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Changes to the Federal Removal Statutes — Questions Still Remain

The Federal Courts Jurisdiction and Venue Clarification Act of 2011 (“Act”) went into effect on January 6, 2012. The stated purpose of the Act was to “bring […] more clarity to the operation of the Federal jurisdictional statutes and facilitate […] the identification of the appropriate State or Federal court where actions should be brought.”1 In fact, Title I of the Act is called “Jurisdictional Improvements.” For the most part, this is an accurate description, but litigants, and some courts, do not necessarily agree. Despite the changes and Congress’ attempt to make “jurisdictional improvements,” certain legal theories continue to be hotly contested, particularly pre-service removal and the forum defendant rule. This article is a brief review of how the courts have addressed these issues pre-Act, the implementation of the Act, and a report of two cases that have addressed the issues since implementation of the Act.

Why Remove the Case?

Pre-service removal of a state court lawsuit has been a valuable tool in the arsenal of defendants across the country. Virtually every pharmaceutical and medical device manufacturer would rather be in federal court versus state court, the belief being that federal courts offer defendants a more fair forum. In the pharmaceutical and medical device world, the typical scenario involves a state court action against a manufacturer who is not deemed a citizen of the forum state for diversity jurisdiction purposes, and a local defendant, the plaintiff’s prescribing physician, for example, so that diversity of citizenship is destroyed, preventing removal to federal court. In most cases, the plaintiff has no real intention of pursuing a claim against the physician. The goal of naming a local defendant is to prevent the “real” defendant (the manufacturer) from removing the case to federal court, thus keeping the case in the plaintiff attorney’s own backyard. By naming a local defendant, the plaintiffs are attempting to invoke the “forum defendant” rule: “[R]emoval is improper if the defendant is a citizen of the state in which the suit is originally filed.”2

Over the years, defendant manufacturers have successfully defeated this tactic by removing such cases to federal court by filing a notice of removal prior to service of the local defendant, relying on the “properly joined and served as defendants” language of 28 U.S.C. § 1441(b).3 “The purpose of the ‘joined and served’ requirement is to prevent a plaintiff from blocking removal by joining as a defendant a resident party against whom it does not intend to proceed, and whom it does not even serve.”4 Plaintiffs have vigorously opposed these removals, claiming that defendants have engaged in gamesmanship and attempted to circumvent the true intent of Congress when it comes to the removal statutes, specifically the forum defendant rule.

Pre-Act Law

Before implementation of the Act, a clear majority of courts interpreting 28 U.S.C. § 1441(b) held that the “properly joined and served as defendants” language of the statute permitted removal where a forum defendant had been named but was not served at the time of removal.5

Plaintiffs often countered with “[r]emoval is strongly disfavored by Congress and thus the removal statutes are to be narrowly construed to limit federal court jurisdiction.”6 The minority view is that allowing a defendant to remove an action before the forum defendant has been served could not be what Congress intended.7

Arguments against pre-service removal hinge on whether a plaintiff can success-fully convince the court that some exception exists to the plain meaning of the “properly joined and served as defendants” language of § 1441(b) — “Judge, that is not what Congress intended.”8

Interestingly, even minority courts concurring with Ethington’s conclusion concede that an exhaustive review of the legislative history concerning § 1441(b) fails to reveal any specific statement from “Congress [or] the advisory Committee on Revision of the Judicial Code […] regarding the addition of the ‘properly joined and served’ language.”9

Prior to becoming law, the original bill was vetted via a clearinghouse process with prominent legal scholars and stakeholder groups, such as the American Bar Association, Lawyers for Legal Justice, the Federal Bar Association, the American Association for Justice, and the U.S. Chamber of Commerce.10 The impetus for the Act was judicial concern that the then current rules forced courts “to waste time determining jurisdictional issues at the expense of adjudicating underlying litigation.”11 Legal scholars developed and endorsed the rule changes “to identify and delete those provisions that were considered controversial by prominent legal experts and advocacy groups.”12 As the Senate committee report noted, “[t]wo of these scholars are the authors of removal chapters in, respectively, Moore’s Federal Practice and Wright and Miller’s Federal Practice and Procedure […].”13

Both of those treatises promote a literal reading of Section 1441(b) to allow removal where the forum defendant has not yet been served. Wright and Miller states: “[T]he language in Section 1441(b) […] implies that a diverse but resident defendant who has not been served may be ignored in determining removability” and that “if the diverse resident defendant is served with process after the case has been removed, neither he nor any other party would have a valid objection to the removal based on his residence […].”14 Moore’s treatise states:

