Justia.com Opinion Summary:
Synoran and e-Pin (appellants) appealed from the district court's confirmation of an arbitration award in favor of Wells Fargo, which had prevailed on its claims for breach of contract and for misappropriation of trade secrets. Appellants maintained that the district court lacked jurisdiction to confirm the award, erred in confirming the award, and abused its discretion in denying their motion to amend or terminate a permanent injunction issued as part of the award. The court rejected appellants' claim that Wells Fargo was a citizen of both South Dakota and California and concluded that the district court did not err in determining that it had subject-matter jurisdiction over the action. The court also held that the district court did not err in determining that appellants had waived their right to challenge the award of injunctive relief; in declining to vacate the award on the grounds that the arbitration panel exceeded the scope of its arbitral mandate; and in confirming the award of attorneys' fees against e-Pin. The court further held that the district court did not abuse its discretion in denying the motion to terminate or amend the permanent injunction. Accordingly, the judgment was affirmed.Receive FREE Daily Opinion Summaries by Email
Civil case - Arbitration. Pursuant to 18 U.S.C. Sec. 1348, a national bank is a citizen only of the state in which its main office is located; applied here, Wells Fargo is a citizen only of South Dakota, and the district court did not err in concluding that it had subject-matter jurisdiction over this action because the parties are citizens of different states; defendants waived their right to enforce a contractual proscription on injunctive relief by failing to challenge Wells Fargo's request for such relief in the arbitration proceedings and by asking for such relief themselves; arbitrators did not exceed scope of the arbitral mandate by deciding the parties' competing claims as to who developed or invented a software package as resolving the issue was necessary to deciding an issue concerning misappropriation; Rule 43(d)(ii) provided a basis for an award of attorneys' fees against e-Pin; district court did not abuse its discretion by denying a motion to terminate or amend the permanent injunction. Judge Murphy, dissenting.
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
Wells Fargo Bank, N.A.,
* Appeal from the United States
* District Court for the
* District of Minnesota.
WMR e-PIN, LLC; e-Banc, LLC;
Submitted: April 1, 2011
Filed: September 2, 2011
Before WOLLMAN, MURPHY, and GRUENDER, Circuit Judges.
WOLLMAN, Circuit Judge.
Synoran, LLC (Synoran)1 and WMR e-Pin LLC (e-Pin) appeal from the district
court’s2 confirmation of an arbitration award of $1.865 million in favor of Wells
Fargo, N.A., which had prevailed on its claims for breach of contract and for
Synoran, LLC is the successor to e-Banc, LLC. For clarity’s sake, we will
refer to the entity that was formerly e-Banc as Synoran throughout this opinion.
The Honorable Joan N. Ericksen, United States District Judge for the District
of Minnesota, adopting the report and recommendation of the Honorable Franklin L.
Noel, United States Magistrate Judge for the District of Minnesota.
misappropriation of trade secrets. Appellants maintain that the district court lacked
jurisdiction to confirm the award, erred in confirming the award, and abused its
discretion in denying their motion to amend or terminate a permanent injunction
issued as part of the award. We affirm.
In 2001, Wells Fargo entered into a business relationship with appellant
Synoran. The parties outlined the terms of the relationship in a Software Licensing
Agreement (SLA), an umbrella agreement to be fleshed out by subsequent agreements
between the parties. Under the SLA, Synoran would provide consulting services and
software products to Wells Fargo that related to its management of customer accounts.
In 2003, Wells Fargo sought additional consulting services from Synoran
related to the development of its Digital Information Exchange software (DIXE
Software). The DIXE Software adopted a “distributed network” approach that Wells
Fargo deemed proprietary. Wells Fargo and Synoran entered a second agreement
(DIXE Consulting Agreement), under which Wells Fargo reserved certain intellectual
property rights associated with the DIXE Software and acknowledged that certain
other intellectual property rights associated with a “central switch” approach belonged
to appellant e-Pin.
In 2004, Wells Fargo and e-Pin executed a Patent License Agreement (PLA)
through which Wells Fargo acquired a license to use certain products patented by ePin that relate to check clearing and check settlement services. The PLA incorporated
by reference the dispute resolution procedures from the SLA, which provided that any
dispute must be resolved through arbitration. Of particular relevance to this appeal
are provisions that relate to the scope of the arbitration proceeding and the forms of
relief available to the parties:
Arbitrators (i) shall resolve all Disputes in accordance with the
substantive law of the state in which the arbitration is held, (ii) may grant
any remedy or relief that a court of the state in which the arbitration is
held could order or grant with the scope here of and such ancillary relief
as is necessary to make effective any award; and (iii) shall have the
power to award recovery of all costs and fees, to impose sanctions and
to take such other actions as they deem necessary to the extent a judge
could pursuant to the Federal Rules of Civil Procedure, or other
[. . .]
Any award in arbitration under this Section shall be limited to monetary
damages and shall include no injunction or direction to any party other
than the direction to pay a monetary amount.
J.A. Ex.000029 at ¶ 7, ¶ 9.
After e-Pin and Wells Fargo executed the PLA, e-Pin assigned certain patent
interests to DataTreasury Corporation (DTC). DTC sued Wells Fargo for patent
infringement. Wells Fargo invoked the dispute resolution procedures and initiated
arbitration proceedings against e-Pin and DTC. DTC contended that it was not subject
to arbitration and was ultimately dismissed. Synoran intervened and together with ePin asserted counterclaims against Wells Fargo arising from their rights under the
In July 2008, a three-member arbitration panel (the Panel) convened and heard
twelve days of testimony. In its findings of facts and conclusions of law, the Panel
dismissed the appellants’ counterclaims, found in favor of Wells Fargo on its claims
for breach of the SLA and misappropriation of the DIXE software trade secrets, and
ordered that “Synoran and WMR e-Bank LLC” pay $1,265,000.00 in attorneys’ fees
and $600,000.00 in costs.3 The Panel also permanently enjoined the appellants from
using or disclosing the DIXE software trade secrets.
In October 2008, Wells petitioned the district court to confirm the arbitration
award (the Award). Before ruling on that petition, the district court heard argument
from the parties regarding its jurisdiction, ultimately concluding, over appellants’
objection, that the prerequisites of subject-matter jurisdiction had been satisfied. The
appellants filed a cross-motion to vacate or modify the Award, arguing that the Panel
had exceeded its authority when it 1) granted injunctive relief in violation of the
governing arbitration procedures, 2) awarded attorneys’ fees, and 3) concluded that
Wells Fargo was the “inventor and owner” of the DIXE software trade secrets.
