Tuesday, April 19, 2011

So Say We All?: Northern District of Indiana Opinion Addresses Circuit Split Over Whether Each Defendant Must Submit Written Documentation Consenting to Removal

Earlier this month, I posted an entry about the circuit split over how 28 U.S.C. Section 1446(b)'s 30 day period for removal applies in actions with multiple defendants served on different days. In other words, the post dealt with when defendants can move to remove in multiple defendant litigation. In today's post, I will discuss the recent opinion of the United States District Court for the Northern District of Indiana in Boruff v. Transervice, Inc., 2011 WL 1296675 (N.D.Ind. 2011), which discussed the circuit split over whether each defendant in multiple defendant litigation must submit written documentation indicating that it consents to removal or whether one defendant's notice of removal can state that other defendant(s) consent to removal. In other words, this post will deal with how defendants can remove in multiple defendant litigation. 

In Boruff, James Boruff filed a complaint in state court, alleging that he was injured as a result of the mechanical failure of a trailer hitch crank support on a vehicle he was operating, which was owned or leased by and/or maintained under the direction of defendants Walgreen Co. and/or Transervice, Inc. Walgreen was served with a summons and the complaint on July 13, 2010, and Transervice was served the next day. On August 12, 2010, Walgreen filed a notice of removal with the United States District Court for the Northern District of Indiana. This notice of removal represented that "Defendant, Transervice, Inc. consents to the removal." Transervice did not itself file any paper indicating that it consented to removal.

Boruff thereafter moved to remand the action to state court, claiming that the defendants failed to comply with 28 U.S.C. Section 1446(a)'s requirement that all defendants consent to removal. Specifically, Section 1446(a) provides that

A defendant or defendants desiring to remove any civil action or criminal prosecution from a State court shall file in the district court of the United States for the district and division within which such action is pending a notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure and containing a short and plain statement of the grounds for removal, together with a copy of all process, pleadings, and orders served upon such defendant or defendants in such action.

In addressing this motion, the court noted that there is a circuit split on the issue. For instance, in Harper v. AutoAlliance Intern., Inc., 392 F.3d 195 (6th Cir. 2004), the Sixth Circuit found no problem with a defendant named Kelly not filing a pleading consenting to removal because the attorney for the three other defendants filed a notice of removal indicating that Kelly consented to removal. According to the court,

Rule 11 merely requires any pleading to be signed "by at least one attorney of record" and states that by presenting such pleading the attorney is certifying that, inter alia, "the allegations and other factual contentions have evidentiary support."... Thus, the attorney for AutoAlliance, AAI and Childress was bound by Rule 11 when she represented to the district court that Kelly consented to the removal. Nothing in Rule 11, however, required Kelly or his attorney to submit a pleading, written motion, or other paper directly expressing that concurrence or prohibited counsel for the other defendants from making such a representation on Kelly's behalf. Had counsel for AutoAlliance, AAI and Childress misrepresented Kelly's concurrence in the removal, no doubt Kelly would have brought this misrepresentation to the court's attention and it would have been within the district court's power to impose appropriate sanctions, including a remand to state court.

Later, in Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208 (9th Cir. 2009) (which Adam Steinman posted about on this blog), the Ninth Circuit

adopt[ed] the Sixth Circuit's position as fully sufficient to implement the unanimous joinder rule. The so-called "rule of unanimity," announced by the Supreme Court in Chicago, Rock Island, & Pacific Railway Co. v. Martin, 178 U.S. 245, 248...(1900), as an interpretation of a predecessor removal statute, merely says that "all the defendants must join in the application" for removal....Chicago does not specify how defendants must join in removal. Nor does any federal rule or statute specifically prescribe a particular manner in which codefendants' joinder must be expressed. In the absence of any rule governing joinder in removal, we turn to the general principles that govern procedures for removal and for attorney representations to district courts generally. Under 28 U.S.C. ยง 1446(a), "[a] defendant or defendants desiring to remove any civil action" must file a "notice of removal signed pursuant to Rule 11 of the Federal Rules of Civil Procedure." Rule 11, in turn, provides that "[e]very pleading, written motion, and other paper must be signed by at least one attorney of record,"...and that "[b]y presenting to the court a pleading, written motion, or other paper-whether by signing, filing, submitting, or later advocating it-an attorney...certifies that...the factual contentions [therein] have evidentiary support...."

Applying these general principles, we conclude that the filing of a notice of removal can be effective without individual consent documents on behalf of each defendant. One defendant's timely removal notice containing an averment of the other defendants' consent and signed by an attorney of record is sufficient. Ernst & Young submitted such an averment under threat of sanctions pursuant to Rule 11; the other co-defendants were notified of the removal notice and had an opportunity to object to it. These two considerations-the availability of sanctions and of objection-mitigate concerns that one defendant might falsely state the other defendants' consent, or that one defendant might game the system by silently allowing another to remove and, if the federal forum proves disadvantageous, belatedly object that he had not consented.

