Trial Practice and Procedure - John O'shea Sullivan and Ashby L. Kent

JurisdictionUnited States,Federal
Publication year2010
CitationVol. 61 No. 4

Trial Practice and Procedureby John O'Shea Sullivan* and Ashby L. Kent**

I. Introduction

The 2009 survey period yielded several noteworthy decisions relating to federal trial practice and procedure in the United States Court of Appeals for the Eleventh Circuit, several of which involved issues of first impression. This Article analyzes several recent developments in the Eleventh Circuit, including significant rulings in the areas of civil procedure, subject matter jurisdiction, arbitration, and statutory interpretation.1

II. Civil Procedure

A. Whether a District Court Can Sua Sponte Remand an Action Based on a Purely Procedural Defect in a Notice of Removal

In Corporate Management Advisors, Inc. v. Artjen Complexus, Inc.,2 the Eleventh Circuit addressed the issue of "whether the failure to allege facts sufficient to establish subject matter jurisdiction in a notice of removal is a defect in the removal procedure."3 The court concluded that the failure to establish subject matter jurisdiction in a notice of removal is a procedural defect in the removal process, and the court further held that a "district court cannot sua sponte remand a case to state court" based on such a procedural defect.4

In Corporate Management Advisors, the defendants sought to remove a lawsuit to the United States District Court for the Southern District of Florida pursuant to 28 U.S.C. Sec. 13325 on the basis of diversity jurisdiction.6 "[I]n their notice of removal, the [defendants] alleged only the residency of one of the parties, rather than his citizenship."7 "Since residency is not the equivalent of citizenship for diversity purposes, the district court concluded that it lacked subject matter jurisdiction" pursuant to 28 U.S.C. Sec. 1447(c)8 and remanded the case sua sponte to state court.9 The defendants subsequently "filed an amended notice of removal in which [] they contend[ed] they alleged sufficient facts to establish complete diversity of citizenship," but the district court remanded the case again.10 Pursuant to 28 U.S.C. Sec. 1447(d),11 "[t]he district court concluded that . . . it lacked jurisdiction to review a remand order 'on appeal or otherwise.'"12 The defendants "appeal[ed] the district court's refusal to allow them to amend their notice of removal [] pursuant to 28 U.S.C. Sec. 1447(d)'s prohibition on review of a remand order 'on appeal or otherwise.'"13 on appeal, the Eleventh Circuit held that "the district court based its sua sponte remand order on a perceived lack of subject matter jurisdiction"—the absence of complete diversity—under Sec. 1447(c).14 Accordingly, the Eleventh Circuit reviewed de novo the district court's interpretation of 28 U.S.C. Sec. 1447.15 The court first noted that a "district court may remand a case sua sponte for lack of subject matter jurisdiction at any time"16 and that "a remand order based on subject matter jurisdiction is not reviewable" on appeal.17 However, the court held that it did have "jurisdiction to review whether the 'district court exceeded its authority under Sec. 1447(c) by remanding th[e] case because of a perceived procedural defect in the removal process without waiting for a party's motion'" to remand.18 Citing its prior holding in Whole Health Chiropractic & Wellness, Inc. v. Humana Medical Plan, Inc.,19 the court noted that

[t]he language of Sec. 1447(c), especially Congress's use of the language "a motion to remand . . . must be made," in connection with a remand based on a procedural defect in the removal process, and the lack of that phrase with respect to removal for lack of subject matter jurisdiction, indicates that the district court must wait for a party's motion before remanding a case based on procedural defect.20

The Eleventh Circuit further "conclude[d] that the failure to establish a party's citizenship at the time of filing the removal notice [constituted] a 'procedural, rather than [a] jurisdictional, defect.'"21 In so holding, the court relied on the United States Court of Appeals for the Fifth Circuit's opinion in In re Allstate Insurance Co.,22 a procedurally analogous case in which the district court remanded a case to state court because the defendant failed to adequately allege a party's citizenship in its notice of removal.23 "on appeal, the Fifth Circuit reasoned that 'a "procedural defect" within the meaning of Sec. 1447(c) refers to any defect that does not go to the question of whether the case originally could have been brought in [a] federal district court.'"24 The Fifth

