Removal Before Service

Our recent post on “wrinkle removal” – that is, removal before service – case got us thinking.  The opinion discussed in that post, Dechow v. Gilead Sciences, Inc., ___ F. Supp.3d ___, 2019 WL 5176243 (C.D. Cal. Feb. 8, 2019), was out of California, in the Ninth Circuit.  That didn’t keep Dechow from citing the Third Circuit case we blogged about last August, Encompass Insurance Co. v. Stone Mansion Restaurant, Inc., 902 F.3d 147 (3d Cir. 2018).  As we discussed last year, Encompass Insurance was the first appellate decision to address removal before service, and it was a resounding victory for the defense position that such removal is expressly allowed by statute and is a perfectly rational (and hardly absurd) response to the repeated gamesmanship that forum-shopping plaintiffs have resorted to, literally for decades.

So, how has removal before service fared since Encompass Insurance has been in the books?  Previously, we thought the defense “plain language” approach was the majority position, but the split was anything but overwhelming.  We’re pleased to report that the Third Circuit’s reasoning appears to have tipped the balance towards “overwhelming.”  First of all, we can run through new decisions by district courts (in Pennsylvania, New Jersey, Delaware, and the Virgin Islands) that are precedentially bound to follow Encompass Insurance.  These are: Anderson v. Merck & Co., 2019 WL 161512, at *1-2 (D.N.J. Jan. 10, 2019) (denying remand in 104 cases) (mentioned in this post), and Mendoza v. Ferro, 2019 WL 316727, at *2 (E.D. Pa. Jan. 24, 2019) (second removal, within 30 days of Encompass Insurance decision).  We can also, of course, subtract any adverse decisions (there were more than a handful) previously issued from district courts in the Third Circuit.

Outside the Third Circuit, courts have mostly found Encompass Insurance persuasive.  A second case from the Central District of California held:

[W]hen a natural reading of the statute leads to a rational, common-sense result, an alteration of meaning is not only unnecessary, but also extrajudicial.  As the Third Circuit explained, a plain meaning interpretation of the language “properly joined and served” in the Forum Defendant Rule “envisions a broader right of removal only in the narrow circumstances where a defendant is aware of an action prior to service of process with sufficient time to initiate removal.”  Stone Mansion, 902 F.3d at 153. . . .  While it is clear that courts in this district have found that permitting pre-service removal absurd, others have not, concluding that the plain language of Section 1441(b)(2) states that it only applies when the local defendants have been “properly joined and served.” Finally, and arguably most importantly − a Plaintiff in this very district, in a similar removal action unsuccessfully invoked [the absurd results argument] to support remand. [Citing Dechow]

Zirkin v. Shandy Media, Inc., 2019 WL 626138, at *3 (C.D. Cal. Feb. 14, 2019) (other citations and quotation marks omitted).  We are particularly gratified to see these two cases out of the Central District of California.  Our last research post on removal before service tallied up all the favorable decisions between 2011 and mid-2018 (it was written about a week before Encompass Insurance was decided).  It found twelve cases out of California, but only two from the Central District.  Encompass Insurance seems to have convinced the judges in that previously rather refractory district to be less refractory.

Another California decision, Monfort v. Adomani, Inc., 2019 WL 131842 (N.D. Cal. Jan. 8, 2019), expressly “agree[d] with the Third Circuit” and permitted removal before service.  Id. at *4.

[T]he more precise question is whether pre-service removal frustrates the purpose behind §1441(b)(2)’s “joined and served” language.  As the Third Circuit explained, the “joined and served” language reflects Congress’s intent to prevent a plaintiff from fraudulently joining a resident party in order to avoid removal to federal court.  Encompass, 902 F.3d at 153.  Interpreting “joined and served” to permit pre-service removal by an in-state defendant does not impair the provision’s anti-fraudulent joinder purpose, which focuses on what a plaintiff may or may not do to defeat diversity jurisdiction.  Id. (noting that a plain language interpretation of joined and served “protects the statute’s goal without rendering any of the language unnecessary”).  Moreover, . . . Congress amended the removal statute after decisions permitting pre-service removal, but did not alter the “joined and served” language.

Id. (non-Encompass Insurance citations omitted).  Encompass Insurance also proved persuasive in Texas Brine Co., LLC v. American Arbitration Ass’n, 2018 WL 4927640 (E.D. La. Oct. 11, 2018), which cited it for the propositions that “defendants may remove despite unserved resident defendants,” and that “[n]o exception for gamesmanship exists.”  Id. at *2.

Still, while there’s been a shift since Encompass Insurance, there remain courts that find gamesmanship by plaintiffs somehow less bothersome than gamesmanship by defendants, and still refuse to recognize removal before service as permitted by the express terms of the removal statute.  Such a case is Delaughder v. Colonial Pipeline Co., ___ F. Supp.3d ___, 2018 WL 6716047 (N.D. Ga. Dec. 21, 2018), which refused to follow Encompass Insurance on a record that revealed both sides engaging in procedural machinations – with plaintiffs determined to keep a personal injury suit in a plaintiff-friendly court, and a diverse defendant just as determined to be in federal court instead.

Here’s what happened in Delaughder.  Two out-of-state litigation tourists sued the target defendant (a Delaware corporation) in Atlanta over an Alabama accident, also joining a Georgia “forum defendant” that would have prevented removal.  Id. at *1-2 & nn 1-2.  The Delaware defendant successfully snap removed.  In response, plaintiffs moved for voluntary dismissed, fully intending to win the race to the courthouse on their second try.  Id.  The defendant was just ready.  On the same day the voluntary dismissal was effective, the defendant changed its Georgia registered agent.  Id.  Plaintiff refiled the next day and – loaded for bear – served the defendant’s former agent less than half an hour after refiling.  Id.  But service was ineffective because of the change in agents, and the defendant snap removed again.  Id.

Although non-residents suing in Georgia over an accident in Alabama seems, to us, a most blatant example of forum-shopping gamesmanship, the court in Delaughder focused solely on the defendant’s actions.  Although recognizing that “the Third Circuit has definitively come down on one side of the issue,” 2018 WL 6716047, at *3, that court nonetheless went with the “absurd result” argument and remanded.  “While [defendant] found a possible avenue to take away Plaintiffs’ power to decide the forum for this litigation, the Court cannot overlook the clear gamesmanship present in this case.”  Id. at *6.

In the words of another Georgia court, “[o]ne person’s ‘gamesmanship’ is strategy to another.”  Francis v. Great West Casualty Co., 2018 WL 999679, at *2 (M.D. Ga. Feb. 21, 2018).  As for Delaughder itself, there are other words Bexis picked up while living in the Peach State:

Forget, hell.

Here’s something we know about Georgia precedent:

Georgia’s registration statute, Ga. Code §14-2-1501, provides no indication that registration affects jurisdiction one way or another; nor are there relevant state cases. However, in Orafol Americas, Inc. v. DBi Services, LLC, 2017 WL 3473217 (N.D. Ga. July 20, 2017), the court held:

Plaintiff notes that [defendant] is registered to do business in Georgia, and has a registered agent in the State.  Additionally, [defendant] has actually engaged in business in Georgia. . . .  But these contacts are woefully insufficient to render [defendant] “at home” in Georgia.  Every company that does any business in Georgia must register with the State and maintain a registered agent.  Just because a company does some small amount of business in Georgia does not mean that due process will allow that company to be sued in Georgia for acts that occurred outside the State.

Id. at *3.

Out of the frying pan, into the fire.  Nothing in the Delaughder opinion gives us any reason to believe that there is any basis for personal jurisdiction in Georgia over the non-forum defendant.  And not only that, once those plaintiffs lose on jurisdiction, they’ll get no tolling of the statute of limitations in Alabama for their frolic and detour in the Georgia courts, since Alabama is one of “[s]ix states [with] no mechanism for preserving claims following a dismissal without prejudice.”

Game on.

On August 17, 2018, we observed in our latest comprehensive post on pre-service removal, that “[w]ith Court of Appeals decisions now breaking in our favor, we can start trying to change the minds of district courts that have previously gone the other way.”

And how.

