Matao Yokeno v. Sawako Sekiguchi

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MATAO YOKENO, AKA Eddie M. No. 11-17196
Yokeno,
Plaintiff-Appellant, D.C. No.
1:09-cv-00020
v.
SAWAKO SEKIGUCHI, AKA Sawako OPINION
S. Lai; EMIL LAI; JOHN DOES, 1-10,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Guam
Frances Tydingco-Gatewood, Chief District Judge,
Presiding
Argued and Submitted
November 4, 2013—Pasadena, California
Filed April 15, 2014
Before: Diarmuid F. O’Scannlain, Susan P. Graber,
and Carlos T. Bea, Circuit Judges.
Opinion by Judge O’Scannlain
2 YOKENO V. SEKIGUCHI
SUMMARY*
Jurisdiction
The panel held that this court and the District Court of
Guam lacked jurisdiction to decide this case exclusively
between aliens, and vacated the district court’s summary
judgment in favor of Sawako Sekiguchi and Emil Lai and
remanded with instructions to remand the case to the Superior
Court of Guam.
Plaintiff Matao Yokeno is an alien admitted to the United
States for permanent residence, living in Guam. Defendants
Lai, a British Overseas Citizen, and Sekiguchi, a Japanese
citizen, both live in Japan, and they removed the case to the
District Court of Guam based on diversity of citizenship.
The Organic Act of Guam conferred upon the District
Court of Guam the same diversity jurisdiction afforded to
Article III courts. From May 18, 1989 to January 5, 2012, the
“deeming clause” amended 28 U.S.C. § 1332 to provide that
for diversity jurisdiction “an alien admitted to the United
States for permanent residence shall be deemed a citizen of
the State in which such alien is domiciled.” This case was
removed to the District Court of Guam in 2011.
The panel held that the deeming clause purported to
confer jurisdiction in cases such as this one by supplying
constitutionally required minimal diversity through deemed
citizenship. The panel held, however, that the Organic Act
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
YOKENO V. SEKIGUCHI 3
precluded the court from deciding the merits of this dispute
between aliens because the Organic Act conferred diversity
jurisdiction upon the District Court of Guam reaching only as
far as the diversity jurisdiction afforded to Article III courts.
The panel concluded that because the U.S. Constitution did
not supply diversity jurisdiction to Article III courts in suits
between aliens, the jurisdiction afforded to the federal court
in Guam must also, under the Organic Act, be so limited.
COUNSEL
Andrew B. Compton, University of Arizona Pro Bono
Appellate Project, Tucson, Arizona, argued the cause for the
Appellant. With him on the briefs were Willie Jordan-Curtis,
Ph.D., J.D., Matthew J. Palmer, David C. Potts, and Michael
R. Shumway, University of Arizona Pro Bono Appellate
Project, Tucson, Arizona.
Carlos L. Taitano, Taitano and Taitano LLP, Tamuning,
Guam, argued the cause for the Appellees and filed the briefs.
OPINION
O’SCANNLAIN, Circuit Judge:
We must decide whether the federal court in Guam has
jurisdiction in disputes exclusively between aliens.
I
Matao Yokeno sued Emil Lai and Sawako Sekiguchi in
the Superior Court of Guam, asserting claims arising from
4 YOKENO V. SEKIGUCHI
alleged breaches of fiduciary duty in the course of the parties’
several business ventures. Sekiguchi and Lai removed the
case to the District Court of Guam based on diversity of
citizenship.
Yokeno is an alien admitted to the United States for
permanent residence, living in Guam.1 Lai, a British
Overseas Citizen, and Sekiguchi, a Japanese citizen, both live
in Japan. The district court did not examine its jurisdiction
and neither party objected to its exercise based on diversity of
citizenship. The district court granted summary judgment on
the merits, in favor of Sekiguchi and Lai, and Yokeno timely
appealed.
Yokeno now contests subject matter jurisdiction for the
first time, contending that no diversity of citizenship exists in
a dispute between aliens. He urges us to dismiss the appeal
and to vacate the district court’s judgment with instructions
to remand to the Superior Court of Guam. Sekiguchi and Lai
maintain that diversity jurisdiction exists but instead,
curiously, move to dismiss this appeal based on res judicata.2
1
We use the term “alien” in this opinion to refer to a foreign national.
