Crystal Lightfoot v. Cendant Mortgage Corporation

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CRYSTAL MONIQUE LIGHTFOOT; No. 10-56068
BEVERLY ANN HOLLIS-ARRINGTON,
Plaintiffs-Appellants, D.C. No.
2:02-cv-06568-
v. CBM-AJW

CENDANT MORTGAGE
CORPORATION, doing business as OPINION
PHH Mortgage; FANNIE MAE;
ROBERT O. MATTHEWS; ATTORNEYS
EQUITY NATIONAL CORPORATION,
Defendants-Appellees.

Appeal from the United States District Court
for the Central District of California
Consuelo B. Marshall, Senior District Judge, Presiding

Argued and Submitted
June 5, 2013—Pasadena, California

Filed October 2, 2014

Before: Stephen S. Trott and William A. Fletcher, Circuit
Judges, and Sidney H. Stein, District Judge.*

*
The Honorable Sidney H. Stein, District Judge for the U.S. District
Court for the Southern District of New York, sitting by designation.
2 LIGHTFOOT V. CENDANT MORTGAGE CORP.

Opinion by Judge W. Fletcher;
Dissent by Judge Stein

SUMMARY**

Federal Question Jurisdiction

Affirming the district court’s dismissal of claims against
the Federal National Mortgage Association, or “Fannie Mae,”
the panel held that Fannie Mae’s federal corporate charter
confers federal question jurisdiction over claims brought by
or against Fannie Mae.

Agreeing with the D.C. Circuit, the panel held that under
American Red Cross v. S.G., 505 U.S. 247 (1992), the sue-
and-be-sued clause in the charter confers subject matter
jurisdiction because the clause specifically mentions the
federal courts.

Dissenting, District Judge Stein wrote that under a 1954
charter amendment, Fannie Mae’s charter confers only
corporate capacity to sue and be sued, and that subject matter
jurisdiction must come from some other provision of law.

**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 3

COUNSEL

Thomas Ogden (argued), Law Offices of Thomas Ogden,
Alhambra, California; Crystal Monique Lightfoot, West Hills,
California, for Plaintiffs-Appellants.

Jonathan Hacker (argued), O’Melveny & Myers LLP,
Washington, D.C.; Jan T. Chilton, Severson & Werson, San
Francisco, California, for Defendants-Appellees.

OPINION

W. FLETCHER, Circuit Judge:

Plaintiffs Beverly Ann Hollis-Arrington and Crystal
Monique Lightfoot appeal the district court’s judgment
dismissing their claims against the Federal National Mortgage
Association (“Fannie Mae”). They argue that the district
court lacked subject matter jurisdiction over their claims. We
disagree. Under the rule announced in American National
Red Cross v. S.G., 505 U.S. 247 (1992), Fannie Mae’s federal
charter confers federal question jurisidiction over claims
brought by or against Fannie Mae. We affirm the district
court.

I. Background

This case is one of several brought by the plaintiffs
following foreclosure proceedings initiated by Fannie Mae
against Hollis-Arrington’s home in West Hills, California.
Hollis-Arrington first filed two suits in the United States
District Court for the Central District of California, alleging
numerous state- and federal-law claims against Fannie Mae
4 LIGHTFOOT V. CENDANT MORTGAGE CORP.

and other defendants. The district court dismissed both suits,
and we affirmed on appeal. Hollis-Arrington v. Cendant
Mortg. Corp., 61 F. App’x 462 (9th Cir. 2003); Hollis-
Arrington v. Cendant Mortg. Corp., 61 F. App’x 463 (9th Cir.
2003).

Plaintiffs then filed the present suit in California state
court, alleging state-law claims similar or identical to those
in the two earlier federal suits. Fannie Mae removed to
federal court, arguing that the sue-and-be-sued clause in its
federal corporate charter conferred federal question subject
matter jurisdiction. Plaintiffs filed a motion to remand, which
the district court denied. The district court dismissed all of
plaintiffs’ claims as barred by res judicata and collateral
estoppel. We initially affirmed in an unpublished disposition.
Lightfoot v. Cendant Mortg. Corp., 465 F. App’x 668 (9th
Cir. 2012). We later withdrew that disposition, appointed pro
bono counsel, and ordered the parties to brief whether Fannie
Mae’s federal charter granted the district court subject matter
jurisdiction. Lightfoot v. Cendant Mortg. Corp., No. 10-
56068 (Apr. 13, 2012) (order withdrawing disposition).

II. Discussion

A. Fannie Mae’s Charter

The sue-and-be-sued clause in Fannie Mae’s charter
authorizes Fannie Mae “to sue and be sued, and to complain
and to defend, in any court of competent jurisdiction, State or
Federal.” 12 U.S.C. §1723a(a). We hold that this language
confers federal question jurisdiction over claims brought by
or against Fannie Mae. In so holding, we do not write on a
clean slate. In Red Cross, the Supreme Court gave us a clear
rule for construing sue-and-be-sued clauses for federally
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 5

chartered corporations. The Court held 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.” 505 U.S. at 255.

The question in Red Cross was whether the American
National Red Cross’s federal charter conferred federal
question jurisdiction over suits brought by or against the Red
Cross. The sue-and-be-sued clause in the Red Cross’s charter
authorized the Red Cross “to sue and be sued in courts of law
and equity, State or Federal, within the jurisdiction of the
United States.” Id. at 248. The Court held that the clause
conferred federal question jurisdiction. Id. at 257. Justice
Scalia dissented for himself and three others. He and his
fellow dissenters would have held that the clause conferred
only corporate capacity to sue and be sued, and that subject
matter jurisdiction had to be conferred by some other
provision of federal law. Id. at 265 (Scalia, J., dissenting).

The Court based its holding on a line of cases, stretching
back to Osborn v. Bank of the United States, 22 U.S.
(9 Wheat.) 738 (1824), that made clear that a sue-and-be-sued
clause for a federally chartered corporation confers federal
question jurisdiction if it specifically mentions federal courts.
Red Cross, 505 U.S. at 252–56. The Court in Osborn held, in
an opinion by Chief Justice Marshall, that a clause
authorizing the second Bank of the United States “to sue and
be sued . . . in all state courts having competent jurisdiction
and in any circuit court of the United States” conferred
federal question jurisdiction. 22 U.S. (9 Wheat.) at 817–18.
Chief Justice Marshall distinguished Osborn from Bank of the
United States v. Deveaux, 9 U.S. (5 Cranch) 61 (1809), in
which the Court had held that the charter of the first Bank of
the United States did not confer federal subject matter
6 LIGHTFOOT V. CENDANT MORTGAGE CORP.

jurisdiction because that bank’s charter authorized the bank
to “sue and be sued . . . in Courts of record,” without
specifying the federal courts. Osborn, 22 U.S. (9 Wheat.) at
817–18; Deveaux, 9 U.S. (5 Cranch) at 85. Chief Justice
Marshall wrote that, in contrast to the first bank’s charter, the
second bank’s charter could not have been “more direct and
appropriate” in conferring federal question jurisdiction.
Osborn, 22 U.S. (9 Wheat.) at 817.

Almost a century later, the Court held in Bankers Trust
Co. v. Texas & Pacific Railway, 241 U.S. 295 (1916), that a
federal corporate charter did not confer federal question
jurisdiction when it authorized a railroad “to sue and be
sued . . . in all courts of law and equity within the United
States.” Id. at 304–05. That language had “the same
generality and natural import” as the language in Deveaux
because it did not specifically mention the federal courts. Id.
at 304; see Red Cross, 505 U.S. at 254. Then, in D’Oench,
Duhme & Co. v. FDIC, 315 U.S. 447 (1942), the Court
upheld federal question jurisdiction based on a federal charter
authorizing the Federal Deposit Insurance Corporation to sue
or be sued “in any court of law or equity, State or Federal.”
Id. at 455.

