Northbrook Excess and Surplus Insurance Co. v. Medical Malpractice Joint Underwriting Association

Northbrook Excess and Surplus Insurance Company (Northbrook) (plaintiff) sued the Medical Malpractice Joint Underwriting Association (JUA), an unincorporated association created under Massachusetts law, in a declaratory-judgment action in a federal district court in Massachusetts. Northbrook prevailed in that suit that found that two doctors against whom medical-malpractice actions had been brought were covered under their JUA insurance policies and not their current Northbrook policies. While an appeal was pending, the JUA challenged the district court’s subject-matter jurisdiction, which had been based on diversity of citizenship. The JUA argued that the citizenship of every member of an unincorporated association must be considered for determining whether complete diversity of citizenship is met. The JUA argued that because one of its members was a citizen of Illinois, the same citizenship as Northbrook, the suit lacked the requisite complete diversity of citizenship. In response, Northbrook sought leave to amend its complaint to name a non-Illinois citizen as class representative of the association’s members as a class under Federal Rule of Civil Procedure 23.2. The district court held that a representative suit under Rule 23.2 cannot be brought against an entity that has jural status under state law to sue or be sued and that because the JUA had such status under Massachusetts law, Northbrook could not use Rule 23.2 to sue the JUA and get around the lack-of-diversity issue. Northbrook appealed and argued that because the plain language of Rule 23.2 does not expressly prohibit such suits and only expressly requires that the representative fairly and adequately protect the interests of the association and its members, it should be allowed to sue the JUA under Rule 23.2.