28 U.S.C. § 1332(c)(1) Does Not Confer Diversity Citizenship on Federally Chartered Corporations Based Solely on Principal Place of Business

1. Introduction

Schneiderman v. American Chemical Society (Second Circuit, Apr. 6, 2026) addresses a recurring jurisdictional problem: whether a federally chartered corporation can be treated as a “citizen” of a State (or the District of Columbia) for purposes of diversity jurisdiction.

Plaintiff-Appellant Arnold Schneiderman (a New York citizen) sued Defendant-Appellee The American Chemical Society (“ACS”), a federally chartered corporation, for disability discrimination under the New York State Human Rights Law. After the Third Amended Complaint dropped federal claims, Schneiderman relied solely on diversity jurisdiction under 28 U.S.C. § 1332. The Eastern District of New York dismissed for lack of subject-matter jurisdiction, concluding ACS was not a state citizen. Schneiderman also sought post-judgment relief to reopen discovery and pursue a potential Rehabilitation Act theory; the district court denied that relief.

The appeal presented two core questions: (1) whether § 1332(c)(1)’s “principal place of business” language makes a federally chartered corporation a citizen of that place, notwithstanding the absence of state incorporation; and (2) whether the district court abused its discretion in denying reconsideration/reopening.

2. Summary of the Opinion

The Second Circuit affirmed. On jurisdiction, the court held that § 1332(c)(1) is properly read to confer corporate citizenship not independently by principal place of business, but only in conjunction with state (or foreign) incorporation—i.e., the statute creates “dual citizenship” for state-chartered corporations (incorporation state(s) and principal place of business), and does not extend to federally chartered corporations that have no state of incorporation.

The court relied on text, statutory context, and legislative history to reject the Fourth Circuit’s contrary reading in Navy Federal Credit Union v. LTD Financial Services, LP (“Navy Federal”). It also rejected the dissent’s effort to revive diversity jurisdiction via the “localization” doctrine, emphasizing waiver/abandonment and the absence of any obligation to locate an unargued basis for jurisdiction.

On post-judgment relief, the court found no abuse of discretion in denying reconsideration and reopening. Schneiderman did not show overlooked controlling law or extraordinary circumstances justifying relief under Rules 59(e) or 60(b), and the district court had considered the Rehabilitation Act discovery narrative in prior orders.

3. Analysis

3.1. Precedents Cited

Foundational Supreme Court baseline: federally chartered corporations and diversity

  • Bankers' Tr. Co. v. Texas & P. Ry. Co. (“Bankers' Trust”), 241 U.S. 295 (1916)
    Role in the opinion: The opinion treats Bankers' Trust as the key historical rule: a federally chartered corporation, whose operations are not confined to a single state and absent a statute granting state citizenship, is “not a citizen of any state” for diversity purposes. The Second Circuit uses this background rule to frame the significance of any claimed statutory change: if Congress intended to alter this landscape broadly, it would do so clearly.
  • Texas v. Interstate Com. Comm'n, 258 U.S. 158 (1922)
    Role: Cited for the notion that federal instrumentalities/federally chartered entities are not tied to any one state in the same way as a state citizen, supporting the court’s skepticism that Congress silently expanded diversity jurisdiction to federally chartered corporations.

Modern diversity statute purpose and “principal place of business”

  • Hertz Corp. v. Friend, 559 U.S. 77 (2010)
    Role: Used for two propositions: (1) Congress’s 1958 amendment to § 1332(c)(1) was prompted by concern that federal dockets had “too many diversity cases”; and (2) the “principal place of business” concept is a defined jurisdictional tool (“nerve center”) that the Second Circuit regards as part of a dual-citizenship limitation for state-incorporated corporations, not a standalone hook for federally chartered entities.
  • Carden v. Arkoma Assocs., 494 U.S. 185 (1990)
    Role: Cited for the “not only...but also” description of the 1958 amendment—supporting the majority’s view that Congress intended an additive, dual-citizenship scheme for state-chartered corporations rather than a broad new basis for federal-corporate citizenship.

