to general jurisdiction in the
Commonwealth's courts, and that it was reasonable to exercise
personal jurisdiction over it in this case. Having made these
findings, the district judge denied the motion to dismiss. And he
denied the motion for reconsideration Moody's filed, too.
About two months later, the Supreme Court released its
opinion in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), a case
which addressed the circumstances in which a court may subject a
defendant to general personal jurisdiction. Arguing that the
Supreme Court had just limited the reach of a court's jurisdiction,
Moody's renewed its motion for reconsideration. The Bank opposed
the motion. But as a backup strategy, and relying on 28 U.S.C.
§ 1631 and 28 U.S.C. § 1406(a), the Bank asked the district judge --
should he conclude that personal jurisdiction is lacking after
Daimler AG -- to sever its claims against Moody's from those
against the other defendants and transfer them to the Southern
District of New York.
For Moody's, the third time around turned out to be the
charm: the district judge agreed with its take on Daimler AG and
concluded personal jurisdiction was lacking in Massachusetts.
Goodyear Dunlop, 131 S. Ct. at 2851 (internal quotation marks
omitted).
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Further, Moody's won a double victory, with the district judge
also denying the Bank's motion to sever and transfer its claims
against Moody's. In denying this motion, the judge concluded he
did not have the power to transfer the claims against Moody's under
either statute the Bank relied upon. Accordingly, he dismissed
the claims against Moody's for lack of personal jurisdiction, and
entered separate and final judgment in favor of Moody's.3 The
3 Because the litigation could continue against other
defendants in Massachusetts, the district court entered final
judgment as to Moody's under Federal Rule of Civil Procedure 54(b),
which allows the district court to "direct entry of a final
judgment as to one or more, but fewer than all, . . . parties,"
but "only if the court expressly determines that there is no just
reason for delay." Fed. R. Civ. P. 54(b). For entry of a Rule
54(b) judgment to be proper, "[a] district court must first
determine that it is dealing with a 'final judgment,'" Curtiss-
Wright Corp. v. General Elec. Co., 446 U.S. 1, 7 (1980), that
"provides an ultimate disposition on a 'cognizable claim for
relief,'" Bos. Prop. Exch. Transfer Co. v. Iantosca, 720 F.3d 1,
7 (1st Cir. 2013) (quoting Curtiss-Wright, 446 U.S. at 7). The
district court must then determine whether its final decision
should be immediately appealable by expressly deciding "whether
there is any just reason for delay." Curtiss-Wright, 446 U.S. at
8.
"We review the district court's finality determination and
its finding that there is no just reason to delay for abuse of
discretion." González Figueroa v. J.C. Penney P.R., Inc., 568
F.3d 313, 317 (1st Cir. 2009). The ruling dismissing all claims
against Moody's for lack of personal jurisdiction clearly
"dispose[s] of all the rights and liabilities of at least one party
as to at least one claim" and so satisfies Rule 54(b)'s finality
requirement. State St. Bank & Tr. Co. v. Brockrim, Inc., 87 F.3d
1487, 1489 (1st Cir. 1996). And because the entry of judgment
against Moody's rests on purely legal grounds distinct from the
factual questions of liability being litigated by the remaining
parties, we create no problematic "imbrication between the
dismissed [parties] and the surviving [parties]" by hearing an
immediate appeal of the final order. Spiegel v. Trustees of Tufts
Coll., 843 F.2d 38, 45 (1st Cir. 1998). Indeed, judicial economy
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Bank's timely appeal of the dismissal and of the denial of its
motion to sever and transfer followed.
SHOULD WE EVEN BE IN FEDERAL COURT?
(SUBJECT MATTER JURISDICTION)
Both the Bank and Moody's tell us that this action was
properly removed to federal court based on the Bank's federal
corporate charter codified at 12 U.S.C. § 1432(a). The Bank cited
Lightfoot v. Cendant Mortgage Corp., 769 F.3d 681, 683-87 (9th
Cir. 2014), petition for cert. filed, No. 14-1055, 2015 WL 905913
(U.S. filed Feb. 17, 2015), a case in which the Bank says the Ninth
Circuit concluded federal subject matter jurisdiction existed
based on Fannie Mae's "materially identical charter" to the Bank's
own. Moody's does not challenge the Bank's view of Lightfoot.4
But "[p]arties cannot confer subject matter jurisdiction
on either a trial or an appellate court by indolence, oversight,
weighs in favor of prompt resolution of the jurisdictional issues
implicated by this appeal so that the parties can potentially
proceed to the merits in an appropriate venue. See Comite Pro
Rescate de la Salud v. P.R. Aqueduct & Sewer Auth'y, 888 F.2d 180,
184 (1st Cir. 1989). And so, we conclude the district court did
not abuse its discretion in finding no just reason for delaying
entry of final judgment as to Moody's. Further, because the
district court's proper entry of judgment under Rule 54(b) gives
us jurisdiction to hear the Bank's appeal, see 28 U.S.C. § 1921,
the Bank's separately-docketed petition seeking leave to take an
interlocutory appeal, see Fed. Home Loan Bank of Boston v. Moody's
Corp. et al, No. 14-8046 (1st Cir. filed Oct. 10, 2014), shall be
denied as moot.
4
Neither party claims that we have diversity jurisdiction
under 28 U.S.C. § 1332.
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acquiescence, or consent." United States v. Horn, 29 F.3d 754,
768 (1st Cir. 1994). And we are "powerless to act in the absence
of subject matter jurisdiction." Espinal-Dominguez v. Puerto
Rico, 352 F.3d 490, 495 (1st Cir. 2003). This court, therefore,
has "an unflagging obligation to notice jurisdictional defects and
to pursue them on our own initiative." Harrison v. Granite Bay
Care, Inc., 811 F.3d 36, 38 (1st Cir. 2016) (quoting Espinal-
Dominguez, 352 F.3d at 495).5
Our starting point is the applicable statutory language.
