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«THE TIMELINESS OF REMOVAL AND MULTIPLE-DEFENDANT LAWSUITS Paul E. Lund∗ Although the procedure for removing cases from state to federal court has ...»

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Paul E. Lund∗

Although the procedure for removing cases from state to federal court

has existed for nearly 225 years, removal remains one of the most

controversial aspects of federal jurisdictional law. Each year, more than

30,000 civil cases are removed from state to federal court, and many of those cases involve more than one defendant. One of the most frequently litigated issues in these cases has involved when the notice of removal must be filed. Prior to a recent amendment, the statute governing removal, 28 U.S.C. § 1446(b), required that a notice of removal be filed within thirty days of service on “the defendant.” Case law also requires all defendants to join in the notice of removal. The issue thus arose: when must the notice of removal be filed if the case involves multiple defendants who were served on different dates? The federal appellate courts have been sharply divided on this issue, with three very differing interpretations of the statute.

This article offers a critical analysis of all three strands of the case law, including three 2011 decisions by federal courts of appeals that take opposing views on the issue. After examining the rationale for each approach, I argue that the rule adopted by the Fourth Circuit—the so- called intermediate rule—offers the best fit with the statute’s language and policy and should be followed in any case governed by former Section 1446(b).

I also examine legislation recently enacted by Congress, the Federal Courts Jurisdiction and Venue Clarification Act of 2011, which has amended Section 1446(b) and codified one of the competing rules, the last- served defendant rule. I identify problems that permanent adoption of this rule will bring about, including significant delays that will occur in some cases in resolving the proper forum. I also identify ambiguities that the new law may create and suggest ways the courts might address those new interpretative issues.

∗Associate Professor, Charleston School of Law. J.D. 1985, Florida State University College of Law; LL.M. 1991, Yale Law School. Thank you to Ryan Andrews, Charleston School of Law Class of 2013, for his valuable research assistance. This article is dedicated to the memory of my father, Robert Andrew Lund.

8 LUND (DO NOT DELETE) 3/14/2012 3:19 PM 2012] REMOVAL OF MULTIPLE-DEFENDANT SUITS 51 I.  Introduction

II.  The Statutory Scheme Governing Removal

A.  The Theory and Availability of Removal

B.  Removal Procedure and the Procedural Limitations on Removal

C.  The Supreme Court’s Interpretation of Section 1446(b) in Murphy Brothers

III.  Former Section 1446(b) and Its Application in MultipleDefendant Cases

A.  The Conflicting Interpretations of Section 1446(b)’s Former Language

1.  The Fifth Circuit and the First-Served Defendant Rule

2.  The Last-Served Defendant Rule

3.  The Fourth Circuit and the Intermediate Rule.............76  B.  The Fourth Circuit’s Intermediate Rule Offers the Best Fit With Former Section 1446(b)

1.  The Intermediate Rule Is the Most Faithful Reading of Former Section 1446(b)’s Text.................84 

2.  The Intermediate Rule Advances the Policies of the Removal Statutes and of Former Section 1446(b).......89  IV.  The Recent Legislative Amendment of Section 1446(b).........95  A.  The ALI’s Federal Judicial Code Revision Project...........96  B.  The Federal Courts Jurisdiction and Venue Clarification Act of 2011

C.  The Codification of the Last-Served Defendant Rule Will Bring About Needless Delays and Will Create New Ambiguities in the Statute

V.  Conclusion

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I. INTRODUCTION Removal of cases from state to federal court is one of the most controversial and contentious aspects of federal jurisdictional law. 1 In recent years, one of the most divisive—and most litigated—issues regarding removal has concerned when a notice of removal must be filed in a case featuring more than one defendant. 2 The federal courts of appeals have been hopelessly divided on this issue, with three very different rules in play. 3 In just 2011 alone, three circuits weighed in on the issue, with the Third Circuit and the Ninth Circuit adopting one rule 4 and the Fourth Circuit, in a divided en banc ruling, maintaining its support for a much different rule. 5 This divide and impasse arose from the language of 28 U.S.C.

§ 1446(b), which imposes a thirty-day time limit on removal. 6 Prior to a 1 See 16 JAMES WM. MOORE, MOORE’S FEDERAL PRACTICE § 107.03, at 107-20 (3d ed.

