UNPUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT


VICKIE C. HUGGER; CAROLYN SETTLE,      
              Plaintiffs-Appellants,
                 v.
THE RUTHERFORD INSTITUTE; THE                    No. 02-1520
RUTHERFORD INSTITUTE OF NORTH
CAROLINA, INCORPORATED; JOHN W.
WHITEHEAD; STEVEN H. ADEN,
              Defendants-Appellees.
                                       
           Appeal from the United States District Court
     for the Western District of North Carolina, at Statesville.
              Carl Horn, III, Chief Magistrate Judge.
                        (CA-00-180-5-H)

                      Argued: February 27, 2003

                        Decided: May 2, 2003

  Before LUTTIG, WILLIAMS, and GREGORY, Circuit Judges.



Affirmed in part, reversed in part, and remanded by unpublished per
curiam opinion.


                             COUNSEL

ARGUED: John Michael Logsdon, MCELWEE LAW FIRM,
P.L.L.C., North Wilkesboro, North Carolina, for Appellants. Thomas
Stephen Neuberger, Wilmington, Delaware, for Appellees. ON
BRIEF: William H. McElwee, III, MCELWEE LAW FIRM,
P.L.L.C., North Wilkesboro, North Carolina, for Appellants.
2                HUGGER v. THE RUTHERFORD INSTITUTE
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).


                               OPINION

PER CURIAM:

   Vickie C. Hugger and Carolyn Settle appeal from the district
court’s denial of their motion to remand and its grant of summary
judgment for The Rutherford Institute (TRI), The Rutherford Institute
of North Carolina (TRINC),1 John W. Whitehead, individually, and
Steven H. Aden, individually, on Hugger and Settle’s claims of defa-
mation, intentional infliction of emotional distress, and negligent
infliction of emotional distress. Because federal diversity jurisdiction
is proper between the parties, we affirm the district court’s denial of
the motion to remand. Additionally, we affirm, on state law grounds,
the district court’s grant of summary judgment on the intentional
infliction of emotional distress and negligent infliction of emotional
distress claims. Because the district court erred in reaching the consti-
tutional issue of whether Hugger and Settle are required to meet the
New York Times Co. v. Sullivan actual malice standard before decid-
ing the state law issue of whether sufficient evidence was proffered
to establish a claim of defamation, we reverse the district court’s grant
of summary judgment on the defamation claim and remand for con-
sideration of the state law issue in proceedings consistent with this
opinion.

                                    I.

  The claims in this case stem from two stories that H.D.,2 a twelve-
year old student at C.B. Eller Elementary in Wilkes County, North
Carolina, told her mother about Settle, her sixth grade teacher, and
Hugger, her school principal. First, H.D. told her mother that Settle
    1
    Although the district court held that TRINC was a "sham" defendant,
TRINC has not been formally dismissed as a party.
  2
    Initials of minor child used pursuant to the Judicial Conference Policy
on Privacy and the E-Government Act of 2002.
                 HUGGER v. THE RUTHERFORD INSTITUTE                       3
ordered her to read the word "damn" in front of the class even though
H.D. explained that she does not say curse words for religious rea-
sons. H.D. told her mother that when she refused, Settle sent her to
Principal Hugger’s office, who ordered H.D. to read the word "damn"
or receive in-house suspension for the rest of the day. At that point,
H.D. said, she returned to class and read the word in front of the class.
Second, H.D. told her mother that Settle made her erase "WWJD"3
and several crosses that she had drawn on the chalkboard in the "fea-
ture one student" section.

   On November 8, 1999, H.D.’s mother contacted The Rutherford
Institute (TRI) regarding H.D.’s stories. TRI telephoned H.D.’s
mother on November 10, 1999, to obtain more information and spoke
with H.D. who retold the stories and provided the name of the book
that the class was reading. TRI obtained a copy of the book and con-
firmed that it contained the word "damn." On November 15, 1999,
Whitehead, president of TRI, faxed a demand letter to the Superinten-
dent of Wilkes County Schools and Hugger. The letter stated that
"Ms. Hugger and Ms. Settle have violated [H.D.]’s First Amendment
rights of free speech and religious expression." (J.A. at 95.) The letter
demanded a written apology and indicated that if TRI did not receive
a response by the close of business the next day, it would "seek
redress for [H.D.] and her family in federal court." (J.A. at 97.)