The Bank is a federally-chartered entity under 12 U.S.C. § 1432(a),
which states that each Federal Home Loan Bank "in its [own] name
. . . shall have power . . . to sue and be sued, to complain and
to defend, in any court of competent jurisdiction, State or
Federal." 12 U.S.C. § 1432(a). To keep things simple, we'll refer
to this clause (and others generally like it) as a "sue-and-be-
sued" clause.
The Supreme Court squarely addressed the jurisdictional
effect of sue-and-be-sued clauses more than two decades ago in
American National Red Cross v. S.G., 505 U.S. 247 (1992) ("Red
5 We quizzed the Bank's counsel at oral argument on the basis
of federal subject matter jurisdiction. Counsel reiterated the
jurisdictional statements set forth in the Bank's brief and
requested the opportunity to submit supplemental briefing if the
court felt there was any question as to the propriety of federal
jurisdiction. We now conclude (without the need for further
briefing) that federal subject matter jurisdiction is proper.
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Cross"). The sue-and-be-sued clause at issue "authorize[d] the
[Red Cross] 'to sue and be sued in courts of law and equity, State
or Federal, within the jurisdiction of the United States.'" Red
Cross, 505 U.S. at 248 (quoting 36 U.S.C. § 2 (1988)). Relying on
this language, the Red Cross removed to federal court a tort action
filed against it in New Hampshire state court. Id. at 248-49.6
So the question for the Court was whether the sue-and-be-sued
clause in the Red Cross's federal charter "confers original
jurisdiction on federal courts over all cases to which the Red
Cross is a party, with the consequence that the organization is
thereby authorized to remove from state to federal court any state-
law action it is defending." Id. at 248.
To get the answer, the Court delved into its
jurisprudence (dating back to 1809) interpreting sue-and-be-sued
clauses applicable to other federally-chartered entities. Id. at
252. Its prior cases, the Court said, "support the rule that a
congressional charter's 'sue and be sued' provision may be read to
confer federal court jurisdiction if, but only if, it specifically
mentions the federal courts." Id. at 255. Turning to the Red
Cross, the Supreme Court found that "[t]he rule established in
these [earlier] cases makes it clear that the Red Cross Charter's
6
The Red Cross also invoked diversity jurisdiction, id. at
249, but the Supreme Court did not address this jurisdictional
basis.
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'sue and be sued' provision should be read to confer jurisdiction."
Id. at 257; see also id. at 268 (Scalia, J. dissenting) (describing
the majority opinion as assuming that "our cases have created what
might be termed a phrase of art, whereby a sue and be sued clause
confers federal jurisdiction 'if, but only if, it specifically
mentions the federal courts'" (quoting id. at 255 (majority
opinion)) (other internal quotation marks omitted)). Because the
clause "expressly authoriz[es] the organization to sue and be sued
in federal courts," the Court concluded that it "extends beyond a
mere grant of general corporate capacity to sue, and suffices to
confer federal jurisdiction." Id. at 257.7
Getting back to our case, we see that the Bank's sue-
and-be-sued clause is similar, but not identical, to the Red
Cross's -- the Bank's includes language specifying that it may sue
and be sued "in any court of competent jurisdiction, State or
Federal." 12 U.S.C. § 1432(a) (emphasis added). The question for
us is whether this additional verbiage makes a difference in
whether the Bank is authorized to litigate in federal court. Once
again, we are not the first court to have considered the issue.
7 The Court also pointed out that the statutory grant of
original jurisdiction to the federal courts poses no
constitutional problem: "Article III's 'arising under'
jurisdiction is broad enough to authorize Congress to confer
federal-court jurisdiction over actions involving federally
chartered corporations." Id. at 264.
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In Lightfoot v. Cendant Mortgage Corp., 769 F.3d 681
(9th Cir. 2014), the Ninth Circuit addressed the sue-and-be-sued
clause in Fannie Mae's Federal Charter. Fannie Mae's clause is
identical to the Bank's, authorizing it "to sue and be sued, and
to complain and to defend, in any court of competent jurisdiction,
State or Federal." Id. at 683 (quoting 12 U.S.C. § 1723a(a)).
The majority of a divided panel concluded that Red Cross's "rule
resolves this case," id. at 684 (citing Pirelli Armstrong Tire
Corp. Retiree Med. Benefits Tr. ex rel. Fed. Nat'l Mortg. Ass'n v.
Raines, 534 F.3d 779, 784 (D.C. Cir. 2008)),8 and found that Fannie
Mae's "federal charter confers federal question jurisdiction over
claims brought by or against" it, id. at 682.
The majority addressed the dissenting judge's position
that the phrase "court of competent jurisdiction" -- added to the
statute in a 1954 amendment -- meant that Congress intended to
confer on Fannie Mae only the capacity to sue and be sued (as
opposed to ordaining original jurisdiction in the federal courts).
See id. at 684. The majority observed that the statute conferred
subject matter jurisdiction on the federal courts even before the
1954 amendment, and it concluded that if Congress had wanted to
eliminate such jurisdiction in 1954, "it logically would have
8 In Pirelli, a majority of a panel of the D.C. Circuit had
also concluded that "Fannie Mae's sue-and-be-sued clause confers
federal subject-matter jurisdiction." Pirelli, 534 F.3d at 788.
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omitted the word 'Federal' from the statute."9 Id. at 685 (quoting
Pirelli, 534 F.3d at 786). The majority also determined that the
addition of the phrase "of competent jurisdiction" (1) "makes clear
that state courts of specialized jurisdiction -- such as family
courts and small-claims courts -- need not entertain suits that do
not satisfy those courts' jurisdictional requirements," id. at
686, and (2) "makes clear that the sue-and-be-sued clause does not
require federal courts of specialized jurisdiction -- such as
bankruptcy courts -- to hear suits falling outside those courts'
jurisdiction," id. at 686-87 (citing Pirelli, 534 F.3d at 785).10
9 Recall that the post-1954-amendment statute read "to sue
and be sued, and to complain and to defend, in any court of
competent jurisdiction, State or Federal." Lightfoot, 769 F.3d at
683 (emphasis added) (quoting 12 U.S.C. § 1723(a)).