The Court wrote in Red Cross that these cases established
a “rule” that would have been known to Congress at least as
far back as 1942, when D’Oench was decided. Red Cross,
505 U.S. at 255–57, 259–60. When federal charters, like
those of the Red Cross and of Fannie Mae, “expressly
authoriz[e] the organization to sue and be sued in federal
courts . . . the provision extends beyond a mere grant of
general corporate capacity to sue, and suffices to confer
federal jurisdiction.” Id. at 257. As the Court of Appeals for
the D.C. Circuit has already held, that rule resolves this case.
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 7

See Pirelli Armstrong Tire Corp. Retiree Med. Benefits Trust
ex rel. Fed. Nat’l Mortg. Ass’n v. Raines, 534 F.3d 779, 784
(D.C. Cir. 2008) (holding, based on Fannie Mae’s charter,
that federal question jurisdiction exists over suits brought by
or against Fannie Mae).

Despite the specific reference to federal courts in Fannie
Mae’s sue-and-be-sued clause, our dissenting colleague
contends that the clause does not confer federal question
jurisdiction. Like Justice Scalia and his fellow dissenters in
Red Cross, the dissent argues that the clause confers only
corporate capacity to sue and be sued, and that subject matter
jurisdiction must come from some other provision of federal
law. Dissent at 23. The dissent relies on the phrase “court of
competent jurisdiction” in the clause. Before 1954, Fannie
Mae, like the Red Cross, had the statutory authority to “sue
and be sued; complain and defend, in any court of law or
equity, State or Federal.” H.R. Rep. No. 83-1429, at 82
(1954) (emphasis added). In 1954, as one of many changes
to Fannie Mae’s charter, Congress amended Fannie Mae’s
sue-and-be-sued clause to authorize it “to sue and to be sued,
and to complain and to defend, in any court of competent
jurisdiction, State or Federal.” Housing Act of 1954, Pub. L.
No. 83-560, § 201, 68 Stat. 590, 620 (codified as amended at
12 U.S.C. § 1723a(a)) (emphasis added).

The dissent acknowledges that Fannie Mae’s pre-1954
charter conferred federal question jurisdiction, but argues that
Congress eliminated that jurisdiction by replacing the phrase
“court of law or equity” with “court of competent
jurisdiction.” Dissent at 23–24. We disagree. Eliminating
the charter’s grant of federal question jurisdiction would have
imposed a severe new restraint on Fannie Mae’s ability to
litigate in federal court. Under the general federal question
8 LIGHTFOOT V. CENDANT MORTGAGE CORP.

jurisdiction statute, 28 U.S.C. § 1331, Fannie Mae would
have been restricted by the well-pleaded complaint rule. See,
e.g., Franchise Tax Bd. v. Constr. Laborers Vacation Trust
for S. Cal., 463 U.S. 1, 9–10 (1983); Louisville & Nashville
R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908). Given that
Fannie Mae is often sued under state-law causes of action,
§ 1331 would have conferred jurisdiction in a relatively small
number of cases. Diversity jurisdiction under 28 U.S.C.
§ 1332, if it existed at all, would have been unavailable in
many, perhaps most, cases because Fannie Mae suits typically
involve mortgage transactions to which there are multiple
parties, often resulting in a lack of complete diversity. See
Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).

There is no indication that Congress intended to eliminate
federal question jurisdiction in 1954 by replacing the phrase
“court of law or equity” with the phrase “court of competent
jurisdiction.” Neither the House nor the Senate report on
Fannie Mae’s 1954 amendments so much as mentions the
“court of competent jurisdiction” language. See H.R. Rep.
No. 83-1429, at 19–24, 43–50; S. Rep. No. 83-1472, at 33,
74–75 (1954). Given the important practical effect of
eliminating federal question jurisdiction under Fannie Mae’s
sue-and-be-sued clause, we should expect the House or the
Senate to have said something if they intended a change of
that sort. Instead, there was silence.

In our view, the most likely explanation for replacing the
phrase “court of law or equity” with “court of competent
jurisdiction” is that Congress was simply modernizing Fannie
Mae’s charter. At our founding and for many years
thereafter, the federal court system and most state court
systems had separate law and equity courts. By the middle of
the 20th century, however, the federal courts and almost
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 9

every state had abandoned the law/equity division. See
Leonard J. Emmerglick, A Century of the New Equity,
23 Tex. L. Rev. 244, 244 n.1 (1945). The Federal Rules of
Civil Procedure merged law and equity in the federal courts
in 1938. Id. By 1945, only five states continued to have
separate law and equity courts. Id. At the time of the 1954
amendment, Fannie Mae’s charter’s reference to “court[s] of
law or equity” had become an antiquarian relic with little
relevance to the American legal system.

The change in Fannie Mae’s sue-and-be-sued clause is
best explained as getting rid of this anachronism, as Congress
had recently done in other statutes. In 1948, in response to
the Federal Rules of Civil Procedure’s elimination of the
law/equity distinction, Congress removed a number of
references to “law or equity” in the statutes defining federal
district court jurisdiction. See Act of June 25, 1948, Pub. L.
No. 80-773, §§ 1332, 1343, 1345–46, 62 Stat. 869, 930–33;
H.R. Rep. No. 80-3214, at A115, A121, A123 (1948). In
1954, as we discuss in more detail below, Congress
exchanged “court of law or equity” for “court of competent
jurisdiction” not just in Fannie Mae’s charter, but also in the
charters of the Federal Savings and Loan Insurance
Corporation (“FSLIC”) and the Home Loan Bank Board.

If Congress wanted to eliminate the grant of federal
question jurisdiction from Fannie Mae’s charter, it is highly
unlikely that it would have done so in the way the dissent
suggests. In 1954, Congress had no reason to think that
replacing the phrase “court of law or equity” with the phrase
“court of competent jurisdiction” would eliminate federal
question jurisdiction under Fannie Mae’s sue-and-be-sued
clause. Supreme Court cases from Deveaux to D’Oench had
put Congress on notice that a specific reference to the federal
10 LIGHTFOOT V. CENDANT MORTGAGE CORP.

courts was “necessary and sufficient to confer jurisdiction.”
Red Cross, 505 U.S. at 252 (emphasis added). The 1954
amendments, while using the new phrase “court of competent
jurisdiction” in Fannie Mae’s sue-and-be-sued clause,
retained the specific reference to the federal courts. Congress
would not have sought to eliminate federal question
jurisdiction under Fannie Mae’s sue-and-be-sued clause by
retaining the very words the Court had recently held
sufficient to confer such jurisdiction in D’Oench. See Pirelli,
534 F.3d at 786 (“If Congress in 1954 did not want to
continue to confer federal jurisdiction in Fannie Mae cases,
it logically would have omitted the word ‘Federal’ from the
statute, not attempted a bank shot by adding the words ‘of
competent jurisdiction.’”).

