Chapter 3 - § 3.7 REMOVAL

• Jurisdiction: Colorado

§ 3.7 Removal

More than one court may have jurisdiction over a dispute. The plaintiff has the first opportunity to choose the court in which the case will be heard because the plaintiff files the case. However, the defendant also gets the opportunity to challenge personal or subject matter jurisdiction or, in certain circumstances, to change the court in which the case is to be decided by "removing" the case to another court that has jurisdiction.

§ 3.7.1 Removing the Case to Another Court

Removal from State District Court to Federal Court

A defendant served with process in state district court may remove the case to federal court if the case meets certain criteria. Removal to federal court can only be done by a defendant, is strictly limited to certain circumstances, and has technical requirements for the process that must be carefully followed.⁷⁷ Grounds for removal from state district court to federal court include diversity jurisdiction, federal question jurisdiction,⁷⁸ and situations in which the defendant is a representative of a sovereign nation.⁷⁹ Certain types of cases cannot be removed, such as civil actions against railroads and actions under state workers' compensation laws, among others.⁸⁰ The removal process is complicated, and courts have been inconsistent in their decisions regarding some details of the process. Before attempting to remove a case to federal court, counsel should carefully study the case law and local rules for the jurisdiction in question. Failure to properly remove a case can subject counsel to sanctions, including costs and attorney fees.⁸¹

The decision by a defendant to remove a case to federal court can change the shape of the litigation of the case. A defendant may decide to try to remove the case to federal court because of the perception that the federal courts enforce the rules more stringently than do state courts. Counsel may believe federal court is a preferable forum because a federal court will make the case follow a more regulated path. Removing a case to federal court may help equalize the "home court advantage" that a local plaintiff may have against an out-of-state defendant. The decision to remove also may be made for geographical reasons, such as when the defendant is sued in a city other than where the federal court is located and the defendant's counsel's office is in the same town as the federal court. Moving the case to federal court—and to the city where the defendant's counsel is located—can make it easier and less expensive for the defendant to defend the case.

Diversity Jurisdiction

Federal courts have original jurisdiction over a case when there is diversity jurisdiction. Diversity jurisdiction exists when there is complete diversity of the citizenship or residency of the parties and where the amount in controversy exceeds $75,000.⁸²

Complete diversity of the parties requires that no plaintiff have the same citizenship as any defendant.⁸³ If even one plaintiff has the same citizenship as that of even one defendant, diversity does not exist. Citizenship of an individual party is determined by the person's "domicile." Domicile is different than residence. A person's domicile is the state in which the person is actually physically present and where the person intends to make a home.⁸⁴ In determining where a person is domiciled, the court will look at multiple factors, including where the person lives, where he or she is registered to vote, where he or she pays taxes, where he or she is employed, and where he or she has personal property.

A corporation is a citizen of both the state in which it is incorporated and the state in which it has its principal place of business.⁸⁵

To avoid having their state court cases removed to federal court, plaintiffs' attorneys often include in the case a defendant who is a resident of the same state as the plaintiff, or at a minimum, a defendant who is a resident of the state in which the action was brought. These defendants are commonly referred to as "diversity buster" defendants. When a plaintiff includes a defendant in a lawsuit solely to destroy diversity, a defendant who wishes to remove the case to federal court may ask that the diversity buster defendant be disregarded on the grounds of fraudulent joinder. Establishing fraudulent joinder is extremely difficult because as long as the plaintiff can properly make a claim against the diversity buster defendant—even if the plaintiff has no actual intention of ultimately pursuing the case to judgment against that defendant—courts generally will not deem the joinder to be fraudulent.

A defendant generally cannot remove a case to federal court if any of the defendants is a citizen of the state in which the case is filed, even if there is complete diversity (such as when the plaintiff is not a resident of the state in which the case is filed).⁸⁶ If there is complete diversity and an out-of-state defendant removes the case before the resident defendant has been served with process, the case can be removed.⁸⁷ This is a little known exception, and it provides a very small window of opportunity to effect removal because once the resident defendant has been served, the case cannot be removed on diversity grounds.

Amount in Controversy

To remove a case based on diversity jurisdiction, the amount of money in controversy must exceed $75,000 exclusive of costs and interest.⁸⁸ Often, the amount in controversy is not evident from the face of the complaint, especially in states like Colorado where complaints in state court are not allowed to specify the amount of damages being sought "in the prayer or demand for relief."⁸⁹ Even if a defense counsel believes it is obvious that the plaintiff is seeking to recover more than $75,000 because of the nature of the case that was filed, such a belief is not enough to establish the requisite amount of controversy. In determining the amount in controversy, other factors can be considered, such as a demand letter that asks for an amount in excess of the jurisdictional amount, a newspaper story in which the plaintiff is quoted about the damages he is seeking, or facts in the complaint alluding to losses the amount of which can determined (such as lost wages or revenue).

In the notice of removal, the defendant must set out the basis for his or her assertion that the amount in controversy exceeds $75,000. The burden is on the defendant to prove this assertion.

Time for Removal

The notice of...