A U.S. court of appeals affirmed the use of “snap removal” by an out-of-state defendant to remove a state court case to federal court before service on two in-state defendants. Normally, under the local defendant rule, removal to federal court is not permitted where a defendant is a citizen of the forum state. Relying on the plain language of 28 U.S.C. § 1441(b)(2), which limits the forum defendant rule to parties “properly joined and served,” the U.S. Court of Appeals for the Fifth Circuit in Texas Brine Company, L.L.C. v. American Arbitration Association, Inc. held that an out-of-state defendant served with process can immediately remove to federal court before in-state defendants are served.
Local Defendant Rule Does Not Apply Until Service on a Local Defendant
In the Texas Brine Co. case, one of the parties to an arbitration claimed that two arbitrators hid conflicts of interest. As a result, a Louisiana state court vacated the arbitration award. The losing party then filed suit in Louisiana state court seeking damages against one out-of-state defendant and two in-state defendants. The out-of-state defendant was served first, and immediately removed to federal court before service on in-state defendants. The plaintiff moved to remand. The district court denied remand and the court of appeals affirmed.
The appellate court noted that “[w]hen the plain language of a statute is unambiguous and does not lead to an absurd result, our inquiry begins and ends with the plain meaning of that language.” Turning to the text of the statute, the court held that “[b]y its text, then, Section 1441(b)(2) is inapplicable until a home-state defendant has been served in accordance with state law; until then, a state court lawsuit is removable under Section 1441(a) so long as a federal district court can assume jurisdiction over the action.”
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