The Southern District of Indiana has been experimenting this year with a pilot program for certain employment cases. The only eligible cases are individual Title VII, ADA and ADEA actions. No hostile environment, failure to hire, harassment, FLSA or class-action cases are eligible, nor are cases with mixed claims. The magistrate judges decide which of their cases to put into the program.
In cases selected, the court issues an Order Regarding Initial Discovery that imposes early and tailored disclosure requirements upon the parties. For instance, 30 days after the answer both parties must disclose core information, such as unemployment information, mitigation information, and diaries from the plaintiff, and the personnel file, relevant policies and identification of the supervisors and decision-makers from the defendant. Initial feedback from the court on the program (for instance at the 7th Circuit Conference) is positive.
Removal after 1 year in diversity actions?
In state court cases potentially removable for diversity, conventional thinking is that removal must occur within one year of commencement of the action. There are two potential exceptions: (1) where bad faith is found; and (2) where the case was not initially removable, although this is not settled.
The applicable statute, 28 U.S.C. 1446(c)(1), provides “A case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section 1332 more than 1 year after commencement of the action, unless the district court finds that the plaintiff has acted in bad faith in order to prevent a defendant from removing the action.”
The “bad faith” provision was added with the statute’s amendment as a part of Federal Courts Jurisdiction and Venue Clarification Act of 2011. As part of that amendment, Congress provided, “If the notice of removal is filed more than 1 year after commencement of the action and the district court finds that the plaintiff deliberately failed to disclose the actual amount in controversy to prevent removal, that finding shall be deemed bad faith under paragraph (1).”
There has been little caselaw on this subject. In Lever v. Jackson Nat’l Life Ins., 2013 U.S. Dist. LEXIS 15193 (D. S.C. 2013), plaintiff sued in state court; the complaint stated “total amount in controversy is less than $75,000.” Defendant removed, plaintiff moved to remand, and defendant argued bad faith. The court remanded, writing, “If [the plaintiff] does not desire to try his case in the federal court he may resort to the expedient of suing for less than the jurisdictional amount, and though he would be justly entitled to more, the defendant cannot remove.”
The second potential exception allowing post-one-year removal is more subtle within the statute. Recall that the statute provides that “a case may not be removed under subsection (b)(3) on the basis of jurisdiction conferred by section 1332 more than 1 year after commencement of the action… .”
Recall that Section (b)(1) has the 30-day removal requirement from service of the complaint. Section (b)(3) then later provides a 30-day limitation for removal from service 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” if “the case stated by the initial pleading is not removable … .”
What, then, if the case stated by the initial pleading was removable, but a defendant was not served for more than one year? Is there are one-year limitation?
From the text of the statute, the answer should be “no,” there is only a 30-day-from-service limitation if the original complaint was removable. Caselaw on this issue is mixed and developing. Compare Brown v. Tokio Marine and Fire Insurance Co., 284 F.3d 871, 873 (8th Cir. 2002), (“The one-year time limitation period modified only the second paragraph of § 1446(b), and therefore only applies to cases that were not removable to federal court when originally filed”); Ophnet, Inc. v. Lamensdorf, 2005 U.S. Dist. LEXIS 36260 (D. Mass. 2005), (“Defendants respond first that the one-year time limit does not apply when removal was appropriate based on the initial pleadings or when a plaintiff fraudulently joined a defendant in order to defeat diversity jurisdiction. They cite to two lines of cases supporting those propositions… The Defendants’ position was plainly reasonable, given case law from other circuits on the issue”); with WMCV Phase, LLC v. Tufenkian Carpets Las Vegas, LLC, 2012 U.S. Dist. LEXIS 150007 (D. Nev. 2012), (discussing issue, remanding and later awarding fees for improper removal).
Practitioners might confront this issue if a removable complaint is served upon their client more than one year after commencement of the action. Under the language of the statute, a 30-day clock for removal begins then, and the one-year limitation should not apply. But practitioners should research the issue for the most current caselaw.
Save the date – The annual Federal Civil Practice 3-hour CLE seminar will be Thursday, Dec. 19 from 1:30 to 4:45 p.m. in Indianapolis.
Run with other attorneys – The 5th Annual Joseph Maley Foundation 5K Run, Walk, Roll is set for 9 a.m. July 13 at Eagle Creek Park in Indianapolis. This event is well attended by area attorneys. To register or sponsor, see www.josephmaley.org•
John Maley – [email protected] – is a partner with Barnes & Thornburg, LLP, practicing federal and state litigation, employment matters, and appeals. The opinions expressed are those of the author.