5th Circuit Joins Trend, Approves ‘Snap Removal’ Exception

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For defendants in civil cases, securing the right to litigate in a federal court is getting easier in some jurisdictions – even when a case was initially filed in a state court in your home state.

But it's critically important to act fast and to have a plan in place to do so.

The so-called Forum Defendant Rule prohibits a “home-state” defendant that “has been properly joined and served” from removing a case to federal court on the basis of diversity jurisdiction.

After years of uncertainty, the Third Circuit, then the Second Circuit and now the Fifth Circuit have all approved “snap removal” by home-state defendants that have not been properly “joined and served” with a summons and complaint. See Texas Brine Co., L.L.C. v. Am. Arbitration Ass'n, Inc., (5th Cir. Apr. 7, 2020); Gibbons v. Bristol-Myers Squibb Co., (2d Cir. 2019), Encompass Insurance Co. v. Stone Mansion Restaurant, Inc., (3d Cir. 2018).

The origin of federal diversity jurisdiction is often attributed to concerns about protecting out-of-state litigants from the potential bias of state court judges and juries. But 230 years later, we see that out-of-state litigants often prefer the state courts, while home-state defendants often prefer the expert, summary judgment and other procedural rules of federal court. And with Courthouse News and other new case alert services, defendants often learn they have been sued before they are formally served.

This “Snap Removal” opportunity will evaporate if action is not taken before formal service. Accordingly, in-house counsel and outside counsel alike should immediately consider whether “Snap Removal” is possible, and whether federal court would be the preferable forum as soon as they learn that a client has been sued in a state court where the client is considered a citizen (e.g., for corporations, the state of incorporation and its principal place of business).

Keep in mind that a plaintiff may voluntarily dismiss the case after removal under Rule 41 of the Federal Rules of Civil Procedure if the defendant has not answered or moved for summary judgment.  Accordingly, it may also be advisable to file an answer with the removal papers, especially if the statute of limitations applicable to any of plaintiff’s claims is about to expire. 

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