10 We have reviewed the opinions of the dissenting justices
in Red Cross, along with the dissent in Lightfoot and criticism by
the concurring judge in Pirelli. It appears to us that each
dissent or concurrence is motivated in large part by
dissatisfaction with the rule fashioned by the majority of the
Supreme Court in Red Cross. See, e.g., Red Cross, 505 U.S. at 267
(Scalia, J. dissenting) (positing, based on the Red Cross's
charter, that "[w]ords conferring authority upon a corporation are
a most illogical means of conferring jurisdiction upon a court,
and would not normally be understood that way" (emphasis omitted));
Pirelli, 534 F.3d at 795 (Brown, J., concurring in the judgment)
(describing the majority, in interpreting Red Cross as setting
forth a rule that a "sue-and-be-sued clause creates jurisdiction
simply because it mentions the federal courts," as fashioning and
applying a "silly test" not enshrined by Red Cross (emphasis
omitted)); see also Lightfoot, 769 F.3d at 691 (Stein, J.,
dissenting) (arguing that Red Cross "did not announce any new rule
of law," or establish a "magic-words test that ends all inquiry
the moment we come across the word 'federal'" in a sue-and-be-sued
clause).
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We see no principled reason why Red Cross's rule should
not apply in the same way to the Bank's charter as the Lightfoot
and Pirelli majorities found it applied to Fannie Mae's. Just
like the Red Cross and Fannie Mae charters, the Bank's includes
language that is "necessary and sufficient" to confer federal
jurisdiction, and we agree with the Ninth Circuit that the
additional phrase, "of competent jurisdiction," does not take away
that jurisdiction. Rather, it delineates which federal courts may
adjudicate claims involving the Bank.
Moreover, Congress made numerous amendments to the
Bank's charter statute (12 U.S.C. § 1432(a)) in 1999, but it left
the sue-and-be-sued clause unchanged. Certainly by 1999 Congress
was well-aware of the language the Supreme Court in Red Cross
considered "necessary and sufficient to confer jurisdiction" on
the federal courts. Cf. Castañeda v. Souza, 810 F.3d 15, 34 (1st
Cir. 2015) (en banc) (noting we "assume that Congress is aware of
existing law when it passes legislation" and that it is also aware
of judicial interpretations of its statutes (quoting Miles v. Apex
Marine Corp., 498 U.S. 19, 32 (1990))). Logically, had Congress
desired to strip the federal courts of jurisdiction to hear and
decide claims involving the Bank, it would have done so in 1999
But our role is not to opine on the wisdom of Supreme Court
precedent. Instead, we are to determine whether that precedent
applies in a particular case and, if so, apply it.
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when it passed amendments that reworked the very same section
containing the sue-and-be-sued clause. That it did not do so
speaks volumes, we think. Cf. Pirelli, 534 F.3d at 786 (declining
to conclude that Congress "attempted a bank shot" in amending
Fannie Mae's charter by adding "of competent jurisdiction" when it
could have simply deleted the word "Federal" had it wanted to strip
away original federal jurisdiction). Accordingly, we find that
the Bank's claims arise under federal law and that the district
court had subject matter jurisdiction over the Bank's claims
against Moody's.
CAN THIS CASE BE SENT SOMEWHERE ELSE?
(TRANSFER UNDER 28 U.S.C. § 1631)
1. Overview and Standard of Review
We now reach the question of which federal court should
decide the Bank's claims.11 The statute at issue is titled
"[t]ransfer to cure want of jurisdiction," and it provides the
following:
Whenever a civil action is filed in a court as
defined in section 610 of this title[12] or an
11The parties agree that, in light of Daimler AG v. Bauman,
134 S. Ct. 746 (2014), Moody's is not subject to personal
jurisdiction in Massachusetts in connection with this litigation.
Given that lack of personal jurisdiction is a waivable defense,
see, e.g., Vázquez-Robles v. CommoLoCo, Inc., 757 F.3d 1, 3 (1st
Cir. 2014), we need not address the issue sua sponte (as we did
with subject matter jurisdiction). So we will simply assume the
parties are right.
12 Section 610 defines the word "courts" to "include[] the
courts of appeals and district courts of the United States, the
United States District Court for the District of the Canal Zone,
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appeal, including a petition for review of
administrative action, is noticed for or filed
with such a court and that court finds that
there is a want of jurisdiction, the court
shall, if it is in the interest of justice,
transfer such action or appeal to any other
such court in which the action or appeal could
have been brought at the time it was filed or
noticed, and the action or appeal shall
proceed as if it had been filed in or noticed
for the court to which it is transferred on
the date upon which it was actually filed in
or noticed for the court from which it is
transferred.
28 U.S.C. § 1631 (emphasis added).
The district judge concluded that this statute permits
transfer only in cases where the court lacks subject matter
jurisdiction. Since the problem in this case is a lack of personal
jurisdiction, the judge dismissed the Bank's claims against
Moody's.13
Determining the scope of a court's authority to transfer
the Bank's claims under § 1631 presents a question of law we review
de novo. See Hannon v. City of Newton, 744 F.3d 759, 765 (1st
Cir. 2014). In a nutshell, the Bank says that the statute is broad
enough to permit transfer where there is no personal jurisdiction,
while Moody's defends the district court's narrower view that it
the District Court of Guam, the District Court of the Virgin
Islands, the United States Court of Federal Claims, and the Court
of International Trade." 28 U.S.C. § 610.
13 The judge also denied the Bank's fallback request to
transfer under 28 U.S.C. § 1406(a), and we'll explain later why we
don't need to reach this statute in today's opinion.
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only applies where there is no subject matter jurisdiction.
