By Sarah E. Harmon
This is Part 6 of an 8-part series which covers:
- Part 1 – Federal Question Jurisdiction;
- Part 2 – Supplemental Jurisdiction;
- Part 3 – Diversity Jurisdiction: Complete Diversity;
- Part 4 – Diversity Jurisdiction: Amount in Controversy;
- Part 5 – Diversity Jurisdiction: Resident Defendants;
- Part 6 – Timing of Removal;
- Part 7 – Checklist for Removal;
- Part 8 – Remand
Part 6 – Timing of Removal
In Part 1 and Part 2 of this Removal series, we discussed removal based on federal question jurisdiction and supplemental jurisdiction. In Part 3, Part 4, and Part 5 of this series, we discussed the three requirements for removal based on diversity jurisdiction. In this article, we explore the timing for removal of an action.
The 30-Day Rule
A defendant must file a Notice of Removal within 30 days of the defendant’s receipt of a copy of the complaint “through service or otherwise.” 28 U.S.C. § 1446(b). The phrase “through service or otherwise” has caused much debate among practitioners as to which specific acts other than service may trigger the deadline for removal. However, the United States Supreme Court clarified that a defendant’s mere receipt of the complaint without formal service is insufficient to trigger the removal deadline. Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc., 526 U.S. 344, 353-56 (1999). Thus, if the defendant obtains a copy of a complaint by downloading the document from the court’s docket, or plaintiff’s counsel emails the defendant a copy of the complaint in the hopes of spurring settlement talks, the clock will not begin to run on removal.
Essentially, the phrase “or otherwise” in 28 U.S.C. § 1446(b) is meant to address situations in which a state’s laws permit the summons and complaint to be served separately or where the defendant need only be served with the summons and not the complaint.
Extensions of Time to Answer a Complaint
The majority rule is that the 30-day time period for removal is mandatory and cannot be extended by stipulation or court order. Therefore, it is important to remember that a stipulation or order to extend the time to file an answer to the complaint will not extend the time to remove the action. Lewis v. City of Fresno, 627 F. Supp. 2d 1179, 1182 (E.D. Cal. 2008).
When An Action Is Not Removable on the Face of the Complaint
Often, a case will not be removable on the face of the complaint, but it will become removable during the course of the action if a party who destroyed diversity jurisdiction is dismissed or the complaint is amended to allege additional damages or a claim based on federal question jurisdiction. In such instances, the Notice of Removal can be timely filed within 30 days after the defendant receives a copy of the
Example
Larry, a Nevada citizen, works for Potatoes Inc., a California entity. One day, while working the potato peelers, Larry’s hand was severely injured. Larry filed a personal injury action in Nevada state court, seeking past and future medical damages, pain and suffering, and lost wages in excess of $15,000. Potatoes Inc. wants to remove the action. Complete diversity exists, and Potatoes Inc. is not a Nevada resident; however, on the face of the complaint, there is no indication that Larry’s damages will exceed $75,000. Thus, at the time of service of the complaint, Potatoes Inc. cannot remove the action. But what are Potatoes Inc.’s options?
Even though Potatoes Inc. is 99.9 percent certain that Larry’s damages are going to exceed $75,000, given the nature of his injury, the amount-in-controversy requirement for removal has to be proven by a preponderance of the evidence. Therefore, Potatoes Inc. may want to wait for the exchange of initial disclosures before attempting to remove the action. The initial disclosures should include more specific information concerning the categories and amount of the damages that Larry is seeking in the case. If the disclosure of Larry’s past medical damages and past lost wages exceed $75,000, then Potatoes Inc. has 30 days from service of the initial disclosures to file a Notice of Removal. On the other hand, if the past medical damages and past lost wages do not exceed $75,000, then Potatoes Inc. may be forced to wait for Larry’s expert disclosure regarding his amount of future lost earnings, future medical damages, and pain and suffering before it will have sufficient evidence to demonstrate that the amount-in-controversy requirement is satisfied.
The One-Year Rule
In the example above, Potatoes Inc. was forced to wait for service of initial disclosures or expert disclosures before it would have grounds to seek removal, because the grounds for removal were not apparent on the face of the complaint. In such circumstances, there is one important rule for defendants to keep in mind: For removals based on diversity jurisdiction, an action cannot be removed more than one year after commencement of the action, regardless of when the grounds for removal are discovered. 28 U.S.C. § 1446(c)(1). The only exception is if the defendant can show the plaintiff acted in bad faith to prevent removal.
Therefore, if you find yourself in the situation where grounds for removal are not apparent on the face of the complaint, the best practice is to err on the side of caution and file a Notice of Removal if a good faith argument can be made that the requirements for diversity jurisdiction are satisfied, even if the facts supporting diversity jurisdiction are not explicit in the complaint. If the case is ultimately remanded due to insufficient evidence of jurisdiction, the defendant can always remove again during the one-year time period if subsequent jurisdictional evidence is obtained. It may be possible to present a good faith argument as to the amount-in-controversy based on common sense (given the categories of damages alleged and the severity of the alleged injury) or historical data (reliance on substantially similar actions filed in the past).
Stay tuned for Part 7 in this series, posted here, in which I will provide a checklist for removal of an action.
Please email me if you would like a copy of this series.
About Sarah Harmon:
Sarah E. Harmon is a partner at Bailey Kennedy and has over 18 years of experience in the areas of appellate advocacy and civil/business litigation, including breach of contract, fraud, legal malpractice, products liability, complex civil litigation, and many other types of business disputes. Her experience with appellate advocacy includes appeals from adverse judgments and orders as well as petitions for extraordinary writ relief. Ms. Harmon can assist clients with obtaining settlements and judgments before going to trial, avoiding errors at trial, and properly preserving issues for an appeal.
If you have any questions about appeals or civil/business litigation, please call or email Sarah Harmon at 702-562-8820 or sharmon@baileykennedy.com. Additional resources can also be found at www.baileykennedy.com/category/articles/ or linkedin.com/in/sarahharmonbk/.
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