A defendant generally may remove a civil action from state court
to federal district court if the district court would have had
jurisdiction had the action been originally filed in that
court. 28 U.S.C. § 1441(a). For years it seemed
that a defendant had only two windows of time in which to remove an
action to federal court. Sections 1446(b)(1) and (b)(3) of
the U.S. Code specify that a defendant must remove a case within
thirty days of service of the complaint or within thirty days of
receiving from plaintiff some "other document" from which
the defendant could ascertain that the case was removable to
federal court. 28 U.S.C. §§ 1446(b)(1),
(b)(3).
Changing expectations, in a recent case the Ninth Circuit addressed
for the first time whether the two thirty-day periods described in
sections 1446(b)(1) and (b)(3) are the only periods during which a
defendant may remove, or if they are merely periods during which a
defendant must remove if one of the thirty-day time limits is
triggered. The case is Roth v. CHA Hollywood Medical
Center, L.P. (9th Cir. June 27, 2013).
In Roth, plaintiffs filed a state-law wage and hour class
action in California state court. The plaintiffs thereafter
filed an amended complaint naming an additional defendant, CHA
Hollywood Medical Center ("CHA"). After conducting
its own investigation, CHA discovered that at least one of the
putative class members was a citizen of Nevada, thereby creating
diversity for removal under the Class Action Fairness Act
("CAFA"). CHA also determined that it could
establish that the amount in controversy exceeded CAFA's
jurisdictional minimum of $5 million. Based on these
discoveries – which occurred more than 100 days after the
filing of the amended complaint – CHA filed a notice of
removal in federal district court.
Asserting that the removal was untimely, plaintiffs moved to remand
the case back to state court, and the district court granted
plaintiffs' motion to remand. The district court held
that removal was improper – even if the jurisdictional
requirements had been satisfied – because neither of the
thirty-day periods specified in sections 1446(b)(1) and (b)(3) had
been triggered by documents received from plaintiffs. Thus,
the district court held that the defendants could not remove based
on information discovered by CHA outside of the thirty-day
periods.
On appeal, the Ninth Circuit reversed. The Ninth Circuit 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." Because here plaintiffs' amended
complaint was "at best 'indeterminate'" with
respect to removability, CHA, which conducted its own investigation
and discovered that the case was removable, was not barred from
removing the action outside the two thirty-day periods.
The Ninth Circuit acknowledged that, under sections 1446(b)(1) and
(b)(3), there are valid reasons for imposing strict time limits on
a defendant when a defendant is put on notice of removability by a
plaintiff. But the court concluded that a plaintiff should
not be able to prevent or delay removal by failing to reveal
information showing removability and then objecting to removal when
the defendant discovers grounds for removal through its own
investigation. The Ninth Circuit noted, "It would be
odd, even perverse, to prevent removal in this case, and we see
nothing in the text of §§ 1441 and 1446 to require such a
result."
The Ninth Circuit further dismissed any concerns that a defendant
may delay removing an action based on information it discovered
until it is strategically advantageous for the defendant to do
so. The Ninth Circuit noted that, in general diversity
actions, any such advantages are severely limited because an action
must be removed within one year of the commencement of the
action. Although no similar limitation exists in CAFA cases,
the Ninth Circuit reasoned that a plaintiff can prevent potential
gamesmanship by providing the defendant with a document from which
removability may be ascertained, thus triggering the 30-day removal
period under section 1446(b)(3).
This groundbreaking ruling has significant implications for
defendants that prefer to be in federal court. Defendants now
have more flexibility and should not be deterred from removing
general diversity or CAFA actions to federal court, provided they
have otherwise complied with sections 1446(b)(1) and (b)(3).
It is possible that lower courts will narrow the Ninth
Circuit's ruling, perhaps attempting to distinguish
Roth on its facts or otherwise attempt to narrow this
additional window for removal. Nevertheless, if followed by
other circuit courts, the ruling would remove the time constraints
that previously existed to determine removability, giving
defendants additional time to investigate and obtain evidence to
support removal.
The Ninth Circuit's June 27, 2013, opinion can found here.
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