Because each side relies to such a great extent on Congress's
purposes in enacting § 1631, along with its legislative history,
we'll begin there to put their arguments in context. This will
also serve as a springboard for our own analysis.
We discussed the history of § 1631 in Britell v. United
States, 318 F.3d 70 (1st Cir. 2003). Congress enacted the statute
in the wake of Investment Co. Institute v. Board of Governors of
the Federal Reserve System, 551 F.2d 1270 (D.C. Cir. 1977), a case
in which the Court of Appeals for the D.C. Circuit "acknowledged
an ambiguity involving which of two courts had appellate
jurisdiction" over a particular type of claim. See Britell, 318
F.3d at 73. The D.C. court opined that, in the future, counsel
should simply "file petitions in both courts . . . if there is any
doubt" about which one has appellate jurisdiction. See id. at 73-
74 (quoting Inv. Co. Inst., 551 F.2d at 1282). Believing the
court's suggestion to be a waste of resources (both for the parties
and the judicial system as a whole), Judge Harold Leventhal
authored a concurring opinion in which he "express[ed] the hope"
that Congress would enact "a general statute permitting transfer
between district courts and courts of appeals in the interest of
justice." Inv. Co. Inst., 551 F.2d at 1283 (Leventhal, J.
concurring).
- 18 -
As Moody's points out, Congress went to work on a
legislative fix. A 1981 Senate Report regarding the proposed
legislation that eventually became 28 U.S.C. § 1631 reveals that
it
would authorize the court in which a case is
improperly filed to transfer it to a court
where subject matter jurisdiction is
proper. . . . This provision is broadly
drafted to allow transfer between any two
federal courts. Although most problems of
misfiling have occurred in the district and
circuit courts, others have occurred in the
Court of International Trade and the Temporary
Emergency Court of Appeals. Some others may
occur in the Court of Appeals for the Federal
Circuit. The broadly drafted provisions of
Section [1631] will help avoid all of these
situations.
S. Rep. No. 97-275, at 30 (1981), reprinted in 1982 U.S.C.C.A.N.
11, 40 (emphasis added). A second passage from the Report mentions
subject matter jurisdiction, too:
In recent years much confusion has been
engendered by provisions of existing law that
leave unclear which of two or more federal
courts [--] including courts at both the trial
and appellate level -- have subject matter
jurisdiction over certain categories of civil
actions. The problem has been particularly
acute in the area of administrative law where
misfilings and dual filings have become
commonplace. The uncertainty in some statutes
regarding which court has review authority
creates an unnecessary risk that a litigant
may find himself without a remedy because of
a lawyer's error or a technicality of
procedures.
Id. at 11, reprinted in 1982 U.S.C.C.A.N. at 21 (emphasis added).
- 19 -
Moody's also tells us that § 1631 was passed as part of
the Federal Courts Improvement Act of 1982, Pub. L. No. 97-164, 96
Stat. 25 ("Improvement Act"), which established the Federal
Circuit and "which, legislators believed, could give rise to yet
additional risks of uncertainty as to the proper tribunal for
hearing certain types of actions." Appellees' Br. at 25. Against
this backdrop, Moody's says in its brief, Congress explained that
§ 1631 would allow the newly-created Court of Appeals for the
Federal Circuit "to transfer cases to the proper circuit court, or
vice versa," Appellees' Br. at 25-26 n.16 (quoting S. Rep. No. 97-
275, at 20, reprinted in 1982 U.S.C.C.A.N. at 30), and that "one
purpose" of § 1631 was "to permit the transfer of an action or
appeal where such has been lodged with the wrong court of appeals,"
id. (quoting 127 Cong. Rec. S14683-723, at 702 (daily ed. Dec. 8,
1981)).
In addition, Moody's directs our attention to additional
information about the drafting process it says should bear on our
interpretation of the statute. Moody's quotes a letter from Judge
Leventhal to a Congressman that it construes as advocating for a
statute that would only allow transfer power in cases lacking
subject matter jurisdiction. Moody's also tells us that "[e]arly
versions of § 1631" -- which we take to mean pre-enactment drafts
-- resembled a then-extant statute that allowed the federal Court
of Claims, when faced with an action over which the federal
- 20 -
district courts have exclusive jurisdiction, to transfer the
action to an appropriate district court. Moody's sees the early
similarity between § 1631 and this narrow transfer mechanism as a
further indication that Congress only intended § 1631 to address
subject matter jurisdiction.
Needless to say, the Bank sees things differently.
First, it emphasizes that we should not even be looking at
legislative history "because 'Congress's authoritative statement
is the statutory text, not the legislative history,'" Appellant's
Br. at 33 (quoting Chamber of Commerce v. Whiting, 131 S. Ct. 1968,
1980 (2011) (internal quotation marks omitted)), and here the text
says it all, and says it clearly. But in any event, the Bank
argues, neither Judge Leventhal's concurrence nor the legislative
history precludes a finding that § 1631 may be used to correct
defects in subject matter or personal jurisdiction.
The Bank points out that Judge Leventhal "urged Congress
to enact 'a general statute permitting transfer between district
courts and courts of appeals in the interest of justice, including
specifically but not exclusively those instances when complaints
are filed in what later proves to be the "wrong" court.'"
Appellant's Br. at 35 (quoting Inv. Co. Inst., 551 F.2d at 1283
(Leventhal, J. concurring) (emphases the Bank's)). According to
the Bank, Judge Leventhal's references to a "general statute" and
its application "specifically but not exclusively" to cases filed
- 21 -
in the "wrong" court demonstrate that he had more on his mind than
just subject matter jurisdiction. The Bank also says the phrase
"the wrong court" could just as easily apply to a court that lacks
personal jurisdiction as it does to a court lacking subject matter
jurisdiction. And, responding to Moody's contention that Judge
Leventhal's involvement in the drafting process showed that he
advocated a narrow statute, the Bank points to a law review article
that it says discusses how Judge Leventhal more broadly "emphasized
[to Congress] the need to provide for transfer between any two
federal courts." Appellant's Br. at 36 (quoting Jeffrey W. Tayon,
The Federal Transfer Statute: 28 U.S.C. § 1631, 29 S. Tex. L. Rev.