   Counsel for Wilkes County Schools immediately responded to
TRI’s letter, saying that he was "in the process of ascertaining the
facts applicable to the incidents identified in [the] letter [and that] [a]n
appropriate response [would] be issued following completion of [the]
inquiry." (J.A. at 98.) On November 16, after counsel for Wilkes
County Schools spoke with TRI’s legal coordinator and expressed his
concerns about the truthfulness of H.D.’s stories, TRI contacted H.D.
again; she claimed that she had not lied and that the stories were true.
H.D. provided the name of a student in her class who could confirm
her story, but TRI was not able to get in touch with the student or the
student’s parents.
  3
    "WWJD" stands for "What Would Jesus Do" and is a popular admo-
nition for Christians to consider how Jesus would act as a model for their
own actions.
4                HUGGER v. THE RUTHERFORD INSTITUTE
   On that same day, TRI issued a press release entitled "Sixth Grader
Punished for Refusing to Curse in Class." (J.A. at 99.) The press
release stated:

     John W. Whitehead, president of The Rutherford Institute,
     has intervened on behalf of [H.D.] and her mother . . ., with
     the Wilkes County School Superintendent, Dr. Joseph John-
     son. Twelve-year-old [H.D.], a student at C.B. Eller Ele-
     mentary School in Elkin, North Carolina, was directed by
     her teacher to read a portion of a book out loud in front of
     her classmates. When [H.D.] skipped over the word "damn"
     in the text and respectfully explained that she did so because
     of her Christian beliefs, she was sent to the principal’s
     office. The principal then ordered [H.D.] to say the swear
     word or receive an in-house suspension for the remainder of
     the day.

         One week later, [H.D.] wrote "WWJD" ("What Would
     Jesus Do") and drew some crosses on the blackboard as part
     of the "feature one child" class participation program where
     students express themselves on the class blackboard. When
     her classmates left the room for lunch, however, [H.D.]’s
     teacher informed her that this type of information could not
     be displayed on the blackboard and ordered her to remove
     it.

        The Rutherford Institute has demanded that a formal writ-
     ten apology be sent to [H.D.] and that informational copies
     be sent to all district administrative and instructional person-
     nel. In addition to the apology, The Rutherford Institute has
     demanded that the teacher and the principal be given a writ-
     ten reprimand for the incident. . . . "[H.D.]’s teacher and her
     principal have violated not only [H.D.]’s First Amendment
     rights of free speech and religious expression, but also her
     right not to be forced to go against her religious beliefs,"
     said Steven H. Aden, Chief Litigation Counsel for The
     Rutherford Institute. . . .

(J.A. at 99.)
                 HUGGER v. THE RUTHERFORD INSTITUTE                      5
   On November 22, 1999, H.D. admitted that she had lied about the
stories. On November 23, TRI wrote a letter of apology to Hugger
and Settle and, on November 24, issued a press release entitled "Ruth-
erford Institute Expresses Regret After Fraud is Disclosed; School
Girl Confesses To Fabricating A Claim Of Religious Discrimination."
(J.A. at 169.)

   Hugger and Settle, both citizens of North Carolina, filed a com-
plaint in state court alleging that the demand letter and the press
release were "false and impeached [them] in their character and their
profession." (J.A. at 12.) Hugger and Settle alleged that "defendants
had a duty . . . to make reasonable efforts to determine the truth or
falsity of the allegations[,] . . . failed to conduct a reasonable investi-
gation of the allegations of [H.D.] prior to publishing false statements
to others," and acted "maliciously or with reckless disregard as to
whether the statements were false." (J.A. at 12.) Hugger and Settle
also alleged intentional infliction of emotional distress and negligent
infliction of emotional distress.

   TRI, TRINC, Whitehead, and Aden removed the case to federal
court based on diversity of citizenship. Hugger and Settle moved to
remand the case, arguing that because TRINC is a North Carolina cor-
poration, there was not complete diversity between the parties and
federal jurisdiction was not proper. Hugger and Settle also argued that
TRI should be deemed a citizen of North Carolina based on its rela-
tionship with TRINC, which would also destroy complete diversity.
The district court held that TRI is a citizen of Virginia and that
TRINC was a "sham" defendant under the doctrine of fraudulent join-
der, and thus, despite TRINC’s North Carolina citizenship, there was
complete diversity between the parties. The district court denied Hug-
ger and Settle’s motion to reconsider its jurisdictional ruling based on
the citizenship of TRI.