On August 22 – less than a week after that post (and while Bexis was on vacation) – the Third Circuit came down strongly on the “plain meaning” side of the ledger in a removal-before-service case and flatly rejected the “absurd result” rationale that some district courts in that circuit had developed.  See Encompass Insurance Co. v. Stone Mansion Restaurant, Inc., ___ F.3d ___, 2018 WL 3999885 (3d Cir. Aug. 22, 2018).  The court first examined the purpose of the “forum defendant” exception to removability of diverse cases and Congress’ amendment adding the “properly joined and served” language that supports pre-service removal:

We therefore turn to section 1441, which contains the forum defendant rule.  Section 1441 exists in part to prevent favoritism for in-state litigants, and discrimination against out-of-state litigants.  The specific purpose of the “properly joined and served” language in the forum defendant rule is less obvious.  The legislative history provides no guidance; however, courts and commentators have determined that Congress enacted the rule 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.

Id. at *4 (citations and quotation marks omitted).

Next, the court examined the competing arguments – “plain meaning” on the defense side, and “absurd result” on the plaintiff side. The facts were rather stark – after initially unconditionally agreeing to accept service, defense counsel notified plaintiff that he would not do so until after he had first removed the case to federal court.  Id. at *1-2.  Although “not condon[ing] this conduct between and among legal practitioners,” the district court denied remand given the express language of 21 U.S.C. §1441(b).  See Encompass Insurance Co. v. Stone Mansion Restaurant, 2017 WL 528255, at *2 & n.1 (W.D. Pa. Feb. 9, 2017).  The Third Circuit affirmed:

Citing this fraudulent-joinder rationale, [plaintiff] argues that it is “inconceivable” that Congress intended the “properly joined and served” language to permit an in-state defendant to remove an action by delaying formal service of process. This argument is unavailing.  Congress’ inclusion of the phrase “properly joined and served” addresses a specific problem − fraudulent joinder by a plaintiff − with a bright-line rule.  Permitting removal on the facts of this case does not contravene the apparent purpose to prohibit that particular tactic.  Our interpretation does not defy rationality or render the statute nonsensical or superfluous, because:  (1) it abides by the plain meaning of the text; (2) it envisions a broader right of removal only in the narrow circumstances where a defendant is aware of an action prior to service of process with sufficient time to initiate removal; and (3) it protects the statute’s goal without rendering any of the language unnecessary.  Thus, this result may be peculiar in that it allows [defendants] to use pre-service machinations to remove a case that it otherwise could not; however, the outcome is not so outlandish as to constitute an absurd or bizarre result.

2018 WL 3999885, *4 (footnotes omitted) (emphasis added).

The omitted footnotes are also significant.  First, the “general rule” that “by interpretation we should not defeat Congress’ purpose of abridging the right of removal” was “not sufficient to displace the plain meaning of the statute.”  Id. at *4 n.3 (citing and quoting Delalla v. Hanover Insurance Co., 660 F.3d 180, 189 (3d Cir. 2011)).  Second, the argument that advanced technology allowing improved docket monitoring was more properly directed to Congress than to the courts:

We are aware of the concern that technological advances since enactment of the forum defendant rule now permit litigants to monitor dockets electronically, potentially giving defendants an advantage in a race-to-the-courthouse removal scenario. . . .  If a significant number of potential defendants (1) electronically monitor dockets; (2) possess the ability to quickly determine whether to remove the matter before a would-be state court plaintiff can serve process; and (3) remove the matter contrary to Congress’ intent, the legislature is well-suited to address the issue.

Id. at *4 n.4.

The Encompass Insurance court therefore unanimously concluded that §1441(b) said what it said when it predicated the forum defendant exception on such defendants being “properly joined and served” and that courts must respect what Congress enacted:

In short, [defendant] has availed itself of the plain meaning of the statute, for which there is precedential support.  [Plaintiff] has not provided, nor have we otherwise uncovered, an extraordinary showing of contrary legislative intent.  Furthermore, we do not perceive that the result in this case rises to the level of the absurd or bizarre.  There are simply no grounds upon which we could substitute [plaintiff’s] interpretation for the literal interpretation.  Reasonable minds might conclude that the procedural result demonstrates a need for a change in the law; however, if such change is required, it is Congress − not the Judiciary − that must act.

Id. at *5.  Finally, the defendant’s previous agreement to accept service did not preclude it from delaying such acceptance until after it removed the case to federal court.  “[W]e are unconvinced that [defendant’s] conduct − even if unsavory − precludes it from arguing that incomplete service permits removal.”  Id.

Thus, the debate is over in the Third Circuit, notwithstanding the prior decisions of some district judges in Pennsylvania, New Jersey, and Delaware to the contrary, and it is perfectly proper for defendants, whether “forum defendants” or otherwise, to monitor state-court dockets electronically for new lawsuits, and to remove diverse cases preemptively to federal court before the plaintiffs (often litigation tourists) can serve in-state defendants whose presence would otherwise preclude removal under §1441(b)(2).

The sound you hear is one more nail being driven in the coffin of litigation tourism.

One last thought.  Query whether, if a defendant in a case in the Third Circuit were unfortunate enough to have removed before service and suffered remand under the “absurd result” rationale rejected in Encompass Insurance, the Third Circuit’s opinion constitutes an “other paper” creating grounds for removal that would support a second removal.  While we don’t know the answer off-hand, it is a question that attorneys representing clients in that situation may want to address.

It’s been a while since we’ve discussed pre-service removal, other than to mention a recent case.  Our last major post was “What’s up with Removal Before Service,” back in May 2011.

Since then, we pointed out an important statutory development – that when Congress rewrote other parts of the removal statute (28 U.S.C. §1441(b)) in 2011, it left intact the language that, read according to its terms (often referred to as “plain meaning” in the cases), allows pre-service removal.  That’s important, because the major argument against pre-service removal is that it’s “gamesmanship” (as if joining 99 disparate plaintiffs in a single complaint isn’t) that leads to “absurd” results that Congress could not have intended.  “However, one person’s ‘gamesmanship’ is strategy to another.” Francis v. Great West Casualty Co., 2018 WL 999679, at *2 (M.D. Ga. Feb. 21, 2018).

[F]rom a policy perspective, §1441(b) protects non-forum defendants from plaintiffs’ procedural maneuvering to deprive these defendants of their statutory right to litigate in a federal forum. . . . This protection . . . is particularly important because the forum defendant rule creates an opportunity for procedural gamesmanship on the part of plaintiffs attempting to keep an action in state court, and thus blocking removal, by either improperly joining a forum defendant, or not serving the forum defendant that they have no intention of pursuing.

In Re Plavix Products Liability & Marketing Litigation, 2014 WL 4954654, at *6 (D.N.J. Oct. 1, 2014) (citations omitted).

That Congress, knowing full well that pre-service removal was being routinely practiced, elected to leave intact the statutory language enabling pre-service removal, makes the “absurdity” argument a much harder sell.  After all, if the statute’s language permits too much “gamesmanship,” the proper response is for Congress to amend the statute, as it did back in 1948 when the “properly joined and served” language was first added.  See Goodwin v. Reynolds, 757 F.3d 1216, 1220-21 (11th Cir. 2014) (discussing 1948 amendment).  It is not the courts’ role to usurp Congress by making ad hoc modifications of statutory language, whenever judges feel like it, particularly when Congress had the opportunity to amend the statute again in 2011, but declined to do so.

[U]nder the plain meaning of §1441(b) an out-of-state defendant, by monitoring state court dockets electronically or otherwise, can dash to the federal courthouse almost immediately with a notice of removal before the complaint is served on it and on an in-state defendant.  As a consequence of advances in technology, there may well be fewer diversity actions precluded from removal under §1441(b) than heretofore.  If this result is deemed to be bad public policy, the remedy lies with Congress which, subject to constitutional limitations, controls the scope of this court’s subject matter jurisdiction and any right of removal.

Valido-Shade v. Wyeth, LLC, 875 F. Supp.2d 474, 478 (E.D. Pa. 2012), summarily aff’d, No. 14-4608 (3d Cir. April 29, 2015).

