Opinion
3:23-cv-00443-YY
09-15-2023
ANDREA MARGARITA TOLEDO CADENA, Plaintiff, v. POLARIS INDUSTRIES INC., a Foreign Corporation; and C. DELMER BRINK, a Resident of Oregon, as Trustee of the BRINK REV LIVING TRUST, Defendants.
FINDINGS AND RECOMMENDATIONS
Youlee Yim You, United States Magistrate Judge
FINDINGS
Currently pending is plaintiff's motion to remand this case to state court. ECF 5. That motion should be denied because subject matter jurisdiction exists over this case based on the diversity between the parties and the amount in controversy, and defendant Polaris Industries, Inc.'s removal did not violate the forum defendant rule codified at 28 U.S.C. § 1441(b)(2) because no in-forum defendant had been served when defendant Polaris removed the case.
I. Legal Standard
Federal courts have limited jurisdiction, generally encompassing actions based on complete diversity between the parties or those presenting a federal question. Exxon Mobil Corp.v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005); 28 U.S.C. §§ 1331, 1332. A plaintiff is “master” of the complaint and “has the choice of pleading claims for relief under state or federal law (or both).” Hansen v. Grp. Health Coop., 902 F.3d 1051, 1056 (9th Cir. 2018). If the plaintiff's claims give rise to jurisdiction in either state or federal court and the plaintiff elects to file the suit in state court, the defendant may remove the action to federal court under the general removal statute, 28 U S.C. § 1441. See also id. The removal statute is strictly construed, and the party asserting removal jurisdiction has the burden of overcoming the strong presumption that a cause is not removable. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992); Corral v. Select Portfolio Servicing, Inc., 878 F.3d, 770, 773 (9th Cir. 2017); Hansen, 902 F.3d at 1057 (“We must exercise prudence and restraint when assessing the propriety of removal because determinations about federal jurisdiction require sensitive judgments about congressional intent, judicial power, and the federal system.”) (simplified).
II. Discussion
Plaintiff, a resident of New York, was seriously injured in an all-terrain vehicle accident in Grants Pass, Oregon, in March of 2021. Compl. ¶ 1-12, ECF 1-1. She filed this suit in state court in March of 2023 against defendant Polaris, the Minnesota-based manufacturer of the vehicle, and defendant C. Delmer Brink, an Oregon resident and trustee of the trust that owned the property where the accident occurred. Id. Plaintiff formally served defendant Polaris with the state court complaint on March 20, 2023. Not. Removal 1, ECF 1. On March 28, 2023, defendant Polaris removed the case to federal court under 28 U.S.C. § 1332 based on diversity jurisdiction. Id. On March 30, 2023, plaintiff served defendant Brink. Pickett Decl. Ex. 2, ECF 9-1. Plaintiff then filed this motion to remand. Mot. Remand 1, ECF 9.
In response to plaintiff's motion, defendant Brink consented to removal. Def. Brink Resp. 1, ECF 14. As explained below, the forum defendant rule and other related removal rules are procedural, not jurisdictional, and arguments regarding defective procedures can be waived. Gaskill v. Travelers Ins. Co., No. 3:11-cv-05847-RJB, 2012 WL 13024806, at *3 (W.D. Wash. Feb. 22, 2012) (“Even were there a defect in removal, failure to obtain unanimous consent to removal is a ‘defect in a removal procedure' under 28 U.S.C. § 1447(c) and, therefore, a non-jurisdictional defect waived if not raised within thirty days of removal.”). Thus, the court does not sua sponte consider whether the removal and consent here were procedurally sound on grounds not raised in plaintiff's motion to remand.
Plaintiff asserts that removal of this case is improper under the forum defendant rule, codified at 28 U.S.C. § 1441(b)(2), because defendant Brink is a resident of Oregon. Mot. Remand 5, ECF 9. That statute provides that “[a] civil action otherwise removable solely on the basis of [diversity jurisdiction] 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.” 28 U.S.C. § 1441(b)(2).
The analysis begins, “as always, with the language of the statute.” Duncan v. Walker, 533 U.S. 167, 172 (2001). Under a plain reading of § 1441(b)(2), the forum defendant rule does not apply because defendant Polaris removed the case before in-forum defendant Brink had been “properly joined and served.” See McAboy v. Intel Corp., No. 3:21-cv-01773-IM, 2022 WL 1519081, at *3 (D. Or. May 13, 2022) (“The bar to removal under 28 U.S.C. § 1441(b)(2) is only triggered if the forum defendant is served.”). “Challenges to removal jurisdiction require an inquiry into the circumstances at the time the notice of removal is filed.” Spencer v. U.S. Dist.Ct. for N. Dist. of Ca., 393 F.3d 867, 871 (9th Cir. 2004). “When removal is proper at that time, subsequent events, at least those that do not destroy original subject-matter jurisdiction, do not require remand.” Id. A straight-forward application of that principle here shows that removal was proper. There is no dispute that the parties are completely diverse and that the amount in controversy is sufficient to confer the court with diversity jurisdiction under 28 U.S.C. § 1332 at the time the case was removed.