Removal is permissible only if none of the parties in interest properly joined and served as defendants is a citizen of the state in which the action is filed. [Footnote omitted.] Thus, even if complete diversity exists, removal is precluded if a local defendant is served; after service, even nonresident defendants may not seek removal.15

The Act

The recent enactment of the Federal Courts Jurisdiction and Venue Clarification Act of 2011, H.R. 394, P.L. 112-6316 has rejuvenated the forum defendant rule and pre-service removal debate. The Act made several changes to the removal statutes, some substantive and some not, and also left in place certain language important to the pre-service removal procedure. Despite the conflicting jurisprudence surrounding pre-service removal and the forum defendant rule, and the substantive amendments to other aspects of the removal statute, Congress left the “properly joined and served as defendants” language of 28 U.S.C. § 1441(b) unchanged when it amended the Act. By leaving the controversial language unchanged, particularly in the context of an overhaul of the code sections relating to removal, Congress made a clear statement that it meant what it said (and continues to say) in the plain language of §1441(b).

So, how have courts reacted since the Act went into effect? Has the Act accomplished its stated purpose of providing more “clarity” to the operation of federal jurisdictional statutes? Here is a look at some recent opinions that have addressed these issues.

Cases Decided Post-Act

Regal Stone Ltd. v. Long’s Drug Stores Cal. L.L.C.

Regal Stone17 is a curious case and not one that will likely be seen often, but does provide an interesting twist to the “properly joined and served” language of § 1441(b). The case arises from a well-publicized incident in which a 900-foot-long container ship struck the San Francisco-Oakland Bay Bridge while under the command of a registered bay pilot. Plaintiffs’ theory of recovery is that the defendants negligently provided prescription medications to the bay pilot, thus causing the bridge collision.

Plaintiffs’ original suit was filed in California state court on January 31, 2011, and an amended complaint was filed on March 9, 2011. Both the original complaint and the first amended complaint were filed under a motion to seal because the bay pilot operating the vessel at the time of the collision claimed a protected privacy interest in medical information. The publicly available version of the complaint was heavily redacted due to the protected privacy interest so there was very little information available to the defendants. On September 7, 2011, the plaintiffs filed another amended complaint, also under seal.

From the filing of the original complaint to the filing of the second amended complaint, hearings on the motion to seal were set by the state court, but never occurred due to continuances by the court sua sponte or at the request of plaintiffs. Important to the court’s analysis is that the plaintiffs never attempted to serve any of the defendants because they were waiting for the court to rule on the motion to seal and issue guidelines on how to treat the bay pilot’s medical information. On September 13, more than seven months after the case began, one of the defendants removed the case to federal court. Plaintiffs quickly thereafter moved for remand.

The court first provided a basic tutorial in removal practice, analyzed the “pro-removal” decisions and the “pro-remand” decisions across the circuits and discussed at length the “properly joined and served as defendants” language of the Act. The court ultimately identified the issue as: May a defendant remove to federal court when a forum defendant has been properly joined but not served?

One of the named defendants was a citizen of California (i.e., a forum defendant), but as of the date of removal, no defendant had been served. Plaintiffs argued that 28 U.S.C. § 1446 made removal improper, because it required that the notice of removal had to be filed within thirty days of receipt by the defendants through service or otherwise.18

It is undisputed that all defendants had received a copy of the initial pleading and that removal did not occur within thirty days of receipt. Thus, the plaintiffs argued, this language created: 1) a thirty-day window within which removal would have been proper; 2) the removal window opened before service; and 3) removal before service was premature. The defendants countered with § 1441(b) and the “properly joined and served as defendants” language.

The court briefly reviewed the split among the courts on this issue — pro-removal and pro-remand — and noted that the courts have assumed that the removal statutes are clear and unambiguous.19 The court then addressed the Act and how both sides pointed out that the Act did not change the language of § 1441(b) or § 1446.20 In urging the court to remand the case, the plaintiffs emphasized the use of the mandatory “shall” in combination with the prepositions “within” and “after,” thus triggering a 30-day removal period. The plaintiffs argued that this language confirms Congress’ intent for service to trigger a thirty-day removal period within which removal may be proper.21 The court rejected the plaintiff’s argument, holding that the plaintiff ’s proposed reading would “improperly discard pivotal parts of the statute as mere surplusage” and denied plaintiff’s motion to remand, holding that the “properly joined and served” language of § 1441(b) trumped § 1446.22

Judge Conti also took the opportunity to provide commentary on the legislative history of the Act. In explaining his ruling, he notes that when Congress amended the removal statutes, “it simply did not have the issue of premature removal in mind.”23 The Judge went on to say:

As much as the Court may wish that Congress had taken the [Act] as an opportunity to speak clearly and affirmatively on this point, Congress did not do so, and it is well-settled that where Congress amends part of a statute and leaves another part unchanged, a court must interpret Congress’ inaction as satisfaction with the unamended portion, or at least tolerance of its inadequacies. (Emphasis added.)24

Boyer v. Wyeth Pharm., Inc.25

In this products liability case, the plaintiffs filed their complaint on February 9, 2012, in the Court of Common Pleas of Philadelphia County against Wyeth Pharmaceuticals, Inc. (“Wyeth”), and Pfizer, Inc. (“Pfizer”). On February 13, 2012, and prior to service of any defendant, Pfizer removed the case to federal court, citing diversity jurisdiction. Plaintiffs moved for remand on the grounds that the forum defendant rule precludes removal based on diversity jurisdiction where a defendant, here, Wyeth, is a citizen of the state in which the action was filed.

The plaintiffs are citizens of Ohio; Pfizer is organized under the laws of Delaware with a principal place of business in New York. Wyeth is organized under the laws of Delaware with a principal place of business in Pennsylvania. The plaintiffs complained in their remand papers that the forum defendant rule precluded removal because Wyeth was a citizen of Pennsylvania. They also argued that the removal statutes are to be strictly construed against removal and “all doubts should be resolved in favor of remand.”26 The defendants countered that the language of the forum defendant rule, read in conjunction with § 1441(b), is plain and unambiguous — the forum defendant rule applies only where a forum defendant has already been “properly joined and served.”27

So here we have removal by a non-forum defendant where a forum defendant has not yet been served and both parties arguing that strict construction of the removal statutes favors their respective positions. What did the court decide?

The court analyzed a series of opinions within its district recognizing the propriety of removal by a non-forum defendant where a forum defendant has not yet been served and that pre-service of removal has been recognized. Ultimately, in a brief analysis, the court adopted the defendants’ interpretation of the removal statutes and held that the pre-service removal by a non-forum defendant where the forum defendant had not been served “[…]was proper under the unambiguous language of § 1441(b).” Interestingly, however, the court never mentioned the Act and relied solely on cases interpreting the removal statutes prior to the amendments.

Conclusion

The stated purpose of the Act was to “bring […] more clarity to the operation of the Federal jurisdictional statutes and facilitate […] the identification of the appropriate State or Federal court where actions should be brought.” Has the stated purpose been fulfilled?

As the United States Supreme Court has “repeatedly held, the authoritative statement is the statutory text, not the legislative history or any other extrinsic material.”28 If Congress intends a different result than that required by the plain language, “it is up to Congress rather than the courts to fix it.”29 Congress had full opportunity to amend the statute to change its plain language, but declined to do so.


[1] H.R. 112-10, at 1.

[2] Allen v. GlaxoSmithKline PLC, 2008 WL 2247067, at *2 (citations omitted).

[3] For pre-service removal by defendants, the operative language is found at 28 U.S.C. § 1441(b), which states:
“Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties, or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” (Emphasis added.)

[4] Stan Winston Creatures, Inc. v. Toys “R” Us, Inc., 314 F.Supp.2d 177, 181 (S.D.N.Y. 2003).

[5] See, e.g., North v. Precision Airmotive Corp., 600 F.Supp. 2d 1263 (M.D. Fla. 2009)(stating that the “majority of courts” have concluded that a non-forum defendant may remove despite the fact that plaintiff has joined, but not yet served, a forum defendant.); Taylor v. Cottrell, Inc., No. 4:09CV536, 2009 WL 1657427 (E.D. Mo. June 10, 2009); Ott v. Consol. Freightways Corp. of Del., 213 F.Supp.2d 662, 665 (S.D. Miss. 2002) (observing that despite some disagreement, “courts have held, virtually uniformly, that where, as here, diversity does exist between the parties, an unserved resident defendant may be ignored in determining removability under 28 U.S.C. § 1441(b)”); Vitatoe v. Mylan Pharms., Inc., 2008 WL 3540462, (N.D.W.Va. Aug.13, 2008) (denying the motion to remand because plaintiff’s “construction of § 1441(b) would require this Court to ignore the ‘and served’ language of the statute”); Stan Winston Creatures, Inc. v. Toys “R” Us, Inc., 314 F.Supp.2d 177, 181 (S.D.N.Y. 2003); Maple Leaf Bakery v. Raychem Corp., 1999 WL 1101326, *1 (N.D.Ill. 1999) (“The plain language of Section 1441(b) indicates that an action may be removed unless a properly joined and served defendant is a resident of State in which the action was initiated”); Wensil v. E.I. Dupont De Nemour & Co., 792 F.Supp. 447, 449 (D. S.C. 1992) (“The statute is clear. The presence of unserved resident defendants does not defeat removal where complete diversity exists”); Republic Western Ins. Co. v. Intern’l Ins. Co., 765 F.Supp. 628, 629 (N.D. Cal. 1991) (holding in a case where complete diversity of citizenship existed that “a resident defendant who has not been served may be ignored in determining removability”). McCall v. Scott, 239 F.3d 808, 813 n.2 (6th Cir. 2001).