Enough ranting (for now).  In any event, since our “What’s up” post, we’ve also written several individual posts about:

Christison v. Biogen Idec, Inc., 2011 WL 13153242 (N.D. Cal. Nov. 14, 2011)

Poznanovich v. AstraZeneca Pharmaceuticals LP, 2011 WL 6180026 (D.N.J. Dec. 12, 2011)

Boyer v. Wyeth Pharmaceuticals, Inc., 2012 WL 1449246 (E.D. Pa. April 26, 2011)

Davis v. Hoffmann-La Roche, 2014 WL 12647769 (Mag. N.D. Cal. Jan. 14, 2014), adopted, 2014 WL 12647768 (N.D. Cal. Jan. 31, 2014)

Young v. Bristol-Myers Squibb Co., 2017 WL 2774735 (D. Del. June 27, 2017)

Cheung v. Bristol-Myers Squibb Co., 282 F. Supp.3d 638 (S.D.N.Y. 2017)

So, that’s six additional pre-service removal cases from five states since our last comprehensive post in 2011.  Let’s see how many more there are out there that we’ve missed.

The first thing we note is that some appellate authority now exists.  Since remand is unappealable (28 U.S.C. §1447(d)), appellate review is rare in remand situations.  Most recently, in Bank of New York Mellon v. Mazza, ___ F. Appx. ___, 2018 WL 3524899 (3d Cir. July 23, 2018), the court observed (albeit refraining from deciding the issue) “that every Court of Appeals to have addressed the issue has concluded that defendants in state-court actions may indeed remove them before being served with process.”  Id. at *2.  Mazza cited Novak v. Bank of N.Y. Mellon Trust Co., 783 F.3d 910, 914 (1st Cir. 2015); La Russo v. St. George’s University School, 747 F.3d 90, 97 (2d Cir. 2014), and Delgado v. Shell Oil Co., 231 F.3d 165, 177 (5th Cir. 2000).

Delgado, of course, is from the antediluvian period before modern, technologically-aided pre-service removal, but the Fifth Circuit did state unequivocally that “service of process is not an absolute prerequisite to removal.”  231 F.3d at 177.  Rather, the language of §1441(b) “consciously reflect[s] a desire on the part of Congress to require than an action be commenced against a defendant before removal, but not that the defendant have been served.”  Id.  See also McCall v. Scott, 239 F.3d 808, 813 n.2 (6th Cir. 2001) (“Where there is complete diversity of citizenship . . . inclusion of an unserved resident defendant in the action does not defeat removal under 28 U.S.C. §1441(b).”).

Delgado was also cited in La Russo, where the Second Circuit held:

The argument lacks merit.  Nothing in sections 1441 or 1446 requires a removing defendant to have appeared in the state court proceeding prior to removal.  Nor is there merit in [plaintiff’s] claim that removal was improper because [a defendant] was not served.  Service of process upon a removing defendant is not a prerequisite to removal.

747 F.3d at 97 (citing not only Delgado, but also City of Ann Arbor Employees’ Retirement System v. Gecht, 2007 WL 760568, at *9 (N.D. Cal. March 9, 2007) – a modern pre-service removal case rejecting the “absurd results” argument).

Delgado was also cited in Novak, which is an even more powerful embrace of pre-service removal.  First, the First Circuit stated:

[W]e think it is clear that a defendant generally need not wait until formal receipt of service to remove.  There is no indication that . . . Congress intended to prohibit a defendant from filing a notice of removal before having been formally served

7893 F.3d at 912. A few pages later, Novak held:

[We find] no indication that a defendant was also prohibited from filing a notice of removal before service. We read the statute to contemplate otherwise.  Our interpretation thus aligns with the decisions of other federal courts that have considered this question. . . .  As far as we can tell, every one has concluded that formal service is not generally required before a defendant may file a notice of removal.  And, because Congress is presumed to be aware of an administrative or judicial interpretation of a statute and to adopt that interpretation when it re-enacts a statute without change, we find it informative that Congress made no effort to cast aside this clear consensus among federal courts when it amended §1446 in 2011 without making any substantive change to subsection (b)(1)

Id. at 914 (citations and quotation marks omitted).  In addition to Delgado and LaRusso, Novak added Whitehurst v. Wal-Mart, 306 F. Appx. 446, 448 (11th Cir. 2008) (“nothing in the removal statute, or any other legal provision, requires that a defendant be served with the complaint before filing a notice of removal”), and Sutler v. Redland Insurance Co., 2012 WL 5240124, at *2 (D. Mass. Oct. 24, 2012), another district court case recognizing pre-service removal.  With Court of Appeals decisions now breaking in our favor, we can start trying to change the minds of district courts that have previously gone the other way.

Also, since our 2011 post − although not in a pre-service removal situation − the Seventh Circuit in Morris v. Nuzzo, 718 F.3d 660 (7th Cir. 2013), helpfully noted that the “properly joined and served” language in §1446(b) creates “a service-based exception to the forum defendant rule, meaning that a properly served out-of-state defendant will not be prevented from removing a case when the plaintiff has named but not yet served a resident defendant.”  Id. at 670 n. 3.

As far as the district courts go, here is what we now have – in addition to what we found back in our 2011 post (we did miss some back then, which we’re backfilling now).  As always, we do not do the other side’s research for them, so what follows are all cases allowing pre-service removal – except for those cases we listed back in 2011:

Alabama

Seong Ho Hwang v. Gladden, 2016 WL 9334726, at *5-7 (M.D. Ala. Dec. 21, 2016); Sasser v. Florida Pond Trucking, L.L.C., 2016 WL 3774125, at *4-5 (Mag. M.D. Ala. June 24, 2016), adopted, 2016 WL 3769754 (M.D. Ala. July 14, 2016); Pathmanathan v. Jackson National Life Insurance Co., 2015 WL 4605757, at *3-5 (M.D. Ala. July 30, 2015); Goodwin v. Reynolds, 2012 WL 4732215, at *3-6 (N.D. Ala. Sept. 28, 2012), aff’d on other grounds, 757 F.3d 1216 (11th Cir. 2014); Lemley v. Midwest Automation, Inc., 2009 WL 1211382, at *1 & n.2 (S.D. Ala. May 1, 2009).

Alaska

Seeds v. ERA Alaska, 2013 WL 11311389, at *3 (D. Alaska Nov. 4, 2013).

California

Saratoga Advantage Trust Technology & Communications Portfolio v. Marvell Technology Group, Ltd., 2015 WL 9269166, at *2 (N.D. Cal. Dec. 21, 2015); Sherman v. Haynes & Boone, 2014 WL 4211118, at *1 (N.D. Cal. Aug. 22, 2014); Wilder v. Bank of America, N.A., 2014 WL 12591934, at *4 (C.D. Cal. June 30, 2014); Davis v. Hoffmann-La Roche, 2014 WL 12647769, at *2 (Mag. N.D. Cal. Jan. 14, 2014), adopted, 2014 WL 12647768 (N.D. Cal. Jan. 31, 2014); Fontalvo v. Sikorsky Aircraft Corp., 2013 WL 3197071, at *9-10 (S.D. Cal. June 20, 2013); Regal Stone Ltd. v. Longs Drug Stores California, L.L.C., 881 F. Supp.2d 1123, 1127-29 (N.D. Cal. 2012); May v. Haas, 2012 WL 4961235, at *2-2 (E.D. Cal. Oct. 16, 2012); Christison v. Biogen Idec, Inc., 2011 WL 13153242, at *1 (N.D. Cal. Nov. 14, 2011); Cucci v. Edwards, 510 F. Supp.2d 479, 482-84 (C.D. Cal. 2007); Waldon v. Novartis Pharmaceuticals Corp., 2007 WL 1747128, at *2-3 (N.D. Cal. June 18, 2007); City of Ann Arbor Employee’s Retirement System v. Gecht, 2007 WL 760568, at *8-9 (N.D. Cal. March 9, 2007).

Delaware

Young v. Bristol-Myers Squibb Co., 2017 WL 2774735, at *2 (D. Del. June 27, 2017); Munchel v. Wyeth LLC, 2012 WL 4050072, at *3-4 (D. Del. Sept. 11, 2012); Hutchins v. Bayer Corp., 2009 WL 192468, at *10-11 (Mag. D. Del. Jan. 23, 2009).