189, 199 n.58 (1987)).
The Bank takes a similar tack when it comes to other
legislative history materials. It says that even if Congress
specifically discussed transfers for lack of subject matter
jurisdiction, the actual statute it enacted is broader and
unambiguously applies wherever either jurisdictional defect is
present. And, in the Bank's view, the legislative history does
not contradict the plain text of the statute Congress actually
passed. So it says we can apply the statute as written and at the
same time respect congressional intent.
2. Our Take
While the parties have presented us with a bevy of
arguments based on their detailed look at § 1631's interesting and
- 22 -
involved history, we start our analysis from a different point.
Indeed, as the Bank reminds, "[o]ur interpretive task begins with
the statute's text." United States v. Godin, 534 F.3d 51, 56 (1st
Cir. 2008). At this opening stage, we must examine the "plain
meaning of the words," id., both in the "specific context in which
that language is used, and the broader context of the statute as
a whole," Yates v. United States, 135 S. Ct. 1074, 1082 (2015)
(quoting Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997)); see
also Godin, 534 F.3d at 56.
"If the meaning of the text is unambiguous our task ends
there," Godin, 534 F.3d at 56, and we must "enforce [the statute]
according to its terms" so long as the result "required by the
text is not absurd," In re Rudler, 576 F.3d 38, 44 (1st Cir. 2009)
(internal quotation marks omitted); see also In re Jarvis, 53 F.3d
416, 419 (1st Cir. 1995) ("If possible, a statute should be
construed in a way that conforms to the plain meaning of its
text."). When a statute is unambiguous, "we consider Congress's
intent only to be certain that the statute's plain meaning does
not lead to 'absurd' results." Rudler, 576 F.3d at 44-45 (quoting
Lamie v. United States, 540 U.S. 526, 534 (2004)). But see
Kloeckner v. Solis, 133 S. Ct. 596, 607 n.4 (2012) (stating that
"even the most formidable argument concerning [a] statute's
purposes could not overcome the clarity we find in [that] statute's
text").
- 23 -
i. Statutory Text
In applying these teachings, we focus first on the text.
And in doing so, we immediately see that § 1631's plain language
talks about "jurisdiction" and "want of jurisdiction." It does
not further delineate whether "jurisdiction" is meant to refer to
subject matter jurisdiction, personal jurisdiction, or both. This
lack of specificity very nicely and reasonably lends itself to an
interpretation that it includes both well-known jurisdictional
flavors. Compare Intera Corp. v. Henderson, 428 F.3d 605, 620-21
(6th Cir. 2005) (the unmodified "jurisdiction" in Federal Rule of
Civil Procedure 41(b) covers personal jurisdiction), with Havens
v. Mabus, 759 F.3d 91, 98 (D.C. Cir. 2014) (Rule 41(b) also covers
subject matter jurisdiction).
Certainly, the fact that the phrase "want of
jurisdiction" appears without any qualifier does not obviously
limit its reach to subject matter jurisdiction alone: for that to
be the case, we would expect the statute to read "want of subject
matter jurisdiction." Since it doesn't say that, the statute on
its face does not plainly restrict a federal court's authority to
transfer an action to those cases in which it lacks subject matter
jurisdiction.
And, significantly, "want of jurisdiction" is a phrase
with an established meaning; Black's Law Dictionary defines "want
of jurisdiction" as "[a] court's lack of power to act in a
- 24 -
particular way or to give certain kinds of relief." Want of
Jurisdiction, Black's Law Dictionary (10th ed. 2014). Black's
goes on to explain that, where there is a want of jurisdiction,
"[a] court . . . may lack authority over a person or the subject
matter of a lawsuit." Id. This definition is consistent with --
indeed, it mirrors -- the Supreme Court's use of the phrase.
Milliken v. Meyer, 311 U.S. 457, 462 (1940) ("Where a judgment
rendered in one state is challenged in another, a want of
jurisdiction over either the person or the subject matter is of
course open to inquiry."). Therefore, we conclude that "want of
jurisdiction" encompasses both personal and subject matter
jurisdiction. It follows that § 1631's plain text supports a
finding that its reference to "want of jurisdiction" embraces both
types of jurisdiction and permits a federal court to order transfer
where it lacks either.14
14 Contrary to what Moody's asserts, we do not believe the
fact that § 1631 applies to a wide range of courts and scenarios
in which it is more common that any "want of jurisdiction" will be
a lack of subject matter, as opposed to personal, jurisdiction
renders the statute ambiguous. Nobody disputes, after all, that
§ 1631 covers cases in which subject matter jurisdiction is
lacking, and we have just explained how the statute's plain text
does not limit its application to that particular jurisdictional
defect.
Further, we are not persuaded by Moody's when it says that
§ 1631's mandatory directive that a court "shall" transfer if it
be in the interest of justice to do so implies that Congress
intended the statute to cover subject matter jurisdiction alone.
The fact that a court has no duty to sua sponte notice a lack of
personal jurisdiction even where no party has raised the issue --
unlike its obligation to do so with subject matter jurisdiction --
- 25 -
Furthermore, the "broader context of the statute as a
whole," Yates, 135 S. Ct. at 1082 (internal quotation mark
omitted), supports a more expansive reading of "jurisdiction."