2
Sekiguchi and Lai move to dismiss the appeal based on res judicata.
They contend (and are seemingly satisfied) that the Superior Court of
Guam has previously decided the claims at issue in this case, precluding
their further litigation.
We “generally may not rule on the merits of a case without first
determining that [we have] jurisdiction over the category of claim in suit
(subject-matter jurisdiction) and the parties (personal jurisdiction).”
Sinochem Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422,
430–31 (2007). The Supreme Court has defined certain exceptions to this
rule, supplying discretionary “leeway to choose among threshold grounds
for denying audience to a case on the merits.” Id. at 431 (internal
YOKENO V. SEKIGUCHI 5
II
We deal first with Yokeno’s jurisdictional challenge. We
have an independent obligation to determine our jurisdiction,
see Chapman v. Pier 1 Imports (U.S.), Inc., 631 F.3d 939, 954
(9th Cir. 2011) (en banc), and we consider Yokeno’s
objection to subject matter jurisdiction even though he raises
it for the first time on appeal, see Detabali v. St. Luke’s
Hosp., 482 F.3d 1199, 1202 (9th Cir. 2007).
A
Article III of the United States Constitution extends the
judicial power to controversies “between Citizens of different
States . . . and between a State, or the Citizens thereof, and
foreign States, Citizens or Subjects.” U.S. Const. art. III, § 2,
cl. 1. This clause, the constitutional source of our diversity
jurisdiction, supplies jurisdiction even where only minimal
diversity of citizenship is present. See State Farm Fire &
Cas. Co. v. Tashire, 386 U.S. 523, 530–31 (1967). In the
case of litigation involving an alien, a state or a citizen of a
state must be a party. Jackson v. Twentyman, 27 U.S. (2 Pet.)
136, 136 (1829); Hodgson v. Bowerbank, 9 U.S. (5 Cranch)
303, 304 (1809); Kavourgias v. Nicholaou Co., 148 F.2d 96,
97 (9th Cir. 1945).
quotation marks and citation omitted). Neither the Supreme Court nor we
have previously identified res judicata as such a “threshold ground,” and
we decline to do so in this case.
6 YOKENO V. SEKIGUCHI
Unlike the Constitution, the diversity statute, 28 U.S.C.
§ 1332,3 requires complete diversity of citizenship. See
Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990) (citing
Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)). We
have repeatedly confirmed the application of this rule in
alienage cases, refusing to hear disputes between aliens for
lack of statutory jurisdiction even when a citizen party—and
thus constitutionally required minimal diversity—is present.
See Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas,
S.A., 20 F.3d 987, 991 (9th Cir. 1994); Craig v. Atl. Richfield
Co., 19 F.3d 472, 476 (9th Cir. 1994); Faysound Ltd. v.
United Coconut Chems., Inc., 878 F.2d 290, 294 (9th Cir.
1989).
Because this is an appeal from the District Court of
Guam, we also consider the unique nature of its jurisdiction.
That district court is not an Article III court; it was created by
the Organic Act of Guam, see 48 U.S.C. §§ 1421–1421k-1,
pursuant to Article IV of the Constitution. See Chase
Manhattan Bank (Nat’l Ass’n) v. S. Acres Dev. Co., 434 U.S.
236, 236–37 (1978) (per curiam). The Organic Act of Guam
confers upon the District Court of Guam the same diversity
jurisdiction afforded to Article III courts:4 “The District Court
3
The statute provides that “[t]he district courts shall have original
jurisdiction of all civil actions . . . between (1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state . . . ;
(3) citizens of different States and in which citizens or subjects of a
foreign state are additional parties; and (4) a foreign state . . . as plaintiff
and citizens of a State or different States.” 28 U.S.C. § 1332(a).
4
The Organic Act also confers upon the District Court of Guam certain
other specific areas of jurisdiction, including, for example, jurisdiction
with respect to the “Guam territorial income tax.” See 26 U.S.C. § 7441;
48 U.S.C. §§ 1421i(h)(1), 1424(b).
YOKENO V. SEKIGUCHI 7
of Guam shall have the jurisdiction of a district court of the
United States, including, but not limited to, the diversity
jurisdiction provided for in [28 U.S.C. § 1332], and that of a
bankruptcy court of the United States.” 48 U.S.C. § 1424(b).