   TRI, TRINC, Whitehead, and Aden then moved for summary judg-
ment on all three claims on the ground that the claims failed under
state law and on the ground that Hugger and Settle were public offi-
cials and had not shown the required actual malice. The district court
granted summary judgment to TRI, TRINC, Whitehead, and Aden on
the defamation claim on the ground that Hugger and Settle were pub-
lic officials and had failed to present evidence of actual malice; the
6                HUGGER v. THE RUTHERFORD INSTITUTE
district court granted summary judgment on the intentional and negli-
gent infliction of emotional distress claims on the grounds that the
claims failed under state law and that Hugger and Settle had failed to
present evidence to support the existence of actual malice. Hugger
and Settle filed a timely notice of appeal of the denial of the motion
to remand and of the grant of summary judgment.

                                   II.

   We first address Hugger and Settle’s argument that the district
court erred by denying their motion to remand the case to the state
court. "[A]ny civil action brought in a State court of which the district
courts of the United States have original jurisdiction, may be removed
by the defendant or the defendants . . . ." 28 U.S.C.A. § 1441(a) (West
1994). TRI, TRINC, Whitehead, and Aden based their removal on
diversity jurisdiction. The district courts have original jurisdiction
based on diversity over actions "where the matter in controversy
exceeds the sum or value of $75,000 . . . and is between . . . citizens
of different States." 28 U.S.C.A. § 1332(a) (West 1993 & Supp.
2002). The requirement that the controversy be between "citizens of
different States" has been interpreted to require complete diversity
between the plaintiffs and defendants. In other words, "[t]o sustain
diversity jurisdiction there must exist an ‘actual,’ ‘substantial’ contro-
versy between citizens of different states, all of whom on one side of
the controversy are citizens of different states from all parties on the
other side." City of Indianapolis v. Chase Nat’l Bank, 

, 69
(1941) (internal citations omitted).

   "The parties agree that the plaintiffs are citizens of North Carolina
and defendants Whitehead and Aden are citizens of Virginia. The par-
ties also agree that TRI was incorporated in Virginia and TRINC was
incorporated in North Carolina." (Appellant’s Br. at 11-12.) For pur-
poses of diversity jurisdiction, "a corporation shall be deemed to be
a citizen of any State by which it has been incorporated and of the
State where it has its principal place of business." 28 U.S.C.A.
§ 1332(c)(1). The district court held that TRINC’s North Carolina cit-
izenship did not destroy complete diversity because TRINC was a
"sham" defendant under the doctrine of fraudulent joinder. See Wilson
v. Republic Iron & Steel Co., 

, 97 (1921) (holding that the
"right of removal cannot be defeated by a fraudulent joinder of a resi-
                 HUGGER v. THE RUTHERFORD INSTITUTE                    7
dent defendant having no real connection with the controversy"). As
Hugger and Settle "acknowledge that there is no evidence that
[T]RINC independently performed any act or omission [that] would
create liability for tortious conduct," (J.A. at 61), we find no error in
the district court’s holding that TRINC was a "sham" defendant that
does not defeat removal.

   Hugger and Settle also argue that TRI should be deemed to be a
North Carolina citizen. The district court held that Hugger and Set-
tle’s "contention that [T]RI is a North Carolina citizen by virtue of
‘reincorporation’ through [T]RINC and [T]RINC’s alleged ‘consoli-
dation’ into [T]RI is manifestly contradicted by the undisputed facts."
(J.A. at 65 n.1.) We review the finding that TRI is not a citizen of
North Carolina for clear error. Sligh v. Doe, 

, 1171 (4th
Cir. 1979) ("Citizenship . . . presents a preliminary question of fact
to be determined by the trial court. Appellate review should be limited
by the usual standards applicable to such determinations."). TRI is
incorporated in Virginia, and is thus a citizen of Virginia. No evi-
dence suggests, and neither party contends, that TRI was formally
incorporated in North Carolina or has its principal place of business
there. Hugger and Settle make two arguments why TRI should never-
theless be deemed a citizen of North Carolina.