This is because Congress has placed the qualifier "subject-matter"
before "jurisdiction" elsewhere throughout Title 28. See, e.g.,
28 U.S.C. § 1390(a) (providing that "the term 'venue' refers to
the geographic specification of the proper court or courts for the
litigation of a civil action that is within the subject-matter
jurisdiction of the district courts in general"); id. § 1447(c)
(setting forth procedural requirements to file a "motion to remand
[a removed] case on the basis of any defect other than lack of
subject matter jurisdiction"); id. § 1447(e) (laying out
procedural options when "after removal the plaintiff seeks to join
additional defendants whose joinder would destroy subject matter
jurisdiction"); see also id. § 1738B(c)(1)(A)-(B) (referring
separately to subject matter and personal jurisdiction in the
context of child support orders).15 Clearly then, Congress knows
is in no way inconsistent with Congress's expressed intent to
require a presumption in favor of transfer once a court has found
(through the usual means) that it lacks personal jurisdiction.
15 Moody's points to these two provisions in § 1738B and asks
why it is that, if the unqualified use of "jurisdiction" refers to
both kinds, Congress went to the trouble of differentiating between
"subject matter jurisdiction" and "personal jurisdiction" since
referring to "jurisdiction" alone would have sufficed? The answer
is that Congress's desire, expressed in certain other statutes, to
explicitly specify that both personal and subject matter
jurisdiction are included when it uses the word "jurisdiction"
does not mean that it must do so on each and every occasion in
- 26 -
how to, through the use of plain language, limit the word
"jurisdiction" to subject matter or personal jurisdiction when it
wants to. That it chose not to do so in § 1631 further supports
reading the term broadly to encompass both. Simply put, we see no
ambiguity.
But, in a further attempt to convince us its
interpretation of § 1631 is correct, Moody's refers to a statement
in a well-respected treatise, Federal Practice and Procedure, that
"the overall 'context of the [Improvement Act] supports [the]
interpretation' that § 1631 'was intended to apply only to
situations in which a court lacked subject matter jurisdiction.'"
Appellees' Br. at 26 (quoting 15 Charles Alan Wright, et al.,
Federal Practice and Procedure § 3842 (4th ed. 2008) (alterations
order to avoid drafting an ambiguous statute. Cf. Caraco Pharm.
Labs., Ltd. v. Novo Nordisk A/S, 132 S. Ct. 1670, 1682 (2012)
("[T]he mere possibility of clearer phrasing cannot defeat the
most natural reading of a statute . . . .").
Moody's could, of course, use this logic to argue that
Congress's explicit indication in certain instances that it's only
talking about subject matter jurisdiction does not mean that it
has to be this specific everywhere in order to limit other
statutes' applicability to subject matter jurisdiction. But we
think Congress's specificity in the context of statutes which, by
their nature, could not sensibly be read to refer to personal
jurisdiction (even without placing "subject matter" before
"jurisdiction"), see, e.g., 28 U.S.C. §§ 1390(a), 1447(c), (e),
actually lends import to Congress's failure to include such a
qualifier in a statute that, like § 1631, contains no such inherent
textual or logical limitations. In other words, the lack of
specificity in a statute that could logically refer to subject
matter jurisdiction, personal jurisdiction, or both cuts in favor
of attributing a broad meaning to the word "jurisdiction."
- 27 -
and emphases the Appellees')). Moody's goes on to quote the
treatise at length regarding the impetus behind Congress's
enactment of the Improvement Act, of which § 1631 was a part:
The Improvement Act created the Federal
Circuit and attempted to mitigate litigants'
confusion as to whether they were supposed to
file in the "regular" federal courts or in one
of the increasing array of specialized courts,
such as the then-new Court of International
Trade, Court of Federal Claims, or the Federal
Circuit. Additionally, the Improvement Act
sought to help litigants who sought review of
administrative action and who were unsure as
to whether they were to file in a district
court or an appellate court. All these
congressional concerns are related to subject
matter jurisdiction and have nothing to do
with personal jurisdiction or venue.
Id. at 26 n.17 (quoting Wright, supra, § 3842 (emphasis the
Appellees')). The authors chalk up the use of language embracing
both personal and subject matter jurisdiction to "a case of clumsy
drafting," and they divine from the legislative history "clear"
signals that § 1631 "was intended to apply only to situations in
which a court lacked subject matter jurisdiction." Wright, supra,
§ 3842. The treatise also justifies departing from the plain text
by dubbing the statute "ambiguous."16
16 In its reply brief, the Bank points out that even the
treatise authors allow that "[t]he textual argument for extending
Section 1631 to situations in which a court lacks personal
jurisdiction is certainly strong" in light of Black's Law
Dictionary's expansive definition of "want of jurisdiction."
Appellant's Reply at 9 n.3 (quoting Wright, supra, § 3842).
- 28 -
With all due respect to the distinguished authors, we do
not agree with their analysis on this point. First, we've already
said that we see no ambiguity in the statutory language, and
Black's provides a clear definition indicating that "want of
jurisdiction" includes both personal and subject matter
jurisdiction. The treatise -- which even recognizes Black's broad
definition -- does not explain how it is that a phrase defined in
this way is ambiguous, and none of our prior cases give any
indication that either "jurisdiction" or "want of jurisdiction" is
ambiguous. Moreover, we believe the absence of limiting language
in § 1631 simply demonstrates that Congress intended to enact a
statute with a broad reach: "the fact that a[n] [unambiguous]
statute can be 'applied in situations not expressly anticipated by
Congress does not demonstrate ambiguity. It demonstrates
breadth.'" Pa. Dep't of Corr. v. Yeskey, 524 U.S. 206, 212 (1998)
(quoting Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 499 (1985)).
Accordingly, Moody's reliance on Federal Practice and Procedure
does not cause us to change our view of § 1631's unambiguous
language.
ii. Caselaw and Other Considerations
Sticking with the statutory language discussion a moment
longer, we note the parties have not cited, nor have we located,
any case in which we have restricted the definition of either
"jurisdiction" or "want of jurisdiction" to refer to subject matter
- 29 -
jurisdiction only. In fact, we have on occasion said there is a
"want of jurisdiction" in cases where the court lacked personal
jurisdiction over a party. See United Elec., Radio and Mach.
