It is no secret that many, if not most, defendants—particularly corporate defendants—would prefer to litigate in federal court rather than state court, if given the choice. Federal court is perceived to have various advantages over state courts, including more geographically diverse jury pools, a potentially greater chance of winning a motion to dismiss or summary judgment motion, and a more structured discovery format under the Federal Rules of Civil Procedure. For all of these reasons, removal of a state court lawsuit to federal court can be a powerful tactical weapon in any defendant's arsenal. A bill recently introduced in Congress, however, would effectively eliminate one avenue to federal court removal that has become increasingly favored by corporate defendants—so called "snap" removals. The progress of this bill will, accordingly, merit close monitoring in the months ahead.

Removal Based on Diversity of Citizenship and the 'Forum Defendant Rule'

To understand the recently introduced bill in its proper context, some basic background on removals—and "snap" removals—is necessary. Pursuant to 28 U.S.C. §1441(a), any civil action brought in a state court, in which the U.S. district courts have original jurisdiction, may be removed to federal court by the defendant or defendants. Most often, removal to federal court is achieved based upon diversity of citizenship jurisdiction, which confers federal jurisdiction over a case where the amount in controversy exceeds $75,000, exclusive of interest and costs, and there is complete diversity of citizenship among the parties. 28 U.S.C. §1332.

Removal based on "diversity of citizenship" jurisdiction is, however, subject to at least one important limitation—the so called "forum defendant rule." Set forth in 28 U.S.C. §1441(b)(2), the "forum defendant rule" states that a civil action otherwise removable solely based on diversity of citizenship "may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." In other words, if a plaintiff with New York citizenship commences a state court action in New Jersey against two defendants with, respectively, Connecticut and New Jersey citizenship, then the "forum defendant rule" would prevent removal of the action to New Jersey federal court—despite the parties' complete diversity of citizenship—because one of the defendants is a citizen of the forum state, New Jersey. See, e.g., Breitweiser v. Chesapeake Energy Corp., 2015 WL 6322625, at *2 (N.D. Tex. Oct. 20, 2015) ("Essentially, a defendant cannot remove to federal court on diversity grounds if the defendant or a co-defendant is (1) a forum defendant—a citizen of the state in which the plaintiff originally filed the case—that (2) has been properly joined and served").

The intent behind the forum defendant rule and the "joined and served" language in 28 U.S.C. §1441(b)(2) has been described as involving a balance between the interests of plaintiffs and defendants. On the one hand, the logic underpinning removal generally—allowing a defendant to "avoid local bias" in the plaintiff's chosen state court forum—is presumed to be less important to an in-state defendant, who is regarded as having less to fear from a state court jury pool in its home jurisdiction. Perez v. Forest Laboratories, 902 F.Supp. 2d 1238, 1245 (E.D. Mo. 2012). At the same time, the requirement that a forum defendant be "joined and served" is intended to prevent plaintiffs from tactically blocking removal by joining a forum defendant in the lawsuit, without ever having any intention of serving that defendant and litigating against it.  Id.

Controversy Over 'Snap' Removals

A significant amount of litigation has developed nationwide around "snap" removals, a practice whereby defendants essentially seek to sidestep the "forum defendant rule" by removing a lawsuit that includes a forum defendant before that forum defendant has been served with process. The logic behind such practice is that if the forum defendant has not yet been served with the state court lawsuit by the plaintiff, then the elements of 28 U.S.C. §1441(b)(2) precluding removal have not yet been met, because no forum defendant has yet been "properly joined and served" at the time of the removal.

District courts throughout the United States have been sharply divided on the propriety of the practice, with a number of courts lining up on each side. For those courts that allow "snap" removals, the practice is supportable based on nothing more than the plain language of 28 U.S.C. §1441(b)(2) itself. See, e.g., Ripley v. Eon Labs, 622 F.Supp. 2d 137, 141-42 (D.N.J. 2007) (finding the "plain language" of §1441(b) permitted removal to federal court "despite the numerous policy arguments against it"); Graff v. Leslie Hindman Auctioneers, 299 F.Supp. 3d 928, 936-37 (N.D. Ill. 2017) (collecting cases permitting removal where forum defendant has not yet been served, and agreeing "with the reasoning of these courts applying the plain language of the statute").

