A statute known as the "forum defendant rule" provides that a case falling within a district court's diversity jurisdiction "may not be removed [from state court] if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." 28 U.S.C. § 1441(b)(2) (emphasis added). Earlier this year, the Fifth Circuit held that, in a multi-defendant case, a defendant that is not a citizen of the state in which the plaintiff filed its lawsuit may remove a diversity action to federal court before the plaintiff serves any local defendant, a practice that some refer to as a "snap removal." Addressing a question left unanswered by the Fifth Circuit, the Honorable Nancy F. Atlas of the United States District Court for the Southern District of Texas recently held that a citizen of the forum state also may remove a diversity case from state to federal court before the plaintiff serves it.
In Latex Construction Company v. Nexus Gas Transmission, LLC, the plaintiff sued a single defendant in Texas state court for breach of contract. The plaintiff corporation was a citizen of Georgia and the defendant limited liability company was a citizen of Texas. The parties, therefore, were diverse, but the defendant was a citizen of the state in which the plaintiff filed its lawsuit (the "forum state"). The Texas state court rules required the plaintiff to serve the defendant through the Texas Secretary of State. Before it could do so, the defendant, invoking diversity jurisdiction, removed the case to federal court.
Arguing that the forum defendant rule prohibited a sole, forum-state defendant from removing a diversity action, the plaintiff moved to remand the case to state court. The District Court addressed the motion by conducting a two part analysis. First, Judge Atlas considered whether the plain language of the forum defendant rule prohibited a sole defendant who is a citizen of the state in which plaintiff filed its lawsuit from removing a case. Judge Atlas held that it did not: "[T]he plain language of [the forum defendant rule] allows defendants that have not been served with process to remove from courts in their home states suits in which they are the sole defendants."
Second, the Court considered whether allowing pre-service removal by a forum state defendant would lead to an absurd result. On that issue, Judge Atlas turned to Texas Brine Co., L.L.C. v. American Arbitration Association, 955 F.3d 482 (5th Cir. 2020). In Texas Brine, the Fifth Circuit noted that the forum defendant rule "provides[s] a bright-line rule keyed on service" and held that, in a multi-defendant case, the forum defendant rule does not prohibit a non-forum defendant from removing a diversity case to federal court before the plaintiff serves a local defendant.
Judge Atlas first observed that, according to the Fifth Circuit, "applying [the forum defendant rule] to allow snap removal by a non-forum defendant was 'at least rational' and was not an absurd result." Judge Atlas then pointed out that the Texas Brine Court relied upon and cited with approval cases from the Second and Third Circuits holding that forum-state defendants also may remove diversity cases preservice. Judge Atlas concluded that "allow[ing] for removal of suits involving a single defendant who is a resident of the forum state . . . is not an absurd result." Therefore, Judge Atlas held that the forum defendant rule did not bar the defendant from removing the case and denied the plaintiff's motion to remand. Latex Construction Company v. Nexus Gas Transmission, LLC, 2020 U.S. Dist. LEXIS 122244 (S.D. Tex. July 13, 2020)
Just before going to print, Judge Starr of the United States District Court for the Northern District of Texas denied a remand motion that Schnader's Aviation Group had opposed on similar grounds. The decision is Serafini v. Southwest Airlines Co., No. 3:20-CV00712-X, 2020 U.S. Dist. LEXIS 163073 (N.D. Tex. Sep. 8, 2020). Judge Starr also denied a similar motion to remand in Baker v. Bell Textron, No. 3:20-CV-292-X, 2020 U.S. Dist. LEXIS 167288 (N.D. Tex. Sept. 14, 2020).
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