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The Role of Equity and Fairness in Determining the Propriety of Removal

Mark Winebrenner

Summary

  • Removing a case to federal court can significantly impact the outcome for defendants, so a solid removal strategy is crucial, and defendants should invest early to secure a federal forum and oppose remand when necessary.
  • Plaintiffs may try to prevent or delay removal to federal court, potentially engaging in bad-faith actions.
  • Courts may prevent plaintiffs from seeking remand if their bad-faith behavior creates defects in removal, emphasizing the importance of equity and fairness.
  • Defendants have a statutory right to remove cases to federal court if there is original jurisdiction but must comply with time-based limitations and other statutory constraints. 
The Role of Equity and Fairness in Determining the Propriety of Removal
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Removing a case to federal court can be a game-changing maneuver for defendants. Particularly in the context of so-called “judicial hellhole” state court jurisdictions, cases can be won or lost, and exposure can rise or fall, based on whether the case is litigated in a state or federal forum. Accordingly, for cases filed originally in state court, a sound removal strategy can pay dividends, and defendants should be willing to invest early to secure a federal forum and oppose remand where the circumstances warrant it.

Plaintiffs have incentives to seek remand of removed actions and from time to time may be tempted to take steps to even prevent removal or induce delay such that removal may ultimately become untimely or improper. To the extent such behavior is in bad faith and creates a defect in removal, defendants are well advised to take note: equity and fairness do matter, and courts may preclude plaintiffs from seeking remand of cases based on defects that their own bad-faith actions create. 

Removal and Its Limitations

Unless excepted by statute, a defendant has a right to remove “any civil action brought in a State court of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). Thus, the first requirement for any case to be removed is that the federal court must have subject matter jurisdiction. See 28 U.S.C. §§ 1331, 1332.

Subject matter jurisdiction aside, the removal statutes prescribe various limitations on when and under what circumstances cases can be removed. Some are time-based. For example, a defendant generally has only 30 days to file a notice of removal following its initial receipt of the complaint, unless the action as originally pled was not removable. In that case, the defendant has 30 days following receipt of a qualified “other paper” that transforms the action into one that can be removed. See 28 U.S.C. § 1446(b). Separately, for diversity cases, a defendant generally cannot remove an action more than one year after commencement, except in cases of “bad faith.” See 28 U.S.C. § 1446(c)(1) (amendment effective Jan. 6, 2012). Nor can a defendant remove a diversity case if any of the named defendants (1) is a citizen of the state in which the action was brought and (2) has been “properly joined and served” at the time of removal. 28 U.S.C. § 1441(b)(2).

Unlike subject matter jurisdiction—which is an absolute prerequisite to litigation in federal court—statutory removal limitations are non-jurisdictional in nature and can be waived. See Baris v. Sulpicio Lines, 932 F.2d 1540, 1543–44 (5th Cir. 1991) (“The plaintiffs have confused improper removal (i.e., lack of removal jurisdiction) with lack of original subject matter jurisdiction. The former is waivable; the latter is not.”) (citing cases); Ariel Land Owners, Inc. v. Dring, 351 F.3d 611, 614 (3d Cir. 2003); Farina v. Nokia, Inc., 625 F.3d 97, 114 (3d Cir. 2010). A party’s waiver can manifest by express consent or simply by the failure to file a timely motion to remand. See Denman v. Snapper Div., 131 F.3d 546, 548 (5th Cir. 1998) (“the presence of an in-state defendant is a procedural defect that is waived unless raised within thirty days of removal”).

The Role of Equity and Fairness in Applying Statutory Limitations to Removal

Statutory removal limitations can be not only waived but also barred through operation of equitable principles where the circumstances warrant it. For example, the doctrine of equitable estoppel can preclude a plaintiff from seeking remand based on removal defects caused by that plaintiff’s own bad-faith actions. Pursuant to this doctrine, courts have “power to control impermissible forum manipulation where the defendant’s failure to get into federal court is a procedural problem caused by the acts of the plaintiff.” Kinabrew v. Emco-Wheaton, Inc., 936 F. Supp. 351, 353 (M.D. La. 1996) (citing Brown v. Demco, Inc., 792 F.2d 478 (5th Cir. 1986); Doe v. Kerwood, 969 F.2d 165, 169 (5th Cir. 1992)); see also Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 233 (3d Cir. 1995) (“[T]he district court can consider whether the plaintiff has engaged in any manipulative tactics. Therefore, an effort by the plaintiff to manipulate the forum should be considered along with other factors in the decision whether to remand.”).

In Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th Cir. 2003), for example, the Fifth Circuit precluded the plaintiff from seeking remand based on the one-year time limitation for removal. There, the plaintiff filed suit against several defendants in state court, including one non-diverse defendant. After discovering the non-diverse party was improperly named, the defendants informed the plaintiff of their intention to remove, and within hours, the plaintiff added a second non-diverse defendant. The plaintiff then signed and post-dated a notice of non-suit as to that non-diverse defendant before the one-year period expired, but did not file the notice until after the one-year period passed. After receipt of the notice of non-suit, the defendants removed even though the one-year time limit for removal had expired. Given clear evidence of forum manipulation, the Fifth Circuit equitably estopped the plaintiff from seeking remand based on the delay in removal. Id. at 425. The court held that “where a plaintiff has attempted to manipulate the statutory rules for determining federal removal jurisdiction, thereby preventing the defendant from exercising its right, equity may require that the one-year limit in § 1446(b) be extended.” Id. at 428–29.

Courts have likewise applied equitable estoppel to preclude remand where plaintiffs have made bad-faith representations or agreements that induced a defendant’s delay or otherwise caused defendants to remove in an untimely fashion. The district court’s analysis in Staples v. Joseph Morton Co., 444 F. Supp. 1312 (E.D.N.Y. 1978), exemplifies this approach. There, the plaintiff filed suit against multiple defendants, including a federal government employee (Wiggin). Shortly after filing, the plaintiff’s attorney agreed with Wiggin’s defense counsel to discontinue the action against Wiggin and obtained the consent of all parties for the discontinuance. Relying on the agreement to discontinue, Wiggin’s counsel did not remove the action to federal court within the 30 days allowed (having been led to believe his client would be dismissed). But after the deadline to remove expired, the plaintiff’s counsel conveyed (contrary to his earlier agreement) that he would not be filing the discontinuance. When Wiggin removed the case after the 30-day deadline passed, the plaintiff moved to remand, and the district court denied the motion:

I conclude that plaintiff is estopped from including the period between October 20 and November 21 in calculating the time which elapsed before the removal petition was filed. During that period, defendant Wiggin did not remove the action to federal court, relying upon plaintiff’s agreement to discontinue the action. . . . Plaintiff, having decided not to proceed with the agreed discontinuance, may not now assert the inaction of defendant Wiggin.

Id. at 1314.

Other courts have similarly recognized that, where a plaintiff’s misleading representations induced a defendant not to take timely action to remove a case to federal court, that plaintiff may be estopped from relying on that untimeliness in seeking remand. See, e.g., Sterling v. LivaNova Holding, USA, Inc., MDL No. 2816, 2021 U.S. Dist. LEXIS 225175, at *17–18 (M.D. Pa. Nov. 22, 2021) (“[P]laintiff engaged in Janus-faced gamesmanship. . . . The court will not countenance such underhanded conduct by remanding the case to state court.”); Hall v. Medeco Sec. Locks, No. 96-1016, 1997 U.S. Dist. LEXIS 12718, at *4 (W.D. Va. Mar. 26, 1997) (“As long as the plaintiff does not mislead the defendant into thinking that ‘the pleading has not been filed or will not be filed,’ the defendant is required to remove within thirty days of receiving a copy of the pleading.”) (quoting Moore v. K-Mart Corp., No. 94-0057, 1994 U.S. Dist. LEXIS 19584, at *6 (W.D. Va. Dec. 15, 1994)).

Conclusion

Defendants should recognize the role that equity and fairness play in litigating the propriety of removal. To the extent a defendant’s removal is rendered untimely or otherwise defective by operation of the bad-faith actions of an adversary, defense counsel should consider an appeal to equitable principles to oppose any motion to remand and maintain the federal forum. 

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