The Right Place at The Right Time: How and When To Remove to Federal Court

Often times, a defendant is sued in state court and presented with the option to remove the matter to federal court. Differences between federal and state procedural rules, as well as judicial efficiency factors that may allow for timely and early resolution of a matter, are typically primary considerations in making the determination whether to remove. If a case warrants removal, it is axiomatic that a party seeking to remove must strictly comply with the statutory procedure for removal. Winters Gov’t Securities v. NAFI Employees Credit Union, 449 F. Supp. 239, 241 (S.D. Fla. 1978). Federal statutes in general require strict compliance. In the context of removal, however, compliance is case specific and time sensitive, with numerous ins and outs, warranting careful analysis and clear understanding.

Removal jurisdiction exists over an action originally filed in state court only where the federal court would have had original jurisdiction over the action. Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 592 (2004). Federal courts have original jurisdiction over matters that constitute a federal question or where diversity jurisdiction exists. When removal is based on diversity jurisdiction, the defendant must make “an affirmative showing … of all requisite factors of diversity jurisdiction, including amount in controversy, at the time removal is attempted.” Ragbir v. Imagine Schools of Delaware, Inc., No. 6:09-cv-321-Orl-19DAB, 2009 WL 2423105, *2 (M.D. Fla. Aug. 4, 2009) (quoting Gaitor v. Peninsular & Occidental S.S. Co., 287 F. 2d 252, 255 (5th Cir. 1961)).1

Section 1441(a) authorizes a defendant to seek removal of a suit originally brought in state court when the federal court has diversity jurisdiction over the cause of action. 28 U.S.C. § 1441(a). Section 1446 describes the appropriate removal procedure to invoke federal jurisdiction and, in short, requires the defendant seeking removal to file a timely notice of removal stating the grounds for removal with the appropriate federal district court. 28 U.S.C. § 1446(a). In order to be timely,

[t]he notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based …

§ 1446(b) (emphasis added). The time-window “is triggered by simultaneous service of the summons and complaint, or receipt of the complaint, ‘through service or otherwise,’ after and apart from service of the summons, but not by mere receipt of the complaint unattended by any formal service.” Murphy Brothers, Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 347-48 (1999); See also Romero v. Randle Eastern Ambulance Service, Inc., No. 08-23179-CIV, 2009 WL 347412 (S.D. Fla. 2009) (defendant’s receipt of an e-mail attaching a non-conformed copy of the complaint does not trigger the thirty day period under § 1446(b)); Sims v. Aropi, Inc., 8 F. Supp. 2d 1367, 1369 (S.D. Fla. 1997) (holding defendant’s receipt of non-conformed copy of complaint, which contained neither a court file stamp nor a civil action number, did not commence 30-day removal period). As the Supreme Court in Murphy Brothers aptly put, “[a]n individual or entity named as a defendant is not obliged to engage in litigation unless notified of the action, and brought under a court’s authority, by formal process.” Id. at 348. Thus, a defendant is required to act, and is bound by the thirty day time-window, “only upon service of a summons or other authority – asserting measure stating the time within which the party served must appear and defend.” Id. at 345.

The statutory language of § 1446(b) though only contemplates one defendant and does not account for actions where multiple defendants are present and receipt by each defendant, “through service or otherwise,” of a copy of the initial pleading is not simultaneous. See Bailey v. Janssen Pharmaceutica, Inc., et al., 536 F. 3d 1202, 1205 (11th Cir. 2008) (citing Brierly v. Alusuisse Flexible Packaging, Inc., 184 F. 3d 527 (6th Cir. 1999)). This is an important distinction, as unanimity among defendants is required for removal. See Russell Corp. v. Am. Home Assur. Co., 264 F. 3d 1040, 1050 (11th Cir. 2001) (the unanimity rule requires that all defendants consent to and join a notice of removal in order for it to be effective). Indeed, a question arises as to how to calculate the timing for removal in the event multiple defendants are served at different times – especially if one or more of them is served outside the original 30-day period. Bailey, 536 F. 3d at 1205.

The Eleventh Circuit recognizes in this instance the last-served defendant rule, meaning each defendant is permitted thirty days in which to seek removal. Id. In so doing, the Eleventh Circuit rejects what other courts recognize as the “first-served rule”, which in application, the thirty day time-window for removal is triggered as of the date of service on the first defendant. See, e.g., Getty Oil Corp. v. Ins. Co. of N. Am., 841 F. 2d 1254, 1262-63 (5th Cir. 1988). As a result, a defendant who otherwise waived the right to seek removal through its own non-adherence with § 1446(b) may have a second opportunity to remove a matter to federal court at such time that a last-served defendant elects to do the same, through joinder. See Bailey, 536 F. 3d at 1205; Russell Corp., 264 F. 3d at 1050 (requiring unanimity).

With regard to the actual document(s) by way of which the time-window for removal may be triggered, “a case may be removed on the face of the complaint if the plaintiff has alleged facts sufficient to establish the jurisdictional requirements.” Lowery v. Ala. Power Co., 483 F. 3d 1184, 1215 n. 63 (11th Cir. 2007). With diversity jurisdiction, actual knowledge by a defendant is not required and mere notice in the complaint of the potential that plaintiff’s claims meet the requirements of diversity, as alleged, is sufficient.