District of Columbia

Middlebrooks v. Godwin Corp., 279 F.R.D. 8, 11-12 (D.D.C. 2011).

Florida

Bergmann v. State Farm Mutual Automobile Insurance Co., 2016 WL 9414108, at *2 (N.D. Fla. Dec. 28, 2016); ViSalus, Inc. v. Then, 2013 WL 3682239, at *3 (M.D. Fla. July 12, 2013); Visalus, Inc. v. Knox, 2013 WL 3462176, at *1-2 (M.D. Fla. July 9, 2013); North v. Precision Airmotive Corp., 600 F. Supp.2d 1263, 1268-70 (M.D. Fla. 2009); Valerio v. SmithKline Beecham Corp., 2008 WL 3286976, at *2 (S.D. Fla. Aug. 7, 2008); Bolin v. SmithKline Beecham Corp., 2008 WL 3286973, at *2 (S.D. Fla. Aug. 7, 2008); Masterson v. Apotex, Corp., 2008 WL 2047979, at *2 (S.D. Fla. May 13, 2008).

Georgia

Francis v. Great West Casualty Co., 2018 WL 999679, at *2 (M.D. Ga. Feb. 21, 2018); McClain v. Bank of America Corp., 2013 WL 1399309, at *3 (S.D. Ga. April 5, 2013).

Illinois

D.C. v. Abbott Laboratories Inc., 2018 WL 4095093, at *3-5 (N.D. Ill. Aug. 28, 2018); Graff v. Leslie Hindman Auctioneers, Inc., 299 F. Supp.3d 928, 934-37 (N.D. Ill. 2017); Selective Insurance Co. v. Target Corp., 2013 WL 12205696, at *1 (N.D. Ill. Dec. 13, 2013); In re Pradaxa (Dabigatran Etexilate) Products Liability Litigation, 2013 WL 656822, at *3-4 (S.D. Ill. Feb. 22, 2013); Massey v. Cassens & Sons, Inc., 2006 WL 381943, at *2-3 (S.D. Ill. Feb. 16, 2006).

Indiana

In re Bridgestone/Firestone, Inc., 184 F. Supp.2d 826, 828 (S.D. Ind. 2002).

Kentucky

United Steel Supply, LLC v. Buller, 2013 WL 3790913, at 1-2 (W.D. Ky. July 19, 2013); Darsie v. Cone, 2010 WL 2923285, at *5 (E.D. Ky. July 22, 2010); Stanley v. Insights Training Group, LLC, 2009 WL 3514590, at *1-2 (W.D. Ky. Oct. 29, 2009).

Louisiana

Lewis-Wallace v. Johnson, 2018 WL 1531921, at *2 (E.D. La. March 29, 2018); Leech v. 3M Co., 278 F. Supp.3d 933, 941-43 (E.D. La. 2017); Sexton v. Exxon Mobil Corp., 2017 WL 6803443, at *2 (Mag. M.D. La. Sept. 15, 2017), adopted, 2018 WL 283259 (M.D. La. Jan. 3, 2018); Mendoza v. JLG Industries, Inc., 2016 WL 6872107, at *2 (E.D. La. Nov. 22, 2016); Gorman v. Schiele, 2016 WL 3583645, at *2-3 (Mag. M.D. La. June 8, 2016), adopted, 2016 WL 3580669 (M.D. La. June 28, 2016); Gorman v. Schiele, 2016 WL 3583640, at *5-6 (Mag. M.D. La. May 20, 2016), adopted, 2016 WL 3580669 (M.D. La. June 28, 2016); Colletti v. Bendix, 2016 WL 770646, at *2 (E.D. La. Feb. 29, 2016); Williams v. Boyd Racing LLC, 2016 WL 236993, at *3 (W.D. La. Jan. 19, 2016); Groves v. Farthing, 2015 WL 3646724, at *4-5 (E.D. La. June 10, 2015); Harvey v. Shelter Insurance Co., 2013 WL 1768658, at *2 (E.D. La. April 24, 2013).

Maryland

Al-Ameri v. Johns Hopkins Hospital, 2015 WL 13738588, at *1-2 (D. Md. June 24, 2015); Moore v. Svehlak, 2013 WL 3683838, at *15 (D. Md. July 11, 2013); Clawson v. FedEx Ground Package System, Inc., 451 F. Supp.2d 731, 736 (D. Md. 2006).

Massachusetts

Sutler v. Redland Insurance Co., 2012 WL 5240124, at *2 (D. Mass. Oct. 24, 2012).

Michigan

Gordon v. Home Loan Center, LLC, 2011 WL 1261179, at *7 (E.D. Mich. March 31, 2011); Revere v. MERS, 2010 WL 1541506, at *2 (E.D. Mich. April 19, 2010).

Mississippi

Holmes v. Lafayette, , 2013 WL 654449, at *1 (N.D. Miss. Feb. 21, 2013); Ott v. Consolidated Freightways Corp., 213 F. Supp.2d 662, 665-66 (S.D. Miss. 2002).

Missouri

Gray v. Monsanto Co., 2018 WL 488935, at *2 (E.D. Mo. Jan. 19, 2018); Travers v. Five Below, Inc., 2017 WL 2813320, at *2-3 (E.D. Mo. June 29, 2017); Johnson v. Emerson Electric Co., 2013 WL 5442752, at *4 (E.D. Mo. Sept. 30, 2013); Taylor v. Cottrell, Inc., 2009 WL 1657427, at *2 (E.D. Mo. June 10, 2009); Brake v. Reser’s Fine Foods, Inc., 2009 WL 213013, at *2-3 (E.D. Mo. Jan. 28, 2009); Johnson v. Precision Airmotive, LLC, 2007 WL 4289656 at *6 (E.D. Mo. Dec. 4, 2007).

Montana

Mahana v. Enerplus Resources U.S.A. Corp., 2012 WL 1947101, at *2-3 (Mag. D. Mont. May 30, 2012), adopted, 2012 WL 4748178, at *1 (D. Mont. Oct. 4, 2012).

New Jersey

In Re Plavix Products Liability & Marketing Litigation, 2014 WL 4954654, at *4-6 (D.N.J. Oct. 1, 2014); Westfield Insurance Co. v. Interline Brands, Inc., 2013 WL 1288194, at *2-4 (D.N.J. March 25, 2013) Poznanovich v. AstraZeneca Pharmaceuticals LP, 2011 WL 6180026, at *3-5 (D.N.J. Dec. 12, 2011); Jaeger v. Schering Corp., 2007 WL 3170125, at *2 (D.N.J. Oct. 25, 2007); Yocham v. Novartis Pharmaceuticals Corp., 2007 WL 2318493 at *3 (D.N.J. Aug. 13, 2007); Frick v. Novartis Pharmaceuticals Corp., 2006 WL 454360, at *3 (D.N.J. Feb. 23, 2006).

New York

Cheung v. Bristol-Myers Squibb Co., 282 F. Supp.3d 638, 643-44 (S.D.N.Y. 2017); Petit v. Bristol-Myers Squibb Co., 2012 WL 11893525, at *1-2 (S.D.N.Y. March 23, 2012); Stop & Shop Supermarket Company LLC v. Goldsmith, 2011 WL 1236121, at *6 (S.D.N.Y. March 31, 2011); Deveer v. Gov’t Employees Insurance Co., 2008 WL 4443260, at *4 (E.D.N.Y. Sept. 26, 2008); In re Fosamax Products Liability Litigation, 2008 WL 2940560, at *2, 5 (S.D.N.Y. July 29, 2008).

Oklahoma

Howard v. Crossland Construction Co., 2018 WL 2463099, at *2 (N.D. Okla. June 1, 2018); Magallan v. Zurich American Insurance Co., 228 F. Supp.3d 1257, 1260-62 (N.D. Okla. 2017).

