The case arose from a disability discrimination claim by New York citizen Arnold Schneiderman against the American Chemical Society (ACS), a federally chartered corporation headquartered in Washington, D.C. Schneiderman sued under New York state law, claiming ACS failed to provide reasonable accommodations for his participation in a 2014 chemistry competition.
The central legal question was whether diversity jurisdiction existed over ACS as a federally chartered corporation. Schneiderman argued that 28 U.S.C. § 1332(c)(1)'s principal place of business provision should independently establish ACS as a citizen of Washington, D.C., even though it was not incorporated by any state.
The Second Circuit panel rejected this interpretation, ruling that the statute's reference to a corporation being deemed a citizen of both its state of incorporation 'and' its principal place of business requires both elements to be present. The court found that the principal place of business provision only applies in addition to, not independently of, state incorporation.
Judge Raggi's majority opinion emphasized that Congress intended the 1958 amendment to narrow, not expand, diversity jurisdiction for state-chartered corporations. The court noted that extending the statute to federally chartered corporations would contradict this legislative purpose and exceed judicial authority to determine federal court jurisdiction.
The district court had also declined to create a judge-made exception for federally chartered corporations, despite Schneiderman's argument that courts should expand jurisdiction based on policy considerations. The Second Circuit affirmed this decision, citing separation of powers principles that reserve jurisdictional determinations to Congress.