There hasn’t been a lot of talk about this, but Congress just passed, and the President signed, something called the” Federal Courts Jurisdiction and Venue Clarification Act of 2011,” H. R. 394, P.L 112-63, copy here.  As far as we’re concerned, this new act (we’ll call it, creatively, “the Act”) is as significant for what it didn’t do as for what it did.
The Act completely rewrote 28 U.S.C. §1441(b).  Why’s that important?  Because the literal language of §1441(b) – “removable only if none of the parties in interest properly joined and served is a citizen of the State in which such action is brought” – is what allows removal prior to service to trump the so-called “forum defendant” loophole.  As we’ve pointed out in many posts (most of which you can access from here), the “and served” qualifier to the forum defendant loophole means that, if an otherwise diverse action is removed before an in-state defendant is served, then that defendant’s citizenship, according to the statute, must be ignored and the action is properly in federal court.
That’s the express language of the statute.  The plaintiffs have responded with a mushy, result-oriented counter-argument that surely Congress didn’t mean what it said; that result would be absurd. As we’ve mentioned, some benighted courts have bought that rationale.
Well, that argument just went out the window.  Why?  Because in the Act (the 2011 one mentioned above), Congress had the opportunity to change §1441(b) if it was uncomfortable with the result dictated by that section’s express terms.  It didn’t.  Quite the contrary, while Congress completely rewrote §1441(b) in the Act, it retained (and arguably improved, see this law review article, pp. 162-63) the “properly filed and served” language verbatim in the new version.  After the Act, here’s how §1441(b) now reads:

(b) REMOVAL BASED ON DIVERSITY OF CITIZENSHIP. – (1) In determining whether a civil action is removable on the basis of the jurisdiction under section 1332(a) of this title, the citizenship of defendants sued under fictitious names shall be disregarded.
(2) A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

Act §103(a)(3) (emphasis added).Continue Reading Removal News

It was one of our biggest issues in the blog’s first couple of years – whether a defendant’s removal of a case before service on: ( 1) the forum defendant where an out-of-state defendant is sued in its own state’s court, or (2) anybody (including the removing defendant), would result in the unserved forum defendant…