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

• Publication year: 2009

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

I. Introduction

The 2008 survey period yielded several noteworthy decisions in the United States Court of Appeals for the Eleventh Circuit relating to federal trial practice and procedure, several of which involved issues of first impression. This Article analyzes recent developments in the Eleventh Circuit, including significant rulings in the areas of statutory interpretation, civil procedure, arbitration, appellate jurisdiction, and other issues of interest to the civil trial practitioner.

II. Removal

A. Determining Whether, in Multi-Defendant Litigation, the Limitations Period for Removal Expires Thirty Days From Service on the "First-Served" or "Last-Served" Defendant Under 28 U.S.C. Sec. 1446(b)

In Bailey v. Janssen Pharmaceutica, Inc.,¹ the Eleventh Circuit held, as a matter of first impression, that in multi-defendant litigation, the limitations period for removal expires thirty days after service on the "last-served" defendant under 28 U.S.C. Sec. 1446(b).² Plaintiff-appellant Lori Jo Bailey, as administrator of the estate of decedent Chad Edgar

Beal, brought a wrongful death action in Florida state court on behalfof Beal, who died from a lethal dose of a pain narcotic from a transdermal skin patch that was manufactured, distributed, and sold by the defendants Alza Corporation (Alza), Janssen Pharmaceutica, Inc. (Janssen), and Walgreen Company (Walgreen), respectively. Alza and Janssen were subsidiaries of the defendant, Johnson & Johnson, Inc. (J&J). The first defendant served in the state court action was Walgreen, served on May 12, 2006. Alza was served on May 15, 2006, and Janssen was served on May 19, 2006. J&J was served on June 22, 2006. On July 24, 2006, J&J, the last-served defendant, filed a notice of removal of the state court action pursuant to 28 U.S.C. Sec. 1446(b).³

After the action was removed to the United States District Court for the Southern District of Florida, Beal sought remand. Beal argued that under Sec. 1446(b), the time for filing a notice of removal ran from the date of service on the first defendant—here, Walgreen on May 12, 2006—and that J&J's notice was not timely filed within thirty days of the May 12 service.⁴ The district court denied Beal's motion to remand and adopted the "last-served" defendant rule, which permits each defendant to file a timely motion for removal within thirty days of service.⁵ Under the "last-served" rule, earlier-served defendants who fail to timely file a notice of removal may consent to a timely motion by a later-served defendant.⁶ Because J&J's notice of removal was filed within thirty days of service, the district court found that it was timely.⁷ Beal appealed, challenging the district court's denial of the motion to remand.⁸

The Eleventh Circuit affirmed, first looking to the language of 28 U.S.C. Sec. 1446,⁹ which provides that: "'[t]he notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based.'"¹⁰ Noting that Sec. 1446(b) does not expressly address multi-defendant litigation,¹¹ the court noted that "[i]n applying the statute to multi-defendant litigation, courts ha[d] split over whether each individual defendant ha[d] a right to seek removal within thirty days of receipt of service or whether the appropriate time window for Sec. 1446(b) runs from receipt of service by the first-served defendant only."¹² Beal urged the court to adopt the "first-served" rule and hold that J&J's notice of removal was untimely because it was filed more than thirty days after service on the first defendant.¹³ In rejecting Beal's argument, the Eleventh Circuit adopted the last-served rule, interpreting Sec. 1446(b) to permit each defendant thirty days in which to seek removal.¹⁴

The Eleventh Circuit first observed that "the trend in recent case law favors the last-served defendant rule."¹⁵ of the four circuit courts that had considered the issue, only the United States Courts of Appeals for the Fifth¹⁶ and the Fourth Circuits¹⁷ had adopted the first-served rule.¹⁸ The Eleventh Circuit noted that the Fourth and Fifth Circuit cases adopting the first-served rule were distinguishable from the case at bar¹⁹ and that the most recent of those decisions was more than fifteen years old.²⁰ In contrast, the court noted that the two circuit courts that adopted the last-served rule had "done so far more recently: the Eighth Circuit in 2001,²¹ and the Sixth Circuit in 1999."²²