Congress’s contemporaneous treatment of the FSLIC
shows that it knew a foolproof method to eliminate federal
question jurisdiction from a sue-and-be-sued clause. That
method was to follow Deveaux and simply to omit the
reference to federal courts. In 1954, the same year Congress
amended Fannie Mae’s charter, Congress eliminated federal
question jurisdiction for the FSLIC by deleting language in its
charter that had authorized suit “in any court of law or equity,
State or Federal.” Congress replaced it with language
authorizing suit “in any court of competent jurisdiction in the
United States.” See H.R. Rep. No. 83-1429, at 90; S. Rep.
No. 83-1472, at 121. Since eliminating the reference to
federal courts in the FSLIC amendment eliminated federal
question jurisdiction over FSLIC suits brought under its sue-
and-be-sued clause, Congress had no reason also to insert the
phrase “court of competent jurisdiction” to accomplish the
same thing. See Corley v. United States, 556 U.S. 303, 314
(2009) (“[A] statute should be construed so that effect is
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 11

given to all its provisions, so that no part will be inoperative
or superfluous . . . .” (internal quotation marks omitted)).

The dissent argues that our holding renders superfluous
the phrase “court of competent jurisdiction.” Dissent at 19,
28. We disagree. As we explained above, the phrase served
the purpose of eliminating an anachronistic reference to
courts of law and equity. But if we need an additional
purpose for the phrase, it is not hard to find one. In Osborn,
the purpose of the phrase “in all State Courts having
competent jurisdiction” was to emphasize that the clause did
not authorize or require the exercise of subject matter
jurisdiction by a state court with narrow, specialized
jurisdiction. See 22 U.S. (9 Wheat.) at 817. Fannie Mae’s
sue-and-be-sued clause can easily be read to have the same
purpose. There was a general concern in the 1950s about the
extent of federal authority to require state courts to hear cases
brought pursuant to federal statutes. In Testa v. Katt, 330
U.S. 386 (1947), the World War II-era federal Emergency
Price Control Act required state courts to entertain civil suits
for treble damages against merchants who charged a retail
price exceeding the maximum set by federal law. The Act
specified that federal and state courts had concurrent
jurisdiction. Like Fannie Mae’s charter, the Act authorized
suit “in any court of competent jurisdiction.” Id. at 387 n.1.
Rhode Island district and superior courts refused to hear a suit
brought under the Act, contending that they were not obliged
to hear a suit under a federal statute authorizing treble
damages. Id. at 388. After determining that the state district
and superior courts were courts “of competent jurisdiction”
with “jurisdiction adequate and appropriate under established
local law” to grant treble damages, the Court held in Testa
that such courts were required to hear suits under the Act. Id.
at 394.
12 LIGHTFOOT V. CENDANT MORTGAGE CORP.

It was in this historical setting that Congress added the
phrase “court of competent jurisdiction” to Fannie Mae’s
charter. Consistent with Testa, the phrase requires state
courts of general or otherwise competent jurisdiction to hear
claims brought by and against Fannie Mae. The phrase
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. Similarly, the phrase also 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. Accord Pirelli,
534 F.3d at 785.

Finally, the dissent points to several circuit court cases
decided after 1954 that interpret the phrase “court of
competent jurisdiction” the same way the dissent does.
Dissent at 24 (citing C.H. Sanders Co. v. BHAP Hous. Dev.
Fund Co., 903 F.2d 114, 118 (2d Cir. 1990); Lomas &
Nettleton Co. v. Pierce, 636 F.2d 971, 973 (5th Cir. 1981);
Bor-Son Bldg. Corp. v. Heller, 572 F.2d 174, 181 (8th Cir.
1978); Lindy v. Lynn, 501 F.2d 1367, 1368 (3d Cir. 1974)).
But all of these cases predate Red Cross. The only post-Red
Cross cases cited by the dissent are district court decisions.
Dissent at 25 & n.2.

B. Legislative History

Our dissenting colleague makes two arguments based on
legislative history that deserve a focused response. First, the
dissent points to the history of the 1954 amendments. The
House Bill, which used the phrase “court of competent
jurisdiction,” was designed to effectuate a transformation of
Fannie Mae from a government-owned corporation to a
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 13

privately owned, but still federally chartered, corporation.
The Senate Bill, which retained the old phrase “in any court
of law or equity,” would not have changed the ownership of
Fannie Mae. The House Bill prevailed. The dissent
concludes that the addition of the phrase “court of competent
jurisdiction” in the 1954 amendments, taken from the House
Bill, was designed to help effectuate the privatizing purpose
of the bill.

Second, the dissent points to a 1974 amendment to Fannie
Mae’s charter. The amendment allowed Fannie Mae to
change its principal place of business from the District of
Columbia to the Virginia or Maryland suburbs, but specified
that Fannie Mae would nonetheless remain a District of
Columbia corporation “for purposes of jurisdiction.”
Housing and Community Development Act of 1974, Pub. L.
No. 93-383, § 806(b), 88 Stat. 633, 727 (codified as amended
at 12 U.S.C. § 1717(a)(2)). The dissent argues that if the
1954 sue-and-be-sued clause confers federal question
jurisdiction, there would have been no need to confer District
of Columbia corporate status on Fannie Mae in 1974, and
thereby to confer diversity jurisdiction over suits to which
Fannie Mae is a party.

1. The 1954 Amendments

The dissent relies heavily on the fact that the 1954
amendments were part of a broad reform reducing the federal
government’s role in Fannie Mae. The change to Fannie
Mae’s sue-and-be-sued clause, the dissent argues, must have
furthered this “overriding purpose.” Dissent at 30.

The dissent is correct that the 1954 amendments sought
to minimize the federal government’s ownership and
14 LIGHTFOOT V. CENDANT MORTGAGE CORP.

operational role in Fannie Mae. But the 1954 amendments
did not completely privatize Fannie Mae, which remained,
even after 1954, a federally chartered corporation with
specific statutory requirements for its corporate governance.
Not every part of the 1954 amendment served Congress’s
“overriding purpose” of privatization, and there is no reason
that the phrase “court of competent jurisdiction” must be
understood as serving this purpose, and there is no evidence
showing that the change to Fannie Mae’s sue-and-be-sued
clause was part of the move toward privatization. Whether
federal courts have federal question jurisdiction over Fannie
Mae cases has nothing to do with “[s]ubstituting private
sources of funds for Government expenditures,” the primary
means by which the House sought to privatize Fannie Mae.
H.R. Rep. No. 83-1429, at 2; see id. at 43–44. The House
Report went into great detail explaining the provisions of the
1954 amendments designed to privatize Fannie Mae. It never
once mentioned the change to Fannie Mae’s sue-and-be-sued
clause.

Even more telling is Congress’s simultaneous use of the
identical phrase, “court of competent jurisdiction,” in
contexts that had nothing to do with either Fannie Mae or
privatization. In the same Act that amended Fannie Mae’s
charter, Congress amended the FSLIC’s charter by replacing
the phrase “court of law and equity” with the phrase “court of
competent jurisdiction.” Housing Act of 1954 § 501(1). Also
in the same Act, Congress added the phrase “court of
competent jurisdiction” to the statute governing the Home
Loan Bank Board (“HLBB”). Housing Act of 1954 § 503(2).
The change to the FSLIC’s sue-and-be-sued clause was one
of very few changes to the FSLIC’s charter. See H.R. Rep.
No. 83-1429, at 90–91; S. Rep. No. 83-1472, at 121–22. As
we discussed above, Congress did eliminate federal question
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 15

jurisdiction for the FSLIC, but it did so by eliminating any
mention of federal courts. The change to the HLBB’s sue-
and-be-sued clause was unrelated to privatization. Indeed,
with respect to jurisdiction, Congress made clear that it
wanted to increase the HLBB’s access to federal courts.
Both the House and Senate explained that they were
providing the HLBB the “means . . . to enforce the laws and
regulations under which Federal savings and loan
associations operate.” H.R. Rep. No. 83-1429, at 27; S. Rep.
No. 83-1472, at 43. The Senate report specifically stated that
HLBB “proceedings could be in the Federal judicial district
in which the association is located.” S. Rep. No. 83-1472, at
43; see also H.R. Rep. No. 83-1429, at 27.

