Thursday, January 12, 2012

Changes to Jurisdiction, Removal and Venue Statutes Now Effective

On Wednesday, December 07, 2011, President Obama signed into law H.R. 394, the "Federal Courts Jurisdiction and Venue Clarification Act of 2011," which amends the statutes dealing with jurisdiction and venue of civil actions in U.S. district courts, including procedures for removal of cases from state courts.

For Fourth Circuit practitioners, one of the more important changes relates to the 30-day time limit for defendants to remove a case. You may recall there was a split of circuits on the so-called "last served defendant rule."  The Fourth Circuit itself was even split on this issue.  There were two different opinions in Barbour v. Int'l Union United Auto. Aerospace, a 2010 opinion adopting the last-served defendant rule, and a later 2011 en banc opinion adopting the "McKinney Intermediate Rule".  No use going into details because this new law settles the question once and for all.

Under the newly amended 28 U.S.C. 1446(b), each defendant now has 30 days to remove from receipt or service of the initial pleadings. The new 1446(b)(2) reads:
(A) When a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.
(B) Each defendant shall have 30 days after receipt by or service on that defendant of the initial pleading or summons described in paragraph (1) to file the notice of removal.
(C) If defendants are served at different times, and a later-served defendant files a notice of removal, any earlier-served defendant may consent to the removal even though that earlier-served defendant did not previously initiate or consent to removal.
This avoids unfair prejudice to the later-served defendant where an earlier-served defendant blew his deadline.

The new law also has some other provisions you will want to review.  It
  • allows removals in diversity cases beyond one year where the court “finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.”
  • adopts a “preponderance of the evidence” standard for proving the amount in controversy and makes some other changes to the amount in controversy proof requirements; and
  • allows removal of cases involving both removable and non-removable claims with required severance and remand of certain non-removable claims; and
  • allows venue changes by consent of all parties
This law does a lot to improve defendants' access to the federal courts.