2.7 Removal Jurisdiction

• Library: Federal Civil Practice in Virginia (Virginia CLE) (2023 Ed.)

2.7 REMOVAL JURISDICTION

2.701 Sources of Authority and General Rules.

Removal jurisdiction is governed by 28 U.S.C. § 1441, and related procedural matters are addressed in Fed. R. Civ. P. 81(c).

Courts strictly construe removal jurisdiction. ⁴⁶⁵ "Removal jurisdiction is not a favored construction; we construe it strictly in light of the federalism concerns inherent in that form of federal jurisdiction." ⁴⁶⁶

The burden is upon the party seeking removal to establish federal jurisdiction in the first instance. ⁴⁶⁷

Accordingly, the Norfolk division of the United States District Court for the Eastern District of Virginia has ruled that, "in determining whether removal is proper, all doubts must be resolved in favor of remanding the case to state court." ⁴⁶⁸

Counsel must be careful to include all bases of federal jurisdiction in the notice of removal. Where a defendant removed a case to federal court, and later tried to amend its notice of removal to assert an additional ground for removal not stated in the original notice, the Fourth Circuit found that this was untimely, because the amendment was filed after the 30-day removal period had expired, and so the case had been properly remanded to state court. ⁴⁶⁹

The following are basic elements for removal under 28 U.S.C. § 1441(a):

A. Only a defendant may remove;

B. Only a "civil action brought in a State court" may be removed;

C. The action must be one over which the federal district courts have original subject matter jurisdiction (namely, federal question or diversity jurisdiction); and

D. The action must be removed to the district court for the district and division where the state court action was pending.

28 U.S.C. § 1441(b)(2) prohibits removal of a case on diversity grounds if any defendant is a citizen of the forum state. ⁴⁷⁰

Under CAFA, any defendant can remove a putative class action, without regard to whether any defendant is a citizen of the state in which the action is brought, and without the consent of all defendants. The general one-year limit under 28 U.S.C. § 1446(c)(1) does not apply. ⁴⁷¹

2.702 Who May Remove.

Only defendants may remove. Federal law governs the determination of who is a defendant. Generally, under 28 U.S.C. § 1441(a), only the defendants named in a complaint may remove. A plaintiff may not remove an action based on a counterclaim, even if state law would characterize the plaintiff as a defendant. ⁴⁷²

A. A cross-claim defendant is not considered to be a defendant for removal purposes. ⁴⁷³

B. A plaintiff-intervenor may not remove on basis of claims it asserts or on the basis of claims asserted against it. ⁴⁷⁴

C. A nonparty may not remove or participate in removal of case, even if it is claiming to be a real party in interest. ⁴⁷⁵

A. Later-Added Counterclaim Defendants.

The Supreme Court recently held that a third-party counterclaim defendant—i.e., a party brought into a lawsuit through a counterclaim filed by the original defendant—cannot remove the counterclaim filed against it under either the general removal statute (28 U.S.C. § 1441) or under CAFA. ⁴⁷⁶

B. The "Consent of All Defendants," or "Unanimity," Rule.

All defendants must consent to removal. ⁴⁷⁷ Failure of all defendants to join in the notice of removal constitutes a procedural defect. ⁴⁷⁸

The Federal Courts Jurisdiction and Venue Clarification Act of 2011 has codified the "consent of all defendants" requirement in 28 U.S.C. § 1446(b)(2)(A).

If a defect is not objected to within 30 days, most courts deem the objection waived. ⁴⁷⁹

"Failure of all defendants to join in the removal petition does not implicate the court's subject matter jurisdiction. Rather, it is merely an error in the removal process. As a result, a plaintiff who fails to make a timely objection waives the objection." ⁴⁸⁰ 28 U.S.C. § 1447(c) provides that "[a] motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a)." In Payne, the plaintiff had failed to move for a remand within 30 days of the notice of removal. The Fourth Circuit determined, therefore, that the plaintiff's right to object to the removal, on the ground that all defendants had not joined in the notice of removal, had been waived. ⁴⁸¹

Where a notice of removal recited that another defendant, which did not file its own notice of removal, had agreed to the removal, it was found sufficient to satisfy the "consent of all defendants" rule. ⁴⁸² The court stated:

we can see no policy reason why removal in a multiple-defendant case cannot be accomplished by the filing of one paper signed by at least one attorney, representing that all defendants have consented to the removal . . . . The practice of having one attorney represent to the court the position of other parties in the case, with the intent that the court act on such representation, is quite common. ⁴⁸³

