Resident Defendant Exception for Removal: A Clever Move or Legal Gamesmanship?

An obscure wrinkle found in 28 U.S.C. § 1441(b) provides the opportunity for resident defendants to remove to federal court before being served with the complaint. Litigators are familiar with the general rule that even where diversity of citizenship exists, a defendant cannot remove a case to federal court if one of the parties “properly joined and served” as a defendant is a citizen of the state in which the case was filed. 28 U.S.C. § 1441(b). This limitation on removal is generally referred to as the resident defendant rule or forum defendant rule. The theory behind the rule is that “[r]emoval based on diversity is intended to protect out-of-state defendants from possible prejudices in state court.” Lively v. Wild Oats Mkts., Inc., 456 F.3d 933, 940 (9th Cir. 2006). “The need for such protection is absent . . . in cases where the defendant is a citizen of the state in which the case is brought.” Id.