Circuit concluded that the failure to allege the plaintiff's citizenship in the notice of removal was "'a procedural, rather than [a] jurisdictional, defect.'"25 Accordingly, the Fifth Circuit held that the district court lacked the discretion to remand the action sua sponte because the failure to allege citizenship for purposes of diversity jurisdiction was a purely procedural defect in the removal process.26

The Eleventh Circuit "agree[d] with the Fifth Circuit's interpretation of Sec. 1447(c) and [its] construction of a party's failure to establish citizenship in its notice of removal as a procedural defect," as opposed to a jurisdictional defect.27 The Eleventh Circuit held this interpretation to be consistent with the fact that pursuant to 28 U.S.C. Sec. 1653,28 procedural shortcomings such as defective allegations of jurisdiction could be cured.29 The court held that "[i]f a party fails to specifically allege citizenship in [its] notice of removal, the district court should allow that party 'to cure the omission,' as authorized by Sec. 1653."30 Accordingly, upon holding "that the district court erred by remanding th[e] case on jurisdictional grounds when faced solely with a procedural defect in the removal process," the Eleventh Circuit reversed the district court's remand order and directed the district court to allow the defendants leave to amend their notice of removal pursuant to 28 U.S.C. Sec. 1653.31

B. Whether the Failure of the United States Marshal to Effectuate Service on Behalf of an In Forma Pauperis Plaintiff Constitutes "Good Cause" for the Plaintiff's Failure to Effect Timely Service Within the Meaning of Federal Rule of Civil Procedure 4(m)

In Rance v. Rocksolid Granit USA, Inc.,32 the Eleventh Circuit held as a matter of first impression that the failure of the United States Marshal to effectuate service on behalf of a plaintiff proceeding in forma pauperis, through no fault of that plaintiff, constitutes "good cause" within the meaning of Federal Rule of Civil Procedure 4(m)33 for the plaintiff's failure to effect timely service.34 In Rance the pro se plaintiff filed a lawsuit against his former employer in the United States District Court for the Southern District of Florida alleging that his employment was terminated in violation of the Fair Labor Standards Act of 193835 and the Americans with Disabilities Act of 1990.36 In its order granting the plaintiff's motion to proceed in forma pauperis, the district court stated as follows: "[T]he Clerk of Court is instructed to prepare the summons and copies of the complaint and same shall be served by the U.S. Marshal. The U.S. Marshal shall file a return of service once service is completed."37

"[O]ne-hundred and eighty-six days after [the plaintiff] filed his complaint, the district court sua sponte issued an 'Order to Show Cause,' ordering [the plaintiff] to show cause [as to] why his case should not be dismissed for failure to" perfect service of process.38 The plaintiff did not respond to the show cause order, and the district court dismissed the plaintiff's case without prejudice.39 The plaintiff appealed,

[r]elying on decisions from other circuits [and] argu[ing] that the complaint should not have been dismissed for failure to serve [process] because the court clerk and the U.S. Marshal failed to prepare the

summons and complaint and serve [the defendant] as expressly directed by the district court and required by law.40

On appeal, the Eleventh Circuit first noted that it had not yet explained the proper standard of review for a sua sponte dismissal pursuant to Rule 4(m).41 The court held that an abuse of discretion was the proper standard of review because the court applies this standard to "a [district] court's decision to grant an extension of time under Rule 4(m)" and a district "court's dismissal without prejudice of a plaintiff's complaint for failure to timely serve a defendant under Rule 4(m)."42

In reviewing the district court's dismissal for abuse of discretion, the Eleventh Circuit first looked to the plain language of Rule 4(m), which provides as follows:

If a defendant is not served within 120 days after the complaint is filed, the court—on motion or on its own after notice to the plaintiff—must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.43

The court noted that "good cause" for failure to make timely service "exists 'when some outside factor, such as reliance on faulty advice, rather than inadvertence or negligence, prevented service.'"44 The court further noted that "[e]ven if a district court finds that a plaintiff failed to show good cause, 'the district court must still consider whether any other circumstances warrant[ed] an extension of time'" to perfect service before dismissing the case.45 The court explained that "[o]nly after considering whether any such factors exist may the district court exercise its discretion and either dismiss the case without prejudice or direct that service be effected within a specified time."46

The court then turned to the language of 28 U.S.C. Sec. 1915,47 which provides that "'[t]he officers of the court shall issue and serve all process, and perform all duties'" when a litigant proceeds in forma pauperis.48 The court compared...

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