Workers of Am. v. 163 Pleasant St. Corp., 960 F.2d 1080, 1085-91,
1099 (1st Cir. 1992) (discussing the lack of personal jurisdiction
over a defendant, and later referring to "the trial court's want
of jurisdiction"); see also Evans Cabinet Corp. v. Kitchen Int'l,
Inc., 593 F.3d 135, 147 n.19 (1st Cir. 2010) (using the term "want
of jurisdiction" interchangeably with "personal jurisdiction" in
its discussion of the Supreme Court's Burger King Corp. v.
Rudzewicz, 471 U.S. 462 (1985), opinion); Sunview Condo. Ass'n v.
Flexel Int'l, Ltd., 116 F.3d 962, 965 (1st Cir. 1997) (reviewing
the district court's dismissal for lack of personal jurisdiction
under the rubric of a "[w]ant of [j]urisdiction"). Thus, our past
references to a "want of jurisdiction" are unquestionably broad
enough to include both personal and subject matter jurisdiction.
Cf. United States v. Boch Oldsmobile, Inc., 909 F.2d 657, 661-62
(1st Cir. 1990) (finding that, where "there is no claim of lack of
personal jurisdiction, and [because] it is clear that the [lower]
court had subject matter jurisdiction," there was no want of
jurisdiction). Therefore, our caselaw is not inconsistent with
our reading of § 1631's plain language as permitting transfer where
a court lacks either personal or subject matter jurisdiction.
- 30 -
Moreover, our interpretation of § 1631's scope is
consistent with that of the other circuits that have considered
the issue.17
In Roman v. Ashcroft, 340 F.3d 314 (6th Cir. 2003), the
Sixth Circuit, noting that § 1631 "does not refer to any specific
type of jurisdiction," looked at Congress's intent in enacting the
statute and "conclude[d] that the statute applies to federal courts
identifying any jurisdictional defect, regardless of whether it
involves personal or subject matter jurisdiction." 340 F.3d at
328. It then found that § 1631 applied to permit transfer in a
case where the district court lacked personal jurisdiction over a
party. Id.
The Tenth Circuit came out the same way in Ross v.
Colorado Outward Bound School, Inc., 822 F.2d 1524 (10th Cir.
1987). The court found that, "[i]n harmony with the intent of
Congress, this section has been broadly construed since its
enactment." Ross, 822 F.2d at 1527 (collecting cases). Thus, it
held that "[t]he correct course" for a federal district court to
follow when it lacks personal jurisdiction is to consider
17
In citing out-of-circuit authority, Moody's points to a
string of district court cases, including a couple from the
district of Massachusetts. The reasoning in these cases does not
dissuade us from our analysis of § 1631's plain language, purposes,
and legislative history. We also note, by the way, that no other
federal appellate court has explicitly found the statutory text to
be ambiguous, and the parties have not directed us to any district
court decision to that effect either.
- 31 -
transferring the action pursuant to § 1631. Id. And the Third
Circuit reached a similar result in Island Insteel Systems, Inc.
v. Waters, 296 F.3d 200 (3d Cir. 2002), stating (albeit without
analysis)18 that a district court "ha[s] authority" under § 1631
to transfer an action over which "it lack[s] in personam
jurisdiction." 296 F.3d at 218 n.9.
Two other circuits have implied, without explicitly
holding, that § 1631 permits transfer when there is a want of
personal jurisdiction. See Johnson v. Woodcock, 444 F.3d 953, 954
n.2 (8th Cir. 2006) ("[W]e affirm the district court's dismissal
[for lack of personal jurisdiction] even though the court was
empowered by 28 U.S.C. § 1631 to transfer the action to another
court to cure the lack of jurisdiction."); Gray & Co. v.
Firstenberg Mach. Co., 913 F.2d 758, 761-62 (9th Cir. 1990) (per
curiam) (concluding that the district court lacked personal
jurisdiction over the defendants and remanding for the court to
consider whether transfer under § 1631 would be "in the interest
of justice"). Cf. Dornbusch v. Comm'r, 860 F.2d 611, 612 (5th
Cir. 1988) (per curiam) (noting, in a case involving improper venue
18
Moody's argues that we should not find these out-of-circuit
cases to have any persuasive value because those courts did not
engage in a sufficiently detailed or rigorous analysis. But when
a court is of the mind that a particular issue is "easy," it is
not at all surprising that its analysis may be brief, and so mere
brevity should not be taken as indicating a lack of attention paid
to a particular issue.
- 32 -
rather than a lack of personal jurisdiction, that § 1631's
legislative history is "fully consistent with . . . a broad,
nontechnical reading of" that statute).
We also note that, though the Sixth Circuit in Roman
identified a "circuit[] . . . split" with some circuits finding
§ 1631 permits transfer only where subject matter jurisdiction is
lacking, Roman, 340 F.3d at 328 (citing cases), we hesitate to
condone that characterization. Our canvassing of the circuits
indicates that, to date, no circuit has explicitly found or held
that the statute is so limited. The Second Circuit has come the
closest, but it addressed the issue in what can only be
characterized as dicta and even there did not take a definitive
stance. See Songbyrd, Inc. v. Estate of Grossman, 206 F.3d 172,
179 n.9 (2d Cir. 2000) (discussing how a court that lacks personal
jurisdiction may appropriately transfer a case pursuant to 28
U.S.C. § 1404 or § 1406, and noting that "the legislative history
of section 1631 provides some reason to believe that this section
authorizes transfers only to cure lack of subject matter
jurisdiction").
The other circuits that have touched upon § 1631 have
not had occasion to decide whether it permits transfer when
personal jurisdiction is lacking. See In re Carefirst of Md.,
Inc., 305 F.3d 253, 257 n.2 (4th Cir. 2002) (explicitly stating
the court "need not decide whether section 1631 extends to cases
- 33 -
where only personal jurisdiction is lacking"); Carpenter-Lenski v.
