Getting Your Company's Case Removed to Federal Court When Sued in Your 'Home' State

It's no secret that companies sued as defendants generally prefer to litigate in federal court, not state court. Federal courts are presumed to be more predictable, more transparent and less subject to local biases than state courts. So companies haled into state court ordinarily resort to their options to remove the case to federal court, including examining whether the parties are “diverse”—that is, whether all the plaintiffs are citizens of different states than the defendants. The problem with removal based on the parties' diversity is that it's typically unavailable for defendants sued in their “home” state by virtue of a federal statute, 28 U.S.C. Section 1441(b)(2), which provides that a civil action cannot be removed on the basis of diversity “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.”

Or so it was thought. But over the past decade or so, corporate defendants have seized upon a little-noticed clause in Section 1441(b)(2)'s so-called “forum defendant rule”—the requirement that a defendant be “properly joined and served.” Using this clause, defendants began to argue that so long as they had not yet been “served” with a state-court pleading, they could remove on diversity grounds even if a home-state defendant had been sued. Courts increasingly warmed to the argument, many finding that they were bound by the plain text of the clause. But others refused to go along, viewing the tactic as nothing but procedural gamesmanship that Congress could not have intended.

This article provides a brief overview of the case law that has developed on this “joined and served” exception to the “forum defendant rule” and a primer on how to put the exception into practice in everyday litigation management.

Statutory Framework for Pre-Service Removal

When a plaintiff files a suit in state court, 28 U.S.C. Section 1441(a) allows a defendant to remove the case to federal court if the case could have been filed there originally. Section 1441(b) then provides rules that are specific to removal based on diversity of citizenship, including the “forum defendant rule” in section 1441(b)(2). Section 1441(b)(2) states that a civil action cannot be removed on the basis of diversity jurisdiction “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.” Cases that are improperly removed can be remanded pursuant to the procedures specified in 28 U.S.C. Section 1447(c).