[6] Ethington v. General Elec. Co., 575 F.Supp.2d 855, 860 (N.D. Ohio 2008) (citations omitted).

[7] DeAngelo-Shuayto v. Organon USA, Inc., 2007 WL 436531 (holding that the plain language interpretation of § 1441(b) leads to the untenable result that forum defendants can remove actions from state court as long as they do so before they are served); Ethington, 575 F.Supp.2d at 861, citing DeAngelo-Shuayto, supra; Brown v. Organon Int’l, Inc. 2008 WL 2833294 at *4 (D.N.J. 2008) (explaining that “[r]eading the statute literally would give rise to the absurd ‘untenable’” results as articulated in DeAngelo-Shuayto.”)

[8] Ethington v. Gen. Elec. Co., 575 F.Supp.2d 855, 861 (N.D. Ohio 2008) (rejecting the plain language of the statute, surmising that Congress could not have intended the result dictated by the actual words in the statute). See also, NFC Acquisition, LLC v. Comerica Bank, 640 F.Supp. 2d 964 (N.D. Ohio 2009).

[9] Sullivan v. Novartis Pharm. Corp. 575 F.Supp.2d 640 (D. N.J. 2008).

[10] H.R. 112-10, at 2-3.

[11] Id. at 1-2.

[12] Id. at 2.

[13] Id.

[14] 14B Charles Alan Wright & Marthur R. Miller, Federal Practice & Procedure § 3723 (4th ed. 2011).

[15] 16 Moore’s Federal Practice § 107.14[2][e] (3d ed. 2011) (emphasis added).

[16] The Act went into effect on January 6, 2012, and applies to cases commenced in federal court on or after January 6, 2012, and cases removed from state court that had been commenced on or after January 6, 2012.

[17] Regal Stone Ltd. v. Long’s Drug Stores Cal. L.L.C., 2012 WL 685756 (N.D. CA. 2012).

[18] Id. at *4.

[19] Id.

[20] The court noted that the Act did not apply because the case was filed prior to enactment, but that it was still relevant as it purports to clarify the removal statutes and provides evidence of prior Congressional intent.

[21] Id.

[22] Id.

[23] Id. at *4, citing H.R. Rep. No. 112-10, at 11-16 (omitting mention of district court split).

[24] Id.

[25] Boyer v. Wyeth Pharm., Inc., 2012 WL1449246 (E.D.Pa, 2012).

[26] Id. at *1, citing Boyer v. Snap-On Tool Corp., 913 F.Supp.2d 108, 111 (3d Cir. 1990).

[27] Id. at *2.

[28] Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005).

[29] Id. at 565.

