Supreme Court: Notice of Removal Requires Only A Short and Plain Statement Regarding the Basis for Jurisdiction

In Dart Cherokee Basin Operating Co. v. Owens, a divided United States Supreme Court answered one question regarding the evidence needed to sustain a removal to federal court. The question was stated by the Court as follows:

To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation? 

"That is the single question argued here and below by the parties and the issue on which we granted review,” and to answer that question the Court stated:

The answer, we hold, is supplied by the removal statute itself.  A statement “short and plain” need not contain evidentiary submissions.

(emphasis supplied). 

As for the comment above regarding it being a divided Court, the concurring and dissenting justices are shown below:

• GINSBURG, J., delivered the opinion of the Court, in which ROBERTS, C. J., and BREYER, ALITO, and SOTOMAYOR, JJ., joined.
• SCALIA, J., filed a dissenting opinion, in which KENNEDY and KAGAN, JJ., joined, and in which THOMAS, J., joined as to all but the final sentence.
• THOMAS, J., filed a dissenting opinion.

Pre-Suit Documents Do Not Trigger Thirty Day Removal Deadline In § 1446(b)

In Village Square Condominium of Orlando, Inc. v. Nationwide Mutual Fire Insurance Co. (09-cv-1711-Orl), Middle District of Florida Judge Gregory Presnell addressed an interesting issue relating to removal of a plaintiff's complaint to federal court.

After allegedly sustaining damages during Hurricane Charley, the condominium association filed a lawsuit in state court.  "Although the Complaint revealed that the parties were diverse, Plaintiff did not demand a specific amount of damages. Instead, Plaintiff simply alleged that the state court’s jurisdictional minimum of $15,000 had been met (Doc. 2, ¶ 1). Soon after it made its initial appearance, Defendant served Plaintiff with a limited set of interrogatories focused specifically on the amount of Plaintiff’s damages (Doc. 1-5 at 22). Plaintiff responded on September 14, 2009, swearing that its damages amounted to $881,384.83 (Doc. 1-5 at 25). On October 8, 2009, Defendant removed the case pursuant to 28 U.S.C. §§ 1332 and 1441(Doc. 1)."

The plaintiff filed a motion to remand and argued that the "Defendant first learned that the case was removable almost a year before the Complaint was even filed, i.e., on April 9, 2008 – the day that it received Plaintiff’s 'Sworn Statement in Proof of Loss'.”  The court disagreed because "the amount in controversy requirement is frequently a subjective and contentious statutory pre-requisite to diversity jurisdiction that must be assessed not at the time suit is commenced but at the time it is removed."

Even assuming that Defendant could determine which portion of the losses Plaintiff claims that it already paid, it is far from clear that Defendant knew, or should have known, that the amount of damages that Plaintiff claimed in the Complaint remained the same for an entire year.8 In other cases, defendants often must rely on demand letters, medical bills, affidavits from experts and carefully worded (if not deliberately evasive) responses to discovery requests – each of which may have a bearing on aplaintiff’s damages only at a particular point in time – in order to meet their burden of proving that the amount of controversy has been met at the time of removal. This evidence is often susceptible to multiple inferences. Unlike citizenship, then, determining what a defendant knew or could have “intelligently ascertained” about the amount in the controversy at a given point in time is inherently subjective and ambiguous.

With regard to whether a case should be remanded because the defendant had documents, the court stated:

The better approach, it seems, as the Fifth Circuit concluded in Chapman, is that Congress contemplated only those papers that are received by the defendant after receipt of the initial pleading – not pre-suit documents received prior to the initial pleading....Finally, the polices regarding removal counsel against adopting a rule that would impute knowledge of pre-suit documents to defendants. Congress has made clear its intent that defendants must be circumspect in deciding whether to remove a case.....On the other hand, a bright-line rule prohibiting the use of pre-suit documents “promotes certainty and judicial efficiency by not requiring courts to inquire into what a particular defendant may or may not subjectively know.”

Accordingly, the Court holds that pre-suit documents concerning the amount in controversy do not trigger the thirty-day clock in 28 U.S.C. § 1446(b). Plaintiff’s“Sworn Statement in Proof of Loss” was therefore of no moment and Defendant’s Notice of Removal was timely.

The court's decision can be found HERE.

ERISA Removal, Provider Claims, Assignment Of Benefits & Davila In The Eleventh Circuit

In Connecticut State Dental v. Anthem Health Plans, Inc., - F.3d -, No. 08-15268, 2009 WL 5126236 (11th Cir. Dec. 30, 2009), the Eleventh Circuit released a published decision and reviewed a decision denying a motion to remand.  The court went into great detail about the two types of preemption, assignment of benefits under ERISA, healthcare provider claims, and among other issues, the test mandated by Aetna Health Inc. v. Davila, 542 U.S. 200, 210, 124 S. Ct. 2488, 2496 (2004).  In its analysis, the court notes the analysis previously applied in the Eleventh Circuit was changed by Davila.  This is an exceptionally long post but it is also a very detailed opinion.  The citation links below are to the Google Scholar version of the respective opinions.  [Update: In addition to this post, Roy Harmon at the Health Plan Law Blog posted an entry on January 6, 2010 about this case which can be found HERE.]