Pennsylvania

Rehmeyer v. Peake Plastics Corp., 2016 WL 7375027, at *3 (E.D. Pa. Dec. 20, 2016); Figured v. Davies, 2016 WL 3148392, at *3 (M.D. Pa. June 2, 2016); Parker Hannifin Corp. v. Federal Insurance Co., 23 F. Supp. 3d 588, 594 (W.D. Pa. 2014); Hutton v. KDM Transport, Inc., 2014 WL 3353237, at *4 (E.D. Pa. July 9, 2014); Valido-Shade v. Wyeth, LLC,, 875 F. Supp.2d 474, 477-78 (E.D. Pa. 2012), summarily aff’d, No. 14-4608 (3d Cir. April 29, 2015); Zokaites Properties, LP v. La Mesa Racing, LLC, 2012 WL 3144127, at *17 (W.D. Pa. Aug. 1, 2012); Banks v. Kmart Corp., 2012 WL 707025, at *2 (E.D. Pa. March 6, 2012); Boyer v. Wyeth Pharmaceuticals, Inc., 2012 WL 1449246, at *2 (E.D. Pa. April 26, 2011); Copley v. Wyeth, Inc., 2009 WL 1089663, at *3 (E.D. Pa. April 22, 2009); Vanderwerf v. Glaxosmithkline, PLC, 2005 WL 6151369, at *1 (E.D. Pa. May 5, 2005).

South Carolina

Fisher v. Pelstring, 2009 WL 10664813, at *2-4 (D.S.C. Sept. 29, 2009).

Tennessee

Linder v. Medtronic, Inc., 2013 WL 5486770, at *1-2 (W.D. Tenn. Sept. 30, 2013).

Texas

Cadena v. ASI Lloyds, 2018 WL 1904839, at *3 (Mag. W.D. Tex. Jan. 5, 2018), adopted, 2018 WL 1899750 (W.D. Tex. Feb. 13, 2018); Doe v. Geo Group, Inc., 2016 WL 3004675, at *3 (W.D. Tex. May 24, 2016); Reynolds v. Personal Representative of the Estate of Johnson, 139 F. Supp.3d 838, 841-43 (W.D. Tex. 2015); Breitweiser v. Chesapeake Energy Corp., 2015 WL 6322625, at *4-7 (N.D. Tex. Oct. 20, 2015); Rios v. Cooper Tire & Rubber Co., 2014 WL 12613385, at *3 (E.D. Tex. March 26, 2014); Carrs v. AVCO Corp., 2012 WL 1945629, at *1-3 (N.D. Tex. May 30, 2012).

West Virginia

Bloom v. Library Corp., 112 F. Supp.3d 498, 506 (N.D.W. Va. 2015); Konikowski v. Wheeling Island Gaming, Inc., 2012 WL 5378252, at *4 (N.D.W. Va. Oct. 31, 2012); Vitatoe v. Mylan Pharmaceuticals, Inc., 2008 WL 3540462, at *2-5 (N.D.W. Va. Aug. 13, 2008).

*          *          *          *

Finally, while not doing the plaintiffs’ research for them, we can safely state, after reading the “absurd result” cases, that the most dangerous form of pre-service removal is by a forum defendant alone, or equivalently, in a case where only forum defendants are sued.  That’s widely seen as a direct slap at the forum defendant rule.  The next most dangerous removals are those taken by forum defendants in cases where there are also non-resident defendants.  The most sympathetic pre-service removal scenario is when the removal is initiated by a non-resident defendant – the type of party that diversity jurisdiction was originally intended to protect.  When defendants have a choice, therefore, it would be best to let the non-resident defendant carry the flag in pre-service removal cases.

One can also hope that current trends in personal jurisdiction might result in dismissal in cases where defendants previously sought to rely upon pre-service removal, since jurisdiction over one affiliated, but separate, “forum defendant” corporation no longer translates into jurisdiction over other corporate defendants.  If, as occurs often in mass tort cases, the plaintiff is also a non-resident of the jurisdiction where suit is brought, then the plaintiff may well not be able to obtain jurisdiction over the non-resident corporate defendant.

Recently, in downsizing our elderly father to a smaller residence and cleaning out his house, we came upon a cassette recording of our too-many-decades-ago Bat Mitzvah. We dug an old boom box out of the basement, listened to our sweet 13-year-old voice, and allowed the waves of nostalgia to wash over us.  We remembered the dress we wore (pink and white) and the upturned faces of our proud relatives (including all four grandparents, the first of whom would depart the very next year).  We recalled the home-cooked food at the “open house” at our home that evening (this was a different era – and tax bracket – than those occupied by cousins who have recently thrown six-figure extravaganzas for their children’s events) and the elusive (for us) sense of religious affiliation. For the thirty minutes of that cassette tape, we were transported.

Our love of nostalgia is neither new nor news. Readers of this blog know how much we love revivals of old Broadway musicals (recent:  South Pacific, Pippin, Finian’s Rainbow, Hello, Dolly; upcoming:  Carousel, My Fair Lady), and we will wax nostalgic in Connecticut this weekend at our 30th law school reunion (Guido’s torts class anecdotes, anyone?).   And we had a wistful flash when we read today’s case.  A decade ago, we were enmeshed in the earliest stages of a mass tort MDL.  Plaintiffs routinely filed in state court and, seeking to evade federal jurisdiction, sued a distributor domiciled in the state of filing (a “forum defendant”) along with our client, the manufacturer.  Trajectory permitting, we would sweep in and remove those cases before the forum defendant was served.  We called these “wrinkle removals,” because a “wrinkle” in the removal statute opened this window for us.

As one of our co-bloggers recently explained, this blog has been posting about “removal before service” since Bexis brought it to the attention of the legal community in 2007.  It’s a procedural tactic that enables defendants to remove cases to federal court despite the “forum defendant rule,” which ordinarily prohibits a defendant from removing to a case that, while it meets the requirements of diversity jurisdiction under 21 U.S.C. § 1332(a), is also pending in the home state of the defendant. Here’s the rule as codified in 21 U.S.C. § 1441(b) (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.” (Emphasis added).

A review of our long chain of posts on this subject reveals dramatic splits among, and even within, district courts (notably, the Eastern District of Pennsylvania) on this issue. Some courts acknowledge the plain language of the statute and deny remand, while others remand in the supposed “spirit” of diversity jurisdiction.  Last week’s Southern District of New York decision in Cheung v. Bristol-Myers Squibb Co., et al., 2017 WL 4570792 (S.D.N.Y. Oct. 12. 2017), one of the best opinions we have read on this issue, falls resoundingly in the former category.  In Cheung, the court explained that, in response to the Eliquis MDL court’s dismissal, on preemption grounds, of the first case subject to a 12(b)(6) motion, plaintiffs’ counsel voluntarily dismissed thirty-three cases and re-filed them in Delaware state court.   The defendants removed them to the United States District Court for the District of Delaware, and the judge there denied motions to remand all thirty-three cases, holding that removal was proper despite the presence of a defendant domiciled in Delaware.  The same plaintiffs’ firm filed four more actions in Delaware state court, and the defendants removed those, too, and tagged them for transfer to the MDL in the Southern District of New York.  The plaintiffs waited to move for remand until the cases were transferred to the MDL, then moved to remand all four.

Denying the motions to remand, the court emphasized that “the [removal] statute prohibits removal when there are in-state defendants only when those defendants have been ‘properly joined and served.’ The specific purpose of the ‘joined and served’ requirement has been read to prevent a plaintiff from blocking removal by joining as a defendant against whom it does not intend to proceed and who it does not even serve,” Cheung, 2017 WL 4570792 at * 3 (internal punctuation and citations omitted), precisely the description of the distributor defendant in our long-ago MDL.  Noting that it was “undisputed that the defendants removed the cases before they were properly served,” id., the Court held that “a plain reading of the forum defendant rule” permitted removal. Id.

The plaintiffs “urge[d] the Court to ignore the plain reading of the statute to discourage what they term[ed] ‘gamesmanship’ by the defendants,” id., suggesting that the statute “should only be enforced when a removal occurs after a plaintiff has had a ‘meaningful chance’ to serve the [forum] defendant.” Id. They argued that upholding the removals, “which they contend[ed were] strategically done in order to evade the forum defendant rule, would be to frustrate the purpose of both diversity jurisdiction and the forum defendant rule.” Id.

