Making a Federal Case Out of It: A Civil Defendant’s Guide to Removal

By J.D. Lowry

See that major futuristic-looking building on Las Vegas Boulevard, between André’s to the east and the Lewis Avenue Corridor Park to the west? It’s the Lloyd D. George Federal Courthouse, home of the unofficial southern division of the U.S. District Court for the District of Nevada, and as civil defense counsel, you may have given short shrift to the idea that your client might do well litigating there.

A number of strategic considerations (aside from the largely irrelevant observation that generally the lines at the metal detectors are shorter, and the timely availability of elevators is greater than at the Regional Justice Center) may lead to a decision between you and your client to pursue removal of a state court action to federal court. However, those considerations are outside the scope of this article. This article provides a brief overview of issues the average private practitioner should keep in mind with respect to removal. As with any other issue involving the federal government, there are multiple exceptions and obscurities involved in federal removal jurisdiction that can represent pitfalls lying outside the well-trod paths of “typical” civil litigation. A review of 28 U.S.C. §1441 et seq., the statutes governing federal removal jurisdiction, is always a beneficial first step.

Is there a basis for federal jurisdiction?
Civil defendants (and criminal defendants too, although they also fall outside the scope of this article) have the ability, pursuant to 28 U.S.C. §1441 et seq., to remove to federal district court cases originally brought in state court over which federal jurisdiction nonetheless exists. Removing defendants have the burden of establishing federal jurisdiction, and the federal court is obliged to reject jurisdiction if any doubt exists as to its propriety. California ex rel. Lockyer v. Dynegy, Inc., 375 F.3d 831, 838 (9th Cir. 2004) (subsequent history omitted). Federal jurisdiction is strictly controlled, in part because courts generally favor allowing plaintiffs to pursue their claims in courts of their own choosing. Removal, like original federal jurisdiction, may be premised on two bases: the existence of a federal question, or the diversity of citizenship of the parties.

Federal question jurisdiction in the removal context may arise from the plaintiff’s pleading of one or more causes of action arising under federal law over which the federal district court would have had original jurisdiction. Federal agencies, federal officers, and members of the armed forces being sued as a result of acts taken under color of office have the right to remove their cases to federal court pursuant to 28 U.S.C. §1442 and 28 U.S.C. §1442a.

An important point for defense counsel to keep in mind is that the federal question giving rise to removal must arise from the plaintiff’s complaint. The defendant cannot create federal question jurisdiction through an affirmative defense, or through a counterclaim arising out of federal law. Also be aware that a handful of cases, including workers’ compensation cases and certain cases against carriers for damages related to shipments, are never removable or removable only under limited circumstances. 28 U.S.C. §1445.

The statute also allows removal on the basis of diversity of citizenship of the parties. 28 U.S.C. §1332(a). If no one on the plaintiffs’ side of the caption is a citizen of the same state as anyone on the defendants’ side of the caption, diversity of citizenship exists and, assuming that at least $75,000.00 is in controversy, the federal courts may assume jurisdiction. Removal is also available based on a hybrid of federal question jurisdiction and diversity jurisdiction arising under 28 U.S.C. §1369, for cases involving seventy-five or more deaths as the result of a single catastrophic accident. 28 U.S.C. §1441(e).

What if there would be complete diversity if not for the fact that the plaintiff sued your client, a Nevada resident, who has a good-faith basis to file a Federal Rule of Civil Procedure (FRCP) 12(b) (6) motion to dismiss? You may be representing a fraudulently joined sham defendant impled only to defeat diversity, and you can petition for removal to federal court and immediately thereafter move for dismissal. The defendant alleging that she has been fraudulently joined to defeat diversity bears a heavy burden, because the existence of any colorable claim by the plaintiff against that non-diverse defendant will suffice as proof that the joinder was not fraudulent.

Is it too late already?
Not if fewer than 30 days have elapsed since your client learned about the claim giving rise to federal jurisdiction. Receipt by the defendant, “through service or otherwise,” of the initial pleading setting forth the claim giving rise to federal jurisdiction triggers this thirty-day time limit, as does “service of summons upon the defendant if such pleading has then been filed in court and is not required to be served on the defendant”; if both of those events have taken place, the shorter time period applies. 28 U.S.C. §1446(b).