On a motion to remand, the removing party bears the burden of showing the existence of federal subject matter jurisdiction....Because Plaintiffs’ complaints allege only state law claims, there is no jurisdiction under the well-pleaded complaint rule....Complete preemption is a narrow exception to the well-pleaded complaint rule and exists where the preemptive force of a federal statute is so extraordinary that it converts an ordinary state law claim into a statutory federal claim....

ERISA is one of only a few federal statutes under which two types of preemption may arise: conflict preemption and complete preemption....Complete preemption, also known as super preemption, is a judiciallyrecognized exception to the well-pleaded complaint rule. It differs from defensive preemption because it is jurisdictional in nature rather than an affirmative defense...Complete preemption under ERISA derives from ERISA’s civil enforcement provision, § 502(a), which has such “extraordinary” preemptive power that it “converts an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule.” Taylor, 481 U.S. at 65-66, 107 S. Ct. at 1547. Consequently, any “cause[] of action within the scope of the civil enforcement provisions of § 502(a) [is] removable to federal court.” [emphasis added].

For a number of years, this Court has applied the four-part test for ERISA complete preemption set forth in Butero v. Royal Maccabees Life Insurance Co., 174 F.3d 1207 (11th Cir. 1999)....A few years after Butero was decided, the Supreme Court [decided Aetna Health Inc. v. Davila, 542 U.S. 200, 210, 124 S. Ct. 2488, 2496 (2004).]  The Davila test thus requires two inquiries: (1) whether the plaintiff could have brought its claim under § 502(a); and (2) whether no other legal duty supports the plaintiff’s claim. While similar to the Butero test, Davila refines Butero by inquiring about the existence of a separate legal duty, which is not a consideration under Butero.

***

First, healthcare provider claims are usually not subject to complete preemption because “[h]ealthcare providers . . . generally are not considered ‘beneficiaries’ or ‘participants’ under ERISA.”...Moreover, such claims often are not the type of claims that could be brought under § 502(a) because they do not “duplicate[], supplement[], or supplant[] the ERISA civil enforcement remedy.”....Second, it is well-established in this and most other circuits that a healthcare provider may acquire derivative standing to sue under ERISA by obtaining a written assignment from a “participant” or “beneficiary” of his right to payment of medical benefits....Claims for benefits by healthcare providers pursuant to an assignment are thus within the scope of § 502(a).....Finally, a provider that has received an assignment of benefits and has a state law claim independent of the claim arising under the assignment holds two separate claims. In such a case, the provider may assert a claim for benefits under ERISA, the state law claim, or both....Thus, so long as the provider’s state law claim does not fall within § 502(a), the existence of the assignment is irrelevant to complete preemption if the provider asserts no claim under the assignment.

The Third, Fifth, and Ninth Circuits have applied these principals to determine the line of demarcation between ERISA and state law claims in actions brought by healthcare providers....

In Blue Cross of California v. Anesthesia Care Associates Medical Group, Inc., 187 F.3d 1045 (9th Cir. 1999), the Ninth Circuit held that healthcare providers’ claims for breach of their provider agreements with Blue Cross were not completely preempted, even though they had received assignments from patients who were beneficiaries of ERISA plans.  The providers’ agreements with Blue Cross required Blue Cross to identify providers in the information it distributed to members of the plan and to direct members to those providers. Id. at 1048. In return, the providers agreed to accept payment from Blue Cross for the services they rendered pursuant to specified fee schedules. Id. After Blue Cross changed the fee schedules, the providers filed a class action in state court alleging that Blue Cross breached the provider agreements by improperly amending the fee schedules and by violating its implied duty of good faith and fair dealing under California law.  On appeal [after the district court granted a motion to remand], the Ninth Circuit held that the providers’ breach of contract claims were not within the scope of § 502(a)(1)(B) because the providers’ breach of contract claims arose solely out of their provider agreements. In other words, the claims were not claims for benefits that could be asserted by the patients-assignors. The Ninth Circuit differentiated the breach of provider contract claims from assignment-based ERISA claims as follows:

[T]he Providers are asserting contractual breaches, and related violations of the implied duty of good faith and fair dealing, that their patient-assignors could not assert: the patients simply are not parties to the provider agreements between the Providers and Blue Cross. The dispute here is not over the right to payment, which might be said to depend on the patients’ assignments to the Providers, but the amount, or level, of payment, which depends on the terms of the provider agreements.