The district court denied appellants’ motion to vacate or modify and granted
Wells Fargo’s motion to confirm. It entered a judgment of $1,685,000 against the
appellants and permanently enjoined them from disclosing or otherwise making use
of the DIXE software trade secrets. Appellants moved to alter the judgment, asking
the district court to lift the permanent injunction on the ground that Wells Fargo had
made public the DIXE software trade secrets when it filed patent application with the
United States Patent and Trademark Office. Appellants argued that the information
no longer constituted a trade secret and that the injunction against its use or disclosure
should be lifted. The district court denied that motion, and this appeal followed.
Appellants ask that we vacate the district court’s confirmation of the award for
lack of subject-matter jurisdiction. In the alternative, they ask that we reverse the
confirmation of the arbitration award, vacate the finding that Wells is the “inventor”
The original order misidentified WMR e-Pin as “WMR e-Bank.” The Panel
later amended the award to correct this mistake, and we refer to the amended award
throughout the remainder of this opinion.
of the DIXE software trade secrets, vacate the award of attorneys’ fees and costs
against e-Pin, and lift the permanent injunction against them.
Appellants contend that the district court lacked subject matter jurisdiction to
confirm the Award. We review de novo questions of subject matter jurisdiction. Sac
& Fox Tribe v. Bureau of Indian Affairs, 439 F.3d 832, 835 (8th Cir. 2006). Federal
subject matter jurisdiction exists if the amount in controversy exceeds $75,000 and the
suit is between citizens of different states. 28 U.S.C. §1332(a)(1). The parties agree
that the amount in controversy element has been satisfied, but dispute whether they
are diverse parties.
Appellant Synoran is a citizen of several states, including California.
Appellants maintain that Wells Fargo is a citizen of California, its principal place of
business, and of South Dakota, where its main office is located. They argue that the
district court erred in holding that Wells Fargo, as a national bank, is deemed a citizen
only of the state in which its main office is located.4
Appellants claim that Wells Fargo is estopped from denying that it is a citizen
of California because the district court in Mont v. Wells Fargo Bank, N.A., No. CV
08-6298, 2008 WL 5046286 (C.D. Cal) found that it was and therefore remanded the
case to state court after Wells Fargo had removed it. In such a circumstance, 28
U.S.C. 1447(d) bars appellate review of any order remanding a case to the state court
from which it was removed. See Things Remembered, Inc. v. Petraca, 516 U.S. 124,
127-28 (1995). According to case law from other circuits, a non-appealable remand
order lacks preclusive effect and is to be adjudged on its own merits. See, e.g., Health
Cost Controls of Ill., Inc. v. Washington, 187 F.3d 703, 708 (7th Cir. 1999); Winters
v. Diamond Shamrock Chem. Co., 149 F.3d 387, 395 (5th Cir. 1998); Alliance to End
Repression v. City of Chicago, 820 F.2d 873, 875 (7th Cir. 1987). Therefore, we find
appellants’ collateral estoppel argument unpersuasive and decline to give preclusive
effect to the findings of the district court from California in an unrelated matter.
National banks are “corporate entities chartered not by any State, but by the
Comptroller of the Currency of the U.S. Treasury.” Wachovia Bank v. Schmidt, 546
U.S. 303, 306 (2005). The relevant statutory language defining the citizenship of
national banks for diversity purposes appears in the second paragraph of 18 U.S.C.
§ 1348: “All national banking associations shall, for the purposes of all other actions
by or against them, be deemed citizens of the States in which they are respectively
located.” At issue is whether a national bank is “located” in the state of its principal
place of business, if its main office is in a different state.
We begin by noting that every court to consider the meaning of § 1348 for
purposes of jurisdiction has recognized that the term “located” is ambiguous. See
Wachovia Bank , 546 U.S. at 318 (“To summarize, ‘located,’ as its appearances in the
banking laws reveal . . . is a chameleon word; its meaning depends on the context in
and purpose for which it is used.”). Consequently, we examine the statutory history
and case law in order to construe the meaning of the term “located” in § 1348.
Congress first authorized national banks in 1863, at which time they could “sue
and be sued in the federal district and circuit courts solely because they were national
banks, without regard to diversity, amount in controversy or the existence of a federal
question in the usual sense.” Mercantile Nat. Bank at Dallas v. Langdeau, 371 U.S.
555, 565–66 (1963). In 1882, Congress eliminated “federal question” jurisdiction for
any lawsuit involving a national bank and created diversity jurisdiction under the same
rubric as that governing state banks. See Excelsior Funds, Inc. v. JP Morgan Chase,
N.A., 470 F. Supp.2d. 312, 318 n.8 (S.D.N.Y. 2006). A subsequent amendment in
1887 provided that national banks shall “be deemed citizens of the States in which
they are respectively located,” id. (quoting Act of March 3, 1887, §4, 24 Stat. 552,
554-55). Congress retained that phrasing without alteration in the Judicial Code of
1911, which “combined two formerly discrete provisions on proceedings involving
national banks,” Wachovia, 546 U.S. at 311, and retained the same phrasing once
more when it amended § 1348 in 1948.
These predecessors of § 1348 demonstrated Congress’s intent “to put national
banks on the same footing as the banks of the state where they were located for all the
purposes of the jurisdiction of the courts of the United States,” Leather
Manufacturers’ Nat’l Bank v. Cooper, 120 U.S. 778, 780 (1887), and to “limit the
access of national banks to, and their suability in, the federal courts to the same extent
to which non-national banks were so limited.” Wachovia, 546 U.S. at 311 (alterations
omitted) (quoting Mercantile Nat. Bank at Dallas, 371 U.S. at 565–66).
Thus, the principle of jurisdictional parity emerged from the evolving statutory
framework governing national banks. The more vexing question is whether that
principle remained intact after Congress adopted § 1332(c)(1) in 1958, which altered
the jurisdiction of state banks and corporations, such that a corporation was “a citizen
of any State by which it has been incorporated and of the State where it has its
principal place of business.” (emphasis added).
Appellants, in making their case that Wells Fargo is a citizen of both South
Dakota and California, rely on Firstar Bank, N.A. v. Faul, 253 F.3d 982 (7th Cir.
2001) and Horton v. Bank One, N.A., 387 F.3d 426 (5th Cir. 2004). Firstar Bank
and Horton concluded that § 1348 must be interpreted in light of § 1332 in order to
honor the principle of jurisdictional parity. See Firstar Bank, 253 F.3d at 988
(“Congress passed 28 U.S.C. 1348 against an interpretive background which assumed
that national banks were to have the same access to the federal courts as state banks
and corporations.”); Horton, 387 F.3d at 435 (“We construe section 1348 in light of
Congress’s intent to maintain jurisdictional parity between national banks on the one
hand and state banks and corporations on the other.”) Yet neither statute refers to the
other or to jurisdictional parity, and neither contains language giving effect to the
That this approach entailed some interpretive strain was not lost on the Seventh
Circuit in deciding Firstar Bank: “Interpreting 28 U.S.C. § 1348, the current version
of which was promulgated in 1948, by referencing 28 U.S.C. § 1332(c)(1), enacted
ten years later in 1958, might strike some as incongruous.” 253 F.3d at 993 n.5.