B
In 1988,5 Congress amended § 1332 to include the
following clause, known as the “deeming clause”:
For the purposes of this section, section 1335,
and section 1441, an alien admitted to the
United States for permanent residence shall be
deemed a citizen of the State in which such
alien is domiciled.6
Pub. L. No. 100–702, § 203(a), 102 Stat. 4642, 4646 (1988).
In 2011, but after this case was removed to the District Court
of Guam, Congress again amended § 1332 to delete the
deeming clause.7
On its face, the deeming clause would seem to confer
jurisdiction in cases, like this one, between a resident alien
plaintiff and non-resident alien defendants, where neither
5
The 1988 amendment to § 1332 became effective May 18, 1989. See
Pub. L. No. 100–702, § 203(b), 102 Stat. 4642, 4646 (1988).
6
Because at all relevant times the diversity statute defined the word
“States” to include the Territories, we consider Guam to be a “State” for
purposes of diversity jurisdiction. See 28 U.S.C. § 1332(e).
7
The 2011 amendment to the statute, which deleted the deeming clause,
became effective January 6, 2012. See Pub. L. No. 112–63, §§ 101,
105(a), 125 Stat. 758, 758, 762 (2011).
8 YOKENO V. SEKIGUCHI
constitutional nor statutory jurisdiction would otherwise exist.
This case requires us to determine the effect of the deeming
clause on the citizenship of a resident alien suing solely alien
defendants—a question of first impression.
III
Sekiguchi and Lai contend that the district court properly
exercised jurisdiction in this case because it is an Article IV
court, not an Article III court. The Organic Act itself makes
clear, however, that the diversity jurisdiction of the District
Court of Guam is coextensive with the diversity jurisdiction
of an Article III district court. See 48 U.S.C. § 1424(b).8 The
Organic Act does not purport to supply the District Court of
Guam with jurisdiction exceeding that of an Article III
district court. Instead, it identifies the diversity statute as the
source of one aspect of such jurisdiction. The question before
us is whether the 2011 version of 28 U.S.C. § 1332 comports
with constitutional limits on the jurisdiction of an Article III
court—the same jurisdiction the Organic Act confers upon
the District Court of Guam.
IV
A
Statutory interpretation begins with the text of the statute.
Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999).
8
Sekiguchi and Lai do not contend that this case presents a federal
question. Nor would such an argument make sense, as a case does not
pose a federal question simply by virtue of the fact that it arises under
Guam law. See Republican Party of Guam v. Gutierrez, 277 F.3d 1086,
1091–92 (9th Cir. 2002).
YOKENO V. SEKIGUCHI 9
“Where the statute’s language is plain, the sole function of
the courts is to enforce it according to its terms, for ‘courts
must presume that a legislature says in a statute what it means
and means in a statute what it says there.’” Int’l Ass’n of
Machinists & Aerospace Workers, Local Lodge 964 v. BF
Goodrich Aerospace Aerostructurers Grp., 387 F.3d 1046,
1051 (9th Cir. 2004) (quoting Conn. Nat’l Bank v. Germain,
503 U.S. 249, 253–54 (1992)) (citation and internal quotation
marks omitted). We do not look at statutory language in
isolation, but consider “the specific context in which that
language is used, and the broader context of the statute as a
whole.” Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997).
Only if this approach leaves or reveals ambiguity may we
turn to extrinsic evidence such as legislative history. See
Dep’t of Hous. & Urban Dev. v. Rucker, 535 U.S. 125, 132
(2002); W. Va. Univ. Hosps., Inc. v. Casey, 499 U.S. 83,
98–99 (1991); R.R. Comm’n of Wis. v. Chi., Burlington, &
Quincy R.R. Co., 257 U.S. 563, 589 (1922) (“Committee
reports and explanatory statements of members in charge
made in presenting a bill for passage . . . are only admissible
to solve doubt and not to create it.” (citations omitted));
United States v. Sioux, 362 F.3d 1241, 1246 (9th Cir. 2004).