Id. at 1051 (emphasis in original). Because the providers’ state law claims arose out of separate agreements with Blue Cross that governed their provision of goods and services to plan members, the assignments were irrelevant to preemption.

The Third Circuit, in Pascack Valley Hospital, Inc. v. Local 464A UFCW Welfare Reimbursement Plan, 388 F.3d 393 (3d Cir. 2004), a post-Davila case, found no preemption under facts similar to those in Anesthesia Care.......

In a recent decision, Lone Star OB/GYN Associates v. Aetna Health Inc., 579 F.3d 525 (5th Cir. 2009), the Fifth Circuit adopted the Ninth Circuit’s “rate of payment” versus “right of payment” test for distinguishing a provider’s state law contract-based claims from a claim for benefits under ERISA......

We agree with these courts that the “rate of payment” and “right of payment” distinction is a useful means for assessing preemption of healthcare provider claims based upon a breach of an agreement separate from an ERISA plan and thus apply it in considering Rutt and Egan’s claims. [emphasis added].

***

The first inquiry is whether Rutt and Egan, “at some point in time, could have brought [their] claim under ERISA § 502(b)(1)(B).”  Davila, 542 U.S. at 210, 124 S. Ct. at 2496. This part of the test is satisfied if two requirements are met: (1) the plaintiff’s claim must fall within the scope of ERISA; and (2) the plaintiff must have standing to sue under ERISA....

Rutt and Egan argue that their claims are not cognizable under § 502(a) because the relief they seek is unavailable under ERISA. They stress that they are not seeking benefits under an ERISA plan, but instead seek to collect unpaid amounts they are owed under their Provider Agreements as a result of Anthem’s use of improper payment methods, such as downcoding and bundling, under the guise of utilization review.  Moreover, they assert, their state law claims are the types of claims federal courts have consistently held are not even defensively preempted under ERISA § 514. The Court emphasized in Davila, however, that merely referring to labels affixed to claims to distinguish between preempted and non-preempted claims is not helpful because doing so “would ‘elevate form over substance and allow parties to evade’ the pre-emptive scope of ERISA.” Davila, 542 U.S. at 214, 124 S. Ct. at 2498 (quoting Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 211, 105 S. Ct. 1904, 1911 (1985)). [emphasis added]......Yet, a closer look [at the Plaintiffs' complaint] discloses more. Plaintiffs’ allegations implicate not only the “rate of payment” under their Provider Agreements, but also the “right of payment.”

What we have, then, is really a hybrid claim, part of which is within § 502(a) and part of which is beyond the scope of ERISA. Because Rutt and Egan complain, at least in part, about denials of benefits and other ERISA violations, their breach of contract claim implicates ERISA. [emphasis added].

Rutt and Egan must have had standing to assert ERISA claims, and because they are providers, they could only have derivative standing through assignments. Thus, unlike Anesthesia Care, supra, the existence of assignments does matter in this case. In the district court, Anthem presented claim forms that Rutt and Egan submitted to Anthem for reimbursement for dental services. Lynn Appicelli, a Project Manager in Anthem’s Government Programs division, confirmed in an affidavit that the attached forms were typical of claim forms that Anthem receives from Connecticut dentists. The claim forms contain the following language: “I hereby authorize payment of the dental benefits otherwise payable to me directly to the below named dental entity.” Anthem contends that these claim forms suffice to show an assignment of benefits by Rutt’s and Egan’s patients. We agree.

***

The second inquiry is whether Rutt’s and Egan’s claims are predicated on a legal duty that is independent of ERISA....Consequently, portions of their claims arise solely under ERISA or ERISA plans and not from any independent legal duty. As for the remaining claims, where removal jurisdiction exists over a completely preempted claim, the district court has jurisdiction over any claims joined with the preempted claim....Therefore, the district court may exercise jurisdiction over Rutt’s and Egan’s nonpreempted state law claims, including those claims for payment in connection with non-ERISA patients.

***

Although this Court has not considered the issue, other courts have concluded that a trade group may obtain statutory standing under ERISA through associational standing....A trade association has standing to sue on behalf of its members when three requirements are met: (a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization’s purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit. Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 343, 97 S. Ct. 2434, 2441 (1977). Even if CSDA met the first two requirements for associational standing, it cannot meet the last one. Generally, an association seeking damages on behalf of its members cannot claim associational standing. See United Food & Commercial Workers Union Local 751 v. Brown Group, Inc., 517 U.S. 544, 554, 116 S. Ct. 1529, 1535 (1996). Damage claims are incompatible with associational standing because such claims usually require “individualized proof.” Warth v. Seldin, 422 U.S. 490, 515-16, 95 S. Ct. 2197, 2214 (1975). Although CSDA seeks both declaratory and injunctive relief, which are normally appropriate relief for associational standing, it also seeks compensatory and punitive damages on behalf of its members, which will require individualized proof of harm. Thus, CSDA could not establish all the requirements for associational standing. Consequently, CSDA’s claim is not completely preempted because it lacks standing to sue under ERISA.

