A recent decision by the Ninth Circuit regarding the timing of removal to federal court has gotten a fair amount of attention in the legal media.  It potentially opens the door to later removals of cases more than 30 days after service of the complaint, although I don’t expect that defendants’ practices will change significantly.  And in circuits outside the Ninth Circuit, caution is likely to dictate that removal happen during the initial 30-day period, as has been defendants’ practice.

In Roth v. CHA Hollywood Medical Center, L.P., No. 13-55771, 2013 U.S. App. LEXIS 13224 (9th Cir. June 27, 2013), the Ninth Circuit construed 28 U.S.C. § 1441(b)(1) and (b)(3), which provide that a notice of removal shall be filed within 30 days of receipt by the defendant of the initial pleading, or, “if the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.”  Id. at *6-7.  The defendants had removed the case under CAFA more than 30 days after receiving an amended complaint that, together with further investigation by one of the defendants, created a basis for establishing minimal diversity and that the amount in controversy exceeded $5 million.  It appears that the reason for the late removal might have been difficulty in locating a putative class member that was a citizen of a state other than California and establishing that class member’s citizenship (the Ninth Circuit characterized this as having been done “quickly,” but it appears it was done more than 30 days after receiving the amended complaint).  The district court remanded the case based on a rationale that the defendants could not remove the case based on information they discovered, but only based on the amended complaint or some other paper received from the plaintiffs, within one of the 30-day periods specified in § 1441(b)(1) and (b)(3).  Id. at *4-5.  This rationale appeared inconsistent with how the vast majority of removals proceed, since most involve the defendant developing information regarding the amount in controversy that goes beyond what has been received from the plaintiffs.

The Ninth Circuit explained that a defendant can remove a case outside of the 30-day periods based on its own investigation, where the complaint and other documents received from the plaintiffs do not demonstrate on their face that the case is removable.  What is most significant here is that the defendant’s investigation in that regard is not required to be completed (at least preliminarily) within the first 30 days after service of the complaint or amended complaint:

We held in Harris v. Bankers Life and Casualty Co., 425 F.3d 689, 693-94 (9th Cir. 2005), that a defendant does not have a duty of inquiry if the initial pleading or other document is “indeterminate” with respect to removability. Thus, even if a defendant could have discovered grounds for removability through investigation, it does not lose the right to remove because it did not conduct such an investigation and then file a notice of removal within thirty days of receiving the indeterminate document. Harris did not address a case in which a defendant conducted its own investigation, even though not required to do so, and discovered that a case was removable.

We conclude that §§ 1441 and 1446, read together, permit a defendant to remove outside the two thirty-day periods on the basis of its own information, provided that it has not run afoul of either of the thirty-day deadlines. For good reason, § 1446(b)(1) and (b)(3) place strict limits on a defendant who is put on notice of removability by a plaintiff. A defendant should not be able to ignore pleadings or other documents from which removability may be ascertained and seek removal only when it becomes strategically advantageous for it to do so. But neither should a plaintiff be able to prevent or delay removal by failing to reveal information showing removability and then objecting to removal when the defendant has discovered that information on its own. Similarly, a plaintiff’s ignorance of the citizenship of would be class members should not defeat removal if defendant independently knows or learns that information.

Id. at *8-9. 

The court recognized that its ruling could lead to defendants delaying a removal until a point in time when it was “strategically advantageous” to remove a case.  But the court noted that plaintiffs could protect themselves from this by providing the defendants with some document that would demonstrate removability, and thereby trigger the 30-day deadline.  Id. at *13.

This decision potentially solves, at least in the Ninth Circuit, one of the difficulties that defendants have faced in removing cases under CAFA.  Such a removal often involves complicated internal and sometimes external inquiries to demonstrate that the amount in controversy exceeds $5 million.  Performing that investigation, at least preliminarily, within a 30-day period can be challenging in some cases.  This case provides a defendant some flexibility on this, at least in the Ninth Circuit (although a defendant concerned about the Supreme Court potentially overturning this result would want to remove within the initial 30-day period).  Whether defendants will utilize this as a strategic option, as the Ninth Circuit suggests, seems less likely to me.  Defendants preferring a federal forum typically want to be in federal court from the outset, so they have the federal court deciding initial dispositive motions, managing any initial discovery, etc.  But if there is a state court procedure that provides a defendant with a particular strategic option, such as a procedural device, that is unavailable in federal court,  that might be a circumstance where deferring removal would be considered.  In circuits outside the Ninth Circuit, I would expect cautious defendants not to delay removal, although if it is simply not possible under the circumstances to develop the necessary information for removal until later in the case, this decision now provides a strong hook to attempt a late removal. 

In cases that were not removed under CAFA because circuit law authorized “binding” stipulations that the amount in controversy was below $5 million, which were rejected by the Supreme Court in Standard Fire Ins. Co. v. Knowles, this new Ninth Circuit decision potentially might allow a late removal, depending on the circumstances.

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Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career at Skadden.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and I was fortunate to have the opportunity to work on some prominent class actions arising from the 2004 hurricanes in Florida and later Hurricane Katrina, including cases involving the applicability of the flood exclusion, statutes known as valued policy laws, and various other issues.  My interest and experience in class actions gradually led me to focus on that area.

In Connecticut courts I’ve defended various kinds of class actions that go beyond insurance, including cases involving products liability, securities, financial services and consumer contracts.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at my desk or flying around the country trying to save insurance companies from the plaintiffs’ bar, or attending a conference on class actions or insurance litigation (for more on those, see the Seminars/Programs page of this blog), I often can be found playing or reading with my young daughter, helping my wife with her real estate and mortgage businesses, reading a book about history or politics, or watching the Boston Red Sox (I managed to find bleacher seats for Game 2 of the 2004 World Series when Curt Schilling pitched with the bloody sock).  When the weather is good I also love to take the ferry to Block Island, Rhode Island and ride a bike or walk the trails there. If you go, I highly recommend the Clay Head Trail.