Whenever possible, federal statutes are construed “‘to
avoid serious doubt of their constitutionality.’” Stern v.
Marshall, 131 S. Ct. 2594, 2605 (2011) (quoting Commodity
Futures Trading Comm’n v. Schor, 478 U.S. 833, 841
(1986)). The avoidance canon, however, “‘does not give [us]
the prerogative to ignore the legislative will in order to avoid
constitutional adjudication.’” Id. (alteration in original)
(quoting Schor, 478 U.S. at 841).
10 YOKENO V. SEKIGUCHI
B
The plain language of the deeming clause instructs us to
treat Yokeno, a permanent resident alien, as a citizen of
Guam for purposes of determining statutory diversity
jurisdiction. To “deem” is “[t]o treat (something) as if (1) it
were really something else or (2) it has qualities that it does
not have.” Black’s Law Dictionary (9th ed. 2009); see also
2 Oxford English Dictionary (Compact ed. 1971) (defining
“to deem” as “to judge, conclude, think, consider, hold”).
According to the text, we should regard Yokeno not as an
alien but as a citizen of Guam, and statutory diversity
jurisdiction should lie in his dispute with alien defendants. In
other words, the deeming clause purports to confer statutory
jurisdiction in this suit between aliens where neither
constitutional nor statutory jurisdiction would otherwise exist.
Cases and commentators, however, have suggested that,
notwithstanding the plain language, the statute might be
unconstitutional in the circumstances presented here because
it would exceed the constitutional requirement of minimal
diversity as well as the longstanding rule of complete
diversity. See, e.g., Saadeh v. Farouki, 107 F.3d 52, 58 (D.C.
Cir. 1997) (“A literal reading of the 1988 amendment to
§ 1332(a) would produce an odd and potentially
unconstitutional result.”); Singh v. Daimler-Benz AG, 9 F.3d
303, 311 (3d Cir. 1993) (noting “the potential
unconstitutional application of the deeming provision” when
“a permanent resident alien sues as the sole defendant either
a permanent resident alien domiciled in another state or a
nonresident alien”); Charles A. Wright et al., 13B Federal
Practice and Procedure § 3604, at 77 (Supp. 1992); David D.
Siegel, Changes in Federal Jurisdiction and Practice under
the New Judicial Improvements and Access to Justice Act,
YOKENO V. SEKIGUCHI 11
123 F.R.D. 399, 408–09 (1989) (noting, in discussing the
deeming clause, that “[t]he jurisdictional outer limits set forth
in § 2 of Article III of the Constitution don’t include a
jurisdictional basis consisting only of alien versus alien”).
C
Three of our sister circuits have interpreted the deeming
clause. None faced, as we do, a case in which the clause
would purport to supply statutory jurisdiction in excess of
that allowed by Article III—though all imply that conferring
jurisdiction in a suit between aliens would be impermissible.
That position appears to be the beginning and the end of the
case law consensus.
1
The Third Circuit, in Singh, held that diversity jurisdiction
existed by virtue of the deeming clause in a suit between a
permanent resident alien living in Virginia and two
defendants—one alien and one corporate citizen of Delaware
and New Jersey. See 9 F.3d at 312. In Singh, the deeming
clause supplied complete diversity of citizenship—satisfying
the requirements for statutory jurisdiction—through the
deemed Virginia citizenship of the permanent resident alien.
Yet the court was not required to confront the question before
us—whether the deeming clause may supply statutory
jurisdiction without the constitutionally requisite minimal
diversity. Constitutional jurisdiction nevertheless existed
without invoking the deeming clause because the alien
plaintiff was diverse from the American corporate defendant.
See id.
12 YOKENO V. SEKIGUCHI
The second of our sister circuits to interpret the clause
reached a different result. Disregarding the text of the
deeming clause, the District of Columbia Circuit held that a
permanent resident alien retains his national citizenship for
purposes of determining diversity jurisdiction. See Saadeh,
107 F.3d at 55, 61. To avoid addressing constitutional
jurisdiction even by implication, the court refused to interpret
the deeming clause as conferring statutory jurisdiction—
through complete diversity of citizenship—in a suit between
an alien on one side and both aliens and permanent resident
aliens on the other. See id.