But the court refused to bite. As the court emphasized, “It is well and long established that courts apply the plain meaning of unambiguous statutory language. . . . The plain language of Section 1441(b) makes clear that its ‘prohibition’ on removal applies only where a defendant who has been ‘properly joined and served’ is a resident of the forum state.” Id. at *4 (citations omitted, emphasis in original).   The court continued, “Ignoring the plain terms of the statute to determine in an individual case when a plaintiff has had meaningful opportunity to serve each defendant and to investigate the parties’ motives . . . would add expense, delay, and uncertainty to the litigation.  In cases like the ones at issue here, the investigation is complicated and points in several directions.  While the defendants no doubt removed the actions swiftly [before the forum defendant rule would prohibit removal], a ruling in favor of the plaintiffs on the issue of removal would reward a different type of gamesmanship altogether.  Instead of promptly moving before [the District of Delaware] for remand of [these] four cases, . . . [the plaintiffs] waited until the JPML had ordered the transfer to move for their remand, . . . hop[ing] for a different result.”  Id.  The court concluded, “If the plaintiffs, then, urge an interpretation of the removal statute that takes the litigants’ strategies into account, theirs may not be ignored.” Id. Remand denied, and all four cases dismissed under the same preemption arguments that had previously prevailed.

We just love this stuff. It combines all the elements that, on a good day, make this a fun job – hornbook statutory construction, chutzpah, a confident judge, and questionable opponents.  We will continue to follow the trail of this doctrine and will hope that more judges veer down this fork in the jurisprudential road.

This post comes from the Cozen O’Connor side of the blog.

We’ve been blogging about “removal before service” since we announced it to the world in 2007.  It’s a procedural tactic that enables defendants to remove cases to federal court despite the “forum defendant rule,” which ordinarily prohibits a defendant from removing to federal court a case that, while it meets the requirements of diversity jurisdiction under 21 U.S.C. § 1332(a), is also pending in the home state of the defendant. Here’s the rule as codified in 21 U.S.C. § 1441(b) (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.

(Emphasis added).

We emphasized the phrase “properly joined and served” because that’s the basis for “removal before service.” Defendants have had success, in certain courts before certain judges, arguing that this phrase should be interpreted according to its plain terms and that, therefore, a defendant who has not yet been served can remove a case on diversity jurisdiction grounds even if the case is in its home state court.

The court in Young v. Bristol-Myers Squibb Co., 2017 U.S. Dist. LEXIS 98736 (D. Del. June 27, 2017), is one of the courts that accepts this argument. Young was one of 33 cases in the Eliquis drug litigation that plaintiffs’ lawyers had filed in the Superior Court of Delaware. Each plaintiff and the two defendants, Bristol-Myers Squibb and Pfizer, were citizens of different states, suggesting that the cases were ripe for removal to federal court on the basis of diversity jurisdiction. But BMS and Pfizer are citizens of Delaware (as are so many corporations), implicating the forum defendant rule’s bar to removal of diversity cases.

But, as the Young court put it, all of this occurred “before Plaintiffs served (or, due to Superior Court procedures, could have served) their complaints on Defendants.” Id. at *2. The defendants had an opportunity. And they took it. They immediately removed the cases to the United States District Court for the District of Delaware where they had the good fortune of drawing a judge who had previously blessed “removal before service”—and did so again:

The undersigned judge has had several occasions to consider this issue. Having done so again, the Court sees no reason here to depart from its previously-adopted reasoning. See Munchel, 2012 U.S. Dist. LEXIS 128971, 2012 WL 4050072; Hutchins, 2009 U.S. Dist. LEXIS 4719, 2009 WL 192468. As in Munchel and Hutchins, the Court views the plain and unambiguous language of § 1441(b) as controlling. Section 1441(b)(2) provides that a case in which there is diversity jurisdiction “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.” Here, there is diversity jurisdiction, but because there was no service on any defendant before removal, none “of the parties in interest properly joined and served as defendants is a citizen” of “the State in which [this] action” was brought, i.e., Delaware. 28 U.S.C. § 1441(b)(2) (emphasis added).

Id. at *5 (emphasis in original). And so we have yet another decision approving “removal of service” under the plain terms of the statute.

In this instance, the Court suggested that it had an additional reason to rule the way it did. The plaintiffs had already engaged in forum-selection tactics of their own. The cases were originally filed in California state court, not Delaware. The defendants, who were not California citizens, promptly removed the cases to a federal court in California and started the process to transfer the cases to the Eliquis MDL, a place that plaintiffs most certainly did not want to be. So—and here it comes—the plaintiffs voluntarily dismissed all 33 cases. They then re-filed the cases, the very same day, in Delaware state court, a court from which they hoped the forum defendant rule would hamstring defendants from once again removing the cases to federal court. Id. at *1-2.

This history of forum shopping clearly influenced the Court’s decision on plaintiffs’ motion to remand:

Additionally, given the history of these cases — including that Plaintiffs voluntarily dismissed cases originally filed in California state court, seemingly (at least in part) to avoid transfer to the MDL — removal is not a nonsensical result. To the contrary, the totality of circumstances strongly supports exercising discretion to deny Plaintiffs’ motions to remand.

Id. at *4-5.

So the “removal before service” option lives on, at least in some courts. And Young offers precedent for an argument that “removal before service” may be even more appropriate when the history of the case suggests that the plaintiff had already engaged in some sort of procedural maneuvering before the case was even removed.

We’ve learned of another win for removal before service in our local federal court, the Eastern District of Pennsylvania. In Boyer v. Wyeth Pharmaceuticals, Inc., C.A. No. 12-739, slip op. (E.D. Pa. April 25, 2011), the case was removed “before any defendant had been served.”  Id. at 1. The plaintiff sued Pfizer, a non-Pennsylvania defendant, and Wyeth, a Pennsylvania “forum defendant.”  The non-forum defendant (Pfizer) was the removing party.  Id.

As usual, the argument in Boyer came down to a choice between the “plain meaning” of the removal statute (21 U.S.C. §1441(b)), and the plaintiff’s claim that removal before service was some sort of gimmick that courts simply should not allow, no matter what Congress provided.  The court (Judge Ludwig) came down on the side of plain meaning.  Slip op. at 2-6 (collecting cases – including some we haven’t cited before in the blog).

A couple of notes about Boyer:

First, the court drew a distinction between removal before service by the forum as opposed to the non-forum defendant, and suggested that remand is more appropriate “where the unserved removing party was the forum defendant.”  Boyer, slip op. at 4 n.2.  We don’t think that should matter, but to the extent that it does – a word to the wise is sufficient.  If the defendant has a choice (and in Boyer we think there was), then always have the non-forum defendant do the removing.  No use handing the other side an issue that can be avoided.

Second, the plaintiff in Boyer did something a little unusual – serving the forum defendant anyway after the case was removed, and claiming that made a difference.  One reason that argument’s unusual is probably that it’s quite meritless.  As the court observed, “[t]he propriety of removal is determined as of the date of removal.”  Slip op. at 4 (citing Wright & Miller).

So if you’re keeping track, Boyer is one more win for the good guys.  We’ll close the way the court did:

[T]he propriety of pre-service removal has been recognized. . . .  [T]he removal statutes expressly permit defendants to remove state court actions to federal court prior to service.  The pre-service removal of this action by a non-forum defendant where the forum defendant had not been served prior to removal was proper under the unambiguous language of §1441(b).

Boyer, slip op. at 4-5 (citations omitted).

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

Our continuing interest in removal/remand strategies for extricating our clients from state-court hellholes comes as no surprise to anyone who’s been following our blog for any length of time.  In particular, we’ve advocated and (we flatter ourselves) helped to popularize the technique of pre-service removal – see our most recent prior post here.

Basically, pre-service removal eliminates a loophole in the federal removal statute that allows plaintiffs to keep cases in which diversity of citizenship indisputably exists in state court through the device of suing an in-state defendant – if that defendant has been “properly joined and served.”  Pre-service removal eliminates this “forum defendant” loophole by removing the action to federal court before the plaintiff has sued the in-state defendant (or, indeed, has served anybody at all).

We’re pleased to pass along a new win on this issue in New Jersey, which is pretty much the pre-service removal “ground zero,” given the number of pharmaceutical manufacturers with the misfortune of being headquartered in this notoriously pro-plaintiff jurisdiction.  The case is Poznanovich v. AstraZeneca Pharmaceuticals LP, No. 3:11-cv-04001-JAP-TJB, slip op. (D.N.J. Dec. 12, 2011).

