This post come from the Dechert side of the blog only.
Discussing removal can be boring. Many of us prefer removals that involve twist-off caps and Budweiser. But sometimes removal cases can at least be intriguing. Guddeck v. Smith Kline Beecham Corp., 2013 U.S. Dist. LEXIS 103904 (July 24, 2013 E.D. Pa.), is at least that. It builds upon the Third Circuit’s decision in Johnson v. SmithKline Beecham Corporation, 2013 U.S. App. LEXIS 11501 (3d Cir. June 7, 2013), which we discussed here. In Johnson, the Third Circuit determined that 28 U.S.C. §1441(b)(2), which prohibits a defendant from removing a case based on diversity jurisdiction if the defendant is a resident of the forum state, didn’t prohibit GSK from removing a case from Philadelphia’s Court of Common Pleas because GSK was a citizen of Delaware, not Pennsylvania. Over a year before that, GSK had lost a remand motion in Guddeck because that EDPA judge determined (erroneously, it turns out) that GSK was a Pennsylvania citizen. So once the Third Circuit issued Johnson, GSK removed the Guddeck case. Again. And plaintiffs sought remand. Again. This time, GSK won.
Unfortunately, decisions on removal procedural requirements can be more than boring. They can be mind-numbing. So we’ll limit our discussion to what mattered to the court, which focused on the two paragraphs of 28 U.S.C. §1441(b) circa 2011 (it’s changed since). The first paragraph sets out the procedure for removal at the time that a defendant first receives a complaint. The second paragraph sets out the procedure if the defendant later receives an order or other paper that reveals that the action is removable:
(b) The 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, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.
If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.
As to the first paragraph, GSK satisfied its requirements when it removed the initial complaint in 2011. The district court just got the remand motion wrong. As to the second paragraph, the plaintiffs focused in their second remand motion on the language stating that a case may not be removed more than a year after it was started. In short, plaintiffs argued that GSK’s second removal was too late.
GSK responded by mixing arguments on the plain meaning of the removal statute with a dose of reality and an appeal to equity. First, GSK argued that it had properly removed the initial complaint. The Johnson decision established that. Second, 1446(b)’s prohibition against removing an action more than one year after it was commenced didn’t matter. That statutory language makes clear that the prohibition applies only to actions in which the case wasn’t removable when first commenced. This one was. Third, it would be inequitable to grant remand. The case should have been in federal court from the start, and it was there now. Guddeck, 2013 U.S. Dist. LEXIS 103904, at *5-6.
The court agreed. It recognized that, under Johnson, GSK had properly removed the complaint the first time. Id. at *11. And §1446(b)’s one-year time-limit didn’t apply because the case had been removable from the start. Id. at *12-13. Taking these circumstances into account, the court simply didn’t want to double-down on a mistake:
Surely, the District Court’s incorrect ruling and remand of this action [in the first place] is a nullity and cannot continue to stand now that the Court of Appeals has spoken that the removal was and is proper.
Id. at *11. In reaching this decision, the court relied heavily on Doe v. American Red Cross, 14 F.3d 196 (3d Cir. 1993), a case in which the Red Cross used a precedential change confirming that federal courts had jurisdiction over matters involving the Red Cross to re-remove a case that had been improperly remanded earlier. The similarities between the two cases were strong, and the Guddeck court chose to apply a similar principle:
As explained in Doe, a defendant may file a second removal notice within thirty days after a court “superior in the same judicial hierarchy” concludes that a remand was erroneous in a different action where the defendant in both cases is the same and both cases involve the same or a similar factual and legal scenario. That is exactly what happened here.
Id. at *11-12.
Plaintiffs also argued that 28 U.S.C. §1447(d) prohibited review “on appeal or otherwise” of remand orders. So, plaintiffs argued, the court had to stick to the earlier remand order. The court looked to the reasoning of Doe once again and held that it wasn’t reviewing or reversing the earlier decision. Rather, its decision was based “on a different ground than the first” remand decision – namely, the Third Circuit’s decision in Johnson. Id. at *7-8. So §1447(d) didn’t apply.
This decision, at least to us, is intriguing. GSK and its attorneys did well to leverage the Third Circuit’s decision in Johnson. And the district court chose not to make the same mistake twice. Our guess, however, is that this isn’t over. It’ll be interesting to see what happens next.