For The Defense, November 2012 - DRI Today
For The Defense, November 2012 - DRI Today
For The Defense, November 2012 - DRI Today
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Product Liability<br />
been filed in federal court.” WRS Motion<br />
Picture and Video Lab. v. Post Modern Edit,<br />
Inc., 33 F. Supp. 2d 876, 876 (C.D. Cal. 1999).<br />
Thus, the U.S. District Court, Central District<br />
of California determined the forum<br />
defendant rule to be jurisdictional consistent<br />
with Grubbs. Id. at 878.<br />
52 ■ <strong>For</strong> <strong>The</strong> <strong>Defense</strong> ■ <strong>November</strong> <strong>2012</strong><br />
<strong>The</strong> Majority Interpret Violating<br />
the Rule as Procedural Error<br />
Creating a Waivable Defect<br />
<strong>The</strong> majority of circuit courts, including<br />
the First, Second, Third, Fifth, Seventh,<br />
Ninth, Tenth, and Elevenths Circuits, hold<br />
that a violation of the forum defendant<br />
rule is procedural and, thus, waivable. See<br />
Farm Constr. Servs., Inc. v. Fudge, 831 F.2d<br />
18, 22 (1st Cir. 1987) (holding that a violation<br />
of the forum defendant rule did not<br />
strip the district court of its jurisdiction<br />
because it was a “technical” defect that had<br />
been waived); Woddward v. D.H. Overmyer<br />
Co., 428 F.2d 880, 882–83 (2d Cir. 1970);<br />
Blackburn v. United Parcel Serv., Inc., 179<br />
F.3d 81, 90 n.3 (3d Cir. 1999) (describing<br />
a §1441(b) violation as a waivable removal<br />
defect); Korea Exchange Bank v. Trackwise<br />
Sales Corp., 66 F.3d 46, 50 (3d Cir. 1995);<br />
In re Shell Oil Co., 932 F.2d 1518, 1523 (5th<br />
Cir. 1991); Hurley v. Motor Coach Indus.<br />
Inc., 222 F.3d 377, 380 (7th Cir. 2000) (holding<br />
that the forum defendant rule “is more<br />
a matter of removal procedure, and hence<br />
waivable, than a matter of jurisdiction”);<br />
Lively v. Wild Oats Markets, Inc., 456 F.3d<br />
933, 940 (9th Cir. 2006) (describing removal<br />
by a forum defendant as a “technical” violation);<br />
Am. Oil Co. v. McMullin, 433 F.2d<br />
1091, 1095 (10th Cir. 1970) (describing a<br />
§1441(b) violation as a waivable defect in<br />
removal proceedings); Pacheco de Perez v.<br />
AT & T Co., 139 F.3d 1368, 1372 n.4 (11th<br />
Cir. 1998); Borg- Warner Leasing v. Doyle<br />
Elec. Co., 733 F.2d 833, 835 n.2 (11th Cir.<br />
1984). Although these circuits agree in<br />
interpreting the forum defendant rule as<br />
raising procedural issues, their procedural<br />
postures and rationales differ.<br />
<strong>For</strong> example, the First Circuit in Fudge<br />
relied on the plaintiff’s actions to determine<br />
“implicit consent” to federal jurisdiction.<br />
See Fudge, 831 F.2d at 22. In Fudge,<br />
the defendants removed the case to a federal<br />
court on the basis of diversity jurisdiction,<br />
and the federal district court rendered<br />
a final judgment dismissing the plaintiff’s<br />
complaint. See id. at 19. <strong>The</strong> removal<br />
was improper under the removal statute<br />
because the defendant was a citizen of the<br />
state where the action was filed. Id. at 22.<br />
<strong>The</strong> plaintiff appealed, arguing that the federal<br />
district court did not have jurisdiction<br />
to enter a judgment against it because “the<br />
parties acted upon a mutual mistake of law<br />
with respect to the propriety of removal to<br />
federal court.” Id. at 21. <strong>The</strong> First Circuit<br />
upheld the federal district court’s judgment,<br />
explaining that the plaintiff’s “prosecution<br />
of the case in federal court for<br />
approximately one year, and its failure<br />
to object to removal until after judgment<br />
had been rendered, constitute[d] implicit<br />
consent to federal court jurisdiction and<br />
waiver of its right to object to removal.”<br />
Id. at 22.<br />
<strong>The</strong> Third Circuit in Korea Exchange<br />
Bank, however, found that whether the case<br />
could have been filed initially in a federal<br />
court would determine the outcome. See<br />
Korea Exchange Bank v. Trackwise Sales<br />
Corp., 66 F.3d at 47. In Korea Exchange<br />
Bank, the plaintiff, a citizen of New York,<br />