   First, they argue that TRINC was consolidated into TRI and that
this consolidation gives TRI citizenship in North Carolina. They rely
on Town of Bethel v. Atlantic Coast Line Railroad Company, 

(4th Cir. 1936), for the proposition that a consolidation results in
the consolidated company being a citizen of each state in which its
constituent corporations existed.

   In Town of Bethel, we considered whether the Atlantic Coast Line
Railroad Company (ACL) was a citizen of North Carolina for diver-
sity purposes. 

pursuant to a complicated "agree-
ment of consolidation or merger," 

many railroad
companies in Virginia, North Carolina, and South Carolina, including
two that were relevant to our decision, the Atlantic Coast Line Rail-
road Company of Virginia (ACLVA), a corporation created under the
laws of Virginia and North Carolina, and the Wilmington & Weldon
Railroad Company, a corporation created under the laws of North
Carolina. The North Carolina enabling act, which authorized the Wil-
8                 HUGGER v. THE RUTHERFORD INSTITUTE
mington & Weldon Railroad Company to consolidate with other com-
panies, provided that "any and all corporations consolidated, leased or
organized under the provisions of this act shall be domestic corpora-
tions of North Carolina." 

agreement provided that all
of the companies would be consolidated into ACLVA, and then
ACLVA would change its name to ACL.

   ACL argued that it was not a North Carolina citizen because what
the agreement provided for was actually a merger whereby only the
Virginia corporation remained. Our holding, however, did not turn on
the distinction between mergers and consolidations. We held that
ACL was a North Carolina corporation because ACLVA "the imme-
diate predecessor of [ACL], was already a corporation of both states
when the consolidation . . . took place and the [North Carolina]
enabling acts [regarding Wilmington & Weldon] expressly provided
that it should continue to be a domestic corporation after the railroad
properties should have been united." 

contrast, TRI, which would be the "immediate predecessor" in
the alleged consolidation in this case, was not a North Carolina corpo-
ration prior to the alleged consolidation and there is no indication that
the North Carolina legislature passed an enabling act requiring that a
consolidation between TRINC and another corporation would result
in a North Carolina corporation. Accordingly, Town of Bethel does
not support Hugger and Settle’s argument that TRI should be deemed
a North Carolina citizen.

   Even assuming, arguendo, that a "consolidation" results in the con-
solidated corporation being a citizen of each state in which its constit-
uent corporations existed, there was no "consolidation" in this case.4
    4
   As noted in the text, we assume without deciding that where a state
legislature passes an enabling act authorizing a corporation organized in
that state to execute articles of consolidation with a corporation orga-
nized outside of that state, the "new consolidated company has a legal
existence in each of the states in which the constituent companies previ-
ously existed," Winn v. Wabash R. Co., 

, 58 (C.C.W.D. Mo.
1902) (cited in Town of 

). We find no support in our
case law, however, for the proposition that something less than a formal
consolidation authorized by legislative acts of the various states results
in a corporation that is a citizen in each state in which its constituent cor-
porations existed.
                 HUGGER v. THE RUTHERFORD INSTITUTE                    9
Hugger and Settle base their argument that there was a consolidation
solely on the affidavit of one of the directors of TRI, who stated that
"[i]n 1992, TRI reorganized into regional offices operated by TRI."
(J.A. at 30.) According to Black’s Law Dictionary, a consolidation of
corporations "[o]ccurs when two or more corporations are extin-
guished, and by the same process a new one is created." Black’s Law
Dictionary 309 (6th ed. 1990). Hugger and Settle concede that TRINC
"has not been administratively dissolved and has not filed articles of
dissolution." (Appellant’s Br. at 13.) Moreover, there is no evidence
that TRI was extinguished pursuant to its reorganization. Thus, the
district court’s finding that TRI is not a North Carolina citizen by vir-
tue of "consolidation" with TRINC is not clearly erroneous.

   Second, Hugger and Settle argue that "TRINC is merely a reincor-
poration of TRI in North Carolina." (Appellant’s Br. at 18.) TRINC
is a separate corporation that was incorporated and directed by North
Carolina residents, not by TRI. Again, the district court’s finding that
there are no facts to support a formal reincorporation is not clearly
erroneous.