Finally, the court reversed an order of the district court that refused to set aside a judgment. The district court entered a judgment after the plaintiff did not respond to a motion to dismiss.  Because the district court did not apply the test outlined in Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395, 113 S. Ct. 1489, 1495 (1993), the judgment was reversed.

Eighth Circuit Affirms FDIC's Unilateral Removal Right And HOLA Preemption

In Casey, et al. v. North American Savings (09-1096), the Eighth Circuit reached two conclusions: 1) As soon as the FDIC becomes involved in an action the case arises under federal law and the FDIC can remove the case without the consent of any other party; and (2) the Home Owners’ Loan Act (HOLA), 12 U.S.C. §§ 1461–1468 preempted the state law claims against the federal thrift institutions. [the case style is Casey, et al v. Federal Deposit Insurance Corporation, et al., however, Casey v. North American is how the court listed the decision on its opinion list.].

The case took an interesting road to get to the Eighth Circuit.  The Missouri state court initially concluded HOLA preempted the claims.  The plaintiff's appealed the decision to the Missouri Court of Appeals.  While the case was pending in the Missouri Court of Appeals, the FDIC was named the receiver for Washington Mutual Bank.  After being substituted as a party, the FDIC removed the appeal in the Missouri Court of Appeals to the United States District Court for the Eastern District of Missouri.

Once the case was in the federal district court, the plaintiffs sought to (1) dismiss the FDIC as a party;  (2) have the action remanded to the state appellate court; and (3) again argued the action was not preempted by HOLA.  The district court denied the motion to dismiss without prejudice, adopted the state court's decision finding the action preempted and transferred the case to the Eighth Circuit for the completion of the appellate review originally started in the Missouri Court of Appeals.

DENIAL OF MOTION TO REMAND

The Eighth Circuit first denied the plaintiff's motion to remand to the state appellate court.  "Section 1447(c) requires that a case removed to federal court be remanded if at any time it is determined that subject matter jurisdiction is lacking...Because we retain subject matter jurisdiction under 12 U.S.C. § 1819(b)(2)(A), however, remand is not required by § 1447(c)."  Relying upon a RTS case, Kansas Pub. Emples. Retirement Sys. v. Reimer & Koger Assocs., 77 F.3d 1063, 1067 (8th Cir. 1996),  the court held: "We find our holding in KPERS persuasive here and conclude that all claims in a case to which the FDIC is a party have "arising under" federal subject matter jurisdiction. The subsequent dismissal of the claim against the FDIC did not defeat that jurisdiction or withdraw the court's jurisdiction over the state law claims filed against the other FSA lenders. Because we retain jurisdiction over the latter claims, section 1447(c) does not require that they be remanded to the Missouri Court of Appeals."

The court then rejected the plaintiff's argument that the case should be remanded because the FDIC failed to get the consent of the other defendants prior to removal.  The court stated: "This case was removed under § 1819(b)(2)(B), however, and that statute allows the FDIC to remove any case to which it is a party from state to federal court within ninety days of its becoming a party. The FDIC’s authority to remove under the statute is unilateral: it does not depend upon the consent of other defendants." 

The final remand argument was also rejected. 

When a case arising under federal law is removed from state court, § 1441(c) affords the federal court discretion to 'remand all [otherwise nonremovable] matters in which State law predominates.'  The question of predominance is informed by the precept that “[p]re-emption, the practical manifestation of the Supremacy Clause, is always a federal question.” Int’l Longshoreman’s Ass’n v. Davis, 476 U.S. 380, 388 (1986).

The homeowners urge us to exercise our statutory discretion to remand because Missouri law governing the practice of law allegedly predominates over the question of the preemptive effect of 12 C.F.R. § 560.2. With the exception of their renewed motion to remand, however, the sole issue on appeal is whether § 560.2 preempts the Missouri laws upon which the homeowners base their claims. And since “[p]reemption . . . is always a federal question,” Missouri law is not even at issue, let alone predominant. Davis, 476 U.S. at 388. Remand under § 1441(c) would be inappropriate because the requirement that state law predominate is unmet.

FEDERAL PREEMPTION

The court also affirmed the Missouri state court's decision concluding that state law claims were preempted by HOLA.

The Missouri Circuit Court dismissed the homeowners’ claims against the FSA lenders because it found the predicate state laws preempted by 12 C.F.R. § 560.2, a federal regulation issued by the Office of Thrift Supervision (OTS) under the authority of the Home Owners’ Loan Act (HOLA) of 1933, 12 U.S.C. §§ 1461–1468.

