United States: The (Tragedy?) (Comedy?) (History?) Of Removal Timing

Last Updated: October 9 2013
Article by P. Michael Jung

As Hamlet might have said if he had been a trial lawyer, "To remove, or not to remove. That is the question." And he might well have added, "And when to remove? Aye, there's the rub." Recent amendments to the federal removal statute and to the Texas Rules of Civil Procedure have made the plot of that drama a little different than it used to be.

For a number of years now, the Fifth Circuit has been creating and refining a distinction between when a defendant may remove a diversity case and when it must remove the case. A case may be removed whenever the defendant is prepared to allege in good faith in the notice of removal, and prove by a preponderance of the evidence if necessary, that the amount in controversy exceeds $75,000; the Fifth Circuit calls controversies about this issue "amount disputes." On the other hand, the thirty-day deadline by which a case must be removed is triggered only by receipt of an original or amended pleading or other paper that "affirmatively reveals on its face" that the plaintiff is seeking damages in excess of $75,000; cases involving this issue are called "timeliness disputes."

Enter Congress, stage left. Effective for cases filed in state court on or after January 6, 2012, the removal statute contains explicit rules for determining the amount in controversy. See 28 U.S.C. § 1446(c). The "sum demanded in good faith in the initial pleading" is presumptively the amount in controversy. In certain circumstances, however, the defendant may allege and prove an amount in controversy. These are when non-monetary relief is sought, when state practice does not permit demand for a specific sum, and when state practice permits recovery of damages in excess of the amount demanded. And if the case stated by the initial pleading is not removable solely because of the amount in controversy, information in the state court record or in responses to discovery can trigger the thirty-day deadline.

Enter the Supreme Court of Texas, stage right. Effective March 1, 2013, Tex. R. Civ. P. 47 requires the plaintiff to state the monetary amount in controversy, within certain brackets. Cases in the brackets over $100,000 will be immediately removable; cases in the $100,000-and-under bracket may or may not be removable, under the federal statutory rules described above. Note, however, that the Rule 47 brackets appear to include interest and costs, whereas the federal jurisdictional amount does not.

The last act of the play is not yet written.  The statutory changes make much of the existing removal jurisprudence obsolete, and raise their own set of new questions. How and when is a plaintiff's bad faith in specifying the amount in controversy to be alleged and proven? Does Texas state practice, which limits judgments to the pleadings but allows post-verdict damage-increasing pleading amendments almost as a matter of right, "permit recovery of damages in excess of the amount demanded?" And does the post-initial-pleading record or discovery information have to disclose the amount in controversy on its face, or will a permissible inference from that information suffice to start the thirty-day clock? Complicating the situation, these questions and others will have to be answered in an appellate environment in which only denials of remand can reach the appellate courts.

Finally, the play has an epilogue, in the form of a slight relaxation in the outside one-year limitation on diversity removal. More about that in a future post.

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.

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