Wachovia Corp. and other national banks chalked up a critical victory Tuesday when the Supreme Court ruled that lawsuits against them may be heard in federal courts rather than in multiple state courts, according to Dow Jones.
The ruling essentially found that national banks are corporate citizens only of the state in which they are headquartered, explained Reuters, and not of every state where they maintain a branch or even an ATM.
The case reportedly involved a lawsuit against a unit of Wachovia, which is based in Charlotte, North Carolina, by Daniel Schmidt III, a South Carolina businessman. Schmidt filed suit in his home state regarding tax advice he received following his 1998 sale of physical-therapy companies, according to Dow Jones.
Wachovia then moved to have the case heard in federal court, the wire service elaborated, which are generally considered more consistent if not friendlier to corporate defendants.
The case went to the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, which ruled in favor of Schmidt and ordered the federal case dismissed for lack of jurisdiction. Tuesday’s Supreme Court ruling overturned that decision.
In her opinion, Justice Ginsburg reportedly wrote that the Fourth Circuit ruling was wrong because it “rendered national banks singularly disfavored corporate bodies with regard to their access to federal courts,” according to Dow Jones. Had the ruling gone the other way, Wachovia could have faced suits in 16 states, the wire service added.