Defendants get accused of using snap removals as some sort of nefarious litigation tactic to thwart the forum defendant rule and drive cases into federal court. But all defendants do when they “snap” remove, is follow the law as written. In case you are new to this area of the law, we will stop here for some background. Pursuant to 28 U.S.C. §1332, federal courts can exercise jurisdiction over cases where the amount in controversy exceeds $75,000 and the dispute is between citizens of different states. That’s diversity jurisdiction. If a plaintiff files suit in state court and the above conditions are met, defendants can remove the case to federal court. However, a civil action otherwise removable on the grounds of diversity “may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. §1441(b)(2)(emphasis added). That’s known as the forum defendant rule. So, Plaintiff from State A sues Defendant from State B in State A – removable. Plaintiff from State A sues Defendant from State B in State B – not removable if Defendant has been served. If Defendant learns about the lawsuit before being served, the plain language of the statute allows that defendant to remove the case.
Plaintiffs claim that with the advent of electronic filing and dockets and other technological advances, snap removal is an improper maneuver and urge courts to read into the statute language that would prohibit pre-service removal or at least delay it. But it is not up to the courts to amend statutes. Their role lies in interpreting and applying and the appellate courts to have considered the issue have interpreted the forum defendant rule by its plain language. Today’s case happens to be from one of the circuits to have ruled on the issue – the Third Circuit. So, there is no question that in federal court in Pennsylvania, pre-service or snap removal is permitted and not a ground for remand. What is not permitted is subterfuge by plaintiff to try to avoid it.
Plaintiff in Sterling v. LivaNova Holding, USA, Inc., 2021 U.S. Dist. LEXIS 225175 (M.D. Pa. Nov. 22, 2021) claims that defendants’ device used during his heart surgery had design and manufacturing defects that led to his injuries and the need for additional surgery. Id. at *6. Before filing suit, plaintiff’s counsel notified defendants of the potential lawsuit and shortly thereafter the parties entered into a tolling agreement. By the terms of the agreement, plaintiff was to refrain from filing suit in exchange for defendants’ agreement to toll the running of the statute of limitations. The agreement was in place for almost one year when it terminated on October 30, 2020. Plaintiff filed his lawsuit in state court in Texas, one of the defendants’ home states, on November 24, 2020. Defendants removed the case, pre-service, the following day. Two days later, plaintiff voluntarily dismissed his complaint without prejudice. Id. at *7-8. And then this happened . . .
The same day plaintiff voluntarily dismissed his case, plaintiff’s counsel contacted defense counsel and asked if defendants would agree to reinstate the tolling agreement until December 31, 2020. Defendants agreed. Id. at *9. That meant plaintiff agreed not to file suit before December 31st and the statute of limitations remained tolled during that period. But, just a few hours after asking for the tolling agreement, plaintiff was attempting to file a new complaint in Texas state court. Due to a court holiday, the new complaint did not get filed on the docket until two days later – by now we are up to November 30th. Because of the tolling agreement, defendants had suspended daily monitoring of the docket and so were not alerted to the new complaint until December 1st, at which time they promptly removed. They learned after filing the removal that the complaint had been served 15 minutes earlier. Id. at *9-10. Plaintiff moved on December 7th to remand. On December 10th, plaintiff sought leave to file an amended complaint adding a new defendant. That motion was granted. Defendants responded to the motion to remand “asserting that plaintiff’s conduct in reinstating—and promptly violating—the parties’ tolling agreement should preclude remand.” Id. at *10. Nothing more happened in the case until it was transferred to MDL 2816 in the Middle District of Pennsylvania. The MDL court asked for supplemental briefing on the motion to remand applying Third Circuit law. Id. at *11.
Here we are almost exactly one year since defendants opposed remand on the basis of plaintiff’s bad faith and at no point did plaintiff respond to or attempt to refute that argument. Plaintiff focused exclusively on service occurring minutes before the filing of the notice of removal as his having successfully prevented a second snap removal – by breaching the tolling agreement. In fact, the reinstatement of the tolling agreement was a “glaring omission in plaintiff’s papers.” Id. at *14. After one year and multiple rounds of briefing,
defendants’ lead argument in favor of this court exercising jurisdiction is entirely unopposed. The only conclusion to be reached on this record is that plaintiff engaged in Janus-faced gamesmanship . . . The court will not countenance such underhanded conduct by remanding the case to state court.
Id. at *17-18.
But denying remand is not strictly speaking a sanction for plaintiff’s duplicity – although it could be. Rather, the forum-defendant rule is procedural, not jurisdictional, and therefore, can be waived. Among the primary factors considered in determining whether the rule has been waived are the amount of time before plaintiff files a remand motion, whether plaintiff seeks relief from the federal court before remand, and “whether the [plaintiff] has engaged in conduct or reaped some benefit “which would make it inequitable to remand the case.” Id. at *16. Plaintiff’s breach of the tolling agreement was certainly conduct that garnered him an inequitable benefit. But that’s not all plaintiff did here. Plaintiff also sought leave to amend his complaint, which is ordinarily viewed as a waiver of the right to seek remand. Id. at *18. “To unwind all that has occurred at this juncture would run afoul of principles of judicial economy.” Id. That coupled with the fact that “the procedural defect in removal exists only because of plaintiff’s success in circumventing what [the Third Circuit] has found to be a permissible litigation strategy” was enough for the court to deny remand. Id. at *19.
This article was written by Michelle Yeary of Dechert LLP.