Nonetheless, it reasoned that “the classic judicial task of reconciling many laws
enacted over time, and getting them to ‘make sense’ in combination, necessarily
assumes that the implications of a statute may be altered by the implications of a later
statute.” Id. (quotation omitted). Horton likewise endorsed the proposition that the
traditional concept of jurisdictional parity should continue to animate our
understanding of § 1348: “Because section 1348 does not have any language
modifying or rejecting the interpretive understanding that came with its predecessors,
this court should presume to retain and incorporate the existing interpretive backdrop
[of jurisdictional parity].” 387 F.3d at 431.
Wells Fargo rejoins that Firstar Bank and Horton overreached in concluding
that a policy preference for jurisdictional parity survived in the absence of clear
statutory language embodying that preference. It also contends that these cases were
implicitly called into question by the Supreme Court’s decision in Wachovia Bank,
which held that a national bank is not a citizen of every state in which it has a branch
office, but is “a citizen of the State in which its main office, as set forth in its articles
of association, is located.” 546 U.S. at 306. Although the Supreme Court did not
consider whether a national bank is also a citizen of the state of its principal place of
business, it did observe:
To achieve complete parity with state banks and other
state-incorporated entities, a national banking association would have to
be deemed a citizen of both the State of its main office and the State of
its principal place of business. See Horton, 387 F.3d at 431, and n. 26;
Firstar Bank, N. A., 253 F.3d at 993-994. Congress has prescribed that
a corporation “shall be deemed to be a citizen of any State by which it
has been incorporated and of the State where it has its principal place of
business.” 28 U.S.C. § 1332(c)(1) (emphasis added). The counterpart
provision for national banking associations, § 1348, however, does not
refer to “principal place of business”; it simply deems such associations
“citizens of the States in which they are respectively located.” The
absence of a “principal place of business” reference in § 1348 may be of
scant practical significance for, in almost every case, as in this one, the
location of a national bank’s main office and of its principal place of
Wachovia Bank, 546 U.S. at 317 n.9.
Because Wells Fargo’s main office is in a state other than that of its principal
place of business, we must consider the outlier scenario identified in footnote nine of
Wachovia Bank. In Excelsior Funds, Inc. v. JP Morgan Chase, N.A., the district court
asserted that “the fairest reading of footnote nine is that the Supreme Court expressed
skepticism over whether the term ‘located’ in § 1348 included a national bank’s
‘principal place of business,’ in view of the absence of such term in the statute.” Id.
at 317. The Seventh Circuit has gone further, reading Wachovia Bank to reject the
proposition embraced in its Firstar Bank decision that a national bank’s principal
place of business is an independent basis for citizenship. In Hicklin Eng’g, L.C. v
Bartell, 439 F.3d 346 (7th Cir. 2005), it concluded that “Wachovia Bank held that
national banks are citizens only of the states in which their main offices are located[.]”
Id. at 348.
Firstar Bank and Horton modeled the citizenship of national banks after that of
corporations on the strength of an assumption that Congress intended to change the
meaning of the former statute when it enacted the latter in order to perpetuate
jurisdictional parity. We find little support for that assumption. We are of the view
that “[t]he most relevant time period for determining a statutory term’s meaning is the
time when the statute was enacted.” Excelsior Funds, Inc., 470 F. Supp. 2d at 319
(citing MCI Telecomms. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218, 228 (1994);
Perrin v. United States, 444 U.S. 37, 42-45 (1979)).
In 1948, when Congress last amended § 1348, it had not yet created principalplace-of-business citizenship. At that time the term “located” referred to the state in
which the national bank had its main office, as designated by its articles of
association. Moreover, when Congress introduced principal-place-of-business
citizenship for state banks and corporations in § 1332(c)(1), it made no reference to
jurisdictional parity, nor to national banks or § 1348. And nothing in §1348 indicates
that it would incorporate by reference any subsequent change in the statutes governing
jurisdiction over state banks and corporations. These circumstances strongly suggest
that, with the passage of § 1332(c)(1), Congress reconfigured the jurisdictional
landscape of state banks and state corporations, but left that of national banks
The alternative proposition—that Congress intended to alter the meaning of
§ 1348 retroactively when it passed § 1332(c)(1) so as to retain jurisdictional
parity—is not derived from the statutory text or canons of statutory interpretation, but
assumes that jurisdictional parity is an immutable principle that endures long after the
statutes from which it arose have been amended and all references to it have been
excised. But the statutory history suggests the opposite, as the district court’s
observations in Excelsior Funds, Inc. make clear:
If Congress intended to achieve jurisdictional parity between
national and state banks for all times in § 1348, and thus to include
principal place of business as a location for a national bank when it
became a basis for citizenship for a state bank, Congress could have
provided for that in the statutory language. Indeed, several of § 1348’s
statutory predecessors contained express language that would have
supported an argument for incorporating by reference subsequent
changes to the citizenship of state banks or individual citizens. See, e.g.,
Act of July 12, 1882 (providing that the jurisdiction for suits involving
national banking associations “shall be the same as, and not other than,
the jurisdiction for suits by or against banks not organized under any law
of the United States....”); Act of March 3, 1887 (“the circuit and district
courts shall not have jurisdiction other than such as they would have in
cases between individual citizens of the same State”); Act of August 13,
1888 (same). However, all such language that expressly invoked the
concept of parity was removed in 1911, well before the current version
of the statute was enacted. See Act of March 3, 1911.
In fact, the language that expressly established parity between
national banks and state banks was removed in 1887, when the language
was changed to create jurisdictional parity between national banks and
“individual citizens.” See Act of March 3, 1887. This change
undermines the argument that the concept of jurisdictional parity
underlying § 1348 is a broad concept designed to trace statutory changes
to the citizenship of state banks through the term “located.” Rather, it
suggests that the concept of jurisdictional parity underlying the statute
is more limited, based on the then-existing understanding of citizenship,
which would have been a single state for either state banks or individual
Excelsior Funds, Inc., 470 F. Supp. 2d. at 319-20 (statutory citations omitted). Had
Congress wished to retain jurisdictional parity in 1958, it could have unequivocally
done so. It did not, and consequently the concept no longer applies. Whether it ought
to be revived is a policy question for Congress, not the federal courts. We will not
import a jurisdictional concept into § 1348 that was unknown at the time of its
adoption. Accordingly, we hold that, pursuant to § 1348, a national bank is a citizen
only of the state in which its main office is located.
