September 01, 2020 Articles

Federal Appellate Courts Provide Needed Guidance on Removal to Federal Court

The question is whether a home-state defendant who has not yet been served is permitted to remove.

By Allison W. Reimann and Deborah Machalow
There is better support than ever for defendants considering snap removal.

There is better support than ever for defendants considering snap removal.

A civil action brought in state court over which a federal district court would have jurisdiction may generally be removed by a defendant to the district court where the state action is pending. 28 U.S.C. § 1441(a). However, when the only basis for federal jurisdiction is diversity of citizenship, removal is not permitted “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.” 28 U.S.C. § 1441(b)(2). This is the “forum defendant rule,” which has been understood to prevent a home-state defendant from removing to federal court based solely on diversity. (Although diversity jurisdiction is commonly understood to protect out-of-state parties from local bias of state courts, home-state defendants may prefer to litigate in a federal forum for any number of reasons, including familiarity with federal judges or federal rules, favorable federal precedent, geographic convenience, or simply gamesmanship.)

By its terms, the forum defendant rule only applies to defendants who are “properly joined and served,” raising the question of whether a home-state defendant who has not yet been served—whether due to the plaintiff’s delay, unique state-law service requirements, or other reasons—is permitted to remove. This question has pitted the plain language of the statute against myriad policy concerns, including avoiding a potentially unseemly race by home-state defendants to remove before service, sometimes only a few hours after filing—a tactic referred to as “snap” removal. Lacking guidance from the circuit courts, federal district courts have split on this question for years—even within individual districts.

Although the forum defendant rule has been on the books since 1948, until relatively recently no federal appellate court had definitively ruled on whether removal to federal court is permissible if the forum defendant has not been served. However, in the last two years, the Second, Third, and Fifth Circuit Courts of Appeal have reached this issue; and all three have adopted the literal interpretation of the statute, allowing removal if the forum defendant has not yet been served. The Tenth Circuit may soon weigh in as well. This procedural quirk also now has garnered congressional attention.

The following explores federal district courts’ divergent interpretations of the forum defendant rule, the rationale of the recent appellate decisions permitting removal before service based on the plain language of the statute, an overview of proposed federal legislation to amend the removal statute, and practice considerations for counsel in light of these recent developments. 

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