Poznanovich is a Nexium case where the plaintiff – an Illinois resident attracted by New Jersey’s pro-plaintiff reputation – chose to sue in New Jersey state court.  Two named defendants, AstraZeneca LP and KBI Sub Inc., were allegedly New Jersey citizens, but the other defendants managed to remove the case before either of those defendants was served with process.

Continue Reading New Stuff #2

God only knows how many times we’ve posted on the topic of removal before service, because we can’t count that high.  We did take a look through our “removal” topic tag and figured out that our last post about this subject was back in May.  Well, a reader recently sent us a new decision, so we’ve found an occasion to bring up this old saw again.

Briefly, for you newbies, what’s the big deal with removal before service?  First, “removal” in this context refers to the process for getting cases out of state court (generally thought of – by both sides – as more plaintiff-friendly), and getting them into federal court (conversely considered more defense friendly).

Plaintiffs do all sorts of things to get cases into their preferred state-court forums (fora? fori? foræ?).  One of them is to take advantage of the so-called “forum defendant” exception to federal diversity (that is, the plaintiff and defendant are citizens of different states) jurisdiction.  That exception allows a diverse plaintiff (say, from North Carolina) to sue a defendant (say, a large drug company) in the defendant’s home state.  This trick is employed when the defendant has the misfortune of being located in a state (say, Pennsylvania, New Jersey, or California) that also contains a judicial hellhole favored by the plaintiff’s bar.

Well, the “forum defendant” exception is purely statutory, and the statute, 28 U.S.C. §1441(b), provides that only defendants “properly joined and served” at the time of removal count as forum defendants.  Defendants recently figured out (all right, we admit, we helped a little bit) that if the case could be removed ASAP, before the plaintiff had time to serve the forum defendant – the forum defendant no longer defeated the removal of an otherwise diverse case under the best reading of the statute, because it hadn’t been “served” as the statute requires.

In removal before service cases, the opposing arguments are:  On the defense side – even if Congress probably didn’t intend (or even think about) this twist, the plain language of the statute provides that removal before service trumps the forum defendant rule.  On the plaintiff’s side – even though we took advantage of the forum defendant loophole to have a plaintiff from Upper Dogpatch bring suit in the defendant’s home hellhole, it’s too much “gamesmanship” to allow defendants to take advantage of their removal before service loophole to our loophole.

Anyway, we’ve painted the scene.  So here’s what’s just happened.  In Christison v. Biogen Idec, Inc., No. C 11-4382 RS, slip op. (N.D. Cal. Nov. 14, 2011), a plaintiff from Utah (not usually thought of as a judicial hellhole) chose to sue several non-Utah defendants, including Elan, a California corporation in California state court (a full-fledged judicial hellhole).  The defendants (or at least Biogen) got wise to the suit and got it out of Dodge within a week of its being filed – before plaintiff could serve process on Elan.  Id. at 2.

Plaintiff argued gamesmanship.  Defendants argued plain meaning.  The court came down solidly on the side of Congress meaning what it says – and that Congress can change it if they didn’t:

There is no dispute, however, that Elan had not been served with summons and complaint at the time that defendant Biogen Idec, Inc. filed the operative notice of removal.  The plain language of the removal statute permits removal where no defendant who has been “properly joined and served” is a resident of the forum. 28 U.S.C. §1441(b) (emphasis added). . . .  [T]he mere absence of . . . delay here does not warrant adopting a judge-made rule departing from statutory text.  Not only does it remain true that Congress can amend the statute if there in fact is a significant problem with “gamesmanship” . . . plaintiff could have avoided the issue, of which his counsel undoubtedly was aware, by ensuring that he served Elan prior to giving Biogen notice of the filing.

Christison, slip op. at 1-2 (following Carreon v. Alza Corp., 2010 WL 539392 (N.D. Cal. Feb. 9, 2010), which we cited in our last removal before service post) (emphasis original).

Thanks to reader Joe Blute of Mintz Levin for sending along this case.  By the way, as part of this post, we also searched for other good removal before service decisions since our last post in May and found nothing useful.  If you’re out there sitting on something good, please – like Joe Blute – send it along to us.

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 not counting for removal/remand purposes.  Application of plain statutory language meant that, in products cases where defendants had the bad fortune of residing in a jurisdiction considered pro-plaintiff, out-of-state plaintiffs could not keep sharp-eyed defendants from defeating the forum defendant rule by removing as soon as they learned of an action.

We played a role in popularizing the tactic, blogging about it here, here, here, here, here, here, here, here, here, here, and here. Trying to organize our multiple posts, we put up a comprehensive post that tried to round up every removal-before-service decision we could find (at least the ones taking the position we liked) back in October, 2009.

But since then – over a year and a half – we’ve said nothing about removal before service.  It’s not like we haven’t covered other removal issues….  Heck we discussed two removal issues just this past week, but we hadn’t gone back to the well of pre-service removal.

Well, a reader recently emailed us and asked why.

We didn’t have a good reason, except maybe indolence (or Herrmann retiring).  So we thought we’d take a stroll down Memory Lane and see what, if anything, has happened on that front since our last big post back in late 2009.

What we’ve found is that the dispute still simmers.  Our side says, follow the “plain language” of 28 U.S.C. §1441(b), which states that only defendants “properly joined and served” at the time of removal count as forum defendants.  The other side urges that the statutory language should be ignored in favor or either some version of “intent” or the assertion that removal before service is some sort of high-tech game that the courts don’t have to put up with because it produces an “absurd” result.

There’s law going both ways – the dispute itself certainly hasn’t gone away.  In fact, the most recent case we’ve seen, Hawkins v. Cottrell, Inc., ___ F. Supp.2d ___, 2011 WL 1898867 (N.D. Ga. May 19, 2011), observed that “the federal district courts have been inundated with a flood of cases addressing this issue.”  Id. at *3.  We’d like to think we contributed to that in some small way.

Hawkins, however, came up with a weird (or at least novel) reading of §1441(b) – that somebody had to be properly served before removal, or else the “none of the defendants properly joined and served” language” (the court thought) made sense.  Id. at *6.  It didn’t seem to matter that scores, if not hundreds, of other cases had found before service to be proper (or if improper, not on this ground). Rather, the court held that its “reading of the statute necessarily restricts removal to cases where at least one defendant has been served.”  Id. at *5.

The Hawkins court reached its admittedly novel result by splitting hairs.  It relied on a state law (in Georgia) that an action can be “commenced” but not yet “pending” for purposes of removal.  Id. at *7.  How that would apply to states like Pennsylvania (where plaintiffs can start litigation with a bare summons without filing a complaint), or New York (where there’s a 10-day grace period after service before an action is considered filed) is unclear.  Actually, though, Hawkins was just the absurd results rationale masquerading as straight statutory interpretation, since it relies upon the same old “Congress couldn’t have foreseen the technology” argument to reach its result, just moved to another part in the argument:

[T]he Court implicitly assumed that service of process would always occur prior to removal. The only reason removal is even possible prior to service is due to the advent of electronic case filing and waiver of service rules that could not have been foreseen when the current removal statute was enacted.

Id. at *6 (discussing and attempting to analogize to Murphy Brothers, Inc., v. Michetti Pipe Stringing, Inc., 526 U.S. 344 (1999)).  Basically the Hawkins court was dead set against reading §1441(b) as written and determined to remand no matter what.

But yes, Hawkins definitely demonstrates that the controversy remains.  Our Westlaw search – “1441(b)” within the same paragraph as “properly joined” limited to cases after our last comprehensive post – found a bunch of other cases.