Finally, the Seventh Circuit, in Intec USA, LLC v. Engle,
held that by virtue of the deeming clause, permanent resident
aliens are citizens of both their native country and their state
of residence for diversity purposes. 467 F.3d 1038, 1043 (7th
Cir. 2006). Therefore, no complete diversity of citizenship—
that is, no statutory jurisdiction—existed in a suit between
alien defendants and a North Carolina limited liability
corporation deemed to have two citizenships because one of
its members was a New Zealand citizen permanently residing
in North Carolina. Id. at 1044.
2
Despite their differences, the cases are consistent in an
important way: Each recognizes that invoking the deeming
clause to supply minimal diversity of citizenship where it
would not otherwise exist, thereby exceeding constitutional
jurisdiction, is constitutionally problematic. See Saadeh,
107 F.3d at 58; Singh, 9 F.3d at 311; see also Intec, 467 F.3d
at 1041, 1044.
YOKENO V. SEKIGUCHI 13
The cases divide on other fronts. Singh and Saadeh both
read the statute to be unambiguous, as do we. The statute
instructs us to regard only Yokeno’s deemed citizenship of
Guam, not his native citizenship. See Saadeh, 107 F.3d at 58;
Singh, 9 F.3d at 306.
Intec, on the other hand, considers the statute to be
ambiguous because it does not specify whether an alien
should be deemed a citizen of his state of domicile
exclusively or, in addition, his native country. Intec,
467 F.3d at 1042. Faced with this ambiguity, Intec
considered both citizenships to be relevant to the diversity
determination. Id.
Intec’s interpretation is both unavailable to us and
unpersuasive. Our precedent directs us to consider only the
American citizenship of a dual citizen for purposes of
determining diversity. See Mutuelles Unies v. Kroll &
Linstrom, 957 F.2d 707, 711 (9th Cir. 1992). And because
deemed American citizenship was not necessary to supply
constitutional jurisdiction in Intec, the case continues to press
the question whether deemed citizenship suffices to confer
minimal diversity for constitutional purposes. See Intec,
467 F.3d at 1041.
Intec presents an unpersuasive answer to such question.
By directing that a permanent resident alien “shall be deemed
a citizen of the State in which such alien is domiciled,” the
statute counsels us to consider Yokeno exclusively a citizen
of Guam. Had Congress wished to instruct us otherwise, it
could have done so. See, e.g., Barnhart v. Sigmon Coal Co.,
534 U.S. 438, 454 (2002); Cumbie v. Woody Woo, Inc.,
596 F.3d 577, 581 (9th Cir. 2010). A corporation, for
example, is expressly “deemed to be a citizen of every State
14 YOKENO V. SEKIGUCHI
and foreign state by which [they have] been incorporated and
of the State or foreign state where it has its principal place of
business.” 28 U.S.C. § 1332(c)(1). As to aliens, however,
Congress identified only the state of residence as the relevant
citizenship for diversity purposes. Indeed, it is only Intec’s
proposed alternative reading of the statute that requires us to
add language to its text, by interpreting it to provide that a
permanent resident alien “shall be deemed a citizen of the
State in which [he] is domiciled” in addition to his native
citizenship.
3
Although only Intec found the deeming clause to be
ambiguous, all three courts nevertheless reviewed the
provision’s legislative history in discussing its meaning. See
Intec, 467 F.3d at 1042–43; Saadeh, 107 F.3d at 58–60;
Singh, 9 F.3d at 306–08.
Singh noted that such history in this case is “scant.”
9 F.3d at 308. The diversity statute was amended to include
the deeming clause as part of the 1988 Judicial Improvements
and Access to Justice Act (the “Bill”), Pub. L. No. 100-702,
102 Stat. 4642 (1988). Singh reasons that, while the House
Report—which was written before the deeming clause was
inserted in the Bill—expresses concern for the “delay caused
by rising caseloads,” such concerns were not dispositive. See
9 F.3d at 307 (citing H.R. Rep. No. 100–889, at 23 (1988),
reprinted in 1988 U.S.C.C.A.N. 5982, 5984). And while the
House Report does not address the deeming clause, the court
reasoned, there is no Senate Report. Id. at 308. Moreover,
according to Singh, the final version of the Bill—an “omnibus
court reform bill”—stepped back from an earlier proposal in
the House to eliminate diversity jurisdiction entirely. See id
YOKENO V. SEKIGUCHI 15
at 306–07 (citing 134 Cong. Rec. 31,049 (1988)). The court
thus refused to set aside the text, having discerned no
congressional directive limiting the statute’s application to
suits between neighbors. See id. at 310.
