Earlier this month we explained that a “wrinkle removal,” was one that capitalized on a “wrinkle” in the language of 28 U.S.C. § 1441(b)(2), which provides that a case cannot be removed on the basis of diversity if any “properly joined and served” defendant is a citizen of the forum state. But if the forum defendant has not yet been served, that “wrinkle” doesn’t apply. Defendants, in our never-ending quest to get cases into federal court, argue that such pre-service removal is consistent with the plain language of the statute. Plaintiffs counter that this interpretation leads to an “absurd result” that refutes the plain language rule. Just last year, the Third Circuit held that in this battle of “plain meaning” versus “absurd result” – plain meaning wins. Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018).
That was in important decision because since remand is unappealable (28 U.S.C. §1447(d)), appellate review is rare in remand situations. It also meant that it was a foregone conclusion that Encompass Ins. would be applied in the District of New Jersey cases we discussed a few weeks ago. When we see it cited and relied upon in the Central District of California, we think that’s important enough to warrant another pre-service removal post this month.
The case is Dechow v. Gilead Sciences, Inc., 2019 WL 517624 (C.D. Cal. Feb. 8, 2019). Plaintiffs from four different states sued defendant, a resident of California and Delaware, in state court. Two weeks after the complaint was filed, but before it was served, defendant removed the case to federal court. Id. at *1. As the court noted, the issue is “primarily an exercise in statutory interpretation.” Id. at *2. And in this instance, the statutory text is “unambiguous. Its plain meaning precludes removal on the basis of in-state citizenship only when the defendant has been properly joined and served.” Id. at *3. With no Ninth Circuit decision on point, the court looked to Encompass Ins.
Plaintiffs did try to argue that this literal interpretation of the statute should be rejected because it would lead to absurd results. For this, they relied on a single case – Vallejo v. Amgen, Inc., 2013 WL 12147584 (C.D. Cal. Aug. 30, 2013). But Vallejo involved a situation where defendants removed the case before the state court issued the summons to plaintiff. In other words, removal occurred before it was possible for plaintiff to effectuate service. Allowing removal in that situation, “would effectively circumvent Congress’s entire statutory scheme and render § 1441(b)(2) superfluous. Such an application could not have been intended by Congress.” Id. That was not the situation in Dechow where service could have been made but was not.
The district court found additional support in the Ninth Circuit’s interpretation of 28 U.S.C. § 1446(b)(2)(A) which provides that “all defendants who have been properly joined and served must join in or consent to the removal of the action.” Another removal provision with the same “properly served and joined” language. To this provision the Ninth Circuit has applied the plain meaning interpretation. Id. at *4. What’s good for one, is good for the other. And plain meaning interpretation is good for the defendants.