Textual interpretation and the meaning of “and”

  • Pulsifer v. United States (“Pulsifer”), 601 U.S. 124 (2024)
    Role: Provides the majority’s methodological anchor: “and” is ordinarily conjunctive but can be context-dependent; courts must determine “what goes together with what.” The Second Circuit uses Pulsifer to justify looking beyond a simplistic reading and to resist the Fourth Circuit’s “zero plus one is one” logic in Navy Federal.

Direct circuit split catalyst

  • Navy Federal Credit Union v. LTD Financial Services, LP (“Navy Federal”), 972 F.3d 344 (4th Cir. 2020)
    Role: The Second Circuit explicitly rejects Navy Federal’s holding that § 1332(c)(1)’s principal-place-of-business clause independently confers citizenship on federally chartered corporations, creating a direct and acknowledged split. The majority characterizes Navy Federal as textually plausible but ultimately inconsistent with context, statutory history, and Congress’s narrowing purpose.

Separation of powers and Congress’s control over jurisdiction

  • Patchak v. Zinke, 583 U.S. 244 (2018) and Snyder v. Harris, 394 U.S. 332 (1969)
    Role: Support the majority’s insistence that expanding federal jurisdiction is primarily for Congress, not courts—used both to validate the district court’s refusal to craft judge-made jurisdictional expansions and to caution against interpretations that would silently enlarge diversity.
  • Empire Healthchoice Assur., Inc. v. McVeigh, 547 U.S. 677 (2006)
    Role: Reinforces the “Congress decides expansion” theme and the court’s reluctance to treat ambiguous language as an enlargement of federal jurisdiction.

Appellate waiver/abandonment and standards for post-judgment relief

  • United States v. Mangano, Genesis Healthcare Corp. v. Symczyk, and Fincher v. Depository Tr. & Clearing Corp.
    Role: Used to frame what was waived (localization) and what could still be reviewed (a statutory point the district court decided sua sponte).
  • Munafo v. Metro. Transp. Auth., Grace v. Bank Leumi Tr. Co. of N.Y., Van Buskirk v. United Grp. of Cos., Inc., Analytical Survs., Inc. v. Tonga Partners, L.P., and Motorola Credit Corp. v. Uzan
    Role: Provide the strict, deferential standards governing reconsideration and Rule 60(b) relief—supporting affirmance of the district court’s post-judgment rulings.

3.2. Legal Reasoning

(a) The “and” in § 1332(c)(1): additive dual citizenship, not independent alternatives

The crux of the decision is the Second Circuit’s reading of § 1332(c)(1): a corporation “shall be deemed to be a citizen of every State ... by which it has been incorporated and of the State ... where it has its principal place of business.” The court holds that “and” links the clauses in a way that presupposes state (or foreign) incorporation and then adds principal place of business as an additional citizenship.

The majority’s textual move is to treat “every State by which it has been incorporated” as grammatically and conceptually presupposing at least one state of incorporation. Because federally chartered corporations have none, the majority rejects the idea that the principal-place-of-business clause can operate as a standalone citizenship grant.

(b) Purpose and history: Congress narrowed diversity for state-chartered corporations

The opinion repeatedly returns to Congress’s 1958 aim: reduce the corporate diversity docket by preventing “local” corporations from manufacturing diversity by incorporating elsewhere while operating primarily in a plaintiff’s home state. Legislative materials—especially committee reports—describe the amendment as making a corporation a citizen “not only” of its incorporation state but “also” of its principal place of business. The court treats this as decisive evidence of an additive, dual-citizenship mechanism, not an expansion to new classes of entities.

(c) Broader statutory context: Congress acts expressly when it wants federally chartered entities treated as state citizens

The court bolsters its interpretation by pointing to multiple statutes where Congress explicitly deems certain federally chartered entities citizens of the District of Columbia (or otherwise specifies citizenship/jurisdictional treatment), including 28 U.S.C. § 1348 (national banks) and several specific entity statutes. The court infers that if § 1332(c)(1) already achieved what Navy Federal claims—state citizenship for all federally chartered corporations by principal place of business—these targeted enactments would have been unnecessary.

(d) Localization is not adopted here (and is treated as waived/abandoned)

The majority acknowledges the “localization exception” as a judge-made doctrine but refuses to use it to save jurisdiction in this case, emphasizing: (1) Schneiderman expressly disclaimed reliance on localization in the district court (waiver), (2) he did not raise it on appeal (abandonment), and (3) courts must ensure they do not act without jurisdiction but need not search for jurisdictional bases the parties do not press.