***

We begin with the regulation itself, which declares unequivocally the OTS’ intent “[to] occupy the entire field of lending regulation for [FSAs].” § 560.2(a). Paragraph (a) of § 560.2 defines the extent to which state law is preempted: “[FSAs] may extend credit . . . without regard to state laws purporting to regulate or otherwise affect their credit activities.” Id. Paragraph (b) provides a nonexhaustive list of the types of state laws that are preempted by paragraph (a). § 560.2(b). Paragraph (c) provides the exception, sheltering from the regulation’s preemptive scope state contract, commercial, real property, homestead, tort, and criminal law “to the extent that they only incidentally affect the lending operations of [FSAs] or are otherwise consistent with the purposes of paragraph (a).” § 560.2(c).

***

Our analysis thus begins by determining whether the state laws in question fall within the scope of § 560.2(b). “If so, . . . the law[s] [are] preempted.” 61 Fed. Reg. at 50966.

***

The conclusion that § 560.2(b) contemplates an “as applied” analysis finds further support in an amicus curiae brief filed by the OTS in Jenkins v. Concorde Acceptance Corp., 802 N.E. 2d 1270 (Ill. App. 2003)—a case factually similar to the case before the court. As here, the Jenkins plaintiffs sought to enforce against FSA lenders a state statute prohibiting the imposition of fees for the preparation of legal documents by nonlawyers. Id. at 1270. And as here, the statute was facially neutral. It did not mention lending and thus was not a type of law listed in § 560.2(b). The OTS maintained that the statute was nevertheless preempted because, as applied, it imposed requirements regarding loan related fees—making it one of the types of laws enumerated in § 560.2(b). Brief of the Office of Thrift Supervision as Amicus Curiae Supporting Defendant Cititbank, F.S.B. and Similarly Situated Defendants at 10, Jenkins, 802 N.E. 2d 1270 (No. 02-2738).

In sum, the OTS adheres to the analytic approach advocated by the FSA lenders. That approach is not only sensible, it is owed deference. See Auer v. Robbins, 519 U.S. 452, 461 (1997). We conclude that a state law that either on its face or as applied3 imposes requirements regarding the examples listed in § 560.2(b) is preempted. A generally applicable state law that imposes no such requirements will not be preempted if, as applied, it “only incidentally affect[s] the lending operations of [FSAs] or [is] otherwise consistent with the purposes of [§ 560.2(a)].” § 560.2(c).

CONCLUSION

We deny the homeowners' renewed motion to remand to the Missouri Court of Appeals because we retain arising under jurisdiction over the remaining state law claims lodged against the FSA lenders, the FDIC's removal power under 12 U.S.C. § 1891(b)(2)(B) is undiminished by the rule of unanimity, the requirement under 28 U.S.C. § 1441(c) that state law predominate is not met, and Burford abstention would be inappropriate. Furthermore, we conclude that the Missouri laws upon which the homeowners base their claims are, as applied, types of laws identified in 12 C.F.R. § 560.2(b). As a result federal law preempts their enforcement here, and the homeowners' claims fail to state causes of action. We therefore affirm the dismissal of the homeowner claims on grounds of preemption.

Deposition Exhibit Triggered Removal Deadline

The Health Law Plan Blog on timeliness of removal:

Tyson takes issue with the Magistrate Judge’s conclusion that removal was untimely. The Magistrate Judge found that Tyson was on notice of the removability of the action on December 30, 2008. Rao’s deposition was taken on that date and, during the deposition, an offer letter (to Rao from his current employer Foster Farms) was introduced as a deposition exhibit by Tyson.).

Rao v. Tyson Foods, 2009 U.S. Dist. LEXIS 49466 (E.D. Cal. June 12, 2009).

The jousting in this dispute over a non-competition clause involves several noteworthy issues. Though this is a diversity case, the question of timely removal offers some insights. In addition, the case reflects competing efforts at controlling venue, with the employer, Tyson, suing in Arkansas, and the employee seeking declaratory relief in before a California court.

The plaintiff, Shivram Rao (”Rao”), filed a civil action against his former employer, Defendant Tyson Foods, Inc. seeking declaratory relief invalidating a non-competition clause. The action was initially filed in state court, but was removed by Tyson on the basis of diversity jurisdiction. Rao filed a motion to remand.

The removal came up in this way. On December 30, 2008, Tyson took Rao’s deposition. Tyson introduced an offer letter from Rao’s new employer, Foster Farms, as an exhibit.

The parties at the deposition also stipulated that the amount of compensation in the offer letter was the amount that Rao was receiving at the time of the deposition. The offer letter shows that Rao’s salary with Foster Farms easily exceeeds the jurisdictional minimum for this Court.

Since the notice of removal was filed on February 12, 2009, if the letter constitutes an “other paper” under 28 U.S.C. § 1446(b), then Tyson’s removal was untimely.