2011) (stating that of the three ways to invoke federal jurisdiction—by filing in federal court, by removal, or by seeking federal-court review of a state judgment—removal “is the most peculiar and difficult of the three”); Scott Dodson, In Search of Removal Jurisdiction, 102 NW. U. L. REV.

55, 57 (2008) (noting that “the removal provisions are a convoluted scheme that lacks a single, uniform historical pedigree of consistent jurisdictional treatment”).

Each year since 2007, more than 30,000 civil cases have been removed from state to federal court, comprising nearly fifteen percent of the federal courts’ new civil cases annually. See ADMIN. OFFICE OF THE U.S. COURTS, ANNUAL REPORT OF THE DIRECTOR 50, Table S-7 (2010).

The total number of civil cases removed in 2010 was 31,341, as compared with 190,543 original filings. Id. For an interesting study of the factors that influence decisions to remove a case, see Neal Miller, An Empirical Study of Forum Choices in Removal Cases Under Diversity and Federal Question Jurisdiction, 41 AM. U. L. REV. 369 (1992). For analysis of whether removal improves defendants’ chance of prevailing, see Kevin M. Clermont & Theodore Eisenberg, Do Case Outcomes Really Reveal Anything About the Legal System? Win Rates and Removal Jurisdiction, 83 CORNELL L. REV. 581 (1998).

2 This article will focus on decisions by the federal circuit courts of appeals. For citation and discussion of the many district court opinions on this issue, see 14C CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE § 3731, at 479–617 (2009 & Supp. 2011); Brian Sheppard, Annotation, When Does Period for Filing Petition for Removal of Civil Action from State Court to Federal District Court Begin to Run Under 28 USCS § 1446(b), 139 A.L.R. FED.

331, 458–68 (1997 & Supp. 2010–11).

3 See infra Part III.

4 Delalla v. Hanover Ins., 660 F.3d 180, 189 (3d Cir. 2011) (adopting the last-served defendant rule); Destfino v. Reiswig, 630 F.3d 952, 956 (9th Cir. 2011) (also adopting the lastserved defendant rule).

5 Barbour v. Int’l Union, 640 F.3d 599, 613 (4th Cir. 2011) (en banc) (reaffirming, by 7-5 vote, use of the intermediate rule).

6 See 28 U.S.C. § 1446(b) (2006).

8 LUND (DO NOT DELETE) 3/14/2012 3:19 PM 2012] REMOVAL OF MULTIPLE-DEFENDANT SUITS 53 recent statutory amendment, Section 1446(b) spoke only in the singular, stating that “the defendant” shall file its notice of removal within thirty days of service. 7 In cases of multiple defendants, the courts have interpreted the removal statutes to require unanimous consent to removal by each

defendant. 8 The problem arose, however, with the thirty-day time limit:

how did the limitation apply when a case involved two or more defendants who received service of process on different dates?

Three distinct interpretations of former Section 1446(b) emerged. 9 The Fifth Circuit adopted the most restrictive view. 10 The Fifth Circuit’s interpretation—known as the first-served defendant rule—requires that a notice of removal be filed within thirty days of service on the first defendant to be served, and further requires all other defendants who have been served by that date to join in the notice of removal. 11 Under this rule, subsequently served defendants may have a very short time frame in which to decide on removal. 12 At the other end of the spectrum, several circuits— including the Sixth, the Eighth, the Eleventh, and, as of 2011, the Third and the Ninth—have adopted the most liberal interpretation of former Section 1446(b), referred to as the last-served defendant rule. 13 Under this interpretation, the time deadline for removal does not begin to run until the last defendant has been served, and removal is proper as long as all defendants join in or consent to removal within thirty days of service on the 7 See id. (“The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based....”).

For the full text of this statute, see infra text accompanying note 49.

As a matter of terminology, I will refer to the pre-amendment version of the statute as “former Section 1446(b)” and to the amended version of the statute as “new Section 1446(b)(2)” or “amended Section 1446(b)(2).” 8 See infra notes 44–47 and accompanying text (discussing the rule of unanimity).

