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Second Circuit Affirms “Snap” Removal Practice

Earlier this week, a Second Circuit panel resolved a sharp disagreement among district courts regarding the interpretation of the forum defendant rule in the context of a multi-district litigation (“MDL”) involving dozens of product liability lawsuits against the makers of the blood-thinning medication Eliquis.

In Gibbons v. Bristol-Myers Squibb Co., ___ F.3d ___, 2019 WL 1339013 (2d Cir. March 26, 2019), the court unanimously affirmed the district court’s holding that 33 cases were properly removed to federal court and that the claims were impliedly preempted by FDA labeling rules.

In resolving the case, the court evaluated the practice of removal before service known as “snap removal.”  To keep cases in favorable state court forums, plaintiffs often sue a defendant in its home forum, or join a smaller co-defendant that resides in a favorable state court jurisdiction so the “forum defendant rule” precludes removal to federal court.  Under that rule, a suit that is “otherwise removable solely on the basis of . . . [diversity of citizenship] 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) (emphasis added)  The rule typically operates when a defendant is served with a suit in a diversity action in a state court in its home state.

But with the advent of electronic docket monitoring, defendants, including those in the Gibbons case, can “snap” remove cases before the plaintiffs can “properly . . . serve[]” them.  28 U.S.C. § 1441(b)(2).  For years, district courts across the country (and within the Second Circuit) have disagreed whether “snap” removal works to secure a federal forum.  Before Gibbons, only the Third Circuit had addressed the issue, which it approved last year in Encompass Ins. Co. v. Stone Mansion Rest. Inc., 902 F.3d 147 (3d Cir. 2018).

In Gibbons, plaintiffs had brought dozens of product liability suits against the defendant drug companies, most of which were consolidated in an MDL in the Southern District of New York.  The MDL court had dismissed many of the cases pursuant to Federal Rule of Civil Procedure 12(b)(6).  At the same time, however, 33 additional cases remained pending in a California federal court awaiting transfer to the MDL.

Following the New York federal court’s dismissal of the cases before it, the California plaintiffs voluntarily dismissed their suits without prejudice, and then refiled them in Delaware state court – where the defendants were incorporated – to take advantage of the forum defendant rule.  But two days later, the defendants, who had not yet been served with the Delaware complaints, removed the cases to the Delaware federal district court and requested they be transferred to the MDL in SDNY.  Plaintiffs then moved to remand, but the Delaware federal court denied the request and dismissed the cases on the same rationale as the earlier SDNY opinion.

On appeal to the Second Circuit, the court looked at the plain language of Section 1441(b)(2) and agreed with the district court that removal before service is proper.  Accordingly, the court held that “the statute plainly provides that an action may not be removed to federal court on the basis of diversity of citizenship once a home‐state defendant has been ‘properly joined and served.’ ” Gibbons, 2019 WL 1339013, at *4 (quoting 28 U.S.C. § 1441(b)(2) (emphasis added)).  The court explained that, by its text, Section 1441(b)(2) does not properly apply until a home‐state defendant has been served in accordance with state law.  Id.  Up to that point, “a state court lawsuit is removable under Section 1441(a) so long as a federal district court can assume jurisdiction over the action.”  Id.

While the plaintiff appellants argued that allowing snap removal would lead to absurd results and the non-uniform application of the forum defendant rule because of variations in state law service requirements (some of which require a delay between filing and service), the Second Circuit explained the removal statute’s language “cannot be simply brushed aside” and that “state‐by‐state variation is not uncommon in federal litigation, including in the removal context.”  The Gibbons court, therefore, held removal before service “is neither absurd nor fundamentally unfair.”  Id. at *4 & *5.

The Gibbons decision, combined with the 3rd Circuit’s 2018 decision, Encompass Insurance, thus approve of “snap” removal as a useful tool for vigilant and quick-acting defendants to secure a federal forum where one may not otherwise be available.

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

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About this Author

Paul A. Werner, Litigation Attorney, Sheppard Mullin, Law firm
Partner

Mr. Werner is a partner in the Business Trial Practice Group in the firm's Washington D.C. office.

Mr. Werner is a seasoned first-chair litigator, whose prodigious representations over the past decade have been before all levels of courts and administrative tribunals, federal and state, and spanned a wide range of complex litigation matters. These matters have run the gamut from high-stakes, “bet the company” commercial disputes to disputes involving statutory, constitutional, communications, energy, environmental, insurance, intellectual...

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Abraham Shanedling, litigation, lawyer, Washington DC, Sheppard Mullin Law Firm
Associate

Abraham Shanedling is an associate in the Business Trial Practice Group in the firm's Washington, D.C. office.

Areas of Practice

Mr. Shanedling represents clients in complex litigation and technical regulatory matters across various industries, including communications regulatory issues and disputes for communications sector clients. Mr. Shanedling has represented clients before federal and state courts across the country as well as federal and state administrative agencies. He has honed his litigation skills regarding every aspect of a case, with matters ranging from multi-district products liability litigation and commercial disputes to government investigations and enforcement actions.

Mr. Shanedling currently represents cable operators and other broadband providers in matters involving communications law issues. This includes issues related to municipal franchising (including franchise renewal and transfers of control), franchise fees, fees in support of Public, Educational and Governmental (“PEG”) channels, institutional networks, access to rights-of-way, pole attachments, infrastructure deployment, and a host of related issues.

Mr. Shanedling previously served as a law clerk with the United States Senate Committee on the Judiciary and as a legal intern in the Office of the Chief Counsel of the United States Department of Homeland Security. Aside from his practice, Mr. Shanedling is an Adjunct Professor at Georgetown University Law Center, where he teaches a course on Legal Research, Analysis and Writing.

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