Big changes for any attorney who practices in the United States federal courts are here. Effective with all new state and federal lawsuits commenced on or after January 6, 2012, the Federal Courts Jurisdiction and Venue Clarification Act of 2011, H. R. 394, P.L. 112-63 (the "Act") has significant implications for diversity jurisdiction and clarifies numerous issues related to removal procedures by resolving differences among the Circuit Courts. There also are changes and clarifications regarding venue.
A lengthy explanation of the Act's purposes and effects is set forth in the House of Representatives' Committee on the Judiciary's Report 112-10. The information set out below is a brief outline of certain key changes.
Citizenship. Section 102 of the Act amends 28 U.S.C. § 1332(c)(1) by specifying the treatment of citizenship in diversity actions involving corporations and, in direct actions, insurance companies. Among other things, all foreign and domestic corporations will be regarded as citizens of both their place of incorporation and their principal place of business, resulting in a denial of diversity jurisdiction when (a) a foreign corporation with its principal place of business in a state sues or is sued by a citizen of the same state, and (b) a citizen of a foreign country sues a U.S. corporation with its principal place of business abroad.
Removal. The Act provides that each defendant shall have 30 days after service of the initial pleading or summons to file a notice of removal. 28 U.S.C. § 1446(b)(2)(A). Previously, the federal courts had different approaches to this issue in multi-defendant cases: some courts held that the 30-day period ran from the date of service on the last-served defendant while others held that the 30-day period ran from the date of service on the first-served defendant. Other courts adhered to the standard that will now be applied across all federal courts. Moreover, earlier-served defendants are permitted to join in and consent to removal by a later-served defendant — even if the earlier-served defendant did not previously initiate or consent to removal.
Venue. Section 201 of the Act redefines the term "venue" by providing a general definition that distinguishes venue ("a geographic specification of the appropriate forum for litigation") from other provisions of federal law that concern subject matter jurisdiction. As made clear in the House Report, "subject matter restrictions may also include geographic terms [but] differ from venue rules in that they may not be waived by the parties and will not be affected by changes in ... general venue rules."
Clarification also is provided for cases removed from state court: consistent with current case law, the Act makes clear that the removal statute — not the venue statute — governs the proper venue for cases removed to federal court.
The revisions further will permit a district court to transfer a civil action to any district or division to which all parties have consented if convenient for the parties and witnesses and in the interest of justice. This expands the prior authority of 28 U.S.C. § 1404, which allowed transfer only to another district or division in which the case might have been brought (i.e., to a district in which venue and subject matter jurisdiction were proper).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
