Law Updates


An Overview of Snap Removal

(April 12, 2022) Imran Shaukat, Principal.

What is Snap Removal?

Removal is the procedure for a party in a state-court action to move the lawsuit to federal court.  For removal to be proper, a federal district court must possess subject matter jurisdiction over the case. Primarily, federal district courts possess subject-matter jurisdiction over claims where a plaintiff alleges a cause of action arising under federal law, see 28 U.S.C. § 1331 (federal question jurisdiction), and claims where the matter in controversy exceeds $75,000, exclusive of interest and costs and is between citizens of different states, see 28 U.S.C. § 1332 (diversity jurisdiction).

When a defendant seeks to remove a state-court action to federal court before a “forum defendant” is served with process, defendants arguably circumvent the Forum Defendant Rule’s prohibition against removal. This apparent loophole is known as snap removal.

 

How does Snap Removal Implicate the Forum Defendant Rule?

The Forum Defendant Rule can be implicated when removal is based on diversity grounds. Under this rule, removal of cases on traditional diversity grounds is prohibited where any party in interest “properly joined and served” as a defendant is a citizen of the state where the action is brought. See 28 U.S.C. § 1441(b)(2). A defendant who is a citizen of the state where the action is brought is known as a “forum defendant.” For example – Plaintiff, a Californian, files suit in New York state court against two defendants, one a citizen of Maryland and the other a citizen of New York. The New York defendant is a forum defendant and the Maryland defendant is a non-forum defendant. Assuming the matter in controversy exceeds $75,000, the Maryland defendant would not run afoul of the Forum Defendant Rule if she removed the state-court action to New York federal court on the ground of diversity jurisdiction prior to the New York defendant being served in the state-court action.

 

What are the Benefits of Snap Removal?

The justification for providing out-of-state litigants who are sued in state court access to federal courts was specifically identified by the Framers and ratifiers of the Constitution of the United States, being borne out of the fear of unjust treatment of out-of-state litigants by local juries. In Lumbermen’s Mut. Cas. Co. v. Elbert, 75 S. Ct. 151, 155 (U.S. 1954), Justice Frankfurter noted in his concurring opinion the “power of Congress to confer such jurisdiction was based on the desire of the Framers to assure out-of-state litigants courts free from susceptibility to potential local bias . . . But in any event, whatever ‘fears and apprehensions were entertained by the Framers and ratifiers, there was fear that parochial prejudice by the citizens of one State toward those of another, as well as toward aliens, would lead to unjust treatment of citizens of other States and foreign countries.”

Today, the benefits of proceeding in federal court not only include pooling juries from larger geographic ranges to obviate the potential for local biases but can also entail cost savings of pre-discovery disclosures and discovery limitations among numerous other benefits. For these and many other reasons, out-of-state defendants will often seek to remove an action from the state in a snap if provided the opportunity.

 

Federal Court Rulings on Snap Removal

Before 2021, all federal courts of appeal that had specifically addressed snap removal concluded that the practice was permissible. However, in Woods v. Ross Dress for Less, Inc., 833 Fed. Appx. 754, 755 (10th Cir. 2021), the United States Court of Appeals for the Tenth Circuit reached the opposing conclusion and held that snap removal by a non-forum defendant was not permissible. In 2014, the United States Court of Appeals for the Eleventh Circuit recognized in dicta that the district  court below it found that a case was removable because the Forum Defendant Rule applies only if a forum defendant has been “properly joined and served.” However, the appellate court noted that “that  aspect of the district court’s order is not before us, and we assume arguendo that it is correct.” See Goodwin v. Reynolds, 757 F.3d 1216, 1220-21 (11th Cir. 2014).

