Fifth Circuit Blesses Snap Removals

New Orleans, LA – The Fifth Circuit recently joined the Second, Third, and Sixth Circuits in blessing so-called “snap removals” – a procedure used by non-forum defendants to seemingly circumvent the forum-defendant rule and remove cases on the basis of diversity before any forum defendants are served. Texas Brine Co., L.L.C. v. Am. Arbitration Ass’n, Inc., 18-31184, 2020 WL 1682777, at *1 (5th Cir. Apr. 7, 2020). The forum-defendant rule provides that an action may not be removed if a defendant that is “properly joined and served” is a citizen of the State in which the action is brought. See 28 U.S.C. § 1441(b)(2). While the Second, Third, Fifth, and Sixth Circuits are the only circuits to expressly consider the issue, district courts that have rejected snap removals use a policy-based interpretation of the forum-defendant rule to remand cases and discourage forum gamesmanship by defendants.

In Texas Brine, the plaintiff, a Texas entity, filed a Louisiana state court action against the American Arbitration Association (the “AAA”), a New York corporation, and two Louisiana citizens. Id. at *2. The AAA immediately removed the case to federal court prior to Plaintiff perfecting service on the forum defendants. Id. at *1. Plaintiff filed a motion to remand on the basis that snap removal was improper because a plain meaning interpretation creates absurd results, is not in favor of remand, and circumvents the forum-defendant rule. Id. at *2-4. Ultimately, the district court denied the motion to remand, and the Fifth Circuit affirmed on appeal. Id. at *2.

In upholding the propriety of snap removals, the Fifth Circuit dismissed any jurisdictional concerns regarding the forum-defendant rule. The Fifth Circuit noted “that the forum-defendant rule is a procedural rule and not a jurisdictional one.” Id. Then, the Court analyzed the plain language of Section 1441(b)(2) and held that the forum-defendant rule only applies when the forum defendants have been “‘properly joined and served’ at the time of removal.” See id. at *3 (emphasis added). Finally, the Fifth Circuit held that the forum-defendant rule did not bar the AAA’s removal because the only forum-defendants had not yet been served. Id. Eliminating all doubt, the Fifth Circuit expressly held that as long as all other prerequisites to removal are met, a non-forum defendant may remove a case so long as the forum defendant is not yet “properly joined and served” at the time of removal. Id.

The Second, Third, and Fifth Circuits[1] each rejected the argument that a plain meaning interpretation leads to absurd results. The courts each held that Congress could have intentionally preferred a simple bright-line rule based on service, rather than a complex intent-based or fact-specific inquiry. See id. at *3 (quoting Gibbons v. Bristol-Myers Squibb Co., 919 F.3d 699, 706 (2d Cir. 2019)) (“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.”); Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147, 153 (3d Cir. 2018) (“Congress’ inclusion of the phrase ‘properly joined and served’ addresses a specific problem . . . with a bright-line rule.”). Similarly, the Fifth Circuit rejected the argument that such an interpretation flouts the general rule that federal courts favor remand because the text of the statute is unambiguous. See Texas Brine, 2020 WL 1682777, at *4; see also Gibbons, 919 F.3d at 705 (quoting Encompass, 902 F.3d at 152) (“‘[T]he language of the forum defendant rule in section 1441(b)(2) is unambiguous.’”).

Prospective plaintiffs, looking to avoid snap removals should be mindful of several options. First, the plaintiff should consider serving forum defendants before they serve any non-forum defendants. Second, the plaintiff may also file and serve the forum defendants with a complaint and later amend their pleadings to include allegations against the non-forum defendant. Finally, if the non-forum defendant nonetheless succeeds in filing a snap removal, the plaintiff may file a notice of dismissal without court order if no answer or motion for summary judgment is on file. See Fed. R. Civ. p. 41(a)(1)(A)(i). However, the plaintiff should keep in mind that the limitations period is generally not tolled when a suit is dismissed.

Given the above tools available to plaintiffs to prevent snap removals, Defendants should take several steps to give themselves the best opportunity to perfect their snap removal. Upon notice of a lawsuit, defendants should consider filing a removal prior to service of any defendant. A defendant may also preempt the plaintiff’s dismissal of the lawsuit under Rule 41 by filing an answer prior to or at the time of removal. See Fed. R. Civ. P. 41(a)(1)(A)(i). An added benefit of removing expeditiously, a removing defendant need not gain consent from any non-forum defendants that are not served. See 28 U.S.C. § 1446(b)(2)(A).

McDowell Hetherington is a national litigation firm that has appeared in matters in nearly ever state in the country. For more information or to discuss how this may impact a recently filed suit, contact McDowell Hetherington attorneys Will Thomas, Brad Aiken, or David Villarreal.

[1] The Sixth Circuit approved of snap removals in dicta without analysis. See McCall v. Scott, 239 F.3d 808, 813 n.2 (6th Cir. 2001) (“Where there is complete diversity of citizenship . . . the inclusion of an unserved resident defendant in the action does not defeat removal under 28 U.S.C. § 1441(b).”).