On October 12, 2011, the United States Court of Appeals for the Third Circuit issued a ruling of importance for lawyers and litigants in the Third Circuit. Specifically, in Delalla v. Hanover Insurance, No. 10-3933, 2011 U.S. App. LEXIS 20651 (3d Cir. Oct. 12, 2011), the Third Circuit held that under the federal removal statute (28 U.S.C. §§ 1441, 1446) each defendant individually has a 30-day period to file a notice of removal that ends 30 days after that defendant is served (the “later-served” rule), as opposed to 30 days after the date on which the first defendant is served (the “first-served” rule). This holding brings the Third Circuit into line with the majority of the circuits that have addressed this issue, and further widens the circuit split regarding what Congress intended by the plain text of the removal statute.
In Delalla, the plaintiffs, Nicole M. Delalla and NMD Marketing, Inc., sued their insurer, Hanover Insurance, and former attorneys retained by Hanover on the grounds that the attorneys committed legal malpractice in a trademark dispute. Plaintiffs filed suit in the Superior Court of New Jersey, Camden County, and on April 14, 2009, served Hanover with the complaint. Plaintiffs did not serve the attorney defendants until more than a week later on April 23, 2009.
On May 15, 2009, more than 30 days after Hanover was served, but less than 30 days after the attorney defendants were served, the attorney defendants filed a notice of removal to the United States District Court for the District of New Jersey. Plaintiffs moved to remand the case to New Jersey state court on the grounds that the notice of removal was untimely under the “first-served” rule. The district court denied plaintiffs’ motion, applying the “later-served” rule and holding that the attorney defendants timely filed their notice within 30 days of the date on which they were served.
On appeal, the Third Circuit framed the issue as follows: “Does the first-served defendant’s thirty-day clock run for all subsequently served defendants (the first-served rule), or does each defendant get his own thirty days to remove after being served (the later-served rule)?” At the time the Third Circuit was deciding this issue, the Fourth and Fifth Circuits had adopted the first-served rule, while the Sixth, Eight, Ninth, and Eleventh Circuits had adopted the later-served rule. Finding that the later-served rule represented the “most faithful and equitable reading of the removal statute,” the Third Circuit adopted the rule and affirmed the district court order denying plaintiff’s motion to remand the case to state court.
The Third Circuit relied heavily on the text of the removal statute in holding that each defendant has its own 30-day period to file a notice of removal upon being served with the complaint. The Third Circuit began by analyzing 28 U.S.C. § 1446(a), which provides that “[a] defendant or defendants” may initiate the removal process by filing a notice of removal. The court reasoned that since the statute refers to “defendants” in the plural, the statute “explicitly anticipates the possibility that multiple defendants will file notices of removal.” Accordingly, the court held that § 1446(b), which states that “[t]he notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant,” necessarily sets out the rule governing the timeliness of each notice of removal that might potentially be filed by each removing “defendant,” and that the plain text of the removal statute therefore “points toward the later-served rule.”
The court further noted that the later-served rule was more equitable than the first-served rule since (1) “[u]nder the later-served rule, each defendant has an equal amount of time in which to decide whether or not to file a notice of removal,” and (2) “under the first-served rule, the possibility exists that a later-served defendant would have had to file a notice of removal before being served with a complaint.”
The Third Circuit’s ruling in Delalla provides lawyers and litigants with clear guidance on the time period that each defendant in a civil action has to file a notice of removal. Given the sharp disagreement among the circuits on the issue, however, we expect the United States Supreme Court to resolve the issue in the near future.