Snap Removal – Key Developments and Decisions in 2018

2 min

Actions filed in state court may be removed to federal court under 28 U.S.C. § 1332 when the action is between citizens of different states with a sufficient amount in controversy – except when one of the defendants is both a citizen of the state where the action was filed and has been properly served. This is the so-called forum defendant rule under 28 U.S.C. § 1441(b)(2). Defendants who may wish to evade the forum defendant rule, however, can "snap remove" an action by removing before any forum defendant is properly served. Snap removals are controversial in most circuits, and an action thus removed is at risk of remand – except, now, in the Third Circuit.

In Encompass Ins. Co., the Third Circuit upheld the propriety of a snap removal because of the plain-language meaning of the removal statute.1 This result is more striking because of the circumstances: counsel for the forum defendant had agreed to accept electronic service and then held off accepting service until after removing the case to federal court. Though the plaintiff argued that the removal amounted to gamesmanship because defendant's counsel delayed accepting service to that defendant's advantage, the Third Circuit disagreed. It found that though the "result may be peculiar in that it allows [the defendant] to use pre-service machinations to remove a case that it otherwise could not," it "is not so outlandish as to constitute an absurd or bizarre result."

The Third Circuit alone has definitively ruled that snap removals are sanctioned, but they remain controversial in other circuits. In Delaughder, for example, the United States District Court for the Northern District of Georgia rejected the Third Circuit's reasoning and remanded an action where the forum defendant was able to remove only because it changed its registered agent shortly after plaintiffs filed their complaint, which allowed it time to remove prior to proper service. The court found remand necessary to undo the defendant's "gamesmanship" and to "close an absurd loophole in the forum-defendant rule."2 Because district courts from other circuits, such as the one in Delaughder, have already started to embrace or reject the Third Circuit's reasoning in Encompass, the Encompass decision may spur other circuits to directly opine on the propriety of snap removals in the coming year.

[1] Encompass Ins. Co. v. Stone Mansion Rest., Inc., 902 F.3d 147, 150-152 (3d Cir. 2018).

[2] Delaughder v. Colonial Pipeline Co., 2018 WL 6716047, at *1 & 3 & 7 (N.D. Ga. Dec. 21, 2018).