The post-removal service on defendant Brink does not change that analysis. The forum defendant rule is procedural, not jurisdictional. Lively v. Wild Oats Markets, Inc., 456 F.3d 933, 939 (9th Cir. 2006) (holding that the forum defendant rule's “additional limitation on diversitybased removal jurisdiction is a procedural, or non-jurisdictional, rule”). That distinguishes this case from others where no diversity existed between the parties, or a non-diverse defendant is added after removal, thus destroying the court's subject matter jurisdiction. See Clarence E. Morris, Inc. v. Vitek, 412 F.2d 1174, 1176 (9th Cir. 1969) (“A nonresident defendant cannot remove a ‘nonseparable' action if the citizenship of any codefendant, joined by the plaintiff in good faith, destroys complete diversity, regardless of service or nonservice upon the codefendant[.]”); Greenway Nutrients, Inc. v. Pierce, No. 2:22-cv-03322-MWF-AFM, 2022 WL 17486359, at *2 (C.D. Cal. Dec. 6, 2022) (“[W]hen evaluating whether diversity exists, a court cannot ignore a defendant's citizenship simply because the defendant has not yet been served.”) (citations omitted); Murphy v. Am. Gen. Life Ins. Co., 74 F.Supp.3d 1267, 1278 (C.D. Cal. 2015) (“[W]here a proposed amendment would add a non-diverse party after removal-thereby precluding existing, diversity jurisdiction-there is greater discretion in determining whether to allow the amendment.”).
Plaintiff does not contest the plain reading of § 1441(b)(2). Instead, plaintiff urges the court to look beyond the plain language of the forum defendant rule because a strict interpretation of the statute leads to an “absurd or unreasonable” result that is contrary to its purpose. Mot. Remand 8-10, ECF 9 (citing Deutsche Bank Nat'l Tr. Co. v. Chicago Title Ins. Co., No. 2:21-cv-01854-CDS-DJA, 2022 WL 2819844, at *4 (D. Nev. July 18, 2022)). Plaintiff characterizes defendant Polaris's removal as exploiting a controversial interpretation of the forum defendant rule under which a defendant races to remove the case before the plaintiff can formally serve the in-forum defendant. Id.; see also Sohal v. Mondelez Glob. LLC, No. 3:22-cv-00998-MO, 2022 WL 6233833, at *1 (D. Or. Sept. 6, 2022) (“Because of its perceived unfairness to plaintiffs and contrariness to the concepts underlying diversity jurisdiction, snap removal has been criticized by some courts and scholars.”). This so-called “snap removal” tactic is based on the language of the forum defendant statute, which only prohibits removal of a diversity case if any “properly joined and served” defendant is a citizen of the forum state. 28 U.S.C. § 1441(b)(2) (emphasis added). Snap removal defendants, like defendant Polaris here, assert that so long as removal is achieved before the in-forum defendant is formally served, the forum defendant rule does not apply. Courts are split on how to interpret and apply the “properly joined and served” language to pre-service or snap removals, and plaintiff urges this court to follow those that have remanded cases where the defendant utilizes this tactic to avoid the forum defendant rule and secure removal of what would otherwise be a non-removable case. Mot. Remand 9, ECF 9; see also Hong Kong Cont'l Trade Co. Ltd. v. Nat. Balance Pet Foods, Inc., No. 2:22-cv-00571-JAK-AFM, 2023 WL 2664246, at *3 (C.D. Cal. Mar. 28, 2023) (collecting cases).
There does not appear to be a Ninth Circuit case on the propriety of pre-service or snap removal, though other circuit courts and numerous district courts in the Ninth Circuit and around the country have grappled with this “seemingly simple question” with varying results. Plymouth v. Dimension Serv. Corp., No. 2:17-cv-00130, 2017 WL 726943, at *1 (S.D. Ohio Feb. 24, 2017) (collecting cases and explaining that snap removal “turns out to have a very complicated answer and has tested the analytical abilities of more than one judge”). The cases generally fall into three categories.