[Background note: 28 U.S.C.A. § 1446(b) states that notice of removal may be filed within 30 days after receipt by the defendant of a copy of an amended pleading, motion, order, or other paper from which it may first be ascertained that the case is or has become removable.]

The district court agreed with the magistrate judge that the deposition exhibit was notice that the case was removable.

. . . the Ninth Circuit has held that a settlement letter, Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002), as well as a letter sent between attorneys in preparation for mediation, Babasa v. Lenscrafters, Inc., 498 F.3d 972, 975 (9th Cir. 2007), were sufficient to put the respective defendants on notice that the amount in controversy exceeded that required for federal diversity jurisdiction. In this case, the offer letter was made an exhibit to Rao’s deposition and the parties stipulated that the amounts stated therein represent Rao’s current compensation. The offer letter expressly identifies Rao’s salary and the dollar value of other benefits and thus, is sufficiently similar to the settlement letter of Cohn and the letter in preparation of mediation in Babasa to put Tyson on notice of the value of the declaratory relief to Rao. This objection is overruled.

Note: For some discussion of the ERISA parallel to the timeliness issue, see the discussion in :: Challenge To Factual Basis Set Forth In Removal Notice Rejected

Under the complete preemption doctrine, the basis for removal will often not be apparent from the face of the complaint. Cf. Peters v. Lincoln Elec. Co., 285 F.3d 456 (6th Cir. 2002) (plaintiff’s responses to deposition questioning may constitute an “other paper”.

Conflicting Authorities - The district court noted that the authorities are split on the issue, stating:

Tyson is correct that some courts hold that a deposition is not an “other paper” or that courts have indicated that the issue is unclear. E.g., Kiedaisch v. Nike, Inc., 2004 U.S. Dist. LEXIS 2828, *5 n.1 (D. N.H. 2004); Smith v. Equitable Life Assur. Co., 148 F.Supp.2d 1247, 1253 (N.D. Ala. 2001); O’Brien v. Powerforce, Inc., 939 F.Supp. 774, 781 (D. Haw. 1996); Fillmore v. Bank of Am., N.T. & S.A., 1991 U.S. Dist. LEXIS 6640, *9 n.4 (N.D. Cal. 1991).

But the court found that the Ninth Circuit’s position was clear based upon Karambelas v. Hughes Aircraft, 992 F.2d 971 (9th Cir. 1993), a decision which rejected the argument that deposition testimony triggered the 30-day clock on the facts presented:).

However, in Karambelas v. Hughes Aircraft, 992 F.2d 971 (9th Cir. 1993), the Ninth Circuit addressed whether the plaintiff’s deposition testimony could form the basis for removal. Karambelas held that the particular deposition testimony was too speculative to show that the plaintiff was alleging an ERISA claim and thus, removal was improper. See id. at 974-75.

And from the Karambelas opinion:

We are also aware of the authorities which permit removal based upon facts developed at a deposition. See, e.g., Felton, 940 F.2d at 507; Zawacki v. Penpac, Inc., 745 F. Supp. 1044, 1047 (M.D. Pa. 1990); Riggs v. Continental Baking Co., 678 F. Supp. 236, 238 (N.D. Cal. 1988); Brooks v. Solomon Co., 542 F. Supp. 1229, 1230-31 (N.D. Ala. 1982).

The Ninth Circuit distinguished these authorities, the district court observed, stating:

The Ninth Circuit distinguished those cases because the testimony was clear and non-speculative, unlike Karambelas’s deposition. See id. at 974-75. Riggs, Zawacki, and Brooks are all lower court cases that expressly held that a deposition can constitute an “other paper” under § 1446(b). Zawacki, 745 F.Supp. at 1047; Riggs, 678 F.Supp. at 238; Brooks, 542 F.Supp. at 1230-31. Felton did not expressly discuss § 1446(b) because the plaintiffs in that case had failed to preserve any error associated with removal. See Felton, 940 F.2d at 907. Nevertheless, the Karambelas court characterized Felton as a case that permits removal based upon facts developed at a deposition. Thus, the Ninth Circuit acknowledged cases that expressly hold that depositions are “other papers” under § 1446(b), characterized one of its own prior cases as an authority that permits removal based on facts from a deposition, examined Karambelas’s deposition testimony, and ultimately distinguished the quality of Karambelas’s deposition testimony from those in Felton, Zawaki, Riggs, and Brooks; the Ninth Circuit did not indicate that depositions were not “other papers.” In light of Karambelas, the law does not seem unclear in the Ninth Circuit — depositions, if sufficiently definite/non-speculative, may form the basis for removal and thus, is an “other paper” under 28 U.S.C. § 1446(b). That lower courts from other jurisdictions have concluded that depositions are not “other papers” does not make the law in the Ninth Circuit “unclear.”

