29 October 20194 minute read

Snap to it: avoiding home state jurisdiction with pre-service removal

In mass tort litigation, plaintiffs and defendants play a jurisdictional tug of war, with plaintiffs strategically pleading claims to maximize odds of remaining in state court, and defendants removing cases to federal court for inclusion in a multidistrict litigation proceeding.  With plaintiffs increasingly joining nominal local defendants – such as treating physicians and medication distributors – to secure state court jurisdiction, a key tool in a mass tort defendant's arsenal is pre-service or "snap" removal.  Pre-service removal refers to the practice of removing a case to federal court before a forum defendant is served to overcome the forum-defendant rule.  Once considered gamesmanship, pre-service removal is increasingly recognized as a legitimate procedural mechanism to remove individual tort cases to federal court.

Under the forum defendant rule, removal based on diversity jurisdiction generally is defeated if any defendant is a citizen of the state in which the action is brought. 28 U.S.C. § 1442(b)(2).  That said, the text of the removal statute contains a caveat: "[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." Id. (emphasis added).  Mass tort defendants have advocated that, read literally, the forum-defendant rule is not triggered unless and until the forum defendant is properly served. Id.

For years, a patchwork of district court decisions have adopted or declined to recognize snap removal.  With two recent favorable circuit court opinions, however, recent case law appears to be coalescing in support of pre-service removal.

In Encompass Insurance Company v. Stone Mansion Restaurant Inc., 902 F.3d 147 (3d Cir. 2018), the plaintiff, an insurance company and a citizen of Illinois, sued in Pennsylvania state court, the home jurisdiction of the defendant.  Prior to formally accepting service of the complaint, the defendant timely removed that action to the Western District of Pennsylvania.  The district court denied the plaintiff's motion to remand.  On appeal, the plaintiff contended that the district court erred in adopting a literal reading of the removal statute – which considers the residence of only properly served defendants in applying the forum-defendant rule – because such a reading would lead to an absurd result.  The Third Circuit disagreed.  "[T]he language of the forum defendant rule in section 1441(b)(2) is unambiguous.  Its plain meaning precludes removal on the basis of in-state citizenship only when the defendant has been properly joined and served." Id. at 152.

Faced with the same issue, the Second Circuit in Gibbons v. Bristol-Myers Squibb Co. and Pfizer Inc., 919 F.3d 699 (2d Cir. 2019), reached the same conclusion.  In Gibbons, the defendants, Bristol-Myers Squibb and Pfizer Inc., faced several individual Eliquis lawsuits in Delaware state court.  Id. at 702.  Prior to being served, the defendants removed the cases to federal court, seeking transfer to the Eliquis MDL.  The District of Delaware denied the plaintiffs' motion to remand and transferred the cases.  Once in the MDL, the plaintiffs renewed their motion to remand, which the court denied.

The plaintiffs appealed contending, like the plaintiff in Encompass, that a literal interpretation of 28 U.S.C. §1441(b)(2) would produce an absurd result and lead to inconsistent application of the forum-defendant rule across the various states depending on the state service of process requirements.  Id. at 706.  The Gibbons court rejected both arguments ruling "that a home-state defendant may in limited circumstances remove actions filed in state court on the basis of diversity of citizenship – is authorized by the test of Section 1441(b)(2) and is neither absurd nor fundamentally unfair." d. at 707.

While the Second and Third Circuits have endorsed snap removal, in other circuits, defendants must rely on district court opinions, which have been uneven in their adoption of the practice.  Regardless, pre-service removal presents defendants with an opportunity to exert control over jurisdiction.  But to take advantage, defendants must act quickly.  Lawyers representing defendants must assess new filings for applicability and alert clients to new filings before they are served.  Taking these actions immediately after a lawsuit is filed may spare mass tort defendants from unfavorable state court jurisdictions.