In December 2011, Congress passed and President Obama signed into law the Federal Courts Jurisdiction and Venue Clarification Act of 2011, substantially changing certain federal jurisdictional statutes. Specifically, among other changes, Congress clarified the rules regarding the time for removal in cases involving multiple defendants (28 U.S.C. § 1446(b)), codified certain changes related to the amount-in-controversy requirement (28 U.S.C. § 1446(c)), and stripped the federal district courts’ ability to exercise jurisdiction over state law claims not within their original or supplemental jurisdiction (28 U.S.C. § 1441(c)).
Time for Removal. The most important changes for product manufacturers relate to the time of removal under § 1446. The previous language of § 1446(b), which referenced “the defendant,” created a circuit split on the question of which defendant’s service of the complaint triggered the 30-day removal period. Some courts followed the “first-served” rule, mandating that each defendant had 30 days from the date on which the first defendant was served to file a notice of removal. Other courts followed the “later-served” rule, granting each defendant 30 days to file for removal after service on that defendant. Congress chose the later-served rule.
The amended § 1446(b)(2)(B) specifies that each defendant has “30 days after receipt by or service on that defendant of the initial pleading or summons … to file the notice of removal” (emphasis added). Therefore, Congress resolved the circuit split – each defendant has 30 days to remove from its own receipt of the complaint. Moreover, the amendment codifies the judicially created “rule of unanimity,” specifying that each defendant who has been properly joined and served must join in or consent to removal. 28 U.S.C. § 1446(b)(2)(A), (C).
Congress also added subsection 1446(c)(1), which allows for removal of an action after one year if the “district court finds that the plaintiff acted in bad faith in order to prevent a defendant from removing the action.” Bad faith includes situations in which the plaintiff deliberately concealed the amount in controversy to prevent removal. 28 U.S.C. § 1446(c)(3)(B).
Amount in Controversy. Congress also addressed issues relating to uncertainty regarding the amount in controversy, creating an exception to the general rule that the amount demanded in the initial pleadings is the amount in controversy. The new rule permits the district court to consider facts in addition to the sum demanded in the initial pleading, including discovery and other pleadings in the state case, and accept removal if it finds, by a preponderance of the evidence, that the amount-in-controversy requirement has been met. 28 U.S.C. § 1446(c)(2) and (3).
Jurisdiction Restricted. Additionally, Congress restricted the jurisdiction of federal courts to hear unrelated state law claims in cases removed based on a federal question. The previous version of 28 U.S.C. § 1441(c) allowed for removal of the entire case whenever an independent federal question claim was joined with one or more nonremovable claims, and it granted the district court discretion to retain jurisdiction over the whole case or to remand all claims in which state law predominated. As amended, § 1441(c) still allows the removal of any case involving a federal question but requires that the district court sever and remand any unrelated state law claims. 28 U.S.C. § 1441(c)(2). There is no indication that Congress intended to alter a district court’s ability to exercise supplemental jurisdiction over substantially related state law claims under 28 U.S.C. § 1367. Nevertheless, defendants must give greater consideration to the possibility of dual civil actions when removing a case with both federal and state law claims.
The act also amended the rules regarding venue (28 U.S.C. §§ 1391 and 1392) and citizenship for foreign corporations and resident aliens for purposes of diversity jurisdiction (28 U.S.C. § 1332).