The Eleventh Circuit also observed that "both common sense and considerations of equity favor the last-served defendant rule."²³ Both the Eighth²⁴ and Sixth Circuits²⁵ had endorsed the last-served rule for equitable reasons, and the Eleventh Circuit was persuaded by the Sixth Circuit's holding that the "first-served" rule improperly requires reading the term "first-served defendant" into the statute.²⁶

The Eleventh Circuit was

unpersuaded by the rationale behind the first-served rule [because] [t]hose courts that have endorsed the first-served rule have generally done so for two reasons: (1) it is perceived as more consistent with the unanimity rule for notices of removal; and, (2) courts are to narrowly construe the removal statute and federal jurisdiction.²⁷

The Eleventh Circuit reasoned that the last-served rule is consistent with the rule of unanimity²⁸ because earlier-served defendants could choose to join in a later-served defendant's motion.²⁹ The court also noted that

[t]he unanimity rule alone does not command that a first-served defendant's failure to seek removal necessarily waives an unserved defendant's right to seek removal; it only requires that the later-served defendant receive the consent of all then-served defendants at the time he files his notice of removal.³⁰

The Eleventh Circuit also rejected the argument that a strict construction of the removal statute required it to endorse the first-served rule.³¹ Instead, the court agreed with the Eighth Circuit's prediction that the United States Supreme Court would endorse the last-served rule because it recognizes that individual defendants are not required to take action until they are properly served.³² The court held as follows:

[The Supreme Court's holding in] Murphy Brothers supports the last-served defendant rule because a defendant has no obligation to participate in any removal procedure prior to his receipt of formal service of judicial process. Contrary to Murphy Brothers, the first-served defendant rule would obligate a defendant to seek removal prior to his receipt of formal process bringing him under the court's jurisdiction.³³

Determing that it would be "contrary to the Supreme Court's holding in Murphy Brothers, as well as the interests of equity, to permit a first-served defendant to . . . bind later-served defendants to a state court forum when those defendants could have sought removal had they been more promptly served by the plaintiff," the Eleventh Circuit adopted the last-served rule—which permits each defendant, upon formal service of process, thirty days to file a notice of removal—as the most reasonable interpretation of Sec. 1446(b).³⁴ The court held this interpretation to be consistent with Supreme Court precedent and the "tide of recent decisions by the courts of appeals, as well as the majority of the district courts in this Circuit [which] recognize that equity favors permitting each defendant thirty days in which to seek removal under the statute."³⁵

III. Statutory Interpretation

A. Whether the Federal Arbitration Act Permits Enforcement of a Contract Clause Requiring an Aggrieved Party Before Filing a Lawsuit, to Institute Mediation or Nonbinding Arbitration

The interlocutory appeal in Advanced Bodycare Solutions, LLC v. Thione International, Inc.³⁶ required the Eleventh Circuit to decide whether the Federal Arbitration Act (FAA)³⁷ permits enforcement of a contractual provision which requires an aggrieved party to institute mediation or nonbinding arbitration before filing a lawsuit.³⁸ In concluding that it does not, the court affirmed an order from the United States District Court for the Southern District of Florida denying the defendant-appellant's motion to stay pending arbitration pursuant to Sec. 3 of the FAA.³⁹ Because the court held that FAA remedies, including mandatory stays and motions to compel, may not be invoked to compel mediation, the court limited its holding and "reserve[d] for another day [the question of] whether non-binding arbitration is within the scope of the FAA."⁴⁰

Advanced Bodycare International (ABI) and Thione International, Inc. (Thione) were parties to a contract that granted ABI exclusive rights to market and distribute Thione's nutritional supplements and related "testing kits."⁴¹ The contract contained a dispute resolution provision that provided in pertinent part the following:

If any dispute arises between the parties relating to the interpretation, breach[,] or performance of this Agreement. . . and the parties cannot resolve the dispute within thirty (30) days of a written request by either party to the other party, the parties agree to hold a meeting . . . to attempt in good faith to negotiate a resolution of the dispute prior to pursuing other available remedies. If within sixty (60) days after such written request, the parties have not succeeded in negotiating a

resolution of the dispute, such dispute shall be submitted to non-binding arbitration or mediation with a mutually agreed upon, independent arbitrator or mediator. . . . If no resolution acceptable to both parties is reached through arbitration or mediation, either party may resort to instituting legal action against the other in court and all rights and remedies of the party shall be preserved in such action.⁴²...