For years, it had been relatively axiomatic that a defendant has two windows of time in which to remove an action to federal court: (1) within 30 days of service of the complaint; or (2) within 30 days of defendant’s receipt of an “other paper” from which the defendant could first ascertain that the case was removable to federal court. But a June 27 decision from the Ninth Circuit in Roth v. CHA Hollywood Medical Center, L.P., 2013 WL 3214941 (9th Cir. June 27, 2013) turned that notion on its head. Reversing the district court, the Ninth Circuit held that where the complaint was “indeterminate” as to whether there was a basis for federal jurisdiction, a defendant could conduct its own investigation to determine whether the case was removable to federal court and remove on its own timetable.
In Roth, a putative wage and hour class action, the first amended complaint (which added a defendant, among other amendments) did not facially indicate whether there was the requisite diversity of citizenship, or whether the requisite amount in controversy had been satisfied, for the case to be removable under the Class Action Fairness Act (CAFA). More than 100 days after the filing of that complaint and 75 days after service of that complaint was effective, the action was removed to federal court by the newly named defendant.
And the basis for removal? After receiving the amended complaint, the newly named defendant conducted its own due diligence into the citizenship of employees who were putative class members in this wage and hour class action. It learned that at least one of the putative class members was a citizen of Nevada, creating the requisite minimal diversity for a removal under CAFA. It obtained a declaration from the employee to that effect. In addition, the defendant submitted declarations from its VP of Human Resources and General Counsel that the amount in controversy exceeded CAFA’s jurisdictional minimum of $5M. (As an aside, and although apparently not raised by the parties, neither the district court nor the Court of Appeals found contacting putative class members regarding the subject of a class action prior to class certification to be improper.)
Plaintiffs moved to remand arguing, among other grounds, that the removal was untimely because it was effectuated more than 30 days after service of the amended complaint and defendant had not received an “other paper” from plaintiff providing a basis for removal. The district court agreed and granted remand. Because the action was removed under CAFA, defendant sought an interlocutory appeal from the grant of remand. On appeal, the Ninth Circuit reversed. The court held that “a defendant who has not lost the right to remove because of a failure to timely file a notice of removal under § 1446(b)(1) or (b)(3) may remove to federal court when it discovers, based on its own investigation, that a case is removable.” So long as the plaintiff did not serve, or provide defendant with, a document evidencing that the case was or had become removable, there is nothing that prevents a defendant from finding its own evidence to support removal beyond the usual 30 day window for removal.
Significantly, the Ninth Circuit recognized that its holding could result in a defendant strategically delaying removal until an advantageous time in the proceeding, particularly in a removal under CAFA, which is not subject the general one year limitation on diversity-based removals. If plaintiff wants to prevent such a result, the Ninth Circuit noted, it should provide defendant with the basis for removal in order to trigger the 30-day window for removal. (The Ninth Circuit remanded the case to the district court for further proceedings to determine whether an exception to CAFA jurisdiction applied.)
The takeaway from this important decision advancing the removal rights of defendants is that a defendant should not sit idly by where a case is not removable on its face. A bit of proactive “self-service” investigation, can go a long way in making an otherwise unremovable case, removable. At a minimum, under the Ninth Circuit’s decision in Roth, a defendant need not be constrained solely by materials served on it by a plaintiff in determining the removability of a case. Most importantly, the removal may be on defendant’s own timetable, rather than one set by plaintiff.