Conversely, in Getty Oil Corp. a Div. of Texaco, Inc. v. Insurance Co. of North America, 841 F.2d 1254 (5th Cir. 1988), the Fifth Circuit held that

while it may be true that consent to removal is all that is required under section 1446, a defendant must do so itself. This does not mean that each defendant must sign the original petition for removal, but there must be some timely filed written indication from each served defendant, or from some person or entity purporting to formally act on its behalf in this respect and to have authority to do so, that it has actually consented to such action. Otherwise, there would be nothing on the record to "bind" the allegedly consenting defendant. 

Later, in Pritchett v. Cottrell, Inc., 512 F.3d 1057 (8th Cir. 2008), the Eighth Circuit agreed with the Fifth Circuit, citing Getty for the proposition that

There must..."be some timely filed written indication from each served defendant," or from some person with authority to act on the defendant's behalf, indicating that the defendant "has actually consented" to the removal.

Most importantly for the Northern District of Indiana, the Seventh Circuit has agreed with the Fifth and Eighth Circuits, relying upon Getty in Roe v. O'Donohue, 38 F.3d 298 (7th Cir. 1994), to conclude that

A petition for removal fails unless all defendants join it.....To "join" a motion is to support it in writing, which the other defendants here did not.

Therefore, the Northern District of Indiana held that Walgreen's representation in its notice of removal

that "Defendant, Transervice, Inc. consents to the removal"...[wa]s insufficient to meet the Seventh Circuit's requirement of express, written consent.

So, who has the better of the argument? I think that the answer is the FifthSeventh, and  Eighth Circuits. Why? Both the Sixth and Ninth Circuit focused upon the fact that Federal Rule of Civil Procedure 11 merely requires any pleading to be signed "by at least one attorney of record," meaning (1) that not all attorneys need to sign notices of removal in multiple defendant litigation; and (2) that an attorney representing that other defendants consented to the removal would be subject to sanctions if the other defendants did not in fact consent.

Here, however, are some problems I see with this analysis. First, what constitutes consent by another defendant? If another defendant indicates that it does not object to removal, is that sufficient? Would it be enough for the other defendant to say that it consents to removal? Or, would the other defendant specifically have to consent to defense counsel representing in the notice of removal that the other defendant consents to removal? Sure, if the defense counsel filing the notice of removal creates the other defendant's consent out of cloth, he would be subject to sanctions under Rule 11, but I imagine that most cases would involve questions about whether other defendants actually consented and could lead to complicated sanctioning and remand decisions. It seems that the only way to avoid these problems would be to have other defendants put their consents in writing, but, if they are putting their consents in writing (and filing them), they are complying with precedent in the FifthSeventh, and  Eighth Circuits.

Of course, this also prompts the question of whether non-filing defendants are bound by notices of removal in the Sixth and Ninth Circuits. Assume that defendant A gets defendant B's consent to remove and indicates as much in its notice of removal. Then, assume that defendant B gets cold feet and wants the action back in state court. Is defendant B bound by the notice of removal? I don't know. Is there any other context in which attorneys can file pleadings, written motions, or other papers that bind parties other than the party or parties that the attorney represents?

One thing that I think is clearer is that defendant B and/or his counsel could not be sanctioned for defendant A's notice of removal in this case. The Advisory Committee's Note to the 1983 Amendment to Federal Rule of Civil Procedure 11 provides that "If the duty imposed by the rule is violated, the court should have the discretion to impose sanctions on either the attorney, the party the signing attorney represents, or both, or on an unrepresented party who signed the pleading, and the new rule so provides."

In this example, the attorney for defendant A does not represent defendant B, so defendant B couldn't be sanctioned for defendant A's notice of removal, and the attorney for defendant B doesn't file anything, so presumably neither could be sanctioned. Or would the attorney for defendant A "represent" defendant B in filing the notice of removal? And could defendant B and/or his attorney be sanctioned for filing a motion to remand after orally representing to the attorney for defendant A that they consented to removal? Again, I don't know.

And, how about this: Let's say (1) that there is no question that defendant B consented to the removal; and (2) that there is no question that the removal was improper (e.g., the amount in controversy clearly did not exceed $75,000). Again, I see no way in which defendant B and/or his attorney could be subject to sanctions under Rule 11 because they never filed anything. And would they be responsible for costs under 28 U.S.C. Section 1447(c)? Again, I don't know.

But if they couldn't be sanctioned, I see sort of a reverse prisoner's dilemma situation possibly developing in multiple defendant removal cases. All defendants want to remove, and it would be in all of their best interests to remove, but none of them want to put their necks on the line and file the notice of removal. Instead, each asks the others to file the notice of removal and represent that they also consent to removal as the 30 day clock ticks.ticks.ticks.

Okay, so maybe this scenario wouldn't arise very often, but it seems to me that the Sixth and Ninth Circuits are trying to make things easier by not requiring all defendants to file writings indicating that they consent to removal. And, I think that this post reveals that such a conclusion actually complicates the issue more and creates mixed motives.  Therefore, I think that a clear rule requiring all defendants to indicate in writing that they consent to removal is the better practice.

-Colin Miller

http://lawprofessors.typepad.com/civpro/2011/04/so-say-we-all-northern-district-of-indiana-opinion-addresses-circuit-split-over-whether-each-defenda.html

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