FCUs Must Be Allowed Access to Federal Courts, Says CUNA Brief

CUNA supports federal credit unions’ access to federal courts via diversity jurisdiction, one of the two methods for a federal court to have jurisdiction, the association indicated in an amicus brief filed Monday. CUNA’s brief was submitted to the U.S. Court of Appeals for the Fourth District, in response to a decision by the U.S. District Court for the Eastern District of Virginia that found Section 1332 of the U.S. Code is the sole source of diversity jurisdiction and that Section 1332 does not apply to federally chartered corporations.

CUNA’s brief, filed in Navy FCU v. LTD Financial Services et al, says that by foreclosing the ability for federal credit unions to invoke diversity jurisdiction, the court has failed to give effect to Congressional intent to treat federal and state credit unions alike in all material respects.

CUNA’s argument states that Congress intended to treat state and federal credit unions equally in all material respects, which is exemplified throughout the Federal Credit Union Act, most notably in provisions that permit and facilitate the ready conversion between federal and state charters after which they can continue to operate in the same manner.

“Precluding federal credit unions from litigating in federal court under diversity jurisdiction creates myriad other problems. For instance, credit unions, particularly those with limited resources, face the burden of being forced to litigate in different states,” the brief reads. “This results in the need to continually engage local counsel and familiarize themselves with the local rules, practices, and procedures in that particular jurisdiction, which is no small task. By contrast, the federal courts largely have uniform rules of evidence and procedure.”