Lightfoot v. Cendant Mortg. Corp., No. 10-56068 (9th Cir. Oct. 2, 2014).
Here we have one of the country’s foremost academic experts on federal jurisdiction addressing the reach of federal jurisdiction. Writing for the Ninth Circuit, Judge William A. Fletcher, long a professor at Berkeley’s law school, deals with a statute that authorizes Fannie Mae “to sue and be sued, and to complain and to defend, in any court of competent jurisdiction, State or Federal.” Is this just a “capacity” statute—one that just gives Fannie Mae the capacity to be a party to a lawsuit? Or does it also confer subject-matter jurisdiction on the federal courts when Fannie Mae’s a party to the lawsuit? Judge Fletcher, joined by Judge Trott, says that under the Supreme Court’s decisions, the statute confers subject-matter jurisdiction on the federal courts because it specifically mentions the federal courts.
But what about the part of the statute that authorizes Fannie Mae to sue or be sued “in any court of competent jurisdiction”? Doesn’t that phrase suggest that jurisdictional competence has to be conferred by something other than the statute itself?
No, says the majority. Looking to legislative history, the majority surmises that “court of competent jurisdiction” was simply meant to replace an older phrase, “court of law or equity,” a phrase that was no longer relevant after the merger of the divided bench. And, the majority adds, the phrase also serves the purpose of not forcing specialized state courts—courts of limited subject-matter jurisdiction—to expand their jurisdiction to hear cases involving Fannie Mae.
District Judge Stein, sitting by designation, dissents. He would hold that the statute doesn’t confer subject-matter jurisdiction on the federal courts. Judge Stein thinks that the majority reads “court of competent jurisdiction” out of the statute, and that its justifications for doing so don’t stand up to scrutiny. He also includes a detailed look at the historical background of the statute that, in his view, supports his reading.