Finis

Citations

  1. H.R. 112-10, at 1. Jump back to footnote 1 in the text
  2. Allen v. GlaxoSmithKline PLC, 2008 WL 2247067, at *2 (citations omitted). Jump back to footnote 2 in the text
  3. For pre-service removal by defendants, the operative language is found at 28 U.S.C. § 1441(b), which states:
    “Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties, or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” (Emphasis added.)
    Jump back to footnote 3 in the text
  4. Stan Winston Creatures, Inc. v. Toys “R” Us, Inc., 314 F.Supp.2d 177, 181 (S.D.N.Y. 2003). Jump back to footnote 4 in the text
  5. See, e.g., North v. Precision Airmotive Corp., 600 F.Supp. 2d 1263 (M.D. Fla. 2009)(stating that the “majority of courts” have concluded that a non-forum defendant may remove despite the fact that plaintiff has joined, but not yet served, a forum defendant.); Taylor v. Cottrell, Inc., No. 4:09CV536, 2009 WL 1657427 (E.D. Mo. June 10, 2009); Ott v. Consol. Freightways Corp. of Del., 213 F.Supp.2d 662, 665 (S.D. Miss. 2002) (observing that despite some disagreement, “courts have held, virtually uniformly, that where, as here, diversity does exist between the parties, an unserved resident defendant may be ignored in determining removability under 28 U.S.C. § 1441(b)”); Vitatoe v. Mylan Pharms., Inc., 2008 WL 3540462, (N.D.W.Va. Aug.13, 2008) (denying the motion to remand because plaintiff’s “construction of § 1441(b) would require this Court to ignore the ‘and served’ language of the statute”); Stan Winston Creatures, Inc. v. Toys “R” Us, Inc., 314 F.Supp.2d 177, 181 (S.D.N.Y. 2003); Maple Leaf Bakery v. Raychem Corp., 1999 WL 1101326, *1 (N.D.Ill. 1999) (“The plain language of Section 1441(b) indicates that an action may be removed unless a properly joined and served defendant is a resident of State in which the action was initiated”); Wensil v. E.I. Dupont De Nemour & Co., 792 F.Supp. 447, 449 (D. S.C. 1992) (“The statute is clear. The presence of unserved resident defendants does not defeat removal where complete diversity exists”); Republic Western Ins. Co. v. Intern’l Ins. Co., 765 F.Supp. 628, 629 (N.D. Cal. 1991) (holding in a case where complete diversity of citizenship existed that “a resident defendant who has not been served may be ignored in determining removability”). McCall v. Scott, 239 F.3d 808, 813 n.2 (6th Cir. 2001). Jump back to footnote 5 in the text
  6. Ethington v. General Elec. Co., 575 F.Supp.2d 855, 860 (N.D. Ohio 2008) (citations omitted). Jump back to footnote 6 in the text
  7. DeAngelo-Shuayto v. Organon USA, Inc., 2007 WL 436531 (holding that the plain language interpretation of § 1441(b) leads to the untenable result that forum defendants can remove actions from state court as long as they do so before they are served); Ethington, 575 F.Supp.2d at 861, citing DeAngelo-Shuayto, supra; Brown v. Organon Int’l, Inc. 2008 WL 2833294 at *4 (D.N.J. 2008) (explaining that “[r]eading the statute literally would give rise to the absurd ‘untenable’” results as articulated in DeAngelo-Shuayto.”) Jump back to footnote 7 in the text
  8. Ethington v. Gen. Elec. Co., 575 F.Supp.2d 855, 861 (N.D. Ohio 2008) (rejecting the plain language of the statute, surmising that Congress could not have intended the result dictated by the actual words in the statute). See also, NFC Acquisition, LLC v. Comerica Bank, 640 F.Supp. 2d 964 (N.D. Ohio 2009). Jump back to footnote 8 in the text
  9. Sullivan v. Novartis Pharm. Corp. 575 F.Supp.2d 640 (D. N.J. 2008). Jump back to footnote 9 in the text
  10. H.R. 112-10, at 2-3. Jump back to footnote 10 in the text
  11. Id. at 1-2. Jump back to footnote 11 in the text
  12. Id. at 2. Jump back to footnote 12 in the text
  13. Id. Jump back to footnote 13 in the text
  14. 14B Charles Alan Wright & Marthur R. Miller, Federal Practice & Procedure § 3723 (4th ed. 2011). Jump back to footnote 14 in the text
  15. 16 Moore’s Federal Practice § 107.14[2][e] (3d ed. 2011) (emphasis added). Jump back to footnote 15 in the text
  16. The Act went into effect on January 6, 2012, and applies to cases commenced in federal court on or after January 6, 2012, and cases removed from state court that had been commenced on or after January 6, 2012. Jump back to footnote 16 in the text
  17. Regal Stone Ltd. v. Long’s Drug Stores Cal. L.L.C., 2012 WL 685756 (N.D. CA. 2012). Jump back to footnote 17 in the text
  18. Id. at *4. Jump back to footnote 18 in the text
  19. Id. Jump back to footnote 19 in the text
  20. The court noted that the Act did not apply because the case was filed prior to enactment, but that it was still relevant as it purports to clarify the removal statutes and provides evidence of prior Congressional intent. Jump back to footnote 20 in the text
  21. Id. Jump back to footnote 21 in the text
  22. Id. Jump back to footnote 22 in the text
  23. Id. at *4, citing H.R. Rep. No. 112-10, at 11-16 (omitting mention of district court split). Jump back to footnote 23 in the text
  24. Id. Jump back to footnote 24 in the text
  25. Boyer v. Wyeth Pharm., Inc., 2012 WL1449246 (E.D.Pa, 2012). Jump back to footnote 25 in the text
  26. Id. at *1, citing Boyer v. Snap-On Tool Corp., 913 F.Supp.2d 108, 111 (3d Cir. 1990). Jump back to footnote 26 in the text
  27. Id. at *2. Jump back to footnote 27 in the text
  28. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 568 (2005). Jump back to footnote 28 in the text
  29. Id. at 565. Jump back to footnote 29 in the text