Saadeh and Intec disagree with Singh most prominently
about the weight to afford this legislative history. Saadeh
considered the deeming clause to comport with the “general
congressional effort to reduce diversity jurisdiction” in the
Bill and found that such effort, combined with the potentially
unconstitutional application of the clause, justified setting
aside the text altogether. See 107 F.3d at 60–61. Saadeh also
relied on observations made by the Judicial Conference and
introduced into the Congressional Record to the effect that
diversity should not lie in a suit between two neighbors solely
on account of one’s status as a permanent resident alien. See
id. at 58–59. Intec, too, credited this explanation for the
deeming clause, but admitted that the text may have
“unanticipated effects at the fringes.” Intec, 467 F.3d at
1044.
While we do not afford the legislative history even the
significance the Singh court did, Singh’s conclusion is
nevertheless most faithful to the text. The text is plain, and
we are required to apply it according to its terms. BF
Goodrich, 387 F.3d at 1051. We do not agree with Saadeh
that the statute must be interpreted always to restrict diversity
jurisdiction. See 107 F.3d at 60. The Bill’s structure belies
the conclusion that we should regard restriction of diversity
jurisdiction as its primary purpose, defeating any other
potential effects. It was an omnibus Bill, addressing
numerous topics in addition to the diversity jurisdiction of the
federal courts—for example, the Federal Judicial Center
Foundation, the Rules Enabling Act, the jurisdiction of the
16 YOKENO V. SEKIGUCHI
Federal Circuit over interlocutory appeals, arbitration in
disputes before federal courts, the Jury Selection and Service
Act of 1968, and a number of other miscellaneous items.
And even if we were to consider the Bill’s history, which we
do not, such history does not preclude the possibility that the
Bill Congress passed into law might have effects outside its
sponsors’ express contemplation. See Pittston Coal Grp. v.
Sebben, 488 U.S. 105, 115 (1988) (“It is not the law that a
statute can have no effects which are not explicitly mentioned
in the legislative history.”).
D
Whether or not Congress intended to confer jurisdiction
in cases like the one before us by supplying constitutionally
required minimal diversity through deemed citizenship, the
deeming clause purports to do so. The Organic Act, however,
precludes us from deciding the merits of this dispute between
aliens because it confers diversity jurisdiction upon the
District Court of Guam reaching only as far as the diversity
jurisdiction afforded to Article III courts. And to determine
the diversity jurisdiction of an Article III court, as Chief
Justice Marshall instructed, we must “[t]urn to the article of
the [C]onstitution of the United States, for the statute cannot
extend the jurisdiction beyond the limits of the
[C]onstitution.” Hodgson v. Bowerbank, 9 U.S. (5 Cranch)
303, 303 (1809). Because the Constitution does not supply
diversity jurisdiction to Article III courts in suits between
aliens, the jurisdiction afforded to the federal court in Guam
must also, under the Organic Act, be so limited.
YOKENO V. SEKIGUCHI 17
V
Both we and the District Court of Guam lack jurisdiction
to decide this dispute exclusively between aliens. We
therefore VACATE the District Court of Guam’s summary
judgment in favor of Sekiguchi and Lai and REMAND with
instructions to remand the case to the Superior Court of
Guam.9
Sekiguchi and Lai’s pending motion to dismiss the appeal
as res judicata is DENIED.
VACATED AND REMANDED WITH
INSTRUCTIONS.
9
Although we do not address the underlying merits, Yokeno has
prevailed on the substance of his appeal in securing vacatur of the
judgment against him. We therefore award costs on appeal to Yokeno.
See Fed. R. App. P. 39(a)(4).