As a postscript to the 1954 amendments, in 1968
Congress split Fannie Mae into two corporations, Fannie Mae
and the Government National Mortgage Association (“Ginnie
Mae”). Housing and Urban Development Act of 1968, Pub.
L. No. 90-448, § 801, 82 Stat. 476, 536 (1968) (codified as
amended at 12 U.S.C. § 1716b). Both Fannie Mae and
Ginnie Mae remained federally chartered, but Fannie Mae
became entirely privately owned and Ginnie Mae became
entirely federally owned. See id. Yet Fannie Mae and Ginnie
Mae kept precisely the same sue-and-be-sued clause,
authorizing them both “to sue and be sued, and to complain
and to defend, in any court of competent jurisdiction, State or
Federal.” 12 U.S.C. § 1723a. If the phrase “court of
competent jurisdiction” had been used in 1954 as part of an
overall plan to privatize Fannie Mae and to limit its access to
federal courts, Congress would not have used that same
phrase in Ginnie Mae’s charter.
16 LIGHTFOOT V. CENDANT MORTGAGE CORP.

2. The 1974 Amendment

The 1974 amendment to the Housing Act changed the
sentence “[Fannie Mae] shall maintain its principal office in
the District of Columbia and shall be deemed, for purposes of
venue in civil actions, to be a resident thereof” to read,
“[Fannie Mae] shall maintain its principal office in the
District of Columbia or the metropolitan area thereof and
shall be deemed, for purposes of jurisdiction and venue in
civil actions, to be a District of Columbia corporation.”
Housing and Community Development Act of 1974 § 806(b)
(emphasis added).

The dissent argues that this change shows that Congress,
in light of the elimination of federal question jurisdiction
effectuated by the 1954 amendment to Fannie Mae’s sue-and-
be-sued clause, sought to authorize diversity jurisdiction
under 28 U.S.C. § 1332 over suits in which Fannie Mae was
a party. If it were clear that the 1974 amendment was
intended to confer diversity jurisdiction over Fannie Mae
cases, this could suggest that Congress belatedly realized that
it had eliminated federal question jurisdiction by its
amendment to Fannie Mae’s sue-and-be-sued clause, and now
sought, twenty years later, to provide some basis for federal
subject matter jurisdiction. See Dissent at 33–34. But we do
not believe that this was the purpose of the 1974 amendment.

The “jurisdiction” to which the 1974 amendment refers is
almost certainly not subject matter jurisdiction. The
reference is almost certainly to personal jurisdiction. The
purpose of the amendment was almost certainly to allow
Fannie Mae to move its principal place of business out of the
District of Columbia to the Virginia or Maryland suburbs, and
at the same time to make clear that Fannie Mae would be
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 17

subject to general personal jurisdiction only in the District
even if it moved its principal place of business into the
suburbs.

A corporation, like an individual, is subject to specific
jurisdiction in a forum when its activities in that forum have
given rise to the suit. See Goodyear Dunlop Tires
Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853 (2011). A
corporation is subject to general jurisdiction only where it is
“essentially at home.” Id. at 2851; see Daimler AG v.
Bauman, 134 S. Ct. 746, 755–58 (2014). The two places
where a corporation is “essentially at home” and therefore
subject to general jurisdiction are its place of incorporation
and its principal place of business. Daimler, 134 S. Ct. at
760. In the 1974 amendment, Congress specified that Fannie
Mae would be “deemed” a District of Columbia corporation
“for purposes of jurisdiction” and thus subject to general
jurisdiction only in the District, despite the possibility that it
might move its principal place of business to the suburbs. See
12 U.S.C. § 1717(a)(2)(B).

The legislative history of the 1974 amendment is
consistent with this reading. The House subcommittee
summarized the amendment as “provid[ing] that the principal
office of FNMA be located in the District of Columbia
metropolitan area, as well as in the District of Columbia,
though for jurisdiction and venue purposes FNMA would be
considered a District corporation.” Subcomm. on Hous. of
the Comm. on Banking and Currency, 93d Cong.,
Compilation of the Housing and Community Development
Act of 1974, at 277 (Comm. Print 1974); see also id. at 379
(summarizing the amendment as “permit[ing] the principal
office of FNMA to be located in the District of Columbia
metropolitan area, as well as in the District of Columbia,
18 LIGHTFOOT V. CENDANT MORTGAGE CORP.

though for jurisdiction and venue purposes FNMA is to be
considered a District resident”). The legislative history
contains no mention of the possibility that the amendment
was intended to authorize diversity jurisdiction based on
newly conferred District of Columbia citizenship for Fannie
Mae. Rather, the legislative history strongly suggests that the
amendment was intended to allow Fannie Mae to move its
principal place of business to the suburbs without effecting
any change to the place where it would be subject to general
jurisdiction. That is, Fannie Mae could move to the suburbs,
“though for jurisdiction and venue purposes [it] would be
considered a District corporation.” Id. at 277.

The dissent cites two other statutes as examples of
Congress creating diversity jurisdiction for federally
chartered corporations. Dissent at 34–35. But both statutes
support reading the 1974 Fannie Mae amendment as referring
to personal rather than subject matter jurisdiction. Both
statutes expressly refer to the corporation a “citizen” of the
relevant forum. See 7 U.S.C. § 941(c) (“The telephone
bank . . . shall, for the purposes of jurisdiction and venue, be
deemed a citizen and resident of the District of Columbia.”
(emphasis added)); 28 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.” (emphasis added)). Federal law
defines diversity jurisdiction in terms of citizenship,
28 U.S.C. § 1332(a), so when Congress sought to authorize
diversity jurisdiction in these two statutes, it used the word
“citizen.” Unlike these two statutes, Fannie Mae’s 1974
amendment does not use the word “citizen.” Rather, it
provides only that Fannie Mae is a “District of Columbia
corporation.” 17 U.S.C. § 1717(a)(2)(B).
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 19

Conclusion

We hold that the sue-and-be-sued clause in Fannie Mae’s
federal charter confers federal question jurisdiction over suits
in which Fannie Mae is a party. Accordingly, we hold that
the district court had subject matter jurisdiction over
plaintiffs’ claims. We affirm the district court’s dismissal of
plaintiffs’ claims for the reasons stated in our previous
unpublished disposition. Lightfoot, 465 F. App’x at 669.

AFFIRMED.

STEIN, District Judge, dissenting:

Fannie Mae’s charter gives the company the power “to
sue and to be sued, and to complain and to defend, in any
court of competent jurisdiction, State or Federal.” 12 U.S.C.
§ 1723a(a). Unlike the corporate charter at issue in American
National Red Cross v. S.G., 505 U.S. 247 (1992), Fannie
Mae’s sue-and-be-sued clause contains a proviso—the phrase
“of competent jurisdiction.” The majority offers a few
potential readings of this phrase, but each of these
constructions effectively renders the proviso superfluous. But
the phrase “of competent jurisdiction” is not a potted plant; it
must mean something. With the proviso included, Fannie
Mae’s sue-and-be-sued clause does not confer automatic
federal subject matter jurisdiction over any action to which
Fannie Mae is a party; jurisdiction must arise from some
other source. I therefore respectfully dissent.
20 LIGHTFOOT V. CENDANT MORTGAGE CORP.