  Accordingly, we affirm the district court’s denial of the motion to
remand as the requisite diversity existed between the parties.

                                  III.

   We now consider Hugger and Settle’s argument that the district
court erred in granting summary judgment to TRI, TRINC, White-
head, and Aden (hereinafter, collectively, TRI) on their intentional
and negligent infliction of emotional distress claims. The district court
held that there were no affidavits or other evidence to support Hugger
and Settle’s "bare allegations," (J.A. at 81(a)), of an essential element
of both intentional and negligent infliction of emotional distress under
state law, namely severe emotional distress, and thus, granted sum-
mary judgment to TRI.5 "Summary judgment is appropriate when a
  5
   The district court also held that TRI was entitled to summary judg-
ment on the intentional and negligent infliction of emotional distress
claims on the ground that Hugger and Settle, as "public officials," were
required to prove actual malice under Hustler Magazine v. Falwell, 485
10                HUGGER v. THE RUTHERFORD INSTITUTE
party, who would bear the burden on the issue at trial, does not fore-
cast evidence sufficient to establish an essential element of the case,
such that ‘there is no genuine issue as to any material fact and the
moving party is entitled to judgment as a matter of law.’" Wells v.
Liddy, 

, 520 (4th Cir. 1999) (internal citation omitted)
(quoting Fed. R. Civ. P. 56(c)). "Viewing the facts in the light most
favorable to the non-moving party, we review a grant of summary
judgment de novo." 

law, to recover for intentional infliction of
emotional distress, "a plaintiff must prove ‘(1) extreme and outra-
geous conduct, (2) which is intended to cause and does cause (3)
severe emotional distress to another.’" Beck v. City of Durham, 

, 190-91 (N.C. App. 2002) (quoting Dickens v. Puryear,

, 335 (N.C. 1981)). An action for negligent infliction
of emotional distress under North Carolina law "has three elements:
‘(1) defendant engaged in negligent conduct; (2) it was reasonably
foreseeable that such conduct would cause the plaintiff severe emo-
tional distress and (3) defendant’s conduct, in fact, caused severe
emotional distress.’" Wells v. N.C. Dep’t of Corr., 

,
814 (N.C. App. 2002) (quoting Robblee v. Budd Servs., Inc., 

, 849 (N.C. App. 2000)).

   Hugger and Settle argue that their medical records show that they
suffer from "severe emotional distress" because they both suffer from
depression. "[T]he term ‘severe emotional distress’ [for purposes of
both intentional and negligent infliction of emotional distress claims]
means any emotional or mental disorder, such as, for example, neuro-
sis, psychosis, chronic depression, phobia, or any other type of severe
and disabling emotional or mental condition which may be generally
recognized and diagnosed by professionals trained to do so." Waddle
v. Sparks, 

, 27 (N.C. 1992) (emphasis in original) (quot-

U.S. 46, 56 (1988), which applied the New York Times Co. actual malice
requirement to claims for emotional distress. As our resolution of the
state law issue is dispositive of the intentional and negligent infliction of
emotional distress claims, we need not and do not reach this constitu-
tional question in affirming the district court’s grant of summary judg-
ment.
                HUGGER v. THE RUTHERFORD INSTITUTE                    11
ing Johnson v. Ruark Obstetrics and Gynecology Assocs., 

, 97 (N.C. 1990)). As the Supreme Court of North Carolina
explained,

    "It is only where [emotional distress] is extreme that the lia-
    bility arises. Complete emotional tranquility is seldom
    attainable in this world, and some degree of transient and
    trivial emotional distress is a part of the price of living
    among people. The law intervenes only where the distress
    inflicted is so severe that no reasonable man could be
    expected to endure it. The intensity and the duration of the
    distress are factors to be considered in determining its sever-
    ity."