Yet, seemingly just as many courts take the opposite view, referring to "snap" removal as a "loophole" or a "bizarre" or "absurd" result that Congress could not possibly have intended when it drafted 28 U.S.C. §1441(b)(2). See, e.g. Penn v. Amazon.com, 2017 WL 8229625, at *2 (C.D. Cal. 2017) (permitting "snap" removal would be "contrary to legislative intent" and produces "absurd results"); Medish v. Johns Hopkins Health Sys. Corp., 272 F.Supp. 3d 719, 726 (D. Md. 2017) (finding that "snap" removal allows defendants "to take advantage of a loophole in the forum defendant rule"); Sullivan v. Novartis Pharma. Corp., 575 F.Supp. 2d 640, 646 (D.N.J. 2008) (district court expressing confidence that "Congress did not add the 'properly joined and served' language in order to reward defendants for conducting and winning a race, which serves no conceivable public policy goal, to file a notice of removal before the plaintiffs can serve process"). Many of these courts have noted that Congress, when it codified the forum defendant rule in 1948, could not have possibly envisioned the development of modern technology that could allow sophisticated corporate defendants to monitor electronic state court dockets, and identify cases in which they have been named, which "allows defendants to remove cases that would otherwise not be removable after service of process is complete."  Penn, 2017 WL 8229625, at *1.

Significantly, in at least two federal Circuits, this debate is now a thing of the past, as both the Second and Third Circuits have recently come down firmly in favor of permitting "snap" removals. The Third Circuit first endorsed the practice in Encompass Ins. Co. v. Stone Mansion Rest., 902 F.3d 147 (3d Cir. 2018), finding that the plain language of 28 U.S.C. §1441(b)(2) was unambiguous and should be given effect. While the Third Circuit conceded that permitting "snap" removals might be interpreted as a "peculiar" result—insofar as it would permit defendants to use "pre-service machinations to remove a case that it otherwise could not"—the court found such outcome "was not so outlandish as to constitute an absurd or bizarre result."  Id. at 153-54. The Second Circuit followed suit a few months later in Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699 (2d Cir. 2019). Gibbons also rested its holding on the plain language of 28 U.S.C. §1441(b)(2), which, by its text, "is inapplicable until a home-state defendant has been served in accordance with state law." Id. at 705. The Second Circuit, echoing Encompass, likewise found that allowing a home-state defendant to remove actions in limited circumstances is "authorized by the text of Section 1441(b)(2) and is neither absurd nor fundamentally unfair."  Id. at 707.

Congress Enters the Fray

To date, the Second and Third Circuits are the only Circuit Courts to weigh in on the propriety of "snap" removal; accordingly, the future of the practice remains unsettled in the majority of the federal Circuits. The recently introduced Removal Jurisdiction Clarification Act of 2020, however, would effectively end "snap" removals nationwide if passed and signed into law. Presently referred to the House Judiciary Committee, the bill's stated purpose is to "establish a procedure for remand of a civil action that has been removed before service on a forum defendant …." The bill would add a section to the remand statute, 28 U.S.C. §1447, specifically providing a limited window for the plaintiff to seek remand of an action that arrived in federal court via a "snap" removal.

Specifically, under the Removal Jurisdiction Clarification Act of 2020, H.R. 5801, if a case is removed based solely on diversity jurisdiction, and, at the time of the removal, any party in interest properly joined as a defendant is (1) a forum defendant and (2) has not yet been "properly served," then the action would still be subject to remand—so long as the forum defendant is properly served under state law "within 30 days" after the filing of the notice of removal, or within the time specified by state law for service of process, whichever period is shorter. The plaintiff's remand motion would still need to be otherwise timely filed under the currently existing remand statute, per 28 U.S.C. §1447(c). Thus, if the Removal Jurisdiction Clarification Act of 2020 were to become law, defendants could still technically engage in "snap" removals prior to the service of a forum defendant with the state court lawsuit, but the plaintiff could effectively nullify the removal by (1) quickly serving the forum defendant with the state court lawsuit, even post-removal, and then (2) timely making a remand motion.

In seeking to effectively eliminate "snap" removals by amending the removal jurisdiction statutes, the Removal Jurisdiction Clarification Act of 2020 seems calculated to overrule the holdings of Encompass, Gibbons, and the scores of lower court federal decisions that have found "snap" removal is permissible based on the plain language of the existing statutes, including most notably 28 U.S.C. 1441(b)(2). The bill's sponsors, moreover, no doubt seek to stake out a clear position that, notwithstanding the conclusions of any prior court decisions opining on the propriety of "snap" removal, such practice is, in fact, not consistent with Congressional intent concerning removal jurisdiction.

It is unclear at this point whether there is sufficient Congressional interest in "snap" removal for the pending bill to have a reasonable prospect of passing both houses of Congress and being signed into law. Nevertheless, the situation may call for close monitoring by defense attorneys, corporate counsel, and any other stakeholders that are presently employing "snap" removal as a method of getting cases into federal court.

Jeffrey M. Beyer is a partner in the Insurance and Litigation groups at Riker Danzig Scherer Hyland & Perretti in Morristown.