Note that the thirty-day time limit for removal does not begin until the plaintiff has plainly asserted a claim giving rise to federal jurisdiction. In other words, if the plaintiff’s original complaint provides no basis for federal jurisdiction, but the plaintiff subsequently amends his complaint in a manner that creates a basis for federal jurisdiction, the thirty-day removal period commences upon the date of service of the amended complaint. Similarly, if the complaint does not plainly set forth a basis for federal jurisdiction, but a subsequent “amended pleading, motion, order, or other paper” does set forth such a basis, the defendant has 30 days from service of that subsequent document to request removal. Lovern v. General Motors Corp., 121 F.3d 160, 162 (9th Cir. 1997). Keep in mind that the “other paper” may be discovery responses or deposition testimony, and the “order” may be the state court’s order dismissing a non-diverse co-defendant who has reached a settlement with the plaintiff.

The defendant has no duty to investigate facts underlying an equivocal complaint to determine whether or not a basis for federal jurisdiction exists. Harris v. Bankers Life and Casualty Co., 425 F.3d 689, 694 n.4 (9th Cir. 2005). However, if the basis for removal is diversity jurisdiction, there is a one-year deadline from the date of commencement of the action during which removal based on newly found grounds may take place. 28 U.S.C. §1446(b). Thus, if you suspect that discovery will demonstrate that purportedly non-diverse parties are actually diverse, it behooves you to conduct that discovery within the first year following commencement of the lawsuit if you plan to use such diversity as a basis for removal to federal court. Also be aware of the one-year deadline if it is possible that all non-diverse defendants will settle out of the case within the first year.

Have I already waived federal jurisdiction?
Probably not. A defendant only waives federal jurisdiction if, after removability has become apparent, the defendant “takes actions in state court that manifest his or her intent to have the matter adjudicated there, and to abandon his or her right to a federal forum.” Resolution Trust Co. v. Bayside Developers, 43 F.3d 1230, 1240 (9th Cir. 1994). Everything short of proceeding to adjudication on the merits will likely not suffice as a waiver by a defendant of federal jurisdiction. Id.

What do I file, and where?
File a Petition of Removal, signed under FRCP 11, in the federal court. The Petition of Removal must contain, according to 28 U.S.C. §1446(a), a “short and plain statement of the grounds for removal,” and must be accompanied by “a copy of all process, pleadings, and orders served” upon the removing defendant(s). “Promptly” thereafter, per 28 U.S.C. §1446(d), the defendant must provide written notice of the filing of the Petition of Removal to all other parties, and file a copy of the Petition of Removal with the state court. The state court will then “effect the removal” and “proceed no further unless and until the case is remanded.”

The Petition of Removal must be filed through the CM/ECF e-filing system. The required $350 fee is payable by credit card through CM/ECF. If you’re not already registered for electronic filing with the District of Nevada, you may do so by calling (888) 674-2323 and/or following the directions on the District of Nevada’s website, www.nvd.uscourts.gov. This assumes, of course, that you’ve been admitted to practice before the District of Nevada; if you’ve not, the relatively quick and painless application process is detailed in Local Rule IA 10-1 (which is also available on the District of Nevada’s web page).

Will I get sent back to state court?
Maybe. The federal court is obligated to remand to state court any removed case over which the federal court loses jurisdiction. Federal jurisdiction can be lost if, e.g., the federal court dismisses the federal cause of action on which you based your petition for removal, or if discovery demonstrates that the amount in controversy in a diversity case will not exceed the jurisdictional threshold of $75,000.00.

Further, if your Petition of Removal is procedurally defective, the plaintiff may move to remand the case to state court within Thirty days. 28 U.S.C. §1447(c). The plaintiff also may move for remand based on a lack of federal subject-matter jurisdiction at any time prior to final judgment. Fees and costs are available, in the federal court’s discretion, to a plaintiff who is successful in obtaining remand. Remand orders aren’t appealable except in civil rights cases initially removed under 28 U.S.C. §1443.

In conclusion, don’t be afraid to take the case against your client to federal court. Just don’t forget your photo I.D.!

Jodi Donetta “J.D.” Lowry, a partner at Gibson Lowry Burris LLP in Las Vegas, Nevada practices in the areas of intellectual property, commercial litigation, and health law. The focus of her practice is copyright and trademark law, and she has a strong interest in intellectual property torts related to blogs, social networking websites, and other new media. She has presented seminars and published in the fields of copyright law, plaintiff litigation in federal courts, and medical malpractice. Before entering law practice in 1999, Miss Lowry was the assistant editor of the Journal of College Science Teaching and the copyright officer of the National Science Teachers Association.  Visit the firm’s web site at www.gibsonlowry.com.

Article courtesy of  Nancy Grimes - Founder GLI / Grimes Legal, Inc. - Legal Search Firm
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