Ramsey, No. 99-3367, 2000 WL 287651, at *2 (7th Cir. Mar. 14, 2000)
(unpublished) (acknowledging uncertainty over the scope of § 1631
but saying that "[w]e have not addressed this issue, and need not
reach it in this case"); Bond v. Ivy Tech State Coll., 167 F. App'x
103, 106-07 (11th Cir. 2006) (per curiam) (unpublished) (affirming
district court's dismissal based on lack of personal jurisdiction
and upholding its finding that the interest of justice did not
require transfer under § 1631 without reaching the question of
whether § 1631 authorizes transfer where personal jurisdiction is
lacking); Hill v. U.S. Air Force, 795 F.2d 1067, 1070-71 (D.C.
Cir. 1986) (per curiam) (affirming dismissal for lack of personal
jurisdiction and concluding that the district court did not abuse
its discretion in failing to sua sponte transfer "an individual
claim" under § 1631 where neither party requested transfer and
where a related suit was already pending in a district where
personal jurisdiction could be obtained over the defendant).
So, at the end of the day, we see that our interpretation
of § 1631 is in line with those few courts of appeals to have
considered the statute's scope and, as such, is consistent with
the weight of authority. Moreover, a broad construction is
consistent with § 1631's purpose and goals, which we discussed in
Britell. Though Britell did not involve the particular
jurisdictional issue we confront today (that panel was called upon
- 34 -
to analyze when a transfer would be "in the interest of justice"),
its discussion of the animating policy considerations behind the
statue's enactment is illuminating.
After examining much of the same legislative history
that the parties here brought to our attention, the Britell panel
concluded that Congress passed § 1631 to (1) make sure that "a
litigant [does not] find himself without a remedy because of a
lawyer's error or a technicality of procedure [that results from]
uncertainty in some statutes regarding which court has review
authority," and (2) eliminate the need to engage in the "wasteful
and costly" practice of filing in multiple jurisdictions in case
one court ended up not having jurisdiction. 318 F.3d at 74
(alterations in original) (quoting S. Rep. No. 97-275, at 11
(1982), reprinted in 1982 U.S.C.C.A.N. 11, 21). Accordingly, the
statute "protects litigants against both statutory imprecision and
lawyers' errors" and "offers a practical alternative" -- i.e.,
transfer when jurisdiction is wanting -- "to the prophylactic, but
inordinately wasteful, precaution of double filing." Id. And, we
observed, the statute "furthers the salutary policy favoring the
resolution of cases on the merits." Id. (citing cases). These
considerations, we said, lead to "[t]he conclusion that transfer,
rather than dismissal, is the option of choice . . . ." Id.
Even though the jurisdictional concerns at issue here
differ from the issues of concern to the Britell court, we think
- 35 -
the policy considerations Britell identified are nonetheless
applicable to this appeal. Indeed, we have previously noted that
"we [were] inclined to read § 1631 as allowing for transfers where
a federal court lacks any type of jurisdiction (including personal
jurisdiction)." Cimon v. Gaffney, 401 F.3d 1, 7 n.21 (1st Cir.
2005). Thus, we think interpreting § 1631 broadly to permit
transfer when there's a lack of either personal or subject matter
jurisdiction serves to advance the legislative purposes we
identified in Britell.19
WHERE DOES THE CASE GO NEXT?
Our conclusion that § 1631 permits transfer where
personal jurisdiction is lacking does not mean the Bank
automatically gets its requested transfer. Still to be determined
is whether transfer is "in the interest of justice," a question
the district judge did not reach.20
We, however, discussed what is meant by "in the interest
of justice" in Britell. We determined that § 1631's plain text
19
There is one loose end to tie up. Because we conclude that
§ 1631 is not ambiguous, we consult legislative history in
accordance with our obligation to ensure that applying it as
written will not lead to an "absurd result[]." Rudler, 576 F.3d
at 44-45. Recalling the parties' extensive discussion of this
topic, we conclude it is not absurd to interpret § 1631 as
permitting transfer in a case where personal jurisdiction is
lacking.
20Another requirement of the statute, that the proposed
transferee court be one "in which the action or appeal could have
- 36 -
and legislative history establish a rebuttable presumption in
favor of transfer, Britell, 318 F.3d at 73, and "[o]nly if an
inquiring court determines that a transfer is not in the interest
of justice is the presumption rebutted," id. at 74. We listed
specific factors cutting in favor of (and others against) transfer,
id. at 74-75, and we indicated that transfer may be warranted where
"an action or appeal has obvious merit and the filing period has
expired" in the putative transferee court's district, id. at 75.
Because the district court did not consider the
"interest of justice" in the first instance, we think remand is
warranted. True, we made the "interest of justice" call ourselves
in Britell. See id. at 75-76. But the question in Britell was
whether an appeal that had admittedly been filed in the wrong
appellate court (the First Circuit) should be transferred to a
different appellate court that would have had jurisdiction (the
Court of Appeals for the Federal Circuit). Id. at 71. There was
no question as to the propriety of the district court's
jurisdiction. Section 1631 thus had nothing to do with the case
until the appeal was docketed here, and so we handled the inquiry
ourselves as the potential transferor court.
Here, our concern is whether, in the interest of justice,
the district court should transfer the Bank's claims against
been brought at the time it was filed or noticed," 28 U.S.C.
§ 1631, is not at issue in this appeal.
- 37 -
Moody's to the Southern District of New York. It is, therefore,
appropriate for us to remand to the district court for it to answer
this question.21
DISPOSITION
For the reasons discussed above, the district court's
order dismissing the Bank's claims against Moody's is vacated and
this matter remanded for further proceedings consistent with this
opinion. Costs to the Bank.
21We are mindful of the Bank's resort to 28 U.S.C. § 1406(a)
as an alternative vehicle for transfer. Given that § 1631 carries
a presumption in favor of transfer (which might not be the case
with other statutes), we need not address § 1406(a) today.
- 38 -