As courts in Florida have stated: “[adding an actual knowledge limitation would complicate an otherwise straightforward statutory provision [(§ 1446(b)], adding a cloud of uncertainty over removal actions, and requiring courts to engage in the difficult and uncertain task of determining whether a particular communication could have (or should have) provided adequate notice to a defendant of a plaintiff’s claimed damages.” Ragbir, 2009 WL 2423105 at 5 (quoting Callahan v. Countrywide Home Loans, Inc., No. 3:06-cv-105, 2006 WL 1776747, at 4 (N.D. Fla. June 26, 2006)). Therefore, it is a bright-line rule that actual knowledge by a defendant is not required so as to “promote certainty and judicial efficiency by not requiring courts to inquire into what a particular defendant may or may not subjectively know.” Id. (quoting Chapman v. Powermatic, Inc., 969 F. 2d 160, 163 (5th Cir. 1992)).

Of course, instances where a federal court would have had original jurisdiction over the action may not necessarily exist at the time of and/or in an initial pleading, or complaint. If an amended complaint by happenstance is the first document by way of which a defendant may first ascertain that federal jurisdiction exists, the thirty-day time-window under § 1446(b) would be triggered then. See Lowery, 483 F. 3d at 1215 n. 63 (thirty-day time limit does not begin to run until a defendant receives an unambiguous statement from the plaintiff which clearly establishes federal jurisdiction). When not readily ascertainable from the complaint, this statement may come from any “other paper” from the plaintiff, including deposition testimony, subsequently obtained. Id. at 1212 n. 62. Evidence independently gathered by the defendant “from outside sources … is not of the sort contemplated by § 1446(b).” Id. at 1221. A problem may arise though if the “other paper” arguably is in the form of a pre-suit document. A pre-suit document may or may not trigger the time-window; it is again a matter of circumstance and case specific. See Village Square Condominium of Orlando, Inc. v. Nationwide Mutual Fire Ins. Co., No. 6:09-cv-1711-Orl-31DAB, 2009 WL 4855700, at 2 (M.D. Fla. Dec. 10, 2009).

With diversity jurisdiction, the elemental status of citizenship of the parties is not necessarily something that is in dispute and is something that may not be divested by subsequent events. See Village Square Condominium, 2009 WL 4855700 at 2. As a result, pre-suit documents that notify a defendant of complete diversity of the parties as to citizenship can – together with a later filing of an initial pleading that otherwise puts a defendant on notice of satisfaction of all other requirements for diversity jurisdiction – trigger the thirty day time-window for removal. See Id. (internal citations omitted).

To the extent citizenship is not clearly set forth in an initial pleading and the only notice of such is in a pre-suit document, the time window for removal still commences at the time of initial filing and/or ascertainment by a defendant of an opportunity to remove – separate and apart therefrom. Id. Courts do not view citizenship in an “other paper” as an exception, tolling time. On the other hand, pre-suit documents that pertain solely to the amount in controversy requirement for diversity jurisdiction do not necessarily work the same way. If a defendant is put on notice pre-suit of damages exceeding the amount in controversy requirement for diversity jurisdiction, there exists no certainty that the amount of damages claimed will remain the same through the time of filing of a formal lawsuit. Id. So, if the amount in controversy is not specifically alleged in the initial pleading, “defendants often must rely on demand letters, medical bills, affidavits from experts and carefully worded (if not deliberately evasive) responses to discovery requests – each of which may have a bearing on a plaintiff’s damages only a particular point in time.” Id.

Until such information is obtained and/or confirmed, a defendant cannot ascertain or, through an initial pleading, learn that a federal court would have original jurisdiction over the action and cannot remove. See Grupo Dataflux, 541 U.S. at 592. “By its plain terms the statute requires that if an ‘other paper’ is to trigger the thirty-day time period of the second paragraph of § 1446(b), the defendant must receive the ‘other paper’ only after [the defendant] receives the initial pleading.” Armstrong v. Sears, Roebuck and Co., No. 8:09-cv-2297-T-23-TGW, 2009 WL 4015563, at 1 (M.D. Fla. Nov. 19, 2009) (quoting Chapman, 969 F. 2d at 164).

In sum, in order for a defendant to meet his or her burden of showing removal as appropriate in a matter, a defendant must meet the requirements for diversity jurisdiction at the time of removal. See Village Square Condominium, 2009 WL 4855700 at 2 (citing, e.g., Lowery, 483 F. 3d at 1208; Gaitor, 287 F. 2d at 255). That said, even if a matter is ripe for removal, removal to federal court is not always a prudent strategy. Clients should confer with counsel to discuss the potential benefits and consequences of litigating in federal court, some of which are described in other articles in this Quarterly.

Endnotes

1 Diversity jurisdiction requires that all plaintiffs be diverse from all defendants and that the amount in controversy exceed $75,000. 28 U.S.C. § 1332(a)-(b) (2006).