## Facts

- Northbrook, an Illinois insurer, issued malpractice policies to physicians who previously had coverage through the Medical Malpractice Joint Underwriting Association of Massachusetts (JUA), an unincorporated association created by statute.
- A dispute arose whether two doctors facing malpractice suits were covered under prior JUA policies or under current Northbrook policies.
- Northbrook sued the JUA in federal district court seeking declaratory relief; jurisdiction was asserted based on diversity of citizenship.
- The district court decided the coverage dispute on the merits in Northbrook’s favor, holding the JUA policies provided coverage.
- While an appeal was pending, the JUA challenged subject-matter jurisdiction, asserting that diversity failed because the JUA’s citizenship included all of its members and at least one member shared Northbrook’s Illinois citizenship.
- Northbrook sought to cure the defect by amending to proceed under Federal Rule of Civil Procedure 23.2, naming a non-Illinois JUA member as a representative defendant for the association’s members.

## Issues

1. Whether, for diversity jurisdiction, an unincorporated association’s citizenship is determined by the citizenship of all its members, defeating complete diversity if any member shares citizenship with the opposing party.
2. Whether Rule 23.2 permits a plaintiff to sue an unincorporated association that has capacity to be sued as an entity by instead naming a single member as a representative, thereby avoiding nondiverse members for diversity purposes.
3. Whether the action had to be dismissed for lack of subject-matter jurisdiction despite a merits judgment previously entered.

## Decision

- The First Circuit affirmed the district court’s jurisdictional ruling.
- The court held that the JUA, as an unincorporated association, takes the citizenship of all its members for diversity purposes; the presence of an Illinois member defeated complete diversity.
- The court held Rule 23.2 could not be used to recast the suit against a member representative when the association itself had jural capacity under state law and was the real party in interest.
- Because diversity jurisdiction was lacking, the federal action had to be dismissed, and the earlier merits judgment could not stand.

## Legal Principles

- For diversity jurisdiction, an unincorporated association is treated as a citizen of every state in which any of its members is a citizen.
- Rule 23.2 is a procedural device aimed at enabling suit by or against an unincorporated association when representative litigation is needed to bind members; it is not a tool to bypass established diversity rules.
- When state law grants an unincorporated association capacity to sue and be sued as an entity, a plaintiff may not use Rule 23.2 to avoid treating the association as the defendant for diversity analysis.
- Federal courts will reject party-structuring that functions to manufacture diversity where the association remains the true party in interest.

## Conclusion

The First Circuit required dismissal for lack of subject-matter jurisdiction because the JUA’s member-based citizenship destroyed complete diversity, and Rule 23.2 could not be used to sidestep that result where the association had capacity to be sued as an entity under state law.


Northbrook Excess & Surplus Ins. Co. v. Med. Malpractice Joint Underwriting Ass’n of Mass., 900 F.2d 476 (1st Cir. 1990)