In one category, an out-of-forum defendant seeks to remove the case before any defendant is formally served with the state court complaint. Compare Hawkins v. Cottrell, Inc., 785 F.Supp.2d 1361, 1369 (N.D.Ga. 2011) (reasoning that a plain reading of the statute “necessarily restricts removal to cases where at least one defendant has been served.”); Gentile v.Biogen Idec, Inc., 934 F.Supp.2d 313, 317 (D. Mass. 2013) (laying out various approaches to snap removal analysis and following Hawkins); Pratt v. Alaska Airlines, Inc., No. 2:21-cv-00084-DWC, 2021 WL 1910885, at *4 (W.D. Wash. May 12, 2021) (“The word ‘any' in ‘any parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought,' means at least one defendant must have been properly served before an out-of-state defendant can remove a state court case to federal court on the basis of diversity jurisdiction.”) with Valido-Shade v. WYETH, LLC, 875 F.Supp.2d 474, 477 (E.D. Pa. 2012), aff'd (Apr. 29, 2015) (“[T]here is simply no statutory requirement that the removing defendant must first have been served with the complaint.”); Carrs v. AVCO Corp., No. 3:11-cv-03423-L, 2012 WL 1945629, at *2 (N.D. Tex. May 30, 2012) (allowing removal where no defendant had been served).
A second category of cases sees the in-forum defendant itself attempt to remove the case to federal court before it is served with the complaint. Compare Ethington v. Gen. Elec. Co., 575 F.Supp.2d 855, 862 (N.D. Ohio 2008) (collecting cases that “rejected the plain language interpretation of § 1441(b) and instead concluded that a forum defendant cannot remove to federal court even if the forum defendant has not been ‘properly joined and served.' ”) (simplified) with Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147, 150 (3d Cir. 2018) (affirming district court's denial of motion to remand because plain language of statute allowed in-forum defendant to remove case before formally accepting service); Glob. Indus. Inv.Ltd. v. Chung, No. 5:19-cv-07670-LHK, 2020 WL 2027374, at *2 (N.D. Cal. Apr. 28, 2020) (“[A] defendant may remove an action prior to receiving proper service, even when the defendant resides in the state in which the plaintiff filed the state claim.”).
In the third category, the one in which the present case lands, the out-of-forum defendant is served with the complaint and then seeks to remove the case before the plaintiff can formally serve the in-forum defendant. Texas Brine Co., L.L.C. v. Am. Arb. Ass'n, Inc., 955 F.3d 482, 484 (5th Cir. 2020) (affirming denial of motion to remand where the “out-of-state defendant was served with process and immediately removed the case to federal court before the in-state defendants were served”). This particular situation nullifies some of the more compelling arguments for rejecting snap removal in the other two categories. Again, § 1441(b)(2) provides that “[a] civil action otherwise removable solely on the basis of [diversity jurisdiction] 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.” 28 U.S.C. § 1441(b)(2). According to some courts' reading, the statute only requires that at least one defendant must have been properly served-it applies “if any of parties . . . properly joined and served as defendants is a citizen” of the forum state. Id. (emphasis added); Gentile, 934 F.Supp.2d at 318 (“Thus, section 1441(b) conditioned removal on some defendant having been served.”) (emphasis in original); cf. McAboy, 2022 WL 1519081 at *3 (“The bar to removal under 28 U.S.C. § 1441(b)(2) is only triggered if the forum defendant is served.”).
Many courts have reasoned that snap removal in certain circumstances is inconsistent or at least not in perfect harmony with Congress's intent in enacting the “properly joined and served” provision of the forum defendant rule. Gentile, 934 F.Supp.2d at 319. Congress added the “properly joined and served” provision to the removal statue in 1948. 28 U.S.C § 1441(b) (1948); see also Gentile, 934 F.Supp.2d at 319. Although the legislative history of the 1948 revision is sparse, several courts have pointed to Supreme Court jurisprudence at the time, which suggests that the purpose of the revision was to “thwart gamesmanship by plaintiffs who joined forum defendants with no intent of ever serving them.” Deutsche Bank Nat'l Tr. Co. v. FidelityNat'l Title Grp, Inc., No. 220CV01606APGBNW, 2020 WL 7360680, at *3 (D. Nev. Dec. 14, 2020) (citing Gentile, 934 F.Supp.2d at 319-20); Encompass, 902 F.3d at 153 (“The specific purpose of the ‘properly joined and served' language in the forum defendant rule is less obvious; courts and commentators have determined that Congress enacted the rule to prevent a plaintiff from blocking removal by joining as a defendant a resident party against whom it does not intend to proceed, and whom it does not even serve.”) (citation and quotation marks omitted).
Since the 1948 revision, modern technology such as electronic monitoring of court filings has seemingly allowed some defendants-in particular sophisticated actors with substantial resources-to engage in their own version of gamesmanship by racing to a federal forum before the in-forum defendant can be served. Deutsche Bank, 2020 WL 7360680 at *4. On this basis, some courts have rejected snap removal as an “absurd” result that is inconsistent with Congress's original purpose of preventing gamesmanship. See Deutsche Bank Nat'l Tr. Co. as Tr. for Am. Home Mortg. Inv. Tr. 2007-1 v. Old Republic Title Ins. Grp., Inc., 532 F.Supp.3d 1004, 1011 (D. Nev. 2021) (“Congress would not have wanted to stop gamesmanship by plaintiffs by allowing gamesmanship by defendants.”); Gentile, 934 F.Supp.2d at 321 (“That the legislative history of the statute is silent about the meaning of the ‘properly joined and served' language suggests Congress did not put it into the statute in order to incentivize defendants to race to a federal forum.”).