9 Compare Brown v. Demco, Inc., 792 F.2d 478, 481 (5th Cir. 1986) (adopting the firstserved defendant rule), with Bailey v. Janssen Pharmaceutica, Inc., 536 F.3d 1202, 1203 (11th Cir.

2008) (adopting the last-served defendant rule), and Barbour, 640 F.3d at 613 (reaffirming use of the intermediate rule).

10 See Brown, 792 F.2d at 481 (holding that if the first-served defendant fails to remove, for any reason, subsequent defendants are barred from seeking removal).

11 See infra notes 78–104 and accompanying text.

12 See Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1263 (5th Cir. 1988) (“It follows that since all served defendants must join in the petition, and since the petition must be submitted within thirty days of service on the first defendant, all served defendants must join in the petition no later than thirty days from the day on which the first defendant was served.”).

13 See infra notes 106–137 and accompanying text.

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last defendant. 14 In 2011, the Fourth Circuit reaffirmed its use of yet a third rule. 15 Under the Fourth Circuit’s interpretation—known as the intermediate rule—removal is proper as long as the first-served defendant files a notice of removal within thirty days of service and each later-served defendant joins in the notice of removal within thirty days of its respective service. 16 This rule is somewhat more generous than the first-served defendant rule, because it gives each defendant a full thirty days in which to decide whether to join in the notice of removal; however, the intermediate rule still requires the first-served defendant to file for removal within thirty days of service on that defendant, and the case will not be removable if that defendant fails to do so. 17 With this seemingly irreconcilable three-way split, defendants in any of the federal circuits that had not addressed the timing issue faced a great deal of uncertainty. Commentators predicted that the Supreme Court ultimately would be called upon to resolve this split. 18 Several differing proposals to clarify the statutory language through legislative amendment also were made. 19 After a number of prior unsuccessful attempts, Congress, as part of the Federal Courts Jurisdiction and Venue Clarification Act of 2011, recently amended Section 1446(b) and legislatively adopted the last-served defendant rule. 20 This legislation applies only to cases commenced after its date of enactment, however, and thus does nothing to resolve the uncertainty and split as to proper 14 See Destfino v. Reiswig, 630 F.3d 952, 956 (9th Cir. 2011).

15 Barbour v. Int’l Union, 640 F.3d 599, 613 (4th Cir. 2011).

16 See infra notes 138–196 and accompanying text.

17 See Barbour, 640 F.3d at 613.

18 See, e.g., 16 MOORE, supra note 1, § 107.30[3][a][iv][C], at 107-190.24(1) to 107-190.25 (predicting that the Court “may well, and should,” adopt the last-served defendant rule).

19 See infra Part IV (discussing the recent legislative amendment). The American Law Institute (ALI) proposed that the statute be amended to codify the first-served defendant rule. See AM. LAW INST., FEDERAL JUDICIAL CODE REVISION PROJECT § 1446(b)(1) (2004) [hereinafter FJC PROJECT], discussed infra at notes 261–273 and accompanying text. The ALI’s proposal would allow some leeway, though, for judges to make exceptions to the rule. See id. § 1446(b)(3), discussed infra at notes 270–273 and accompanying text. The Judicial Conference of the United States, however, recommended legislative adoption of the last-served defendant rule, and all of the subsequent bills introduced in Congress conformed to this recommendation. See infra notes 274– 305.

20 Federal Courts Jurisdiction and Venue Clarification Act of 2011, Pub. L. No. 112-63, § 103(b)(3)(B), 125 Stat. 758 (enacted Dec. 7, 2011) (to be codified at 28 U.S.C. § 1446(b)(2)).

8 LUND (DO NOT DELETE) 3/14/2012 3:19 PM 2012] REMOVAL OF MULTIPLE-DEFENDANT SUITS 55 interpretation of the former statutory language. 21 Moreover, the new clarifying language creates new ambiguities in the statute for the courts to address in future cases. 22 This Article has two overall goals. First, by reviewing former Section 1446(b) and the conflicting interpretations of its language, I hope to suggest which interpretation is most consistent with the statute’s language and policy. Second, I hope to identify any problems with the recent legislative adoption of the last-served defendant rule.

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