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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district court had original diversity jurisdiction.<br />
Id. <strong>For</strong> the purposes of this article,<br />
only the court’s analysis regarding diversity<br />
jurisdiction is discussed. <strong>The</strong> parties<br />
agreed that when the plaintiff originally<br />
filed the action in the state court the parties<br />
were diverse. Id. at 1145. However, the<br />
defendants removed the case under 28<br />
U.S.C. §1441, under which a defendant may<br />
not remove a case to a federal court on the<br />
basis of diversity jurisdiction if any of the<br />
defendants is a citizen of the state where<br />
the action was filed. Id. One of the defendants<br />
was a resident of the state from which<br />
the case was removed; thus, the federal district<br />
court did not have diversity jurisdiction<br />
when the case was removed. Id.<br />
<strong>The</strong> defendants argued that a violation<br />
of the forum defendant rule was merely<br />
a procedural defect and that the plaintiff,<br />
therefore, waived any right to object to<br />
the removal. Id. <strong>The</strong> Eighth Circuit examined<br />
Grubbs and found that it was factually<br />
distinguishable from the facts in<br />
Hurt. Id. <strong>The</strong> Eighth Circuit noted that in<br />
Grubbs neither party ever questioned the<br />
removal’s correctness until after the federal<br />
district decided the merits of the case;<br />
then the plaintiff appealed to the Fifth Circuit,<br />
without objecting to the removal in<br />
the federal district court, and Fifth Circuit<br />
then sua sponte questioned the federal<br />
district court’s jurisdiction and ultimately<br />
remanded the case. Id. at 1145–46. <strong>The</strong><br />
Eighth Circuit found Grubbs inapplicable<br />
because the plaintiff in Hurt did object to<br />
the removal to the federal district court in<br />
that court, and “subject- matter jurisdiction<br />
is not a mere procedural irregularity<br />
capable of being waived.” Id. at 1146. In a<br />
footnote, the Eighth Circuit reiterated that<br />
in the Hurt case “there is an absence of<br />
subject- matter jurisdiction,” and “[a] jurisdictional<br />
defect, unlike a procedural defect,<br />
cannot be waived.” Id. at 1146 n.1.<br />
While the Eighth Circuit factually distinguished<br />
Grubbs from Hurt based on the<br />
Hurt plaintiff’s objection to the removal in<br />
the federal district court, it did not analyze<br />
thoroughly or explain why failing to<br />
comply with the forum defendant rule is a<br />
subject- matter jurisdiction defect and not<br />
a procedural defect. Instead, the Eighth<br />
Circuit merely concluded that this type<br />
of violation was a subject- matter jurisdictional<br />
defect.<br />
Undecided Circuits<br />
Answering whether violating the forum defendant<br />
rule creates a waivable defect while<br />
litigating a case in the Fourth or Sixth Circuit<br />
Courts of Appeal becomes a bit murkier.<br />
Neither circuit has definitely answered<br />
the question. District courts in each district<br />
have provided tentative but not definitive<br />
guidance. <strong>The</strong> federal district courts in the<br />
Fourth Circuit have found that the defect<br />
created by violating the forum defendant<br />
rule is procedural and waivable. See, e.g.,<br />
Rehbein v. Biomet Orthopedics, LLC, Civil<br />
No. WDQ-12-1247, <strong>2012</strong> WL 2340000 (D.<br />
Md. June 15, <strong>2012</strong>). On the other hand,<br />
federal district courts in the Sixth Circuit<br />
have found that violating the forum defendant<br />
rule creates a jurisdictional and<br />
nonwaivable defect. See, e.g., Regions Bank<br />
v. Am. Justice School of Law, No. 5:08CV-<br />
134-M, 2009 WL 909548 (W.D. Ky. March<br />
30, 2009).<br />
<strong>The</strong> Fourth Circuit District<br />
Courts—Procedural Defect<br />
<strong>The</strong> Fourth Circuit has not addressed<br />
whether violating the forum defendant<br />
rule results in a procedural or a jurisdictional<br />
defect. See Rehbein v. Biomet Orthopedics,<br />
LLC, Civil No. WDQ-12-1247, <strong>2012</strong><br />
WL 2340000, at *2 n.11 (D. Md. June 15,<br />
<strong>2012</strong>). However, several federal district<br />
courts in that circuit have weighed in on<br />
the issue and all have, thus far, concluded<br />
that violating the rule creates a procedural<br />
and waivable defect if a plaintiff does not<br />
raise an objection within 30 days. See,<br />
e.g., Ada Liss Group v. Sara Lee Branded<br />
Apparel, No. 1:06CV610, 2007 WL 634083,<br />
at *3–4 (M.D.N.C. Feb. 26, 2007); Councell<br />
v. HomerLaughlin China Co., 823 F. Supp.<br />
2d 370, 379 (N.D. W.Va. 2011); Rehbein,<br />
<strong>2012</strong> WL 2340000, at *2.<br />
<strong>The</strong> most thorough analysis of the issue<br />
in the Fourth Circuit has come from the<br />
U.S. District Court, Northern District of<br />
West Virginia in the Councell case. 823 F.<br />
Supp. 2d 370 (N.D. W.Va. 2011). In Councell,<br />
the plaintiffs filed a lawsuit in a West<br />
Virginia state court for wrongful termination.<br />
Id. at 373. <strong>The</strong> parties were diverse,<br />
but the defendant had its principal place<br />
of business in West Virginia. Id. <strong>The</strong> defendant<br />
subsequently removed the case to<br />
the federal court on the basis of both federal<br />
question and diversity jurisdiction.<br />
Id. <strong>The</strong> plaintiffs filed a motion to remand,<br />
arguing that neither federal question nor<br />
diversity jurisdiction existed. Id. <strong>The</strong> plaintiffs<br />
specifically argued that diversity jurisdiction<br />
did not exist in the case because the<br />
defendant had its principal place of business<br />
in West Virginia, so the forum defendant<br />
rule precluded the lawsuit. Id. <strong>The</strong><br />
defendant argued that the plaintiffs had<br />
<strong>The</strong> court explained<br />
that the “policy behind the<br />
rule is to prevent a party<br />
who is aware of a defect<br />
in removal procedure<br />
from using the defect as<br />
insurance against later<br />
unfavorable developments<br />
in federal court.”<br />
waived the forum defendant rule argument<br />
because they failed to file a motion<br />
to remand within 30 days of removal as<br />
required by 28 U.S.C. §1447(c).<br />
<strong>The</strong> federal district court evaluated<br />
“whether removal violative of the forum<br />
defendant rule is a procedural defect or<br />
amounts to a complete lack of subjectmatter<br />
jurisdiction.” Id. at 378. In evaluating<br />
this question, the court found that<br />
while the Fourth Circuit has not yet ruled<br />
on the issue, the majority of other federal<br />
circuit courts to address the issue “have<br />
found that removal by a forum defendant<br />
is a procedural defect, and thus waivable.”<br />
Id. <strong>The</strong> court also pointed to other district<br />
courts within the Fourth Circuit that had<br />
considered the issue and found a violation<br />
of the forum defendant rule to be procedural.<br />
Id. (citing Ada Liss Grp., 2007 WL<br />
634083, at *3–4). In addition, the court<br />
found the rationale set forth by the Ninth<br />
Circuit in Lively v. Wild Oats Markets, Inc.,<br />
456 F.3d 933 (9th Cir. 2006), persuasive.<br />
Id. Specifically, the court agreed with the<br />
<strong>For</strong> <strong>The</strong> <strong>Defense</strong> ■ <strong>November</strong> <strong>2012</strong> ■ 53