This interpretation accords with the position taken by the Office of the
Comptroller of the Currency during oral argument in Wachovia Bank.5 During an
e-Pin notes that the OCC had previously asserted that a national bank, like a
corporation, is susceptible to citizenship in two states based on where its main office
and principal of business are located in an interpretation letter from 2002. See Office
of the Comptroller of the Currency, Interp. Ltr. No. 952, at 6 (Oct. 23, 2002).
Whatever occasioned the change of heart at the OCC, we credit its statement at oral
argument, quoted herein, finding it both more recent and more defensible in light of
exchange between the OCC and Justice Ginsburg at the outset of the government’s
argument, the OCC expressly disavowed that a national bank’s principle place of
business provided an independent basis for citizenship:
MR. SRINIVASAN: Thank you, Mr. Chief Justice, and may it please the
For purposes of determining its State citizenship under 28 U.S.C. 1348,
a national banking association is located in the State in which its main
office is found, not every State in which it may maintain a branch office
or other form of physical presence.
JUSTICE GINSBURG: What about its principal place of business if it’s
different from its main office?
MR. SRINIVASAN: The–
JUSTICE GINSBURG: Principal place of business.
MR. SRINIVASAN: We--we don’t think that a national banking
association is a citizen of a State in which its principal place of business
is found, insofar as that might be different from the State in which its
main office is located.
JUSTICE GINSBURG: So the main office is it, like 1332 before the ’58
MR. SRINIVASAN: That’s right, Justice Ginsburg, and in part, that’s
because of the historical chronology. The word located was first used in
1887 and the current version of section 1348 was enacted in 1948, which
was 10 years before the concept of principal place of business had any
jurisdictional salience. That was the first time that Congress-- this was
in 1958--that Congress enacted a specific provision dealing with
the statutory history and text of § 1348.
corporate citizenship, and that’s the first time that we see the concept of
principal place of business having relevance in the jurisdictional context.
Oral Arg. at 18:22, Wachovia Bank, 546 U.S. 303.6 The OCC’s counsel conceded that
it is not “an open and shut case” and that “one could reach the conclusion that 1332’s
reference to principal place of business should also apply to national banks.” Id. at
29:06. Yet, for the reasons set forth above, we conclude that the basis for doing so is
attenuated, at best. Accordingly, we reject appellants’ claim that Wells Fargo is a
citizen of both South Dakota and California and conclude that the district court did not
err in determining that it had subject-matter jurisdiction over this action.
Appellants contend that the district court erred in denying their motion to vacate
or modify the arbitration award; that the panel lacked authority to grant injunctive
relief and to determine inventorship of technology subject to pending patent
applications; and that the district court erred in affirming the award of attorneys’ fees
against appellant e-Pin, LLC.
On appeal from a district court’s order confirming, modifying, or vacating an
arbitration award, we review findings of fact for clear error and questions of law de
novo. Crawford Group, Inc. v. Holekamp, 543 F.3d 971, 976 (8th Cir. 2008). “The
district court affords the arbitrator’s decisions an extraordinary level of deference and
confirms so long as the arbitrator is even arguably construing or applying the contract
and acting within the scope of his authority.” Id. (internal quotation marks omitted).
An arbitral award may be vacated only on grounds enumerated in the Federal
Arbitration Act (FAA). Id. (citing Hall Street Assoc., LLC v. Mattel, Inc., 552 U.S.
576, 583 (2008)).
Both the transcript and the audio recording are available at:
A. Challenge to the Grant of Injunctive Relief
In paragraph 7(b) of the Award, the Panel ordered that appellants be
“permanently restrained and enjoined from . . . asserting any ownership interest in
. . . or using in any way the DIXE Trade Secrets.” Appellants claim that the Panel
exceeded its authority in doing so and refer us to the express prohibition outlined in
the dispute resolution procedures that were to govern the arbitration: “Any award in
arbitration under this Section shall be limited to monetary damages and shall include
no injunction or direction to any party other than the direction to pay a monetary
amount.” J.A. Ex.000029 ¶ 9. Appellants contend that the Panel ignored the
contract’s express prohibition of injunctive relief.
The district court concluded that, because appellants had argued that an
injunction should be issued against Wells Fargo during the course of the arbitration,
they waived the right to challenge the grant of injunctive relief contained in the
Award. It relied on the precept that “[i]f a party willingly and without reservation
allows an issue to be submitted to arbitration, he cannot await the outcome and then
later argue that the arbitrator lacked authority to decide the matter.” Minneapolis-St.
Paul Mailers Union v. Nw. Publ’ns, Inc., 379 F.3d 502, 509 (8th Cir. 2004) (quoting
Slaney v. Int’l Amateur Athletic Fed’n, 244 F.3d 580, 591 (7th Cir. 2001)).
Appellants deny that their references to injunctive relief constitute a concession
that it was an available remedy and contend that even if it they did affirmatively
request injunctive relief, the Panel lacked the authority to grant it under the governing
Commercial Rules of the American Arbitration Association (AAA Rules).
Our review of the record confirms that the appellants were on notice that Wells
Fargo was seeking injunctive relief and that they sought it as well. In the pre-hearing
brief Wells Fargo submitted in April 2008, it asked the Panel to enjoin the appellants
from continuing the alleged misappropriation of DIXE software trade secrets.
Appellants did not object or challenge the Panel’s authority at this time. This alone
may not have been enough to abrogate the prohibition on injunctive relief in the
parties’ agreement, but appellants affirmatively requested injunctive relief on two
separate instances later in the proceedings. First, in a section of their final briefing
to the panel entitled “Appropriate Remedies,” they asked the Panel to “[d]eclare that
Wells had misappropriated . . . confidential trade secrets and enjoin Wells from using
such confidential information and trade secrets[.]” J.A. Ex. 000384. And second,
during closing argument, counsel for one of the appellants stated: “we think the
evidence is clear that we’ve proven that [Wells Fargo] took this based on the litany
that I just gave you, and that would be our preference that you find that they did and
you enjoin them from using the software as it’s defined in our proposed order.” J.A.