I. The Red Cross Default Rule

Congress has used the sue-and-be-sued clauses of federal
corporations to achieve multiple goals. Most obviously, these
clauses make clear that the federal entity—as opposed to, for
example, its administrator—has the ability to engage in
litigation. See Fed. Hous. Admin. v. Burr, 309 U.S. 242, 245
(1940). Congress also uses these clauses to confirm that a
federally created entity cannot invoke sovereign immunity.
See id. at 249. And Congress may also draft a sue-and-be-
sued clause to confer federal jurisdiction upon any suit to
which the federal corporation is a party.

A hoary line of U.S. Supreme Court precedent sets forth
how Congress may achieve this final goal. The Court first
considered this question in Bank of the United States v.
Deveaux, 9 U.S. (5 Cranch) 61 (1809), with Chief Justice
Marshall writing. The corporation in that case was the first
Bank of the United States, and its charter empowered the
Bank “to sue and be sued, plead and be impleaded, answer
and be answered, defend and be defended, in courts of record,
or any other place whatsoever.” Id. at 85. The Court
concluded that this section merely granted the Bank the
capacity to sue. It did not “enlarge the jurisdiction of any
particular court.” Id.

Two lines of reasoning supported this holding. First, the
Court concluded that automatic access to the federal courts
did not necessarily follow from a generic authorization to sue
and be sued. See id. at 85–86. Second, a different section of
the Bank’s charter explicitly provided for federal jurisdiction
in certain suits against the president and directors of the
Bank. See id. at 86. “This,” the Chief Justice announced,
“evinces the opinion of congress, that the right to sue does not
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 21

imply a right to sue in the courts of the union, unless it be
expressed.” Id.

Congress seemingly responded to the Court’s ruling when
it chartered the second Bank of the United States. The
relevant section of the second Bank’s charter gave it the right
“to sue and be [sued], plead and be impleaded, answer and be
answered, defend and be defended, in all State Courts having
competent jurisdiction, and in any Circuit Court of the United
States.”1 Osborn v. Bank of the United States, 22 U.S.
(9 Wheat.) 738, 817 (1824). The Osborn Court, once again
through Chief Justice Marshall, determined that unlike the
language at issue in Deveaux, the second Bank’s charter
unambiguously conferred federal subject matter jurisdiction.
Id. at 817–18.

Deveaux and Osborn together established a default rule
for determining whether a federal corporation’s sue-and-be-
sued clause confers federal subject matter jurisdiction. As the
Supreme Court summarized in American National Red Cross
v. S.G., 505 U.S. 247 (1992): “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.

The clause at issue in that case gave the Red Cross the
power “to sue and be sued in courts of law and equity, State
or Federal, within the jurisdiction of the United States.” Id.

1
At the time the second Bank was chartered, the circuit courts had both
original and appellate jurisdiction over certain civil actions. See Am. Nat’l
Red Cross v. S.G., 505 U.S. 247, 256 n.8 (1992); Richard H. Fallon, Jr. et
al., Hart and Wechsler’s The Federal Courts and the Federal System 22,
30 n.65 (6th ed. 2009).
22 LIGHTFOOT V. CENDANT MORTGAGE CORP.

at 248. This language went beyond the general authorization
of Deveaux. See id. at 256–57. In addition, the Red Cross’s
clause was “in all relevant respects identical” to a charter
provision that the Court held to confer jurisdiction in
D’Oench, Duhme & Co. v. Federal Deposit Insurance Corp.,
315 U.S. 447 (1942). See Red Cross, 505 U.S. at 257.
Importantly, Congress amended the relevant provision of the
Red Cross’s charter just five years after D’Oench was
decided. See id. at 260. The plain language and statutory
history together compelled the conclusion that the Red
Cross’s charter gave federal courts subject matter jurisdiction
over suits to which the company was a party.

Red Cross provides the Supreme Court’s most recent
pronouncement on the jurisdictional implications of federal
sue-and-be-sued clauses. However, Red Cross did not
announce any new rule of law. See id. at 255–57. Rather, the
Court simply restated the “rule established” in the Court’s
twin decisions of Osborn and Deveaux. Id. at 257. Red
Cross thus did not announce a magic-words test that ends all
inquiry the moment we come across the word “federal”; it
restated a default rule to assist Congress and the courts in
writing and interpreting sue-and-be-sued clauses.

Recognizing that the rule in Red Cross is a default has an
important implication—it means that Congress can draft
exceptions to the rule. When Congress creates corporations,
it “has full authority to make such restrictions on the ‘sue and
be sued’ clause as seem to it appropriate or necessary.” Fed.
Hous. Admin. v. Burr, 309 U.S. 242, 249 (1940); cf. Fed. Sav.
& Loan Ins. Corp. v. Ticktin, 490 U.S. 82, 86–87 & n.5
(1982) (Congress can write provisos that limit “broad grant[s]
of federal jurisdiction.”). Counsel for Fannie Mae nicely
summarized this point at oral argument: “If Congress says
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 23

you can sue or be sued in federal court, that is at least a
profoundly strong default rule . . . and you’d have to find
something else in the statute that says even though we want
you to sue in federal court, we don’t really mean it.” Oral
Arg. Rec. at 28:58.

Red Cross did not tie Congress’ hands, preventing it from
crafting sue-and-be-sued clauses as it deems fit. We cannot
ignore the “of competent jurisdiction” proviso; we must
determine what it means. The Red Cross default rule gives us
the starting point for our analysis of Fannie Mae’s sue-and-
be-sued clause. The Supreme Court’s application of the
default rule over the past two centuries defines the
interpretive tools for our analysis. Using this approach,
Fannie Mae’s sue-and-be-sued clause allows for only one
reading—a court must have an independent basis of
jurisdiction to hear a suit involving that company.

II. The Plain Language of Fannie Mae’s Sue-And-Be-
Sued Clause

As noted, Fannie Mae’s charter grants the company the
power “to sue and to be sued, and to complain and to defend,
in any court of competent jurisdiction, State or Federal.”
12 U.S.C. § 1723a(a). Absent the “of competent jurisdiction”
proviso, this clause would clearly confer jurisdiction on the
federal courts. See D’Oench, 315 U.S. at 455. The true
question before this Court, then, is what the proviso means.
On its face, the phrase “of competent jurisdiction” “look[s] to
outside sources of jurisdictional authority.” Califano v.
Sanders, 430 U.S. 99, 106 n.6 (1977). When “of competent
jurisdiction” modifies “State” courts, the proviso instructs us
to look for a jurisdictional hook in that state’s law. See
Osborn, 22 U.S. (9 Wheat.) at 817. The proviso performs the
24 LIGHTFOOT V. CENDANT MORTGAGE CORP.

same function when it modifies “Federal” courts. No
court—state or federal—is competent to hear a suit involving
Fannie Mae unless it has subject matter jurisdiction by some
means other than Fannie Mae’s sue-and-be-sued clause.