Importantly, the majority also rejects the dissent’s suggestion that § 1332(c)(1) codifies localization, reasoning that “principal place of business” is not coextensive with localization (a corporation can have a “nerve center” while operating nationally).

(e) Post-judgment relief: strict standards, no overlooked law or extraordinary circumstances

Applying deferential review, the court finds the district court explicitly considered the Rehabilitation Act discovery narrative but properly treated it as irrelevant to jurisdiction over a complaint that pleaded only state-law claims and sought no timely leave to amend before dismissal.

3.3. Impact

Immediate doctrinal effect in the Second Circuit

  • No diversity jurisdiction over federally chartered corporations based solely on “principal place of business.” Federally chartered corporations remain “stateless” for diversity purposes absent (i) explicit congressional citizenship language for the entity, or (ii) a successful localization showing (if properly raised and established).
  • Textual method matters: the opinion frames “and” as context-sensitive but ultimately resolves ambiguity with purpose/history, emphasizing Congress’s narrowing objective. Litigants should expect careful scrutiny of jurisdiction-expanding interpretations.

Inter-circuit conflict and Supreme Court prospects

The opinion expressly rejects the Fourth Circuit’s approach in Navy Federal, entrenching a split on a frequently recurring question affecting credit unions, congressionally chartered nonprofits, and other federal instrumentalities. That split increases the likelihood of Supreme Court review or congressional clarification.

Practical litigation consequences

  • Plaintiffs suing federally chartered entities in the Second Circuit will often be confined to state court unless a federal question exists or Congress has deemed the entity a state citizen.
  • Defendants that are federally chartered may be able to defeat diversity jurisdiction even when headquartered in a single state, unless localization is pleaded/proven or a specific statute applies.
  • Pleading strategy becomes critical: if localization might apply, it must be timely asserted and supported by facts (operations confined, branch presence, geographic footprint, etc.).

4. Complex Concepts Simplified

  • Diversity jurisdiction: Federal courts can hear state-law claims if the parties are citizens of different states and the amount in controversy is met.
  • Corporate citizenship under § 1332(c)(1): For most (state-chartered) corporations, citizenship is both (i) where incorporated and (ii) where the principal place of business is. The Second Circuit holds this “both” structure does not translate to federally chartered corporations.
  • Federally chartered corporation: An entity created by an Act of Congress (here, ACS under 36 U.S.C. § 20501) rather than by a state incorporation statute.
  • “Stateless” for diversity: A party that is not a citizen of any state cannot be used to create diversity jurisdiction in the ordinary way; if such a party is necessary to the case, diversity fails.
  • Principal place of business (“nerve center”): Usually the headquarters where top officers direct and coordinate the business (from Hertz Corp. v. Friend). The court treats this as an additional citizenship for state-incorporated corporations—not an independent citizenship-creation device for federally chartered entities.
  • Localization doctrine: A judge-made exception under which some federally chartered corporations with operations essentially confined to one state may be treated as citizens of that state. The majority does not apply it here due to waiver/abandonment and because it is not identical to “principal place of business.”
  • Waiver vs. forfeiture: Waiver is an intentional surrender of an argument; forfeiture is a failure to raise it in time. The majority treats localization as waived below and abandoned on appeal.

5. Conclusion

Schneiderman v. American Chemical Society establishes a clear Second Circuit rule: § 1332(c)(1)’s principal-place-of-business clause does not independently confer state citizenship on federally chartered corporations. The statute is construed as an additive “dual citizenship” provision for corporations incorporated by a state (or foreign state), enacted to narrow corporate diversity jurisdiction, not to expand it to federally chartered entities.

The decision cements a circuit split with Navy Federal Credit Union v. LTD Financial Services, LP (“Navy Federal”) and channels many disputes involving federally chartered corporations away from federal court absent a federal question, explicit congressional citizenship language, or a properly raised and supported localization theory. It also illustrates the high bar for post-judgment reconsideration when jurisdiction was lacking at the time of dismissal and amendment was not timely pursued.