We don’t do plaintiffs’ research for them, so they’ll have to find the relatively few “purpose”/”absurdity” cases for themselves, but we’re happy to provide a list of the recent cases (since our last compilation) holding that removal before the forum defendant is served is proper and creates diversity jurisdiction.  Here they are:

CaliforniaAllen v. Eli Lilly & Co., 2010 WL 3489366, at *2 (S.D. Cal. Sept. 2, 2010) (“clear language” of statute allows removal before service of forum defendants); Carreon v. Alza Corp., 2010 WL 539392, at *2 (N.D. Cal. Feb. 9, 2010) (following plain meaning, finding nothing absurd about the result); Timmons v. Linvatec Corp., 2010 WL 2402918, at *1 (C.D. Cal. Jan. 24, 2010) (removal before service allowed forum defendant to be ignored), reconsideration denied, 2010 WL 2402924, at *1 (C.D. Cal. March 9, 2010) (“the plain language of the statute states that it only applies when the local defendants have been ‘properly joined and served’”); Haseko Homes, Inc. v. Underwriters Insurance Co., 2010 WL 358531, at *2 (S.D. Cal. Jan. 22, 2010) (removal proper where forum defendant not served; defendant may remove before being served).

GeorgiaGibson v. Wal-Mart Stores East, LP, 2010 WL 419393, at *2-4 (M.D. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored; distinguishing cases where diversity is lacking).

Hawai’iWatanabe v. Lankford, 684 F. Supp.2d 1210, 1218-19 (D. Haw. 2010) (following plain meaning, finding nothing absurd about the result).

Illinois: In re Yasmin & Yaz (Drospirenone) Marketing, Sales Practices & Relevant Products Liability Litigation, 2010 WL 3937414, at *11 (S.D. Ill. Oct. 4, 2010) (“[T]his action was removed before the forum defendant was served. This fact, standing alone, is a sufficient ground for denying Plaintiff’s motion to remand.”).

LouisianaBilliot v. Canal Indemnity Co., 2010 WL 4975622, at *2 (W.D. La. Nov. 8, 2010) (removal before service allowed forum defendant to be ignored); Stewart v. Auguillard Construction Co., 2009 WL 5175217, at *3-4 (E.D. La. Dec. 18, 2009) (following plain meaning, finding nothing absurd about the result; forum defendant rule not resurrected by post-removal service).

Maryland:  Robertson v. Iuliano, 2011 WL 476520, at *3 (D. Md. Feb. 4, 2011) (following plain meaning, finding nothing absurd about the result).

MissouriTerry v. J.D. Streett & Co., 2010 WL 3829201, at *2 (E.D. Mo. Sept. 23, 2010) (following plain meaning, finding nothing absurd about the result); Wallace v. Tindall, 2009 WL 4432030, at *3-4 (W.D. Mo. Nov. 30, 2009) (improper service allowed forum defendant to be ignored).

NevadaLamy v. United Parcel Service, Inc., 2010 WL 1257931, at *2 (D. Nev. March 27, 2010) (removal before service allowed forum defendant to be ignored).

New Jersey:  Bivins v. Novartis Pharmaceuticals Corp., 2010 WL 1463035, at *1 (D.N.J. April 12, 2010) (forum defendant rule not resurrected by post-removal service).

North CarolinaChace v. Bryant, 2010 WL 4496800, at *2 (E.D.N.C. Nov. 1, 2010) (removal before service allowed forum defendant to be ignored).

TexasEvans v. Rare Coin Wholesalers, Inc., 2010 WL 595653, at *2 (E.D. Tex. Jan. 28, 2010) (removal before service allowed forum defendant to be ignored).

West VirginiaLeonard v. Mylan, Inc., 718 F. Supp.2d 741, 743 n.2 (S.D. W.Va. 2010) (recognizing removal before service as proper; plaintiffs did not seek remand)

A few observations.  First, in some of these cases the removing defendant was actually served first, and took advantage of the plaintiff’s delay in serving the would-be forum defendant.  In others the removing defendants learned about the litigation, in one way or another, before anyone had been served.  We don’t think the distinction matters because the statute doesn’t distinguish between the two situations.  Obviously, the Hawkins court (but not much else) does.

Second, we note with some satisfaction that more than half of the cases we’re seeing on removal before service don’t involve drugs and devices.  We’re glad to see other defendants jumping on the bandwagon.  When everybody relies upon removal before service, it gets harder for the other side to characterize it as some sort of procedural gimmick that shouldn’t be allowed.

Third, we also came across a useful law review article on the subject, M. Curry, “Plaintiff’s Motion To Remand Denied: Arguing For Pre-Service Removal Under The Plain Language Of The Forum-Defendant Rule,” 58 Clev. St. L. Rev. 907 (2010), which marshals the arguments in favor of pre-service removal, and critiques the arguments against.

We also found a decision that demonstrates how removal before service can have collateral benefits, although a screw-up by the other side is necessary.  In In re Trasylol Products Liability Litigation, 2011 WL 830287 (S.D. Fla. March 8, 2011), the defendant successfully removed some cases before service, and (we assume) won the removal before service argument as remand was denied.  After that, the plaintiffs apparently fell asleep at the switch.  After losing the remand motion, they never bothered to complete service against anybody.  After time passed (enough for the statute of limitations to run), the defendant pounced on this error, and moved to dismiss – again successfully.  Removal before service didn’t in any way prevent these plaintiffs from doing what any competent plaintiff should do, and complete service after removal:

[I]t is undisputed that Plaintiffs have never perfected service. . . .  The issue thus boils down to whether [defendant] has waived the defense of lack of personal jurisdiction by its conduct of this litigation.  I find that [it] has not.  While [the] strategy of removing this case to federal court before service could be perfected certainly rises to the level of “legal gamesmanship,” it does not constitute “overt wrongdoing,” an attempt to “avoid service,” or a general appearance in the case sufficient to forfeit the defense.

2011 WL 830287, at *6.  Dismissal for failure to perfect service is not something one wishes to discuss with ones client.

Thus, in courts that follow the plain meaning of §1441(b) in removal before service cases, smart defendants should be making sure that the plaintiffs in fact do complete service.  Plaintiffs have 120 days to do this under Rule 4(m).  After that, it’s open season for dismissal.  However, even smarter defendants, as in Trasylol, make sure to wait until after the statute of limitations has run.

But we have to say that plaintiffs aren’t the only ones who do dumb things.  Removal before service can only be used to obtain jurisdiction in a truly diverse case – one that could have been brought in federal court in the first instance.  Hair-trigger removal only provides a way around the forum defendant rule (that even diverse cases aren’t removable where the defendant is sued in its home court), but not around a fundamental lack of diversity.  Removal before service of a non-diverse case (where the plaintiff and at least one of the defendants are citizens of the same state) can’t create federal jurisdiction.  E.g., Jennings-Frye v. NYK Logistics Americas Inc., 2011 WL 642653, at *3-4 (C.D. Cal. Feb. 11, 2011) (“case law is clear that a defendant who is a citizen of plaintiff’s state destroys complete diversity, regardless of whether that defendant was properly served prior to removal”); Smith v. Federal Express Corp., 2010 WL 3634347, at *3 (E.D. Mich. Sept. 14, 2010) (“including the unserved defendant, destroys diversity and eliminates this Court’s jurisdiction”); O’Brien v. Cessna Aircraft Co., 2010 WL 4721189, at *15 (D. Neb. July 21, 2010) (“Diversity of citizenship among the parties is determined . . . regardless of whether each party has been served at the time of removal”).

This is pretty basic 1-L civil procedure, so we don’t recommend removing a non-diverse case just because the plaintiff hasn’t gotten around to serving the non-diverse defendant.  For one thing, it could lead to fee-shifting sanctions, and telling a client it has to pay the other side’s lawyers is also something unpleasant.  But more fundamentally, even if the plaintiff is asleep at the switch, it’s not a good idea to remove a non-diverse case.  There’s no subject matter jurisdiction, and subject matter jurisdiction can be challenged at any time.  That means that a defendant removing a non-diverse case for lack of service on a non-diverse defendant could end up spending a lot of time and effort litigating a case to a favorable result, and have everything taken away when the plaintiff finally wakes up (or a court sua sponte raises subject matter jurisdiction).

Overall, we’d have to say based on our review, that removal before service is alive and well, and that the good guys – the “plain meaning” argument – seem to have the upper hand at the moment.  The dispute is likely to continue for some time, because remand orders are not appealable, and removal by definition takes place at the outset of the case.  Even if somebody were inclined to challenge a successful removal on appeal long after the fact, that’s still in the future.