000425. Having requested that the Panel enter injunctive relief on their behalf,
appellants cannot complain when the Panel decides instead to enter injunctive relief
Appellants contend that even if they did affirmatively request injunctive relief,
the Panel nonetheless was precluded from granting it under Rule 43(a) of the AAA
Rules. Rule 43(a) provides that “[t]he arbitrator may grant any remedy or relief that
the arbitrator deems just and equitable and within the scope of the agreement of the
parties . . . .” Appellants contend that this rule bars the Panel from awarding relief
prohibited by the agreement, even if such relief is requested by the parties. But their
position ignores the lesson of Minneapolis-St. Paul Mailers Union, 379 F.3d at 509,
which teaches that the arbitrator may expand the scope of its review based on the
issues the parties submit or the arguments they advance in the proceedings. We find
unpersuasive appellants’ argument that Minneapolis-St. Paul Mailers Union and like
cases are inapposite because they did not involve a form of relief that the parties
specifically prohibited in their agreement.
We conclude that the appellants have waived their right to enforce the
contractual proscription on injunctive relief by failing to challenge Wells Fargo’s
request for such relief and by requesting it themselves. Accordingly, the district court
did not err in determining that appellants had waived their right to challenge the
Panel’s award of injunctive relief.
B. Challenge to the Panel’s Misappropriation Determination
For similar reasons, we reject appellants’ contention that the Panel exceeded its
authority by determining “the inventorship of pending patent applications.” One of
the main issues driving the arbitration was each side’s assertion that the other had
misappropriated trade secrets relating to the DIXE technology. Given this posture,
both parties clearly contemplated that the Panel would consider the inventorship and
rightful ownership of aspects of that technology. The Panel ultimately concluded that
Wells Fargo is the inventor and owner of all the DIXE Trade Secrets
which DIXE Trade Secrets are set out within the documents entitled: (1)
Digital Information Exchange “DIXE” Business Architecture and
Technology Review, Version 2.0, dated August 19, 2003 and (2) The
DIXE System Architecture, Version 2.0 - Working Draft, dated October
16, 2003, Wells Fargo Evidentiary Hearing Exhibits WF DIXE-35 and
WF DIXE-118, respectively, all of which were misappropriated from
Wells Fargo by Synoran, Inc. and WMR e-Pin LLC.
J.A. 000054 ¶ 7(a). After reviewing the record, we are satisfied that the Panel did not
exceed its authority in resolving the issue of misappropriation in this fashion.
Appellants claim that they never agreed to submit the issue of inventorship. But
the record is replete with instances in which the appellants staked out their position
that they are the rightful owners and inventors of aspects of the DIXE software and
asked the Panel to acknowledge them as such. Wells Fargo points to a number of
examples in the appellants’ final briefing in which it claimed to have invented,
created, or developed the technology and corresponding patents before Wells Fargo
subsequently stole it.
Moreover, as set forth above, in a section of the final briefing entitled
“Appropriate Remedies,” appellants asked that the Panel find in their favor and enjoin
Wells Fargo from further misappropriation and, in the alternative, invited the Panel
to “[d]ecline to exercise its jurisdiction to render a determination as to the ownership
of the intellectual property in question.” J.A. Ex. 000384. Thus, so long as the
question of ownership and inventorship was left open, the appellants actively tried to
sway the Panel in their favor. Though they suggested that the Panel might also
decline jurisdiction, they did not contend that it should do so for other than prudential
reasons and treated this as a secondary option.
Appellants counter that the question of “inventorship” for pending patent
applications is reserved exclusively to the United States Patent and Trademark Office
(USPTO) under federal law. See 35 U.S.C. § 135. Accordingly, appellants argue,
even if the parties had agreed to arbitrate the issue of inventorship, the Panel lacked
the power to resolve it. Moreover, appellants maintain that the Panel’s decision
conflicts with the conclusions of the USPTO in a subsequent interference proceeding
in November 2008 in which the USPTO rejected a patent application from Wells
Fargo.7 Appellants assert that the USPTO’s conclusions effectively invalidate the
Panel’s finding that Wells Fargo is the “inventor and owner” the DIXE software trade
secrets at issue.
We find that appellants read too much into the phrase “inventor and owner” in
¶ 7(a) of the Award and ignore the specific context of the dispute over
misappropriation that the Panel was charged with resolving. The Panel concluded that
An interference proceeding is “an administrative proceeding in the U.S. Patent
and Trademark Office to determine which applicant is entitled to the patent when two
or more applicants claim the same invention. Such a proceeding occurs when the
same invention is claimed (1) in two pending applications, or (2) in one pending
application and a patent issued within a year of the pending application’s filing date.”
Black’s Law Dictionary, 818-19 (7th ed. 1999).
appellants had misappropriated trade secrets related to a technology that they claimed
to have invented and developed. At bottom, appellants’ dispute is with the Panel’s
conclusion, not with the extent of the Panel’s authority. Throughout the proceedings,
appellants urged the Panel to exercise that same authority to declare that they owned
and invented the technology in dispute.
Mindful of the deference accorded to the arbitrators’s decision, Crawford
Group, Inc., 543 F.3d at 976, we will not second guess the Panel’s determination that
resolving the competing claims as to misappropriation made it necessary to consider
who invented or developed the DIXE software. Appellants assumed as much by
treating the question who invented or developed the software as a linchpin of the
dispute over which party wrongfully misappropriated it. Accordingly, we conclude
that the district court did not err when it declined to vacate the Award on the grounds
that the Panel exceeded the scope of its arbitral mandate.
C. Challenge to Award of Attorneys’ Fees
Appellants contend that the district court erred in confirming the award of
attorneys’ fees against e-Pin, arguing that there was no basis to hold e-Pin liable for
them. They point out that e-Pin is a party to the PLA, but not the SLA, and that the
PLA provides that any dispute or agreement arising out of it “be resolved in
accordance with the dispute resolution procedures specified in the [SLA].” J.A. Ex.
000274. Those procedures, in turn, endow the Panel with the authority to award costs
and fees “to the same extent a judge could pursuant to the Federal Rules of Civil
Procedure, or other applicable law.” Id. ¶ 7. Appellants argue, however, that the
Panel grounded its award of attorneys’ fees on a different provision of the SLA, ¶
12(k), which allows attorneys’ fees to be awarded to the prevailing party. That
provision is not incorporated by reference in the PLA and thus should not be applied
against e-Pin, which was not a party to the SLA. Therefore, according to the
appellants, the Panel exceeded its authority in assessing fees against e-Pin in Wells
Fargo’s favor on the basis of the “prevailing party” provision.
Wells Fargo responds that the parties agreed that the arbitration would be
governed by the AAA Rules, a provision of which expressly provides that “the award
of the arbitrator(s) may include . . . an award of attorneys’ fees if all parties have
requested such an award or it is authorized by law or their arbitration agreement.”
AAA Rule 43(d)(ii). Wells Fargo submits that under this provision, if parties bound
by the AAA Commercial Rules request attorneys’ fees, then the arbitrators before
whom they appear are empowered to award such fees.