Congress has utilized substantively identical language in
other sue-and-be-sued clauses, and the courts of appeals have
overwhelmingly agreed that an “of competent jurisdiction”
proviso requires an alternative basis of jurisdiction. Fannie
Mae has directed our attention in particular to the sue-and-be-
sued provision that authorizes the Administrator of the
Federal Housing Administration “to sue and be sued in any
court of competent jurisdiction, State or Federal.” 12 U.S.C.
§ 1702. A long line of cases has held that this statute does
not confer federal jurisdiction. See C.H. Sanders Co. v.
BHAP Hous. Dev. Fund Co., 903 F.2d 114, 118 (2d Cir.
1990); Lomas & Nettleton Co. v. Pierce, 636 F.2d 971, 973
(5th Cir. 1981); Bor-Son Bldg. Corp. v. Heller, 572 F.2d 174,
181 (8th Cir. 1978); Lindy v. Lynn, 501 F.2d 1367, 1368 (3d
Cir. 1974). This very Circuit has followed the non-
jurisdictional interpretation of the statute, albeit in dicta. See
Munoz v. Small Business Admin., 644 F.2d 1361, 1365 n.3
(9th Cir. 1981). The majority criticizes my reliance on these
cases because they were handed down prior to Red Cross,
which, as set forth above, announced no new rule of law. But
if the majority seeks post-Red Cross cases that agree with this
dissent that an independent basis is needed to support federal
subject matter jurisdiction for Fannie Mae, we need only look
to the numerous district court opinions in this Circuit that the
majority overrules with its decision. As district judge Dean
Pregerson recently summarized, “courts in this circuit appear
to have uniformly reached the [] conclusion” that Fannie
Mae’s charter does not confer federal subject matter
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 25

jurisdiction. Fed. Nat’l Mortgage Ass’n v. Moreno, No. 14-
CV-2984, 2014 WL 1922955, at *2 (C.D. Cal. May 14, 2014)
(collecting cases). Judge Pregerson concurred with that
significant consensus.2 See id.

In sum, when Congress has included “of competent
jurisdiction” provisos in sue-and-be-sued clauses, courts have
honored Congress’ intent and ruled these clauses to not
confer subject matter jurisdiction. Fannie Mae’s sue-and-be-
sued clause should be no different.

2
The district courts in our circuit are not alone in their consensus that
Fannie Mae’s sue-and-be-sued clause does not confer federal subject
matter jurisdiction. Indeed, this appears to be the position of the majority
of those district courts in all circuits that have written on this issue. See
Warren v. Fed. Nat’l Mortg. Ass’n, No. 14-CV-0784, 2014 WL 4548638
(N.D. Tex. Sept. 15, 2014); Kennedy v. Fed. Nat’l Mortg. Ass’n, No.
13-CV-203, 2014 WL 3905593, at *5–6 (E.D.N.C. Aug. 11, 2014); Fed.
Nat’l Mortg. Ass’n v. Davis, 963 F. Supp. 2d 532, 537–43 (E.D. Va.
2013); Carter v. Watkins, No. 12-CV-2813, 2013 WL 2139504, at *3–4
(D. Md. May 14, 2013); Fed. Home Loan Bank of Indianapolis v. Banc of
Am. Mortg. Sec., Inc., No. 10-CV-1463, 2011 WL 2133539, at *1–2 (S.D.
Ind. May 25, 2011) (construing the FHLB’s substantively identical sue-
and-be-sued clause); Fed. Home Loan Bank of Atlanta v. Countrywide
Sec. Corp., No. 11-CV-489, 2011 WL 1598944, at *3 (N.D. Ga. Apr. 22,
2011) (construing FHLB charter); Fed. Home Loan Bank of Chicago v.
Banc of Am. Funding Corp., 760 F. Supp. 2d 807, 809–10 (N.D. Ill. 2011)
(construing FHLB charter); Rincon Del Sol, LLC v. Lloyd’s of London,
709 F. Supp. 2d 517, 522–25 (S.D. Tex. 2010); Knuckles v. RBMG, Inc.,
481 F. Supp. 2d 559, 562–65 (S.D.W. Va. 2007). Those district courts
that have sided with the majority have done so without an extended
discussion of this question. See Fed. Home Loan Bank of Boston v. Ally
Fin., Inc., No. 11-CV-10952, 2012 WL 769731, at *1–3 (D. Mass. Mar.
9, 2012); In re Fannie Mae 2008 Sec. Litig., No. 08 Civ. 7831, 2009 WL
4067266, at *3 (S.D.N.Y. Nov. 24, 2009); Grun v. Countrywide Home
Loans, Inc., No. 03-CV-0141, 2004 WL 1509088, at *2 (W.D. Tex. July
1, 2004).
26 LIGHTFOOT V. CENDANT MORTGAGE CORP.

The majority offers two alternative readings for the “of
competent jurisdiction” proviso. Neither is persuasive. First,
the majority suggests that the proviso was part of Congress’
drive to modernize the U.S. Code in the mid-20th century.
During this period, law and equity were merged in the federal
courts and in a majority of the states. See Fed. R. Civ. P. 2.
The merger largely rendered references to “courts of law and
equity” into historical curiosities. As the majority correctly
points out, when Congress amended title 28 of the U.S. Code,
it cleaned up these references in the sections that confer
jurisdiction on the district courts. Congress went about its
task expeditiously—it simply deleted references to courts of
law or equity.3 Congress did not replace these phrases with
new references to “courts of competent jurisdiction” for a
singularly valid reason. As explained above, the phrase “of
competent jurisdiction” signals that the section containing
that phrase will not also harbor a grant of jurisdiction. It
would make no sense to include this proviso in a section
designed to confer jurisdiction.

Next, the majority offers that the “of competent
jurisdiction” proviso could be read to emphasize that state
and federal courts of specialized jurisdiction need not hear
cases involving Fannie Mae purely on the basis of its sue-
and-be-sued clause. There are two flies in the ointment of
this reading.

3
Compare 28 U.S.C. § 41(1) (1946), with Act of June 25, 1948, ch. 646,
§§ 1331, 1332, 1345, 62 Stat. 869, 930, 933 (deleting reference to “suits
of a civil nature, at common law or in equity”); compare 28 U.S.C.
§ 41(7), (14) (1946), with ch. 646, §§ 1338, 1343, 62 Stat. at 931–32
(deleting references to “suits at law or in equity”); and compare 28 U.S.C.
§ 41(20) (1946), with ch. 646, § 1346, 62 Stat. at 933 (deleting reference
to “a court of law, equity, or admiralty”).
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 27

First, the majority relies on the Osborn Court’s
interpretation of the second Bank’s charter, which authorized
the Bank to sue “in all State Courts having competent
jurisdiction.” Osborn, 22 U.S. (9 Wheat.) at 817. According
to the majority, this phrase ensured that “a state court with
narrow, specialized jurisdiction” was not required to hear any
case involving the Bank. Majority Op. at 11. This is an
unduly narrow reading of the clause. In fact, the second
Bank’s charter made clear that no state court was required to
hear a suit involving the Bank, unless that court had a free-
standing basis for jurisdiction. This reading accords with the
understood relationship between Congress and the state
courts around the time the second Bank was chartered: “I
hold it to be perfectly clear, that Congress cannot confer
jurisdiction upon any Courts, but such as exist under the
constitution and laws of the United States, although the State
Courts may exercise jurisdiction on cases authorized by the
laws of the State, and not prohibited by the exclusive
jurisdiction of the federal Courts.” Houston v. Moore,
18 U.S. (5 Wheat.) 1, 27–28 (1820) (emphasis added). The
“of competent jurisdiction” proviso serves precisely the same
purpose in Fannie Mae’s charter—the only difference is that
the proviso applies to the courts of the states and the federal
government.

Second, Red Cross forecloses the majority’s construction
of the “of competent jurisdiction” proviso. The Red Cross’s
charter gave that organization the power “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. In his dissenting opinion, Justice Scalia argued that if
this sue-and-be-sued clause must confer federal jurisdiction,
it must confer jurisdiction on all the federal courts, including
those of specialized jurisdiction. See id. at 267 (Scalia, J.,
28 LIGHTFOOT V. CENDANT MORTGAGE CORP.

dissenting). The Court rejected this approach and held that
the Red Cross’s charter confers automatic jurisdiction only in
the district courts—today, the sole federal courts of broad
original jurisdiction. See id. at 256 n.8 (majority opinion).
Red Cross therefore demonstrates that Congress does not
need an “of competent jurisdiction” proviso to ensure that
Fannie Mae will not foist itself upon federal courts of
specialized jurisdiction. The majority’s reading of the
proviso would render it entirely superfluous.