filed a complaint in a New Jersey state court<br />
against three defendants, all citizens of<br />
New Jersey. See id. at 47. <strong>The</strong> first defendant<br />
that the plaintiff served, Trackwise Sales<br />
Corp., timely removed the action to a federal<br />
district court on diversity jurisdiction<br />
grounds. Id. Nothing happened in the case<br />
for over seven months after the federal district<br />
court sua sponte remanded the case<br />
due to violation of the forum defendant<br />
rule. Id. <strong>The</strong> defendants appealed the federal<br />
district court’s remand order. Id. <strong>The</strong><br />
Third Circuit reversed, holding that “an<br />
irregularity in removal of a case to federal<br />
court is to be considered ‘jurisdictional’<br />
only if the case could not initially have been<br />
filed in federal court.” Id. at 50 (emphasis<br />
added). <strong>The</strong> Third Circuit recognized in the<br />
holding that unlike in Grubbs, the federal<br />
district court in the Korea Exchange Bank<br />
case had not entered a final judgment. Id.<br />
Similar to Korea Exchange Bank, the<br />
Fifth Circuit in In re Shell Oil Co. based its<br />
holding on the language of the removal<br />
statute and the statute’s underlying policy.<br />
See In re Shell Oil Co., 932 F.2d at 1521–22.<br />
In In re Shell Oil Co., the plaintiffs moved<br />
for a remand 34 days after the filing of the<br />
defendants’ notice of removal, arguing that<br />
two of the defendants were citizens of the<br />
forum state. Id. at 1518. <strong>The</strong> federal district<br />
court granted the remand, and the<br />
defendants appealed. Id. <strong>The</strong> Fifth Circuit<br />
reversed the remand order, holding that<br />
“improper removal under §1441(b) is [] a<br />
waivable removal defect.” Id. at 1522. To<br />
support the holding the court relied on the<br />
text of 28 U.S.C. §1447(c), which states that<br />
“‘a motion to remand the case on basis of<br />
any defect in removal procedure must be<br />
made within 30 days after the filing of the<br />
notice of removal.’” Id. at 1521 (quoting 28<br />
U.S.C. §1447(c)). <strong>The</strong> court explained that<br />
the “policy behind the rule is to prevent a<br />
party who is aware of a defect in removal<br />
procedure from using the defect as insurance<br />
against later unfavorable developments<br />
in federal court.” Id. at 1522.<br />
<strong>The</strong> Minority Interpret Violating<br />
the Rule as a Jurisdictional Issue<br />
Creating a Nonwaivable Defect<br />
<strong>The</strong> Eighth Circuit Court of Appeals is the<br />
only circuit court to hold expressly that<br />
failing to comply with the forum defendant<br />
rule is a jurisdictional issue thus creating a<br />
nonwaivable defect. See Hurt v. Dow Chem.<br />
Co., 963 F.2d 1142, 1146 (8th Cir. 1992). In<br />
Hurt, the plaintiff filed the lawsuit in a state<br />
court against the defendants for personal<br />
injuries allegedly resulting from exposure<br />
to pesticide manufactured and applied by<br />
the defendants. Id. at 1143. <strong>The</strong> defendants<br />
filed a petition to remove the case to the<br />
federal court on the basis of federal question<br />
removal jurisdiction. Id. <strong>The</strong> plaintiff<br />
moved to remand the case to the state<br />
court, arguing that the case was improperly<br />
removed on federal question grounds.<br />
Id. at 1143–44. <strong>The</strong> federal district court<br />
denied the plaintiff’s motion, holding that<br />
removal on federal question grounds was<br />
proper at the time of removal, and plaintiff<br />
“waived any non- jurisdictional objection<br />
to the impropriety of removal.” Id. at<br />
1144 (quoting Hurt v. Dow Chem. Co., No.<br />
90-0783-C (3), slip op. 3 (E.D. Mo. May 22,<br />
1991)). <strong>The</strong> plaintiff appealed to the Eighth<br />
Circuit. Id.<br />
In the appeal, the sole question presented<br />
was whether removal was proper.<br />
Id. <strong>The</strong> defendants argued that removal<br />
was proper because a preemption defense<br />
arising under federal law gave the federal<br />
district court federal question jurisdiction<br />
and, in the alternative, the federal