As support, Wells Fargo cites affidavits from counsel for e-Pin, as well an
affidavit from its sole owner, that were submitted to the Panel before it announced the
Award. The affidavits requested that attorneys’ fees be awarded to appellants. Wells
Fargo had made a similar request before the Panel announced its decision.
Accordingly, “all parties requested” an award of attorneys’ fees and thus the Panel
was authorized to consider those requests. Because Rule 43(d)(ii) provides a basis for
the award of attorneys’ fees against e-Pin, we conclude that the district court did not
err in confirming it.
As recounted above, after the district court confirmed the Award, appellants
moved to terminate or amend the permanent injunction pursuant to Rules 59(e) and
60(b)(5) of the Federal Rules of Civil Procedure. Rule 59(e) permits a motion to alter
or amend a judgment no later than 28 days after it has been entered. Such motions
“serve the limited function of correcting manifest errors of law or fact or to present
newly discovered evidence.” Lowry v. Watson Chapel Sch. Dist., 540 F.3d 752, 761
(8th Cir. 2008). Rule 60(b)(5) allows for relief from a final judgment on the grounds
that “the judgment has been satisfied, released or discharged; it is based on an earlier
judgment that has been reversed or vacated; or applying it prospectively is no longer
equitable[.]” Fed. R. Civ. P. 60(b)(5).
The district court indicated that it did not discern any error of fact or law, nor
had the appellants presented evidence of changed circumstances that rendered the
confirmation of the award inequitable or manifestly unjust. Consequently, it denied
the motion to terminate or amend the permanent injunction. D. Ct. Order of Oct. 27,
2009, at 2. Appellants contend the district court abused its discretion in denying this
post-trial motion. Wells Fargo contends that the appellants’ motion does not satisfy
the prerequisites for relief under either Rule 59(3) or Rule 60(b)(5), as reflected in the
district court’s findings denying their motion.
Appellants seek relief from the part of the Award that permanently enjoins them
from “claiming as their own, asserting any ownership interest in, disclosing any part
of, or using in any way the DIXE Trade Secrets of Wells Fargo Bank, N.A.” J.A.
000054 ¶ 7(b). Appellants contend that the trade secrets to which this paragraph
refers entered the public domain in January 2006 as a result of a patent application
Wells Fargo filed. Thus, according to appellants, the permanent injunction bars them
from using or disclosing information that is already in the public domain. By
upholding it, they claim, the district court contravened the Minnesota State Secrets
Act, which reads:
Actual or threatened misappropriation may be enjoined. Upon
application to the court, an injunction shall be terminated when the trade
secret has ceased to exist, but the injunction may be continued for an
additional reasonable period of time in order to eliminate commercial
advantage that otherwise would be derived from the misappropriation.
Minn. Stat. § 325C.02. According to appellants, because the DIXE Software entered
the public domain via Wells Fargo’s patent application, it ceased to exist as a trade
secret and the district court abused its discretion in refusing to terminate the
Appellants locate their right to seek Rule 60(b)(5) relief in 9 U.S.C. § 13, which
provides that a judgment confirming an arbitration award “shall have the same force
and effect, in all respects, as, and be subject to all the provisions of law relating to, a
judgment in an action; and it may be enforced as if it had been rendered in an action
in the court in which it is entered.” See AIG Baker Sterling Heights, LLC v.
American Multi-Cinema, Inc., 579 F.3d 1268, 1273 (11th Cir. 2009) (concluding that
a judgment confirming an arbitration award is “to be treated no better or worse than
any other civil judgment” and therefore is subject to Rule 60(b) relief). Appellants
claim that enforcing the permanent injunction “is no longer equitable” under Rule
60(b)(5). But as the chronology they recite makes clear, to the extent that Wells Fargo
brought the relevant DIXE software trade secrets into the public domain by filing for
a patent application, it did so in January 2006, more than two and a half years before
the Award was issued.
Because an injunction, “whether right or wrong, is not subject to impeachment
in its application to the conditions that existed at its making,” United States v. Swift
& Co., 286 U.S. 106, 119 (1932), appellants must identify changed circumstances that
shift the equitable balance in their favor under Rule 60(b)(5). They have failed to do
so. Rather, appellants appear to invoke the rule to attack the merits of the Panel’s
conclusion, not because that conclusion is “no longer equitable” in light of changes
in the law or underlying facts. This misconstrues the function of 60(b)(5) relief.
The fact that the rule allows relief if it is “no longer equitable” for the
judgment to have prospective application is not a substitute for an
appeal. It does not allow relitigation of issues that have been resolved
by the judgment. Instead it refers to some change in conditions that
makes continued enforcement inequitable.
11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2863,
at 340 (2d ed. 1995). We conclude that the district court did not abuse its discretion
in denying the motion to terminate or amend the permanent injunction.
The judgment is affirmed.
MURPHY, Circuit Judge, dissenting.
I dissent from the majority's answer to the question left open by the Supreme
Court in Wachovia Bank v. Schmidt, 546 U.S. 303, 317 n.9 (2006). The Court's
footnote 9 lends itself to two divergent interpretations of decisive importance in the
case before this court. I respectfully suggest that the majority has followed the less
supportable one. Based on the record and the well developed law in this area, I
conclude that plaintiff Wells Fargo is not diverse to defendant Synoran since they are
both citizens of the same state. While Wells Fargo's main office is located in South
Dakota, its principal place of business is in California. There thus being no basis for
diversity jurisdiction in this case, the judgment of the district court should be vacated
and the case dismissed for lack of subject matter jurisdiction.
The starting point for analysis is 28 U.S.C. § 1348 which provides in relevant
part: "All national banking associations shall, for the purposes of all other actions by
or against them, be deemed citizens of the States in which they are respectively
located." The focus of the case before our court is on the meaning of the word
"located" for purposes of diversity jurisdiction. Section 1348 traces its roots to
statutes enacted in 1882 and 1887 which created jurisdictional parity between state
and national banks. Act of July 12, 1882, ch. 290, § 4, 22 Stat. 162, 163 (the
jurisdiction of national banks "shall be the same as, and not other than, the jurisdiction
for suits by or against banks not organized under any law of the United States");
see Act of March 3, 1887, ch. 373, § 4, 24 Stat. 552, 554–55 (national banks shall be
"deemed citizens of the States in which they are respectively located").
Though the language and codification of these statutes changed slightly over
time, the Supreme Court has consistently interpreted them to have placed national
banks "on the same footing as the banks of the state where they were located for all
the purposes of the jurisdiction of the courts of the United States." Leather Mfrs.'
Nat'l Bank v. Cooper, 120 U.S. 778, 780 (1887); see Continental Nat'l Bank v. Buford,
191 U.S. 119, 123–24 (1903); Petri v. Commercial Nat'l Bank, 142 U.S. 644, 650–51
(1892) ("no reason" why national banks "should not resort to federal tribunals as other
corporations and individual citizens might").