An email from co-defendants consenting to removal may be enough to prove unambiguous consent. ⁴⁸⁴

Where certain defendants were contractually bound to litigate in state court, those defendants had waived any right to remove, and, thus, could not consent to removal, requiring a remand to state court. ⁴⁸⁵

The Fourth Circuit recently held that a forum selection clause in an assisted-living facility's agreement providing that "the county in which the Facility is located shall be the sole and exclusive venue for any dispute between the parties" precluded removal of a state-court action to the federal court with jurisdiction over the county, because there was no federal courthouse in the designated county. ⁴⁸⁶

C. Exceptions to "Consent of All Defendants" Rule.

Defendants who have not yet been served need not join in the removal. ⁴⁸⁷

In Murphy Bros. v. Michetti Pipe Stringing, Inc., ⁴⁸⁸ the Supreme Court ruled that a defendant cannot be required to take any action in a civil case until proper service upon that defendant has been made. ⁴⁸⁹ The Supreme Court's opinion suggests that an improperly served defendant need not join in a notice of removal.

The provisions of 28 U.S.C. § 1446(b)(2)(B) were amended by the Federal Courts Jurisdiction and Venue Clarification Act of 2011. ⁴⁹⁰ In cases removed on the basis of the existence of a federal question, but where unrelated claims are made under state law that are not within the original or supplemental jurisdiction of the district court, the entire action may now be removed, and the unrelated claims "shall" be severed from the federal question claims, and remanded. Under these circumstances, only defendants against whom federal question claims have been asserted are required to join in, or consent to, the removal.

Under the provisions of § 1446(b)(2)(B), each defendant now has 30 days after "receipt by or service on" that defendant of the initial pleading or summons to file a notice of removal. This amendment legislatively resolved a circuit split regarding the time frames for removal in a multi-defendant action. ⁴⁹¹

Furthermore, if a later-served defendant files a notice of removal, any earlier-served defendant that did not file such a notice may file a consent to the removal. ⁴⁹²

Purely "nominal" parties need not consent to removal. ⁴⁹³ A "nominal" party means "simply a party having no immediately apparent stake in the litigation either prior or subsequent to the act of removal. In other words, the key inquiry is whether the suit can be resolved without affecting the non-consenting nominal defendant in any reasonably foreseeable way." ⁴⁹⁴ "The word nominal should be taken to mean what a good dictionary says it should mean: 'trifling' or '[e]xisting in name only.'" ⁴⁹⁵

Fraudulently joined parties also will be disregarded for removal purposes. ⁴⁹⁶

In class actions, any defendant can remove: consent of all defendants is not necessary. ⁴⁹⁷

Where removal is based on a specific statutory authorization for removal, only those defendants to the removable action must join in removal notice. For example, removal by a federal officer under 28 U.S.C. § 1442 does not require concurrence of all defendants. ⁴⁹⁸

Ordinarily, the existence of subject matter jurisdiction at the time of judgment cures any defect in removal procedure. ⁴⁹⁹ A removal defect is not cured, however, if the case is reversed on the merits and remanded to the trial court for further proceedings. ⁵⁰⁰

D. Defendant Must Not Have Waived the Right to Remove.

A defendant can waive the right to remove by taking some affirmative action in state court before filing the notice of removal. ⁵⁰¹ For example, filing a counterclaim before filing a notice of removal has been found to waive the right to remove. ⁵⁰² The waiver must, however, be clear and unequivocal. ⁵⁰³ Waiver does not occur if removal precedes, or occurs simultaneously with, the action taken by the defendant in state court. ⁵⁰⁴

Waiver by one defendant constitutes a constructive waiver by each co-defendant of its right to remove. ⁵⁰⁵ One vivid illustration of the "consent of all defendants" rule involves a forum-selection clause in a contract to which several of the defendants were parties. Where some of the defendants who wished to remove the case were contractually bound to litigate the dispute in state court, the court found that those defendants had voluntarily waived their right to remove. ⁵⁰⁶ The court also held that, under the "consent of all defendants" rule, all defendants had not consented to removal, and, therefore, the case had to be remanded to state court. ⁵⁰⁷

2.703 Defendant May Remove Any Action If It Originally Could Have Been Filed in Federal Court.

A. Diversity Cases.

Diversity jurisdiction must be established at the time of removal. ⁵⁰⁸

Complete diversity of citizenship is required. Defendants may remove an action on the basis of diversity of citizenship only if there is complete diversity between all named plaintiffs and all named defendants and when no...