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Litigation: New defense-friendly procedures

Get to know the new Federal Courts Jurisdiction and Venue Clarification Act

Here is a scenario that many litigators will be familiar with: You walk into the office on a Monday morning in January 2011, only to find a client waiting at your doorstep with a rather unusual, nervous look on his face. The client then reaches into his large box, hands you the paperwork filling it, and explains that he was served 25 days ago and needs the case transferred to federal court. As an experienced attorney, you believe that you still have time. But you soon discover that another defendant in the case was served over 30 days ago. You now know that you are out of luck, and that there is nothing you can do.

Fast forward to March 2012. Hot off the presses is the new Federal Courts Jurisdiction and Venue Clarification Act of 2011 (Act). Now, there is hope you can help your client. The Act provides that each individual defendant has his own 30-day window to have the case removed to federal court.

The announcement may have come with little fanfare, but the Act should not be overlooked. The Act refines the federal rules related to removal, venue and jurisdiction, in an attempt to pave a clearer path for removal of a case to federal court. It also clarifies the current circuit split dealing with cases where multiple defendants may each want to seek removal. The Act will not only affect the litigation interplay between state and federal courts, but also will have ramifications on litigation strategy for years to come.

Prior to its enactment, the language of the removal statute in the Act only addressed single-defendant cases. This drafting left little guidance to the courts in determining the parameters of seeking removal when one defendant was served prior to another. Before the Act, the circuits were split as to whether the 30-day removal requirement for defendants began to toll when the first defendant was served or whether a new 30-day requirement began anew for each defendant as they were served.

The Act clears this up, and states that any newly added defendant has its own 30-day time period to seek removal. This does away with plaintiffs in some circuits simply serving sophisticated defendants well after the first defendant in an attempt to run the 30 days down, thereby keeping the case in state court.

In addition, the Act codifies the unanimity requirement, which requires that all named and served defendants join in or consent to the removal. The Act provides that “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.” § 1446(b)(2)(C). The plaintiff here still runs the risk of removal, even if the original defendant had failed to remove within 30 days.

As can be seen, the Act makes some fairly significant changes that litigators will want to learn to best represent their clients. In the end, defense litigators should gain easier access to federal courts.

Contributing Author

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Matthew Walsh

Matthew Walsh is a partner in the Chicago office of Hinshaw & Culbertson LLP and co-leader of the firm's Business Litigation Department. His practice concentrates...

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