(quoting Restatement (Second) of Torts
§ 46 cmt. j (1965)). Viewing the facts in the light most favorable to
Hugger and Settle, the evidence does not show that they suffer from
any emotional distress "so severe that no reasonable man could be
expected to endure it," 

most, the medical
reports show that Settle had "worsening anxiety" on November 29,
1999, (J.A. at 128), and that Hugger received "routine medication
management of depression," (J.A. at 148.). These conditions do not
rise to the level of severe emotional distress under North Carolina
law. See 

. Moreover, with regard to Hugger,
she also did not forecast sufficient evidence to establish that her
depression was caused by TRI’s actions. Her medical treatment was
not closely connected temporally with TRI’s actions, and her medical
records indicate that her depression was caused by events in her child-
hood. Accordingly, we affirm the district court’s grant of summary
judgment on the intentional and negligent infliction of emotional dis-
tress claims.

                                 IV.

   Finally, we turn to Hugger and Settle’s arguments that the district
court erred by granting summary judgment on their defamation claim
based on a finding that they were public officials required to prove
actual malice to recover damages for defamation and that they failed
to prove actual malice. A defamation claim is, at its root, a state law
tort claim. The First Amendment, incorporated and applied to the
12               HUGGER v. THE RUTHERFORD INSTITUTE
states through the Fourteenth Amendment, however, limits the state
remedies available to a defamation plaintiff. New York Times Co. v.
Sullivan, 

(1964). Under New York Times Co., a plaintiff
who is a "public official" may not recover damages for defamation
"relating to his official conduct unless he proves that the statement
was made with ‘actual malice’—that is, with knowledge that it was
false or with reckless disregard of whether it was false or not." 

moved for summary judgment on the grounds that Hugger and
Settle were public officials who had not shown actual malice and that
the underlying statements were not defamatory. The district court pro-
ceeded directly to the constitutional question of whether Hugger and
Settle are public officials, without addressing the state law question
of whether Hugger and Settle proffered sufficient evidence to estab-
lish a claim of defamation under North Carolina law.

   "[C]ourts should avoid deciding constitutional questions unless
they are essential to the disposition of a case." Bell Atl. Md., Inc. v.
Prince George’s County, Md., 

, 865 (4th Cir. 2000)
(applying the rule of Ashwander v. Tenn. Valley Auth., 

,
341-47 (1936) (Brandeis, J., concurring)); cf. Hutchinson v. Proxmire,

, 121 (1979).6 "[B]y deciding the constitutional question
  6
    In Hutchinson v. Proxmire, 

, 122 (1979), the Court rec-
ognized that its practice is "to avoid reaching constitutional questions if
a dispositive nonconstitutional ground is available." 

. In Hutchinson, the court of appeals addressed the constitu-
tional issue of whether the plaintiff was a public figure without address-
ing the state law issue of whether the statements constituted defamation
under state law. 

Court noted that ordinarily it would
remand the case for resolution of the state law issue because resolution
of the state law issue might render resolution of the First Amendment
issue unnecessary. 

court of appeals’ observation that the
statements "may be defamatory falsehoods," in explaining its conclusion
that the statements were protected by the Speech and Debate Clause,
however, indicated that the court of appeals would have held that the
statements at issue constituted defamation under state law. 

Court interpreted this observation to indicate the court of appeals’
view that "the appeal could not be decided without reaching the constitu-
                  HUGGER v. THE RUTHERFORD INSTITUTE                     13
. . . in advance of considering the state law question[ ] upon which the
case might have been disposed of, the district court committed revers-
ible error." Bell Atl. 

. Accordingly, we reverse
the district court’s grant of summary judgment on Hugger and Settle’s
defamation claim and remand for consideration of the state law issue
in proceedings consistent with this opinion. We express no opinion on
the proper resolution of either the state law issue or the constitutional
law issue.

                                    V.

   For the foregoing reasons, we affirm the district court’s denial of
the motion to remand and the grant of summary judgment to TRI on
the intentional and negligent infliction of emotional distress claims,
and we reverse the grant of summary judgment to TRI on the defama-
tion claim and remand for consideration of the state law issue in pro-
ceedings consistent with this opinion.

   AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

tional question." 

omitted). Thus, the Court
held that it was necessary to reach the constitutional issue as well. 

case, there is no indication that the district court would
consider the statements to constitute defamation under state law. In fact,
the district court refers to the statements as "the allegedly defamatory
publication." (J.A. at 80.) Accordingly, we follow what the Hutchinson
Court indicated would be the ordinary remedy when the lower court
reaches a constitutional issue without addressing a potentially dispositive
state law issue and remand to the district court for consideration of the
state law issue.