The first judicial interpretation of the word "located" in the predecessor statutes
to § 1348 was done by the Ninth Circuit in American Surety Company v. Bank of
California, 133 F.2d 160, 162 (9th Cir. 1943). Reasoning that the citizenship of a
corporation was "fixed by its principal place of business," the court held that national
banks were citizens only of the "states in which their principal places of business were
maintained." Id. Thus, at the time § 1348 was enacted in 1948: (1) the only Supreme
Court decisions interpreting its predecessor statutes had ruled that a national bank's
location should be considered on a comparable basis with state banks and
corporations, and (2) the only circuit court decision had explained that a national
banking association was located in the state of its principal place of business.
The current provision defining the citizenship of corporations, 28 U.S.C.
§ 1332(c)(1), was enacted in 1958. Although that statute did not reference the
national banking association provision in § 1348, the Supreme Court explained again
five years later that the 1882 Act, a predecessor to § 1348, "sought to limit, with
exceptions, the access of national banks to, and their suability in, the federal courts to
the same extent to which non-national banks are so limited." Mercantile Nat'l Bank
v. Langdeau, 371 U.S. 555, 565 (1963) (emphasis added). And fifteen years after the
passage of § 1332(c)(1), our en banc court focused on the four prior judicial decisions
which had recognized the congressional policy favoring jurisdictional parity for state
and national banks. See Burns v. Am. Nat’l Bank & Trust Co., 479 F.2d 26, 27–30
(8th Cir. 1973) (en banc). Neither the Supreme Court nor our court suggested in any
way that the 1958 enactment of 28 U.S.C. § 1332(c)(1) had changed the longstanding
and unanimous interpretations of § 1348 and its predecessors requiring jurisdictional
parity between national and state banks.
The two leading appellate decisions addressing the exact issue before us—
whether national banks are citizens of the state in which their principal place of
business are located—are Firstar Bank, N.A. v. Faul, 253 F.3d 982, 985–94 (7th Cir.
2001), and Horton v. Bank One, N.A., 387 F.3d 426, 429–36 (5th Cir. 2004), cert.
denied, 546 U.S. 1149 (2006). Both circuit courts decided that the answer was yes
after thorough analyses,8 and both decisions were referenced positively in Wachovia.
See 546 U.S. at 317 n.9. Thus, by 2004 three circuits had concluded that a national
banking association is a citizen of the state of its principal place of business. See
Horton, 387 F.3d at 436; Firstar, 253 F.3d at 994; Am. Sur. Co., 133 F.2d at 162.
In Wachovia, the Supreme Court reaffirmed the reasoning in Firstar and Horton
in the course of deciding that a national banking association is not a citizen of every
state in which it maintains a branch office, but that it is at least a citizen of the state
"in which its main office, as set forth in its articles of association, is located." 546
U.S. 303, 307 (2006). Specifically, the Court employed the principle of jurisdictional
parity, the very principle which the majority concludes "no longer applies" and for
which it finds "little support." The Court explained that "in comparison to the access
Both decisions also held that national banks were citizens of the state "listed
in its organization certificate." See Horton, 387 F.3d at 436; Firstar, 253 F.3d at 994.
See also Wachovia, 546 U.S. at 307.
afforded state banks and other state-incorporated entities," national banks' access to
a federal forum would be "drastically reduced" if a national bank were deemed a
citizen of every state where it maintained a branch. Id. at 307; see also id. at 317.
Most significantly, in Wachovia the Court alluded to, but did not decide, the
precise issue now before our court. In its footnote 9, the Court wrote that "to achieve
complete parity with state banks and other state-incorporated entities," a national
banking association "would have to be deemed a citizen of both the State of its main
office and the State of its principal place of business," and it cited Firstar and Horton
favorably. Id. at 317 n.9. It acknowledged that § 1348 does not refer to a bank's
"principal place of business," unlike § 1332(c)(1), but speculated that the "absence of
a 'principal place of business' reference in § 1348 may be of scant practical
significance for, in almost every case, as in this one, the location of a national bank's
main office and of its principal place of business coincide." Id.
Subsequently a number of district courts have faced the question before us and
disagreed about whether a national bank is a citizen of the state of its principal place
of business. Judge John Koetl took a new approach to the issue in Excelsior Funds,
Inc. v. JP Morgan Chase Bank, N.A., 470 F. Supp. 2d 312 (S.D.N.Y. 2006). Relying
heavily on the fact that Congress did not amend § 1348 in 1958 at the time it enacted
§ 1332(c)(1), he concluded that national banks are not citizens of the state of their
principal place of business. Some subsequent district court decisions have followed
his line of thinking, as has the majority here. Compare Tse v. Wells Fargo Bank,
N.A., No. C10-4441 TEH, 2011 WL 175520, at *2 (N.D. Cal. Jan. 19, 2011), and
DeLeon v. Wells Fargo Bank, N.A., 729 F. Supp. 2d 1119, 1123–24 (N.D. Cal. 2010),
with Stewart v. Wachovia Mortgage Corp., No. CV 11-06108 MMM, 2011 WL
3323115, at *2–6 (C.D. Cal. Aug. 2, 2011), and Goodman v. Wells Fargo Bank, NA,
No. CV 11-2685-JFW, 2011 WL 2372044, at *2 (C.D. Cal. June 1, 2011).
I respectfully disagree with the majority's framing of the issue to be whether the
principle of jurisdictional parity "remained intact" after the adoption of § 1332(c)(1)
in 1958. I submit that the issue is more properly viewed to be whether Wachovia
undermines the longstanding and unanimous circuit precedent holding that national
banks are citizens of their principal places of business. In my view, Wachovia should
be construed in favor of continuing to read § 1348 in light of the preexisting policy
of jurisdictional parity between national banks on the one hand and state banks and
corporations on the other. Accordingly, I would hold that national banks are citizens
of the state where their principal place of business is located in addition to the state
in which their main office is located.
In Wachovia the Supreme Court actually applied the principle of jurisdictional
parity to reverse a circuit court decision that had not complied with it. The Fourth
Circuit's conclusion that national banks were citizens of every state in which they
maintained a branch office was erroneous because, "in comparison to the access
afforded state banks and other state-incorporated entities," national bank access to a
federal forum would be "drastically reduced." Wachovia, 546 U.S. at 307; see also
id. at 317 ("By contrast, the Court of Appeals' decision in the instant case severely
constricts national banks' access to diversity jurisdiction as compared to the access
available to corporations generally."). If the majority were correct that the principle
of jurisdictional parity in § 1348 was abrogated with the passage of § 1332(c)(1) in
1958, the Supreme Court would not have relied on that principle to decide Wachovia.
