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Oral arguments set for challenge to FCUs' ability to file suit in federal court
Oral arguments have been set for March 17-20 in Navy Federal Credit Union's appeal of a lower-court decision that determined the credit union did not have diversity jurisdiction to file a federal lawsuit. NAFCU in May filed an amicus brief in support of Navy Federal.
The credit union is challenging the U.S. District Court for the Eastern District of Virginia's ruling that Navy Federal is not a citizen of Virginia – where it is headquartered – or any other state based on statutory language that says federal credit unions are corporations. This is contrary to how courts have long looked at this issue.
In order to sue in federal court, certain criteria must be met: the plaintiff and defendant either have to have a federal case or controversy, or be citizens of different states. If this criteria is not met, then the lawsuit must be filed in state court.
NAFCU remains committed to advocating for federal- and state-chartered credit unions. If this precedent were to stand it could have wide-ranging impact. The association will continue to stand by Navy Federal throughout hearings and provide credit unions with updates on potential implications.