In Woods, Plaintiff, a citizen of Oklahoma, tripped and fell over a “Ross is hiring” sign outside a Ross Dress for Less, Inc. (“Ross”) store in Oklahoma. Plaintiff sued Ross, a non-Oklahoma corporation headquartered in California, and the store’s manager, an Oklahoma citizen, in Oklahoma state court, asserting premises liability under Oklahoma state law. Id. at 717. Ross removed the action to federal court, invoking diversity jurisdiction under 28 U.S.C. § 1332(a)(1). Id. Plaintiff filed a motion to remand the case back to state court, arguing that removal was improper because she and the store’s manager were both citizens of Oklahoma. Specifically, Plaintiff argued that the store manager’s citizenship must be considered even though she had not been served. Id. at 756. The district court denied Plaintiff’s motion to remand and granted summary judgment in favor of Ross. Regarding the denial of Plaintiff’s motion to remand, the district court relied on 28 U.S.C. § 1441(b)(2), holding that removal was appropriate because no “properly joined and served” defendant was an Oklahoma citizen at the time of removal. Id. Plaintiff appealed. Id. at 757.

On appeal, the Court of Appeals for the Tenth Circuit held, inter alia, that the district court erred in denying the motion to remand Plaintiff’s case back to state court. Specifically, the appellate court concluded that the district court lacked removal jurisdiction under 28 U.S.C. § 1441(a) and 28 U.S.C. §1332(a)(1), and lacked diversity subject matter jurisdiction to enter summary judgment because Plaintiff and the store manager were not diverse. Id. at 756. The Court of Appeals for the Tenth Circuit reasoned that “[b]ecause there was not complete diversity between all named plaintiffs and all named defendants, . . . and no other basis for federal jurisdiction existed,” the court lacked removal jurisdiction. Id. at 759.

 

Appellate Split in Snap Removal 

Federal courts across the country are divided on whether snap removal is permissible. An out-of-state defendant, therefore, must pay close attention to the law of the litigation forum when analyzing whether removal is available before the service of a forum defendant.  Four Circuit Courts of Appeal have weighed-in on the availability, and non-availability, of snap removal:

  • Second Circuit : See Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 706 (2d Cir. 2019) (“Allowing a defendant that has not been served to remove a lawsuit to federal court ‘does not contravene’ Congress’s intent to combat fraudulent joinder . . .”)(citations omitted)
  • Third Circuit : See Encompass Insurance Company v. Stone Mansion Restaurant Incorporated, 902 3d 147, 151-52 (3rd Cir. 2018) (Concluding that “the language of the forum defendant rule in section 1441(b)(2) is unambiguous. Its plain meaning precludes removal on the basis of in-state citizenship only when the defendant has been properly joined and served.”)
  • Fifth Circuit : See Texas Brine Co., L.L.C. v. American Arbitration Association, 955 F.3d 482 (5th 2020) (affirming denial of motion to remand after removal and concluding that a non-forum defendant may remove otherwise removable case even when named defendant who has yet to be properly joined and served is a citizen of forum state).

 

Federal Circuit Prohibiting Snap Removal

  • Tenth Circuit (Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming): See Woods v. Ross Dress for Less, Inc., 833 Fed. Appx. 754, 756 (10th Cir. 2021) (concluding that the district court lacked removal jurisdiction under 28 S.C. § 1441(a) and 28 U.S.C. § 1332(a)(1), and lacked diversity subject matter jurisdiction to enter summary judgment because Plaintiff and the un-served store manager were both citizens of Oklahoma).

 

Current State of Snap Removal 

The debate over snap removal has even entered Congress with the introduction of The Removal Jurisdiction Clarification Act of 2020 (H.R. 5801), which seeks to codify a “snapback” provision in which a district court must remand a snap removal case upon motion by the plaintiff.  The bill is currently sitting in the House Committee on the Judiciary, having been referred to the Subcommittee on Courts, Intellectual Property, and the Internet.  Absent a statutory amendment to the removal procedures, litigants must continue to monitor new federal decisions at the district and circuit levels to determine whether they can take advantage of snap removal in cases where a forum-defendant is present.

If you have questions about snap removal or other aspects of federal civil procedure, contact Imran Shaukat at ishaukat@semmes.com.