We’re fixated on the subject: When a plaintiff files a complaint in state court that names both residents and non-residents of the forum state as defendants, can the non-resident defendant remove before the plaintiff serves the in-state defendant?

(We know that’s cryptic shorthand, but regular readers of this blog have seen more expansive descriptions of the issue in many previous posts, including here, here, and here, among others. We even ventured off into the print media on the subject.)

We’re not alone in our fixation. Litigants keep raising, and courts keep addressing, this issue, too.
Most recently, in In Re: Avandia Marketing, Sales Practices And Products Liability Litigation, 2009 U.S. Dist. Lexis 15210 (E.D. Pa. Feb. 25. 2009), the court considered a slew of removals of California pharmaceutical product liability lawsuits. The removals ran the gamut of pre- and post-service fact patterns. In some cases, removal was after service. In others an out-of-state defendant (GSK, a Pennsylvania citizen) removed before the in-state defendant (McKesson, a California distributor) was served. In still others, removal occurred before anybody at all was served – thanks to the miracles of modern technology.

The court discussed the “forum defendant rule,” observing that because diversity jurisdiction was created to protect out-of-state defendants from “prejudice” in a plaintiff’s home court, Congress determined that defendants sued in their own home courts “do not require access to the federal courts.” Lexis slip op. at *41. The “filed and served” exception was to prevent plaintiff-side hanky panky – naming an in-state defendant as a sham to prevent removal. Congress hadn’t caught up with technology and the phenomenon of on-line dockets:

[T]he rule is silent as to arguably equivalent defense tactics, in particular, the phenomenon — enabled by modern litigation technology – of the forum defendant removing an action before being served with process due to its ability to electronically monitor state court filings. A literal reading of the “properly joined and served” language of § 1441(b) would suggest that the statute allows even a forum defendant into federal court provided it can win such a “race to remove.”

Lexis slip op. at *42. After examining both sides of the issue, the court decided to help Congress along by “reject[ing] any construction. . .that would allow an in-state defendant to side-step the restrictive purpose of the forum defendant rule by ‘racing to remove’ before being served with process.” Id. at *44. To read the statute literally would produce a result “absurd on its face” that “could not have been intended by Congress.” Id.

The court then turned to the nobody-served group of cases. While the nuances were a little different, the court came out in the same place – that the statute should be read to prevent a “race to remove” (even if that’s not exactly what it actually says):

Discussing the rationale for the latter approach, district courts have noted that “when no defendant has been served . . . the non-forum defendant stands on equal footing as the forum defendant . . . [n]either defendant in that scenario is obligated to appear in court[, n]or has the thirty day period for removal started to run.” Courts also note the real concern of encouraging an unfair “race to remove” by technologically sophisticated non-forum defendants through a rule that permits removal prior to any service. The reasoning of the latter rulings is persuasive to the Court, and will be followed herein.

Lexis slip op. at *45-46 (citation containing footnotes omitted).

The only situation where pre-service removal was proper, the Avandia court held, was where the out-of-state defendant was served before the in-state co-defendant. “In that situation, the rationale behind the “joined and served” requirement. . .and, to some extent, the protective purpose of diversity jurisdiction, are implicated, and removal by the foreign defendant is proper.” Id. at *47.

That’s one (actually about a dozen all wrapped in one) – but this is a two-fer.

Down in Delaware, Eileen Hutchins filed a product liability suit involving the drug Trasylol in Delaware state court. Hutchins v. Bayer Corp., No. 08-640-JJF-LPS, 2009 WL 192468 (D. Del. Jan. 23, 2009). She named as defendants Bayer Corporation (a Pennsylvania citizen), Bayer Health, LLC (a citizen of Delaware and Connecticut), Bayer Healthcare Pharmaceuticals, Inc. (a citizen of Delaware and New Jersey), and Bayer AG (a German corporation). If either of the Delaware citizens had been served with the complaint, then the case would not have been removable, because a case is 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.” 28 U.S.C. Sec. 1441(b).

But what if the plaintiff has not yet served anyone, so none of the parties “joined and served” was a citizen of Delaware? That was what happened here, where Bayer Corporation removed the case before any defendant had been served.

Hutchins moved to remand; Bayer filed a motion to stay the federal case so that it could be transferred as a tag-along action to a federal multidistrict litigation proceeding pending in the Southern District of Florida. (Stay and transfer would have caused the federal MDL judge, rather than the federal judge in Delaware, to address the remand motion, which is what happened in Avandia.)

Magistrate Judge Leonard Stark reasoned that (1) there were no other cases in the federal MDL presenting the “joined and served” issue, and (2) there was nothing about the remand issue that made the MDL judge uniquely qualified to decide it, so he denied Bayer’s motion to stay a decision on the remand question. Id. at *4.

He then promptly ruled in favor of Bayer on the merits and stayed all other proceedings pending the MDL Panel’s decision whether to transfer the case to the Southern District of Florida.

The magistrate judge recognized that removal statutes are generally strictly construed, so doubts about removability should be resolved in favor of remand. Id. at *4-*5. And he acknowledged that statutes must not be construed to lead to bizarre or absurd results. Id. at *5-*6. And statutes should not be construed to lead to results that Congress did not intend. Id. at *6-*7. And plaintiffs usually get to choose their own forum. Id. at *7. And the party seeking removal bears the burden of proof. Id. at *8.

Geez — at this point, we were thinking that the deck was hopelessly stacked against Bayer.

But the court then read the statute. And the court knew that it must enforce the plain language of an unambiguous statute, and every word in a statute must be given effect, and an unamended statute probably means what courts have said it means, and so on. Id. at *8-*10.

Finally, the court trotted through the many cases that have reached conflicting decisions about whether courts should remand cases that defendants have removed before service on a resident defendant.

Ultimately, the statutory language prevailed: “The language of Section 1441(b) is plain and unambiguous. . . . Accordingly, this action ‘shall be removable’ and the motion to remand should be denied.” Id. at *11. The magistrate judge thus recommended (which is all he was empowered to do when deciding a motion to remand in the Third Circuit, id. at *3) that the motion to remand be denied.

When we spied this issue a long time ago, we predicted that it would both recur and trouble the courts. We’ve been right on both scores, and we’re not particularly happy about it. Here’s yet another of diametrically opposed decisions leaving us all – both plaintiffs and defendants – not knowing what we should do. We sure hope an appellate court soon decides the question, so that parties don’t continue to spend money litigating what should be routine threshold jurisdictional issues.

We need a definitive answer. What is to control? The text of the statute or presumed congressional intent and the rule against “absurd” results?