Removal Jurisdiction is Based on Pleadings or Documents Provided by Plaintiff - Not Defendant

In Thomas v. Bank of America Corporation (09-11143), the Eleventh Circuit issued a published opinion on removal jurisdiction.

The Court held:

"Bank of America filed a Notice of Removal to the United States District Court for the Middle District of Georgia, contending that jurisdiction was appropriate because the action qualified as a 'mass action' under the Class Action Fairness Act of 2005 (“CAFA”), Pub. L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.). Under CAFA, to remove a mass action to federal court, a defendant must show: (1) an amount in controversy of an aggregate of $5,000,000 in claims: (2) minimal diversity; (3) numerosity involving monetary claims of 100 or more plaintiffs; and (4) commonality showing that the plaintiffs’ claims involve common questions of law or fact."

The plaintiff did not provide any "information relating to the amount in controversy or the number of plaintiffs in each class, Bank of America supplemented its Notice of Removal with a declaration that stated that '[f]rom October 23, 2006 through June 30, 2008, Defendant enrolled 77,787 customers and collected a total of $4,825,809 in fees from customers in Georgia for the Credit Protection Plus plan'." Bank of America argued that the statutes application of treble damages brought the amount to a figure well above the requisite $5,000,000.00.

The district court remanded the action to Georgia state court because the complaint did not establish the requisite amount in controversy. "The court thus concluded that there was “great uncertainty regarding the amount in controversy and the class size.”

"A case does not become removable as a CAFA case until a document is 'received by the defendant from the plaintiff—be it the initial complaint or a later received paper . . . [that] unambiguously establish[es] federal jurisdiction'...Once such a document is received, the defendant has thirty days to file the notice of removal. 28 U.S.C. § 1446(b)."

Timeliness of Removal Procedural Defect, Not Jurisdictional

In Kowallek v. Prestia (08-16872), the Eleventh Circuit affirmed the district court's dismissal, notwithstanding the fact that the Notice of Removal was improper.

In this case, the defendant untimely removed a case to the Southern District of Florida. Looking beyond the timeliness of the removal, the district court dismissed the action for failure to state a claim.

Timeliness of removal is a procedural defect and not a jurisdictional defect and, therefore, does not divest the district court of jurisdiction. Citing Ayres v. General Motors Corp., 234 F.3d 514, 519 (11th Cir. 2000) (“The untimeliness of a removal is a procedural, instead of a jurisdictional, defect.”). If the defect in removal had been jurisdictional, the dismissal would have been vacated. Citing Caterpillar Inc. v. Lewis, 519 U.S. 61, 77, 117 S. Ct. 467, 477 (1996) (requiring that a judgment denying a motion to remand must be vacated when a “jurisdictional defect remains uncured”).

"Because Kowallek sued Prestia for refusing to divulge information she acquired as an employee of the Internal Revenue Service, the district court had removal jurisdiction. 28 U.S.C. § 1442(a)(1)." Therefore, the dismissal need not be vacated absent a jurisdictional defect in the notice of removal.

Further, the district court properly dismissed the action with prejudice because allowing the plaintiff to amend would have been futile. See Hall v. United Ins. Co. of Am., 367 F.3d 1255, 1262 (11th Cir. 2004).

Eleventh Circuit on Remand to Agency

In World Fuel Corp. v. Geithner (08-13111), the Eleventh Circuit dismissed for lack of jurisdiction. The court summarized the standard of review when a district court remands to an agency and stated:

Before we can review the Remand Order, we must determine whether we have jurisdiction to do so. “Under 28 U.S.C. § 1291 (1994), 4 our jurisdiction is limited to final decisions of the district courts.” In re Grand Jury Proceedings, 142 F.3d 1416, 1420 n.9 (11th Cir. 1998). “A final order is one that ‘ends the litigation on the merits and leaves nothing for the court to do but execute its judgment.’” Crawford & Co. v. Apfel, 235 F.3d 1298, 1302 (11th Cir. 2000) (quoting Huie v. Bowen, 788 F.2d 698, 701 (11th Cir. 1986)). “As a general rule, remand orders from district courts to administrative agencies are not final and appealable.” MCI Telecomm. Corp. v. BellSouth Telecomm. Inc., 298 F.3d 1269, 1271 (11th Cir. 2002). There is an important distinction, however, between situations where a district court orders the agency to “proceed under a certain legal standard,” and situations where a district court remands for further consideration of evidence. Id. “A remand order generally is found appealable in the former cases because the agency, forced to conform its decision to the district court’s mandate, cannot
appeal its own subsequent order.” Id.

Federal Court Order Not Reviewable by Eleventh Circuit When Case Subsequently Remanded

In W.R. Huff Asset Management Co., LLC v. Kohlberg Kravis Roberts & Co. (07-13114) the Eleventh Circuit held that (1) remand orders are not reviewable; (2) an order substituting a party, which divested the district court of diversity jurisdiction, is not reviewable; and (3) should a state appellate court rule that the substitution was improper the case will remain in state court and cannot be removed a second time.