The majority claims that Testa v. Katt, 330 U.S. 386
(1947), provides an historical backdrop for its interpretation
of the sue-and-be-sued clause. This is an interesting
hypothetical, but one without relevance to the issue presented
in this case. Testa restated the uncontroversial proposition
that state courts cannot refuse to hear federal causes of action
when those courts entertain similar state law causes of action.
See id. at 394; see also, e.g., Haywood v. Drown, 556 U.S.
729, 735–36 (2009). But Congress did not give Fannie Mae
a proprietary cause of action when it amended the company’s
charter in 1954. When Fannie Mae sues or is sued, the cause
of action must derive from a separate realm of federal law or,
more likely, from state law. See, e.g., Welch v. Burton,
252 S.W.2d 411, 413 (Ark. 1952) (Fannie Mae joined as
defendant in quiet title action); Malcolm MacDowell &
Assocs. v. Ecorse-Lincoln Park Bank, 38 N.W.2d 921,
921–22 (Mich. 1949) (Fannie Mae sued for breach of a
mortgage-related contract). Testa does not evidence a mid-
century climate of fear that federal entities would be denied
access to state courts, especially in cases touching on state
property and mortgage law.

The Red Cross default rule does not allow us to ignore the
“of competent jurisdiction” proviso—it must mean
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 29

something. The only natural reading of this phrase instructs
us to look for a source of jurisdiction outside of Fannie Mae’s
sue-and-be-sued clause.

III. The Legislative Context of Fannie Mae’s Sue-And-
Be-Sued Clause

Looking beyond the plain language of Fannie Mae’s sue-
and-be-sued clause, the history of Congress’ amendments to
this statute reinforces the conclusion that the clause does not
confer federal subject matter jurisdiction.

A. The 1954 amendment

Prior to 1954, Fannie Mae’s sue-and-be-sued clause gave
it the power “[t]o sue and be sued, complain and defend, in
any court of law or equity, State or Federal.” Nat’l Housing
Act, ch. 847, § 301(c)(3), 48 Stat. 1246, 1253 (1934). This
clause inarguably gave Fannie Mae access to the federal
courts. See D’Oench, 315 U.S. at 455. But knowing this,
Congress in 1954 struck the language “in any court of law or
equity,” and replaced it with “in any court of competent
jurisdiction.” It is a basic tenet of statutory interpretation that
“[w]hen Congress acts to amend a statute, [courts] presume
it intends its amendment to have real and substantial effect.”
Stone v. I.N.S., 514 U.S. 386, 397 (1995). Indeed, the
Supreme Court in Red Cross reinforced the importance of this
canon in the context of sue-and-be-sued clauses. See Red
Cross, 505 U.S. at 260. Congress thus emphasized the non-
jurisdictional implications of the “of competent jurisdiction”
proviso by adding it to a previously jurisdiction-conferring
statute.
30 LIGHTFOOT V. CENDANT MORTGAGE CORP.

Congress’ motivation and method in amending Fannie
Mae’s charter have proved obscure to some. See Pirelli
Armstrong Tire Corp. Retiree Med. Benefits Trust ex rel. Fed.
Nat’l Mortg. Ass’n v. Raines, 534 F.3d 779, 786–87 (D.C.
Cir. 2008). It is true that the legislative history behind the
1954 amendment does not expressly discuss the addition of
the “of competent jurisdiction” proviso. But the legislative
history does reveal that Congress intended to reduce the
footprint of the federal government in the national housing
market. Congress’ amendment to Fannie Mae’s sue-and-be-
sued clause was simply one facet of this overriding purpose.

The 1954 Act was prompted by President Eisenhower’s
desire to “develop a new and revitalized housing program
better adapted to current requirements, which would clearly
identify the proper role of the Federal Government in the
housing field and outline more economical and effective
means for improving the housing conditions of our people.”
H.R. Rep. No. 83-1429, at 1 (1954). As the House
Committee on Banking and Currency put it, one of the Act’s
“basic objectives” was “[s]ubstituting private sources of
funds for Government expenditures whenever possible,
especially in connection with the provision of a secondary
market for home mortgages.” Id. at 2.

The House passed H.R. 7839—a version of the 1954 Act
that would dramatically remake Fannie Mae. Pursuant to
H.R. 7839, Fannie Mae would be dissolved and rechartered
“with substantial changes in its authority and with provision
for the eventual substitution of private capital for
Government investment in its secondary market operations.”
H.R. Rep. No. 83-1429, at 18. The new Fannie Mae would
issue capital stock to the Secretary of the Treasury and
convertible bonds to private investors. See id. at 18–19.
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 31

Once the capital stock owned by the Secretary was retired,
the convertible bonds could be exchanged for common stock
and Fannie Mae could issue more common stock directly to
the public. See id. at 18–19, 43–45. Notably for our
purposes, the House bill included the “of competent
jurisdiction” proviso in Fannie Mae’s amended corporate
charter. See id. at 89–90.

The Senate Committee on Banking and Currency strongly
disagreed with the House’s treatment of Fannie Mae. That
Committee did not believe that “the testimony and facts
presented to it warrant[ed] the sweeping action contained in”
the House bill. S. Rep. No. 83-1472, at 33 (1954). The
Senate proposed only minor changes to Fannie Mae’s then-
existing corporate authority. See id. at 74–75. Importantly,
the Senate version of H.R. 7839 did not include the “of
competent jurisdiction” proviso. See id. at 121.

The conference committee roundly rejected the Senate’s
approach and adopted the House’s version of the Act. See
Conf. Rep. No. 83-2271, at 25–35 (1954). The final version
of the law included the Treasury-to-private capitalization
path. See Housing Act of 1954, Pub. L. No. 83-560, § 201,
68 Stat. 590, 613–15. It also provided that once this capital
conversion was complete, Fannie Mae’s administrative parent
would request that Congress turn Fannie Mae over entirely to
its private owners. See id., 68 Stat. at 615. It also included,
32 LIGHTFOOT V. CENDANT MORTGAGE CORP.

as we know, the “of competent jurisdiction” proviso.4 See id.
at 620.

In sum, the non-jurisdictional reading of the 1954 sue-
and-be-sued clause meshes comfortably with Congress’
overall intention when enacting the Housing Act of 1954.
Congress intended to put Fannie Mae on a path that would
eventually take the federal government out of the secondary
mortgage market. As part of this process, Congress removed
Fannie Mae’s jurisdiction-granting sue-and-be-sued clause
and elected the default option for federally chartered
corporations—that they do not automatically gain access to
the federal courts, unless the government owns more than half
of the corporation’s capital stock.5 After Congress passed the
1954 Act, Fannie Mae would still have access to the federal