The Court suggested in footnote 9 in Wachovia that jurisdictional parity
remains a salient principle. That is the closest it has come to deciding the issue now
before us. The Court noted that to "achieve complete parity with state banks and other
state-incorporated entities," a national bank "would have to be deemed a citizen of
both the State of its main office and the State of its principal place of business." Id.
at 317 n.9 (emphasis added). Having just relied on that principle to decide the case
before it, the Court appeared to hint that in order to achieve "complete parity," a
national bank would be a citizen of the state of its principal place of business. And
the two circuit cases it cited favorably, Firstar9 and Horton, reached that conclusion.
In view of the Court's reliance on the principle of jurisdictional parity to decide
Wachovia, footnote 9 is most fairly read to suggest that, in the rare case where a
bank's main office and principal place of business are in different states, the national
bank would be "located" in both. To reach that conclusion would achieve "complete
parity," a principle that the Supreme Court linked to § 1348 and its predecessors. That
would explain the Court's citations to Firstar and Horton and its emphasis that
corporations are citizens of their state of incorporation "and" the state of their
principal place of business (emphasis in original). Wachovia, 546 U.S. at 317 n.9.
The majority also overlooks a significant portion of the exchange between
individual Justices and the attorney representing the Comptroller of the Currency
during the arguments in Wachovia. Counsel argued that a national banking
association is not a citizen of each state in which it has a branch, a position
subsequently taken by the Court. In the course of his comments he also remarked that
a national bank is not a citizen of the state of its principal place of business. See slip
op. at 13; 2005 WL 3358081, at *20–21. Several Justices appeared skeptical of
reading the jurisdictional statutes to limit a national bank to being a citizen of only one
state. Counsel faced vigorous questioning from members of the Court on that position
and twice admitted that its position was not "open and shut":
The majority suggests that Hicklin Eng'g, L.C. v. Bartell, 439 F.3d 346, 348
(7th Cir. 2006) may have overruled Firstar. Hicklin does no such thing; it does not
even mention Firstar. Although it contains dicta referencing Wachovia, Judge Flaum,
the author of Firstar, was on the panel and would surely have addressed any contrary
JUSTICE STEVENS: Is it your view that a national bank may have two
parallel locations or just one?
MR. SRINIVASAN: It–it could have a main office that's different from
what one would construe to be its principal place of business under the
test that applies to corporations under 1332(c)[.]
MR. SRINIVASAN: Our view is that it wouldn't be a citizen of a State
simply by virtue of the fact that it has its principal place of business
there. Now, I would say, though, that it's not an open and shut case
because the Court in a case that specifically raised the issue . . . could
construe 1332(c) . . . as also applying to national banking associations[.]
JUSTICE SCALIA: And if we did–if we did interpret 1332(c) that way,
there wouldn't be any favoritism for national banks.
MR. SRINIVASAN: That's right. It would entirely eliminate favoritism.
JUSTICE GINSBURG: But you did say 1332(c) does not apply to the
national bank. It's only one location.
Mr. SRINIVASAN: That–that's our view, but again, I’m–I wouldn't
characterize it as an–as an open and shut case[.]
2005 WL 3358081, at *29–32.
Chief Justice Roberts and Justice Scalia both appeared concerned that limiting
a national bank's citizenship to its main office would put national banks in a "favored"
position. 2005 WL 3358081, at *8–9, 30. Justice Stevens questioned the logic of a
rule that would allow a national bank to choose its main office in a small state
removed from where it does a majority of its business. See id. at *24–26. And counsel
for Wachovia Bank even conceded that § 1348 could be interpreted "to include
principal place of business." Id. at *8. Significantly, all Justices concurred in footnote
9's acknowledgment that to achieve "complete parity" a national banking association
"would have to be deemed a citizen of both the State of its main office and the State
of its principal place of business." Wachovia, 546 U.S. at 317 n.9.
This position is also consistent with what appear to be the only widely available
written positions taken by the Comptroller of the Currency on the issue now before
us, see Office of the Comptroller of the Currency, Interp. Ltr. No. 952, at 6 (Oct. 23,
2002), as well as the Comptroller's amicus brief in Horton. See 2003 WL 25953465,
at *3–14. That brief remains accessible on the government's website today. See
www.occ.gov/topics/laws-regulations/litigation/leg-proc-other-horton-vs-bankone.pdf, at 14 (last accessed Aug. 26, 2011) ("Thus, for diversity purposes a national
bank should be deemed a 'citizen' of the state of its principal place of business and (if
different), the state specified in the bank's articles of association.").
I also respectfully suggest that the majority has overlooked relevant circuit
precedent. In Burns, the en banc court recounted § 1348's history as embodying the
principle of jurisdictional parity. See 479 F.2d at 28–29. Burns was decided in 1973,
after the 1958 enactment of § 1332(c)(1), but the majority does not cite it and instead
concludes that jurisdictional parity "no longer applies" because Congress did not
choose to "retain" the concept in 1958. That conclusion is inconsistent with Burns's
recitation of the history of § 1348.
When § 1348 was enacted in 1948, the only appellate court to have expressly
considered the issue now before us had held that a national banking association is
"located" in, and therefore a citizen of, the state of its principal place of business. See
Am. Sur. Co., 133 F.2d at 162. Congress is presumed to have intended that principle
to carry over to § 1348. See Bragdon v. Abbott, 524 U.S. 624, 645 (1998); Lorillard
v. Pons, 434 U.S. 575, 580–81 (1978), and cases cited; Firstar, 253 F.3d at 988. The
majority concludes that the "most relevant time period for determining a statutory
term's meaning is the time when the statute was enacted." Slip op. at 9. Yet it does not
cite American Surety and even implies that principal place of business citizenship
"was unknown at the time of its adoption." Slip op. at 11. This is simply inaccurate,
since principal place of business citizenship was a creature of the common law, and
had been applied in American Surety to § 1348's predecessor statute.
No doubt Congress could have also made § 1348 clearer in 1958 when it
enacted § 1332(c)(1), but it need not have done so given the preexisting understanding
of the statute and its predecessors which placed national and state banks on equal
jurisdictional footing. Had Congress intended to abrogate the principle of
jurisdictional parity in 1958, it would have been a "noteworthy departure" from
established jurisdictional principles, and it "more likely than not  would have plainly
stated such intent" if that had been its preferred outcome. Am. Sur. Co., 133 F.2d at
Since I conclude that Wells Fargo is a citizen both of South Dakota and of
California, its principal place of business, I would hold that it and Synoran are
nondiverse parties. The case should therefore be dismissed for lack of subject matter