The procedural history of the case is interesting and extensive. The case was filed in Alabama state court, removed to the Bankruptcy Court for the Northern District of Alabama, remanded to the Alabama state court, and removed to the Northern District of Alabama.

The federal district court judge denied plaintiff's motion to file its fourth amended complaint and granted defendants motion to dismiss with prejudice. The plaintiff appealed the dismissal and a prior panel of the Eleventh Circuit reversed. The prior decision, W.R. Huff Asset Management Co. v. Kohlberg, Kravis, Roberts, 209 Fed. App’x. 931 (11th Cir. 2006), can be found here. The eleventh circuit reversed on the basis for the dismissal, however, specifically indicated there may be other valid reasons to dismiss.

On remand from the Eleventh Circuit, the district court granted leave to amend and to file the fourth amended complaint. The amended complaint added a party and defeated diversity and, therefore, the district court remanded the case back to state court.

Back for a second time at the Eleventh Circuit, the Eleventh Circuit held it was without jurisdiction to review the district court's order. Essentially, the court held the remand order is not reviewable and the order granting leave to amend is a non-final order and, therefore, also not reviewable. The court joined the other circuits that have held there is nothing to prevent the state appellate court from reviewing the federal district court's order [in this case allowing the amendment]. Further, if the state appellate court were to reverse the case cannot be removed back to federal court. The court stated:

An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise. 28 U.S.C. § 1447(d)...Notwithstanding the force of the § 1447(d) bar, the case law has staked out limited exceptions. Thus, we may review orders 'that lead to, but are separate from, orders of remand and have a conclusive effect upon the ensuing state court action'...Section 1291 of the Judicial code generally vests courts of appeals with jurisdiction over appeals from ‘final decisions’ of the district courts.” Cunningham v. Hamilton County, 527 U.S. 199, 203 119 S. Ct. 1915, 1919, 144 L. Ed. 2d 184 (1999). The general rule is that a district court order is considered final and appealable only if it ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. Catlin v. United States, 324 U.S. 229, 65 S. Ct. 631 (1945). Obviously, the instant district court order does not end the litigation on the merits. However, the Supreme Court has “interpreted the term ‘final decision’ in § 1291 to permit jurisdiction over appeals from a small category of orders that do not terminate the litigation. That small category includes only decisions [1] that are conclusive, [2] that resolve important questions separate from the merits, and [3] that are effectively unreviewable on appeal from the final judgment in the underlying action.”...Our analysis leads to the conclusion that the district court’s order is effectively reviewable on appeal from a final judgment in state court. Accordingly, the district court’s order does not satisfy the third prong of the collateral order doctrine and we have no jurisdiction to review it...

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The novel question we must address is whether the district court’s order is effectively unreviewable in light of the remand...Here, Appellants cannot obtain review in federal court. Section 1447(d) prevents this Court from reviewing the remand order itself...[therefore] we join the decisions of several of our sister circuits in finding no reason why the state appellate courts cannot review the propriety vel non of the district court’s order on appeal from a final judgment...We see no reason, on the facts before us, why Appellants cannot raise in the state appellate court all the merits issues they seek to present to us in this appeal. State courts 'possess the authority, absent a provision for exclusive federal jurisdiction, to render binding judicial decisions that rest on their own interpretations of federal law.'

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Appellants expressed concern over a possible ping-pong of the case between federal and state court. If the state court reverses the substitution order, Appellants claim they will again remove the action to federal court under 15 U.S.C. § 77p(c). If the federal court persists in permitting substitution, the case will again be remanded to state court for lack of subject matter jurisdiction. Appellants assert that such a vicious circle of litigation makes the substitution order effectively unreviewable. We disagree...Appellants have received an opportunity to litigate in a federal forum. The policy of Congress is that Appellants now utilize the “equally competent” state courts to resolve the claims against them. Id. If the state courts determine that substitution was improper, Appellants may ask the state court to dismiss the action under SLUSA.

Removing Party Entitled to Correct Procedural Defect in Removal Petition

In Corporate Management Advisors v. Artjen Complexus (08-14606), the Eleventh Circuit reversed the District Court's sua sponte remand order. The defendant removed the case from state court to federal court, however, only alleged the residency of the plaintiff as opposed to the citizenship of the plaintiff. Based upon the defect in the removal petition, the District Court remanded the case. The Eleventh Circuit reversed and held that failure to properly establish citizenship in the removal petition is a procedural defect and the districts court cannot remand a matter based upon a procedural defect absent a motion timely filed by a party. Further, the court instructed the district court to allow the defendant to correct the procedural defect on remand.