But even assuming that “preventing gamesmanship” by either side is the legislative purpose animating the rule, courts do not unanimously agree that snap removal always violates that policy. See Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 706 (2d Cir. 2019) (“Allowing a defendant that has not been served to remove a lawsuit to federal court does not contravene Congress's intent to combat fraudulent joinder. In fact, Congress may well have adopted the ‘properly joined and served' requirement in an attempt to both limit gamesmanship and provide a bright-line rule keyed on service, which is clearly more easily administered than a fact-specific inquiry into a plaintiff's intent or opportunity to actually serve a home-state defendant. Absurdity, then, cannot justify a departure from the plain text of the statute.”).
The situation here-where defendant Polaris was served and then removed the case before defendant Brink was served-does not reflect the type of rank gamesmanship or “absurd” result under § 1441(b)(2) that justifies departing from the plain language of the statute. See Crooks v. Harrelson, 282 U.S. 55, 60 (1930) (“[T]he absurdity must be so gross as to shock the general moral or common sense.”). Plaintiff points to the close timing between when defendant Polaris was served on March 22, 2023, when it removed the case on March 28, 2023, and when defendant Brink was served “at a personal residence after repeated attempts.” Reply 4, ECF 16. But there is nothing to suggest that plaintiff was prevented from first pursuing service on inforum defendant Brink before serving defendant Polaris to ensure that the forum defendant rule would apply. See DLJ Mortg. Cap., Inc. v. Fid. Nat'l Title Grp., Inc., No. 2:20-cv-02251-APG-DJA, 2021 WL 3081059, at *4 (D. Nev. July 20, 2021) (“The purposes underlying § 1441(b)(2) are better served by disallowing removal before any defendant is served. The plaintiff can preserve its ability to remain in state court by serving the forum defendant first and without delay.”).
The party invoking the “absurdity cannon” to override the clear language of the statute faces “an extremely high bar.” United States v. Torres, 995 F.3d 695, 705 (9th Cir. 2021). Plaintiff has not demonstrated the type of “gamesmanship” that courts in other cases have relied on in refusing to allow snap removals. Delaughder v. Colonial Pipeline Co., 360 F.Supp.3d 1372, 1375 (N.D.Ga. 2018) (remanding case where the out-of-forum defendant changed its registered agent in a transparent attempt to manipulate electronic docket monitoring and remove the case merely three minutes before the in-forum defendant was served). Nor does it seem so impossible or improbable that Congress intended that a properly served out-of-forum defendant could remove a case if an in-forum defendant had not yet been served. See In re Hokulani Square, Inc., 776 F.3d 1083, 1088 (9th Cir. 2015) (“The absurdity canon . . . is confined to situations where it is quite impossible that Congress could have intended the result . . . and where the alleged absurdity is so clear as to be obvious to most anyone.”); Texas Brine, 955 F.3d at 487 (rejecting argument that removal by the out-of-forum defendant prior to service on the in-forum defendant was an absurd result because, among other things, it was consistent with the purpose of diversity jurisdiction and removal “to protect out-of-state defendants from in-state prejudices”); cf. Salveson v. W. States Bankcard Ass'n, 731 F.2d 1423, 1429-30 (9th Cir. 1984) (applying another removal procedural rule and explaining that “[o]ur circuit rule is that a party not served need not be joined; the defendants summonsed can remove by themselves”) (citing Community Bldg. Co. v. Maryland Casualty Co., 8 F.2d 678 (9th Cir. 1925)).
Finally, plaintiff's argument that the case should be remanded because “issues of state law predominate” is unavailing. Mot. Remand 14-15, ECF 9. That factor is one to consider in a bankruptcy case where the federal court's jurisdiction is based on 28 U.S.C. § 1334, but it has no relevance to the court's diversity jurisdiction under 28 U.S.C. § 1331. See Levin v. Johnson &Johnson, No. 3:19-cv-00590-YY, 2019 WL 2505055, at *2 (D. Or. May 23, 2019), report and recommendation adopted, No. 3:19-cv-00590-YY, 2019 WL 2505033 (D. Or. June 17, 2019) (explaining factors relevant to determining “whether equitable grounds support remand” in bankruptcy case).
RECOMMENDATIONS
Plaintiff's motion to remand (ECF 9) should be denied.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Wednesday, August 30, 2023. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.