4
The 1954 Act inserted an “of competent jurisdiction” proviso into the
sue-and-be-sued clauses of two other entities—the Federal Savings and
Loan Insurance Corporation and the Home Loan Bank Board (in the
context of Board actions to enforce its regulations of savings and loan
institutions). See Pub. L. No. 83-560, §§ 501(1), 503(2), 68 Stat. at 633,
635. Congress made the interpretive task concerning these two clauses
easier, since it did not include a specific reference to federal courts.
Neither of these sue-and-be-sued clauses confers automatic federal
jurisdiction.
5
As a consequence of the Supreme Court’s decision in Osborn, “a suit
by or against a corporation of the United States is a suit arising under the
laws of the United States.” Pac. R.R. Removal Cases, 115 U.S. 1, 11
(1885) (citing Osborn, 22 U.S. (9 Wheat.) at 817–28). The district courts
thus have jurisdiction over suits by or against federally chartered
corporations under 28 U.S.C. § 1331, at least in theory. See id. at 14; see
also Red Cross, 505 U.S. at 251. In 1925, Congress limited this ground
of jurisdiction so that only corporations where the government owns more
than half of the capital stock could benefit from it. See Act of Feb. 13,
1925, ch. 229, § 12, 43 Stat. 936, 941 (codified as amended at 28 U.S.C.
§ 1349).
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 33

courts purely on the basis of its federal charter until the
Treasury disentangled itself from the corporation. At that
point, the government would no longer own more than half of
the corporation’s capital stock, Fannie Mae’s administrator
would request that the company be completely turned over to
its private owners, and Fannie Mae would be in the position
of every other federally chartered corporation that does not
receive the special treatment of a jurisdiction-conferring sue-
and-be-sued clause. See Paul E. Lund, Federally Chartered
Corporations and Federal Jurisdiction, 36 Fla. St. U. L. Rev.
317, 334–35 (2009) (calling the number of corporations with
automatic access to federal courts through their sue-and-be-
sued clauses “a select group” and a “handful”).

Although Congress did not speak specifically to its intent
in amending Fannie Mae’s sue-and-be-sued clause, it did not
have to. Congress’ intent for the Housing Act of 1954—to
place the government and Fannie Mae on paths that would
ultimately diverge—was clear. The amendment to Fannie
Mae’s sue-and-be-sued clause was part and parcel of this
overarching intendment.

B. The 1974 amendment

Congress returned to Fannie Mae’s corporate charter in
1974 to once again amend the company’s ability to gain
access to the federal courts. This amendment did not touch
on the sue-and-be-sued clause, but it affects our interpretation
of that portion of Fannie Mae’s charter. If a separate portion
of Fannie Mae’s charter explicitly speaks to jurisdiction, this
militates against a jurisdictional reading of the sue-and-be-
sued clause. See Deveaux, 9 U.S. (5 Cranch) at 86.
34 LIGHTFOOT V. CENDANT MORTGAGE CORP.

Prior to 1974, both Fannie Mae and its sister corporation,
Ginnie Mae (formally titled the Government National
Mortgage Corporation), were required to “maintain [their]
principal office in the District of Columbia and shall be
deemed, for purposes of venue in civil actions, to be a
resident thereof.” Housing and Urban Development Act of
1968, Pub. L. No. 90-448, § 802(c)(3), 82 Stat. 476, 536, 537.
Then, in the Housing and Community Development Act of
1974, Congress amended this clause to provide that Fannie
Mae “shall be deemed, for purposes of jurisdiction and venue
in civil actions, to be a District of Columbia corporation.”
Pub. L. No. 93-383, tit. VIII, § 806(b), 88 Stat. 633, 727
(codified at 12 U.S.C. § 1717(a)(2)(B)) (emphasis added).
Congress did not make a parallel amendment to the corporate
charter of Ginnie Mae, which had no capital stock and was
“in the Department of Housing and Urban Development.”
12 U.S.C. § 1717(a)(2)(A).

By adding the term “jurisdiction,” Congress intended to
allow Fannie Mae to access the federal courts via diversity
jurisdiction pursuant to 28 U.S.C. § 1332. Section 1332
deems a corporation a citizen “of every 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). But
federally chartered corporations are not “citizens” of any
“State” for the purposes of section 1332. See Wachovia Bank
v. Schmidt, 546 U.S. 303, 306 (2006); Bankers’ Trust Co. v.
Tex. & P. Ry. Co., 241 U.S. 295, 309–10 (1916); Hancock
Fin. Corp. v. Fed. Sav. & Loan Ins. Corp., 492 F.2d 1325,
1329 & n.4 (9th Cir. 1974). Recognizing this fact, Congress
has filled the statutory gap on a few occasions by deeming
specific corporations or classes of corporations to be citizens
of the states in which they are located. See Act of Mar. 3,
1887, ch. 373, § 4, 24 Stat. 552, 554 (codified as amended at
 LIGHTFOOT V. CENDANT MORTGAGE CORP. 35

28 U.S.C. § 1348) (“[A]ll national banking associations
established under the laws of the United States shall, for the
purposes of all actions by or against them . . . be deemed
citizens of the States in which they are respectively located
. . . .”); see also 7 U.S.C. § 941(c) (“The telephone bank . . .
shall, for the purposes of jurisdiction and venue, be deemed
a citizen and resident of the District of Columbia.”). The
1974 amendment to Fannie Mae’s charter is another example
of this type of statute.

Fannie Mae would have no use for diversity jurisdiction
if it could enter the federal courts pursuant to its sue-and-be-
sued clause. The latter basis of jurisdiction does not contain
an amount-in-controversy requirement, a complete-diversity
requirement, or a forum-defendant rule. It is also not limited
by the well-pleaded complaint rule. See Red Cross, 505 U.S.
at 258. If Fannie Mae’s sue-and-be-sued clause confers
subject matter jurisdiction, then Congress amended the
company’s charter in 1974 for no reason whatsoever. See
Hancock, 492 F.2d at 1328–29. The absence of any change
to Ginnie Mae’s charter confirms this interpretation of the
Fannie Mae amendment. Ginnie Mae had no use for diversity
jurisdiction whatsoever—it had plenary access to the federal
courts as an agency of the federal government. See 28 U.S.C.
§§ 1345, 1346.

The majority believes that the word “jurisdiction” in the
1974 amendment refers only to personal jurisdiction, not
subject matter jurisdiction. A natural reading of the statute
does not lead to this result. When Congress dubbed Fannie
Mae “a District of Columbia corporation,” it employed a
phrase with a universally understood meaning. Just as “a
Delaware corporation” is an entity incorporated under the
laws of that state, see, e.g., Eldridge v. Richfield Oil Corp.,
36 LIGHTFOOT V. CENDANT MORTGAGE CORP.

364 F.2d 909, 909 (9th Cir. 1966), “a District of Columbia
corporation” is one that has been incorporated under the laws
of the District. Section 1332 fills in the rest, making that
District of Columbia corporation a District citizen, and
therefore eligible for diversity jurisdiction. See 28 U.S.C.
§ 1332(c)(1), (e). Congress’ designation of the District as the
effective place of Fannie Mae’s incorporation also makes
Fannie Mae subject to general jurisdiction—that is, personal
jurisdiction—in the District’s courts. See Daimler AG v.
Bauman, 134 S. Ct. 746, 760 (2014). But the 1974
amendment cannot be cabined so that it legislates personal
jurisdiction, and personal jurisdiction alone.

The plain language of the 1974 amendment shows that
Congress intended to give Fannie Mae access to the federal
courts by diversity jurisdiction. Since we cannot presume
that Congress amends statutes with frivolous intent, it follows
that Fannie Mae must have needed this jurisdictional hook.
Congress’ pronouncement confirms that Fannie Mae’s sue-
and-be-sued clause does not confer federal jurisdiction.

IV. Conclusion

The Supreme Court’s cases interpreting sue-and-be-sued
clauses, culminating with Red Cross, have defined the tool
box we are to use in examining Fannie Mae’s charter. All of
the interpretive techniques point in a single direction—that
the “of competent jurisdiction” proviso added to Fannie
Mae’s charter demands that the company come up with some
point of entry to the federal courts other than its status as a
federally chartered corporation. I respectfully dissent.