Tuesday, November 27, 2007

Removing despite a named forum-state defendant

Suppose complete diversity exists.  The amount in controversy easily exceeds the jurisdictional amount.  Yet, the plaintiff wants to keep the case in state court.  The next step in the common forum-fight template is that the plaintiff sues in a forum of which at least one defendant is a citizen.  It's commonplace:  a forum-state-citizen defendant defeats removal.  Or perhaps, as illustrated by James Beck and Mark Herrmann at Drug and Device Law, we should review 28 U.S.C. 1441(b) more carefully.

What if a defendant removes before the forum-state defendant has been served?  What if a defendant monitors the docket and removes before any defendant (including the removing defendant and the forum-state defendant) has been served?  1441(b) only bars removal when a forum-state defendant has been "properly joined and served."  Most folks reading that provision naturally think of fraudulent joinder -- of course we can disregard the citizenship of a jurisdiction killer who has been fraudulently joined to the lawsuit.  But relying upon the plain language of the statute, several defendants have succeeded in using 1441(b) to defeat removal despite the presence of a not-fraudulently-joined forum-state defendant, by simply removing before that defendant has been served. Discussing the recent case, Thomson v. Novartis, Beck and Herrmann note:

We're not mentioning this case only because it's curious. It also has practical implications for drug companies. If your company is facing mass tort litigation -- and non-resident plaintiffs are running to sue you in your home state court, to prevent removal -- monitor your state court dockets. Remove diverse (but otherwise non-removable) cases before the plaintiffs serve the company. Presto! Federal jurisdiction in seemingly nonremovable cases.

*Update here.



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